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Contents Foreword ..................................................................................................................v Preface ....................................................................................................................vii Editor .......................................................................................................................xi Acknowledgments .................................................................................................xiii Chapter 1 General Information .............................................................................1 1.1 Geography ................................................................................................ 1 1.2 Population and Ethnic Groups.................................................................. 2 1.3 Language .................................................................................................. 4 1.4 Religion .................................................................................................... 5 1.4.1 Indigenous Religions ...................................................................................... 5 1.4.2 Imported Religions ......................................................................................... 6 1.4.3 Official Policies towards Religion in China ................................................... 6 1.5 Education.................................................................................................. 6 1.5.1 Literacy........................................................................................................... 7 1.5.2 The Formal Education System ....................................................................... 7 1.5.3 Education Expenditures.................................................................................. 7 1.5.4 Prognosis ........................................................................................................ 8 1.6 Political Structure..................................................................................... 8 1.6.1 The Communist Party of China ...................................................................... 8 1.6.2 Administration................................................................................................ 9 1.6.3 Military Organization ................................................................................... 10 1.6.4 Judicial Organization.................................................................................... 10 1.7 Brief Overview of Modern Chinese History .......................................... 10 1.7.1 China under Mao Zedong............................................................................. 10 1.7.2 Economic Reform after Mao ........................................................................ 11 1.7.3 The Future .................................................................................................... 12 Chapter 2 Economic Conditions and Policy........................................................13 2.1 General Economic Conditions................................................................ 14 2.2 International Economic Angst................................................................ 16 2.2.1 China?s Entry into the WTO......................................................................... 18 2.2.2 Where Does China Stand on Its Commitments to the WTO?....................... 20 2.3 Foreign Economic Relations and Trade ................................................. 21 2.3.1 Current Trading Status ................................................................................. 21 2.3.2 Trade Policy and Administration .................................................................. 21 2.3.3 Major Trade Regulations.............................................................................. 22 2.3.4 Policy Instruments to Promote International Trade...................................... 23 2.3.5 China?s Barriers to U.S. Exports .................................................................. 24 2.4 Special Economic Zones ........................................................................ 24 2.4.1 Special Economic Zones .............................................................................. 25 2.4.2 Open Coastal Cities / ETDZs ....................................................................... 25 2.4.3 High-Technology Development Zones......................................................... 26 2.4.4 Foreign Investment Policy in the Electronics Industry................................. 26 2.5 China?s High Technology ...................................................................... 27 2.6 Foreign Investment in China .................................................................. 28 2.6.1 Liberalization Influencing FDI Flows .......................................................... 29 2.6.2 China/Hong Kong Closer Economic Partnership Arrangement and FDI Flows ................. 29 2.6.3 General Investment Climate ......................................................................... 30 2.6.4 Permitted Forms of Foreign Direct Investment ............................................ 32 2.6.5 U.S. Export Controls .................................................................................... 35 2.7 Financial System .................................................................................... 35 2.8 Fiscal Structure....................................................................................... 38 2.8.1 Turnover Taxes............................................................................................. 38 2.8.2 Enterprise Income Taxes .............................................................................. 38 2.8.3 Personal Income Taxes................................................................................. 38 2.8.4 Import Tariffs ............................................................................................... 39 2.8.5 Most Favored Nation Trade Status ............................................................... 40 2.9 Chinese Government Policy towards Cross-Border Mergers and Acquisitions........... 40 2.10 Evolution of Foreign Investment Project Catalogs ................................ 42 Chapter 3 China?s Science and Technology........................................................43 3.1 History of China?s S&T Development................................................... 43 3.2 Overview of China?s S&T Policies ........................................................ 46 3.3 China?s R&D Expenditures.................................................................... 47 3.4 China?s S&T Organizational Structure .................................................. 49 3.4.1 Ministry of Science and Technology............................................................ 50 3.4.2 Ministry of Education................................................................................... 51 3.4.3 Commission of Science, Technology and Industry for National Defense .... 51 3.4.4 Chinese Academy of Sciences...................................................................... 51 3.4.5 Chinese Academy of Engineering ................................................................ 