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20/05/2013

* Luxury is out; bargains are in for Chinese tourists

SCMP: “Armed with empty suitcases and same-day return tickets, an army of mainland Chinese is descending on suburban outlet shopping malls and international fashion chains in Hong Kong, turning cheap into the new chic as luxury falls out of favour.

Wealthy Chinese used to stop over in Hong Kong for a few days to pick up a Louis Vuitton bag or a wristwatch for up to 40 per cent less than in Beijing or Shanghai.

These well-heeled tourists have now been overtaken by bargain-hunters that stay for a few hours, spend more at shops like Inditex’s Zara and malls such as Citygate Outlets, turning Hong Kong into a must-be location for retailers who are braving some of the world’s most expensive commercial rents.

“There are more mainland consumers than locals,” said Tsz Chung, a salesman at a Nike store in Citygate, located in the satellite town of Tung Chung near the airport. “Typically, mainland consumers look for cheap goods.”

Foreign retailers treat Hong Kong as a gateway to China, which is poised to become the world’s biggest consumer market in three years, and how mainland tourists shop is big business. Sluggish sales growth in Europe and the United States also makes China, with its rapidly expanding middle class and rising incomes, especially attractive.

Chinese nationals were the largest single group of tourists to Hong Kong last year. Of the 35 million who visited, 20 million came and left the same day, an increase of more than a third on 2011, according to tourism bureau data.

Many short-term visitors come by shuttle bus or train from the southern Chinese province of Guangdong. They often head straight to Citygate, where more than 80 international brands including Levi’s jeans, Coach, Polo Ralph Lauren and Burberry are offered at steep discounts.

“It’s cheaper here and there’s a wide range of options,” said Chen Yunlong, a 29-year-old tourist from the border town of Shenzhen as he strolled through the mall on a recent Saturday.

Visitors like Chen, who said he shops in Hong Kong up to three times a week, made Citygate the best performer among the big malls operated by realtor Swire Properties.

First-quarter sales rose 22 per cent at the outlet mall, beating a one per cent loss at the luxury-focused Pacific Place and a 3.5 per cent increase at the mid-tier Cityplaza mall.

At the Nike outlet, Chung said all sales staff were now required to be fluent in Mandarin, the most prevalent Chinese dialect. Most Hong Kong residents speak Cantonese.

Thrifty Chinese tourists are also proving a boon for New Town Plaza, a shopping mall located in the suburban Sha Tin district and owned by Sun Hung Kai Properties Ltd.

Retail rents at New Town, which is miles away from spots frequented by tourists, are among the city’s highest. Last month, L Brands lingerie chain Victoria’s Secrets chose to locate its first Hong Kong stores at the mall and the prime downtown district of Central.

The increase in the number of bargain-seeking Chinese tourists was a factor that attracted 51 international brands to set up their first Asia Pacific stores in Hong Kong last year, about twice as many as in Singapore and Tokyo, according to research recently released by property consultancy CBRE.

Affordable retailers already established in the region are also forking out lofty rentals to attract these visitors.

Japan’s Fast Retailing, owner of the Uniqlo clothing chain, last month opened a 37,500-square-foot store in the iconic Causeway Bay, which overtook New York’s Fifth Avenue as the world’s most expensive retail location.

British fashion brand Topshop will open a 14,000 sq ft store in Central in June, paying $516,000 a month in rent. Zara is also taking over the space once occupied by H&M.

“There are just too many brands looking for shops,” said Susan MacLennan, director of retail at property consultants Savills in land-scarce, densely populated Hong Kong. “A lot of international brands are still very interested, but it’s quite difficult to find space for them.”

The boom in Hong Kong’s mass market retail sector comes as luxury goods sales suffer due to a slowdown in China’s economic growth, a government crackdown on giving expensive gifts in return for favours and in-your-face displays of wealth.

LVMH, the world’s biggest luxury goods group, said in April demand in China had been “flattish” for about 10 months. Luxury watch retailers Sincere Watch (Hong Kong) and Emperor Watch & Jewellery also reported a decline in sales.