52 3.4.6 National Natural Science Foundation of China ............................................ 53 3.5 China?s S&T Infrastructure .................................................................... 53 3.5.1 CAS-operated Institutes and Laboratories.................................................... 53 3.5.2 Universities and Colleges ............................................................................. 54 3.5.3 National Engineering Research Centers ....................................................... 56 3.5.4 Science Parks................................................................................................ 56 3.6 China?s Major S&T Development Programs ......................................... 57 3.6.1 National High-Technology Research and Development (863) Program ...... 57 3.6.2 National Basic Research Priorities Program................................................. 57 3.6.3 Torch Program.............................................................................................. 58 3.7 China?s Major S&T Development Efforts and Achievements............... 58 3.7.1 China?s Indigenous IC Development............................................................ 59 3.7.2 China?s Avionics and Space......................................................................... 60 3.7.3 China?s Development of the Global Positioning System ............................. 61 3.7.4 China?s Supercomputers............................................................................... 61 3.7.5 China?s Telecommunications Effort............................................................. 62 3.7.6 China?s Development on Wi-Fi.................................................................... 63 3.7.7 China?s Effort in Audio-Visual and DVD Development.............................. 63 3.7.8 China?s Efforts in Nanotechnologies............................................................ 64 3.8 Promoting Innovation and Creativity ..................................................... 64 3.9 Summary ................................................................................................ 65 Chapter 4 The Development of China?s Electronics Industry...........................67 4.1 China?s National Five-Year Development Plans ................................... 67 4.1.1 The First Five-Year Plan, 1953-1957 ........................................................... 67 4.1.2 The Second Five-Year Plan, 1958-1965....................................................... 68 4.1.3 The Third and Fourth Five-Year Plans, 1966-1975...................................... 68 4.1.4 The Fifth and Sixth Five-Year Plans, 1976-1985 ......................................... 68 4.1.5 The Seventh Five-Year Plan, 1986-1990...................................................... 69 4.1.6 The Eighth Five-Year Plan, 1991-1995........................................................ 69 4.1.7 The Ninth Five-Year Plan, 1996-2000 ......................................................... 70 4.1.8 The Tenth Five-Year Plan, 2001-2005 ......................................................... 70 4.1.9 The Eleventh Five-Year Plan, 2006-2010 .................................................... 71 4.2 Government Organizations ? The Ministry of Information Industries... 73 4.3 Foreign Trade and Investment in China?s Electronics Industry............. 74 4.4 Imports and Exports of Electronics Products ......................................... 76 4.5 Major National Electronics Projects....................................................... 77 4.5.1 Golden Bridge Project .................................................................................. 77 4.5.2 Golden Card Project ..................................................................................... 78 4.5.3 Golden Customs Project ............................................................................... 79 4.5.4 Golden Taxation Project............................................................................... 80 4.5.5 909 Project.................................................................................................... 80 4.5.6 Electronic Air Traffic Control Project.......................................................... 81 4.5.7 Three Gorges Electronic System Project...................................................... 82 4.6 Major Electronics Companies ................................................................ 83 Chapter 5 China?s Semiconductor Industry .......................................................89 5.1 A Brief History of China?s Semiconductor Industry.............................. 89 5.2 Semiconductor Production and Market Size .......................................... 92 5.3 China?s Current Semiconductor Industry............................................... 93 5.3.1 Discrete Semiconductor Sector..................................................................... 97 5.3.2 Integrated Circuit Sector............................................................................... 98 5.3.3 IC Design.................................................................................................... 101 5.4 Major Domestic Semiconductor Manufacturers .................................. 105 5.4.1 Semiconductor Manufacturing International Corporation.......................... 106 5.4.2 Shanghai Hua Hong (Group) Co., Ltd........................................................ 107 5.4.3 Hejian Technology (Suzhou)...................................................................... 109 5.4.4 Advanced Semiconductor Manufacturing Corp. ........................................ 109 5.4.5 Grace Semiconductor Manufacturing Corporation, Ltd. ............................ 110 5.4.6 Shougang NEC Electronics Corporation .................................................... 111 5.4.7 Wuxi China Resource Microelectronics Co., Ltd. (formerly Hua Jing Electronics Group Corp.) 111 5.4.8 Shanghai Belling Stock Holding Co. Ltd. .................................................. 113 5.4.9 Hua Yue Microelectronics Corporation...................................................... 114 5.4.10 Others ......................................................................................................... 115 5.5 Involvement of Foreign Capital and Technology................................. 116 5.6 Intellectual Property Protection Issues ................................................. 118 5.7 Challenges and Strategies..................................................................... 119 Chapter 6 Electronic Manufacturing Service Industries .................................121 6.1 China?s Device-Level Electronic Packaging Industry ......................... 121 6.1.1 Overview .................................................................................................... 121 6.1.2 Foreign Manufacturers ............................................................................... 122 6.1.3 Domestic Manufacturers............................................................................. 124 6.1.4 Adopted Technologies and Levels.............................................................. 125 6.2 China?s PCB Fabrication Industry ....................................................... 126 6.2.1 Foreign Manufacturers ............................................................................... 