In a bid to boost business, some upmarket brands are sending clients on all-inclusive shopping trips to Hong Kong.

But as the influence of these big-spenders on the global luxury market wanes, the spending power of their less wealthy countrymen is rising and changing Hong Kong’s retail scene.”

via Luxury is out; bargains are in for Chinese tourists | South China Morning Post.

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20/05/2013

* A robust defence of India’s growth story

English: Arvind Panagariya

English: Arvind Panagariya (Photo credit: Wikipedia)

FT: “Why Growth Matters: How Economic Growth In India Reduced Poverty and The Lessons For Other Developing Countries, by Jagdish Bhagwati and Arvind Panagariya, PublicAffairs, RRP$28.99/RRP£19.99

English: Jagdish Bhagwati

English: Jagdish Bhagwati (Photo credit: Wikipedia)

With an election due in 2014, India may soon face its most intriguing political choice in a generation. On one side stands Rahul Gandhi, the son of Congress party leader Sonia Gandhi, and scion of a dynasty stretching back to the nation’s independence in 1947. On the other is Narendra Modi from the Hindu nationalist Bharatiya Janata party opposition, a controversial but effective chief minister who runs the business-friendly state of Gujarat.

Both men have drawbacks. It is never clear Mr Gandhi actually wants the top job, while Mr Modi’s appeal is blemished by a massacre of Muslims that occurred on his watch in 2002. Nonetheless, the potential clash has New Delhi’s political class salivating; it could even offer something approaching a battle of ideas between the broadly centre-left Congress and the more centre-right Mr Modi.

Yet behind it lies the need for a deeper debate about the direction of the economy; a debate that is often poorly articulated by political leaders, even as India’s growth has lately come off the boil so conspicuously.

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For that reason this latest contribution from Jagdish Bhagwati and Arvind Panagariya, two Indian-born economists at Columbia University, is welcome. In Why Growth Matters, the duo provide perhaps the most full-throated defence to date of India’s economic liberalisation, which began in 1991 and is widely understood to have led to a period of fast growth over the past decade.

But not so fast: leftwing critics are undermining these achievements, the authors claim, promulgating a series of “myths” that are debunked in the first half of the book. The result is a convincing (if at times slightly wearying) litany, arguing that India’s growth spurt did indeed benefit lower caste Indians, for instance, or that it lifted many millions of people from poverty.

It is notable for its pugnacious tone too; for this is a book that comes out swinging. In its early pages the economist Joseph Stiglitz and the financier George Soros are accused of “Jurassic Park economics”, for their questioning of pro-market orthodoxies. The work of Dani Rodrik, a respected Harvard academic who backs some trade restrictions in developing countries, is dismissed tartly as “hollow”.

The Indian thinker Amartya Sen is mentioned only in passing, however, which seems odd, given Why Growth Matters is in large part a riposte to his arguments – namely that post-reform India has suffered rising inequality and performed badly on development indicators, at least when compared to poorer neighbours such as Bangladesh and Nepal.

Indeed, Prof Bhagwati and Prof Sen have been staking out their sides of this debate for years, with the former styling himself as the chief defender of further liberalisation. It is a cause he clearly relishes, although one that would benefit from considering the unpopularity of the measures he backs. If the argument for further growth-enhancing liberalisation has only upsides, the reader is left to ponder why it often has so few allies.

Despite this, the authors’ contention that India needs a further shake-up is surely correct, as is their suggested focus on rejigging outdated systems of land acquisition, planning and a tightly regulated labour market.

The latter point is especially well made: India ought to be a global giant in low-skilled, labour-intensive manufacturing industries, such as garment-making and electronics. But it isn’t – in fact the country employs only about 5m workers in manufacturing facilities with more than 10 staff, a pitiful record in a country with about half a billion workers, but where senseless regulations stop too many businesses expanding.”

via A robust defence of India’s growth story – FT.com.

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19/05/2013

* Factory women: Girl power

The Economist: “SITTING around a restaurant table, six workers discuss the progress of their labour action. Five of them are women, as are most of their several hundred colleagues who have been occupying the toy factory since mid-April. They have been sleeping on floors, braving rats and mosquitoes, to stop the owner shutting down the factory without giving them fair compensation. Those at the table are all migrants from the countryside. A couple are tearful. All are angry and determined not to give way.

In Guangdong province, where nearly 30% of China’s exports are made, women usually far outnumber men on labour-intensive production lines such as those at the toy factory in the city of Shenzhen, next to Hong Kong. Rural women are hired for their supposed docility, nimble fingers and attention to mind-numbing detail.

 

But in recent years Guangdong’s workforce has changed. The supply of cheap unskilled labour, once seemingly limitless, has started to dry up. Factory bosses are now all but begging their female workers to remain. At the same time the women who have migrated to the factory towns have become better-educated and more aware of their rights. In labour-intensive factories, stereotypes of female passivity are beginning to break down.

Over the past three decades the migration of tens of millions of women from the countryside to factories in Guangdong and other coastal provinces has helped to transform the worldview of an especially downtrodden sector of Chinese society (the suicide rate among rural women is far higher than for rural men). Conditions in the factories have often been harsh—poor safety, illegally long working hours, cramped accommodation, few breaks and little leave—but for many it has also been liberating and empowering, both personally and financially. Leslie Chang, an American journalist, spent three years reporting on women workers in Dongguan, a city near Shenzhen. In her 2008 book “Factory Girls” Ms Chang wrote that, compared with men, the women she encountered were “more motivated to improve themselves and more likely to value migration for its life-changing possibilities.”

They are still not as well-educated as men (about a year less in school on average, with most having only primary- or junior secondary-school education). But the gap has been narrowing.

Crucially, China’s changing demography has been shifting in their favour. Labour shortages that began to hit low-skilled manufacturing in the second half of the past decade have driven up wages and forced factories to improve working conditions. Once all but unthinkable (for both sexes), strikes have become increasingly common. Anecdotally at least, women appear as likely to take part as men.

Strikes in 2010 affecting factories in Guangdong owned by Honda, a Japanese car firm, helped to galvanise labour activism. One of them occurred in the city of Zhongshan, where the workers were mostly female. The unrest there resulted in pay concessions and set a precedent for collective bargaining led by representatives chosen by the workers themselves, rather than government-controlled trade unions. At the Shenzhen toy factory, the workers have chosen five representatives to negotiate with management. Three of them are women. A male worker says the women are more aware of their rights.

China Labour Bulletin, a Hong Kong-based NGO, reported on March 19th that about a fifth of strikes in Guangdong since the beginning of the year had been in factories and other workplaces with largely female staff. It said that women were also “some of the most active workers posting information online about strikes and protests, and in seeking out legal assistance for problems at work.” The protesting toy-workers offer evidence of this. They have posted photographs on microblogs of protesting female workers clad in red jackets opposite lines of police. One of their slogans reads: “Bad boss—give us back our youth”.”

via Factory women: Girl power | The Economist.

Posted in China alert, Economics, employment, labour shortage, Migrant workers | Leave a Comment »

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19/05/2013

* China Premier Li Keqiang in India for first foreign trip

BBC: “China‘s Premier Li Keqiang is travelling to India in the first stop of his maiden foreign trip since taking office.

Chinese and Indian flags flie in New Delhi on 18 May 2013

Upon his arrival in Delhi, Premier Li will hold talks with Prime Minister Manmohan Singh, followed by dinner at the Indian leader’s residence.

Border tensions and trade ties are expected to be among the issues discussed by the two men.

The neighbours are the world’s two most populous countries.

Beijing hopes the visit will help build trust and a new strategic partnership to the benefit of both countries, China’s official news agency Xinhua said.

Delhi thought “very highly” of Mr Li’s decision to make India his first foreign stop and the aim of the talks was to “enhance trust”, Indian foreign ministry spokesman Syed Akbaruddin said.

A decades-long border dispute flared up last month after India accused Chinese troops of crossing the countries’ de facto border in the Himalayas.