127 6.2.2 Domestic Manufacturers............................................................................. 127 6.2.3 Adopted Technologies and Levels.............................................................. 130 6.3 China?s Printed Circuit Board Assembly Industry............................... 132 6.3.1 Major Board Assembly Companies............................................................ 133 6.3.2 Adopted Technologies and Research Abilities........................................... 134 6.4 Summary .............................................................................................. 135 Chapter 7 China Connectors, Cable Assemblies, and Backplanes .................137 7.1 Connectors and Cable Assemblies by Design Type and Sector........... 139 7.1.1 Computer Sector......................................................................................... 139 7.1.2 Telecom Sector........................................................................................... 141 7.1.3 Connectors, Cable Assemblies and Backplanes in Communications/Wireless Sector.......................................................................................................... 142 7.1.4 Connectors, Cable Assemblies and Backplanes in Datacom / Network Sector........... 142 7.1.5 Connectors, Cable Assemblies and Backplanes in Military / Aerospace Sector......... 143 7.1.6 Connectors, Cable Assemblies and Backplanes in Automotive Sector ...... 144 7.1.7 Connectors and Cable Assemblies in Consumer Electronics Sector .......... 144 7.2 Analysis of Connector Production in China......................................... 146 7.3 Analysis of Suppliers in China............................................................. 146 7.4 Doing Business in China ...................................................................... 148 7.4.1 Housing ...................................................................................................... 149 7.4.2 Meals .......................................................................................................... 149 7.4.3 Four Types of Business Operations in China ............................................. 150 7.4.4 Export License............................................................................................ 150 7.4.5 Business Strategies Differ by Region of China .......................................... 150 7.4.6 Import to and Export from China ............................................................... 150 7.5 Major Customers in China ................................................................... 151 7.6 Leading EMS / ODM Companies ........................................................ 152 7.6.1 Flextronics International............................................................................. 152 7.6.2 Jabil Circuit ................................................................................................ 152 7.6.3 Hon Hai Precision Industry ........................................................................ 152 7.6.4 Sanmina-SCI .............................................................................................. 152 7.6.5 Solectron..................................................................................................... 153 7.6.6 Quanta Computer........................................................................................ 153 7.6.7 Compal Electronics .................................................................................... 153 7.6.8 Asian EMS / ODM Companies .................................................................. 153 7.7 Manufacturing Processes in China ....................................................... 154 7.7.1 Connectors.................................................................................................. 154 7.7.2 Cable Assemblies ....................................................................................... 154 Chapter 8 Computers ..........................................................................................157 8.1 China?s Computer Market.................................................................... 158 8.1.1 Market for Business Computers ................................................................. 159 8.1.2 Market for Home Computers...................................................................... 160 8.1.3 Market for Notebook Computers................................................................ 160 8.2 Major Domestic Computer Manufacturers........................................... 161 8.2.1 Legend Group/Lenovo................................................................................ 161 8.2.2 Founder Group ........................................................................................... 162 8.2.3 Great Wall Group ....................................................................................... 163 8.2.4 Others ......................................................................................................... 163 8.3 Major Foreign Competitors.................................................................. 163 8.4 China?s Super Computers..................................................................... 165 Chapter 9 The Telecommunications Industry ..................................................167 9.1 Overview of China?s Telecom Industry ............................................... 167 9.2 Related Government Organizations and Regulations........................... 168 9.2.1 Telecom Equipment Market Policy: Buy Local ......................................... 168 9.2.2 Telecom and Internet Regulations.............................................................. 169 9.3 Fixed-line Business .............................................................................. 170 9.4 Mobile Communications Business....................................................... 170 9.5 Development of the Backbone Transfer Network................................ 172 9.6 China?s Telecommunications Operators .............................................. 173 9.6.1 China Telecommunication Corporation ..................................................... 174 9.6.2 China Mobile Communication Corporation ............................................... 175 9.6.3 China United Communication Co., Ltd...................................................... 175 9.6.4 China Network Communications Co., Ltd. ................................................ 176 9.6.5 China Railway Communication Co., Ltd. .................................................. 177 9.6.6 China Satellite Communication Corporation.............................................. 177 9.7 China?s Telecom Equipment Manufacturers........................................ 178 9.7.1 PuTian Information Group (POTEVIO)..................................................... 178 9.7.2 Huawei Technologies Co., Ltd. .................................................................. 179 9.7.3 Zhongxing Telecommunications ................................................................ 181 9.7.4 Alcatel Shanghai Bell Company................................................................. 183 9.7.5 Datang Telecom Technology Co. Ltd. ....................................................... 183 9.7.6 Fiberhome Telecommunication Technologies Co., Ltd. ............................ 