The dispute over the territory in the Ladakh region has dogged the two countries since the 1950s.

Boosting trade ties is also expected to dominate the talks. China is already one of India’s top trading partners and both countries have already agreed a new $100bn (£65bn) bilateral trade target for 2015.

Premier Li will spend three days in India before travelling on to Pakistan, Switzerland and Germany.”

via BBC News – China Premier Li Keqiang in India for first foreign trip.

Posted in China alert, Chindia Alert, Diplomacy, Economics, Foreign invasion, GeoPolitics, History, India alert, Neighbour conflict, Politics | Leave a Comment »

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19/05/2013

* Chinese shoppers bringing bags of cash

Manila Bulletin: “Lin Lu remembers the day last December when a Chinese businessman showed up at the car dealership he works for in north China and paid for a new BMW 5 Series Gran Turismo -in cash.

“One of his friends carried about $60,000 in a big white bag,“ Mr. Lin recalled, “and the buyer had the rest in a heavy black backpack.“

Lugging nearly $130,000 in cash into a dealership might sound bizarre, but it’s not exactly uncommon in China.

This is a country, after all, where home buyers make down payments with trunks filled with thick wads of renminbi, China’s currency. And big-city law firms hire armored cars to deliver the cash needed to pay monthly salaries.

For all China’s modern trappings -the high-speed rail networks and soaring skyscrapers -analysts say this country still prefers to pay for things the old-fashioned way, with cash.

Doing business in China takes a lot of cash because Chinese authorities refuse to print any bill larger than the 100-renminbi note. That’s equivalent to $16. Since 1988, the 100-renminbi note, graced by Mao Zedong‘s face, has been the largest note in circulation, even though the economy has grown fiftyfold. No major economy has limited itself to such a low denominated bill as China.

By making the 100-renminbi note the largest bill, the nation’s citizens need more of it to buy a television, never mind a car, home or a yacht.

Chinese economists and govern ment officials often suggest that printing larger denomination notes might fuel inflation. But there is another reason.

“I’m convinced the government doesn’t want a larger bill because of corruption,“ said Nicholas R. Lardy, a leading authority on the Chinese economy at the Peterson Institute for International Economics in Washington, noting that it would help facilitate corrupt payments to officials. “Instead of trunks filled with cash bribes you’d have people using envelopes. And there’d be more cash leaving the country.“

All the buying, bribing and hoarding forces China to print a lot of paper money. China, which a millennium ago was the first government to print paper money, accounts for about 40 percent of all global paper currency output.

Although China’s coastal cities have flourished during the 30 years of economic prosperity, economists say the country’s interior remains poor and disconnected from the more modern aspects of the financial grid. As a result, the poor prefer to do business in cash. The rich also like to deal in cash, and they typically hide their money in the underground economy to avoid government scrutiny.

“The average Chinese trusts neither the Chinese banks nor the Communist Party,“ said Friedrich Schneider, an authority on shadow economies and a professor of economics at the Johannes Kepler University of Linz in Austria.

That lack of trust fosters a game between the government and its subjects, analysts say. Executives make secret cash deals to earn outside consulting fees while working at state-run companies. The government responds by trying to penetrate a vast underground economy, where transactions are conducted almost entirely in cash.

Often, the culprits are the very government officials who are supposed to be upholding the laws.

Take the case of Wen Qiang, the former police chief in the city of Chongqing. He was caught in 2009 with nearly a million dollars in renminbi, carefully wrapped in plastic bags and hidden in a water tank at a relative’s home.

To keep a lid on the illegal cash transfers, China restricts cross-border money transfers and places limits on foreign currency exchange.

And then there’s the issue of rodents. In March, a migrant worker in Shanghai discovered that mice had chewed into tiny pieces the $1,200 his wife stored in a closet. A local bank agreed to exchange the money if the man could reassemble at least three-quarters of a bill.

“But the bills are now in small pieces and it’s almost impossible to fix them,“ said Zhao Zhiyong, the 37-year-old worker. “Who could know that the money would be chewed by mice?“ Xu Yan contributed research in Shanghai.

via : http://mb.pressmart.com/manilabulletin/publications/ManilaBulletin/MB/2013/05/18/articlehtmls/Chinese-shoppers-Bring-Bags-of-Cash-18052013648009.shtml

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19/05/2013

* China owner smashes up his Maserati in service protest

News Asia: “A wealthy Chinese Maserati owner hired four sledgehammer-wielding men to smash up his $420,000 supercar in protest at poor customer service, reports said on Wednesday.

four-sledgehammer-wielding-men-destroy-a-maserati-outside-the-qingdao-convention-center-in-china-on-may-14-2013-4

BEIJING – A wealthy Chinese Maserati owner hired four sledgehammer-wielding men to smash up his $420,000 supercar in protest at poor customer service, reports said Wednesday.

The car owner, identified only by his surname Wang, had the group attack the Maserati Quattroporte at the opening of an auto show in the eastern city of Qingdao in Shandong province, the Qingdao Morning Post said.

Video images showed the men going about their task with gusto, leaving the vehicle with a shattered windscreen and mirrors, the grille broken and dents to the bodywork. It was draped in a banner accusing the Italian manufacturer of poor decision-making.

Wang bought the luxury car in 2011 for 2.6 million yuan, the report said — around 100 times the average income of Chinese urban residents last year.

But problems first arose when he took it back to the dealer for an unspecified repair, with staff charging him for new spare parts despite using used ones, the paper quoted Wang as saying. It later failed to fix a problem with a door and scratched the vehicle, he added.

“I hope foreign luxury car producers acknowledge clearly that Chinese consumers are entitled to get the service that is commensurate with the brand,” Wang said.

Maserati’s China arm said the company and its dealer in Qingdao had responded to the customer’s complaint and it regretted his decision.

“We deeply regret that the customer decided to terminate bilateral talks in such a sudden manner,” it said in a statement read to AFP by an employee.

Qingdao’s authorised Maserati dealer said on China’s Twitter-like Sina Weibo: “We deeply regret that before the two sides could reach a result via negotiation, the vehicle owner… smashed the world famous car in public… to cause a sensation.”

During the dispute “thugs” had disrupted its daily operations and intimidated staff and visitors, it added.

Chinese Internet users were divided over the incident, with some expressing scepticism about the car owner’s motives.

“Is it to defend his rights or just for show? I think it is more of a show — why do you smash your supercar if you just want to seek justice for the change of a 2,400-yuan part?” said one posting.

via China owner smashes up his Maserati in service protest – Channel NewsAsia.

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18/05/2013

* China’s protesters: winning battles?

FT: “Even in China, David sometimes beats Goliath – though it’s sometimes hard to be sure.

This week, residents of Songjiang – a suburb of Shanghai which has gained fame around the world for having over 10,000 dead pigs floating in its water supply – found that though they could not vanquish the porcine invader, they had scared away an intruder from the corporate world. Shanghai Guoxuan High-Tech Power Energy company said it was abandoning plans for a battery factory in Songjiang, after residents protested on the streets and on the internet against it.

In a statement broadcast on local TV, the company said it would return the land allocated by local government and “will not seek any compensation”. It said it was halting its existing operations and pulling out of the area completely.

Residents staged street protests against the plant regularly since late April and more than 10,000 signed a petition against the project with many others voicing their opposition to it on the internet. At least one protester was reported to have been injured by police.

But Chinese citizens know that plants vanquished in one location in China, by “not in my backyard” or “nimby” protests, often pop up in someone else’s backyard. Residents of neighbouring Jinshan, another industrial area on the outskirts of Shanghai, now fear that the plant will end up on their doorstep.

“We already have so many chemical plants. We really cannot tolerate one more battery plant. Shall we protest together?” asks one user on a Jinshan property owner’s online forum.

Ordinary Chinese are less and less ready to pay the environmental price for economic development – or rather, more and more ready to see someone else pay it. This week, up to a thousand people protested in Kunming, in southwest China, the second large demonstration this month against plans to produce paraxylene (PX), a chemical used in making fabrics and plastic bottles, at a plant in the town.