184 9.7.7 Great Dragon Telecom Group .................................................................... 185 9.8 Challenges and Prospects ..................................................................... 186 Chapter 10 Other Electronics Industries...........................................................189 10.1 China?s TV Industry............................................................................. 189 10.1.1 High Definition TV (HDTV)...................................................................... 191 10.1.2 Digital TV................................................................................................... 191 10.2 China?s DVD Industry ......................................................................... 192 10.3 China?s Cellular Phone Industry .......................................................... 193 10.4 China?s Automotive Electronics Industry ............................................ 195 10.4.1 Recent Developments in China?s Automobile Industry ............................. 197 10.4.2 U.S. Auto Parts Trade with China .............................................................. 198 10.5 China?s Avionics Electronics Industry................................................. 199 10.5.1 Regulatory Agencies .................................................................................. 200 10.5.2 Aviation Industries Corporation of China I and II...................................... 200 10.5.3 The China Aerospace Science and Technology Corporation ..................... 201 10.5.4 China Aerospace Science and Industry Corporation .................................. 202 10.5.5 The Civil Aviation Administration of China .............................................. 202 10.6 The Medical Electronics Industry in China.......................................... 202 10.7 China?s Military Electronics Industry .................................................. 204 10.7.1 Overview of Government Policy on Defense and Military Market............ 204 10.7.2 Domestic Military Industry ........................................................................ 205 10.7.3 Export of Military Products........................................................................ 206 10.7.4 Import of Military Products........................................................................ 206 10.7.5 Air Force Technology................................................................................. 207 10.8 China?s Space Electronics Industry...................................................... 208 Chapter 11 The Software Industry in China.....................................................211 11.1 Overview of Software Industry Development in China ....................... 211 11.2 Policy of China?s Software Industry .................................................... 212 11.3 Central Government Preferential Policies for the Software Industry in the Areas of Finance and Tax........ 213 11.3.1 Investment and Financing........................................................................... 213 11.3.2 Taxation...................................................................................................... 213 11.3.3 Exports........................................................................................................ 213 11.3.4 Revenue Allocation .................................................................................... 214 11.4 Software Education and Training......................................................... 214 11.4.1 Basic Education .......................................................................................... 214 11.4.2 Tertiary Education ...................................................................................... 215 11.4.3 Software Blue Collar .................................................................................. 215 11.5 Software Technology Research............................................................ 215 11.5.1 Institute of Software ................................................................................... 215 11.5.2 The National Research Center for Intelligent Computing .......................... 216 11.5.3 China National Software and Service Company Limited........................... 216 11.5.4 Macao Special Administrative Region ....................................................... 216 11.5.5 Hong Kong Special Administrative Region ............................................... 217 11.6 Investment ............................................................................................ 217 11.6.1 Software Parks and Science Parks.............................................................. 217 11.6.2 Zhongguancun Science Park in Beijing...................................................... 218 11.6.3 Special Economic Zones and Costal Cities ................................................ 218 11.6.4 Shanghai Pudong Software Park ................................................................ 218 11.6.5 Southern Software Industrial Park.............................................................. 219 11.6.6 Hong Kong Special Administrative Region ............................................... 219 11.6.7 Tianjin ........................................................................................................ 219 11.6.8 Dalian ......................................................................................................... 219 11.7 Legal Protection ................................................................................... 220 11.8 Outsourcing of Software and IT Service to China ............................... 221 11.9 Accomplishments of the Chinese Software Industry ........................... 221 11.10 Potential of the Chinese Software Industry.......................................... 221 Chapter 12 Conducting Business in China........................................................223 12.1 The Advantages.................................................................................... 225 12.1.1 A Low-Cost, High-Quality Labor Force .................................................... 225 12.1.2 A Complete Supply Chain with World-Class Infrastructure ...................... 227 12.1.3 Favorable Tax Structure and Low Capital Costs ........................................ 230 12.1.4 Large Internal Market................................................................................. 231 12.1.5 Entrance into the World Trade Organization.............................................. 232 12.2 The Cons .............................................................................................. 232 12.2.1 Shortage of Energy and Resources............................................................. 233 12.2.2 Inadequate Land Transportation System .................................................... 234 12.2.3 Currency Revaluation and Financial System.............................................. 235 12.2.4 Deficiency of Enforcement in Intellectual Property Protection.................. 236 12.3 Summary .............................................................................................. 237 Index .....................................................................................................................239
Library of Congress Subject Headings for this publication:
Electronic industries -- China.
China -- Commerce.