Protestors complained that the environmental impact assessment for the project was suspect, because it was done by one subsidiary of China National Petroleum Corp, the country’s largest oil and gas producer and supplier, while the plant would be operated by another. That is the equivalent of “grandson assessing Grandpa,” said one Weibo user.

Last November, the eastern city of Ningbo suspended a petrochemical project after days of street protests. The year before, big protests against a PX plant in the northeastern city of Dalian forced the city government to suspend it.”

via China’s protesters: winning battles? | beyondbrics.

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18/05/2013

* China gives environmental approval to country’s biggest hydro dam

Reuters: “China’s environment ministry has given the go-ahead for the construction of what will become the country’s tallest hydroelectric dam despite acknowledging it will have an impact on plants and rare fish.

Dadu River, China

The dam, with a height of 314 meters (1,030 feet), will serve the Shuangjiangkou hydropower project on the Dadu River in southwestern Sichuan province.

To be built over 10 years by a subsidiary of state power firm Guodian Group, it is expected to cost 24.68 billion yuan ($4.02 billion) in investment.

The ministry, in a statement issued late on Tuesday, said an environmental impact assessment had acknowledged that the project would have a negative impact on rare fish and flora and affect protected local nature reserves.

Developers, it said, had pledged to take “counter-measures” to mitigate the effects. The project still requires the formal go-ahead from the State Council, China’s cabinet.

China aims to raise the share of non-fossil fuels in its energy mix to 15 percent by 2020, up from 9.4 percent in 2011. Hydropower is expected to make the biggest contribution.

It has vowed to speed up construction of dams in the 2011-2015 period after slowing it down following the completion of the controversial Three Gorges project in 2006.

The Three Gorges Dam, which serves the world’s biggest hydropower station on the Yangtze river, measures 185 meters.

The 300-m Nurek dam in Tajikistan in Central Asia is the world’s highest, though other taller dams are now under construction. China’s tallest dam now, at 292 meters, is the Xiaowan Dam on the Lancang River, also known as the Mekong.

On completion, the Sichuan project will have a total installed capacity of 20 gigawatts (GW), with annual power generation to exceed 7 billion kilowatt-hours (kWh).

The government said this year that hydropower capacity was expected to reach 290 GW by 2015, up from 220 GW at the end of 2010. It also said it would begin building a controversial project on the undeveloped Nu River in Yunnan province.

Guodian was one of a number of state-owned firms criticized by China’s national audit office last week for starting work on projects not yet been approved by the central government. The office said by the end of 2011, the company had invested nearly 30 billion yuan in 21 unapproved projects.

The Huaneng Group, China’s biggest power company, was also criticized for launching construction of the Huangdeng hydropower plant before receiving the government’s go-ahead.”

via China gives environmental approval to country’s biggest hydro dam | Reuters.

Posted in carbon emission, China alert, Economics, Electricity | 1 Comment »

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16/05/2013

* China in innovation challenge to Europe

FT: “Europe’s business leaders fear its industry will fall behind China in technological innovation within a decade as the economic crisis undermines one of the continent’s competitive advantages.

More than two-thirds of business leaders surveyed by Accenture, the consultancy, on behalf of BusinessEurope, the business lobby group, said China would reach or pull ahead of Europe in innovation by 2023.

Weak demand caused by Europe’s economic crisis has sent industrial production into decline, while corporate reluctance to delve into cash reserves is holding back new investment, training and R&D.

Rising unemployment threatens labour flexibility and Europe’s ability to maintain a highly skilled workforce. Fewer than half of those surveyed said Europe’s workforce remained a competitive advantage for industry.

European policy makers are determined to reverse industry’s decline. The European Commission last year proposed by 2020 to raise industry’s share of EU gross domestic product from 15.6 per cent to 20 per cent.

“We cannot continue to let our industry relocate outside Europe,” said Antonio Tajani, vice-president of the European Commission.

European companies remain leaders in sectors ranging from automotive to aerospace, engineering to pharmaceuticals, and two-thirds of surveyed business leaders said European industry was still competitive internationally.

But some Chinese companies such as Huawei, the telecoms equipment maker, are drawing level in innovation capability and gaining share in Europe. Some 61 per cent of those surveyed said they feared Europe would struggle to recover from its economic crisis for at least three years.

Some 90 per cent of German business leaders said Europe’s industry was competitive compared with only half of business leaders in Spain.

The Accenture study identified two areas to support growth: rebuilding Europe’s skills base and reinvigorating industry’s access to finance, including better access to capital markets and venture capital funding for start-ups.

Although Europe is mired in recession, there remain opportunities in areas ranging from low-carbon technology and smart grid networks to biotechnology and advanced manufacturing.

“The China machine is definitely going to invest a lot of money in technology innovation over the next 10 years . . . [But] there’s a sense that if we get our act together Europe can remain successful in manufacturing,” said Mark Spelman, strategy chief at Accenture.

“Just because there is zero growth across Europe doesn’t mean there are not segments of good growth within that . . . So it’s about how you place bets in an intelligent way.

To address the innovation deficit, business leaders want to see more public funding for R&D, reduced tax for R&D and capital investment and improved financing conditions.

European executives raised a variety of other worries ranging from the cost of energy to labour costs.

A majority of respondents were pessimistic that European industry would be cost-competitive in energy compared with markets such as the US, Russia and China in three years’ time.

US industry is enjoying cheap energy courtesy of discoveries of shale gas that permit new investment in gas-intensive industry, such as petrochemicals.

In contrast, Europe remains dependent on more expensive Russian gas, and costly regulation and investments in renewable energy are adding to the burden.”

via China in innovation challenge to Europe – FT.com.

See also: https://chindia-alert.org/prognosis/how-well-will-china-and-india-innovate/

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16/05/2013

* India: Patents and precedents

FT: “Pharmaceutical companies fear that the battle raging in India over patents will inspire other countries to change their laws

Meena, a 45-year-old New Delhi widow with a 10-year-old son, was diagnosed with potentially fatal blood cancer in 2010. To control it, her doctors prescribed an Indian*- made generic version of Novartis’ leukaemia drug.

But her body stopped responding to it and Meena was advised to switch to a more expensive drug, Sprycel, a second-line cancer drug made by Bristol-Myers Squibb. Sprycel costs Rs160,000 ($2,900) per month, far out of reach for a woman living on her late husband’s Rs17,000 monthly pension.

A solution appeared to be at hand last May when Natco, an Indian generic drugs company, started selling its own version of Sprycel for Rs9,000 a month. A charity helped Meena to buy it.

But Meena’s ability to obtain potentially lifesaving medicine became tied up in a dispute pitting the interests of the world’s largest drugmakers – who spend $70bn annually developing drugs – and generic manufacturers in the developing world.

BMS, the US drugs group with revenues of $17.6bn in 2012, accused Natco of patent infringement, prompting the India’s Supreme Court to order the Indian drugmaker to stop making the medicine until a final verdict was reached. While some patients stocked up before the generic disappeared, Meena could only afford a few bottles.

The BMS “access programme” for the poor offered to sell her Sprycel for Rs15,000 per month – a big discount on the market price but still more than she can afford. Friends have chipped in to buy her a month’s supply but she is distraught about the future. “I don’t see a ray of hope,” she says. “Even if I use all my resources, I can only afford it for two months. It’s not sustainable.”

It is this struggle of educated, middle-class patients to obtain cutting-edge medicine that has led to a showdown between India and western pharmaceutical companies over the patents and prices of lifesaving drugs.

Western drugmakers fear India will inspire other emerging markets to challenge their patents. They have accused India of trampling on their intellectual property rights after a series of decisions overriding, revoking or refusing patents on cancer and hepatitis C drugs from Bayer, Pfizer, Roche and Novartis. The companies are also irate that New Delhi is considering compulsory licenses for another three patented cancer drugs, including Sprycel, and Roche’s breast cancer drug Hercepterin.

At a recent US Congressional hearing, Roy Waldron, Pfizer’s chief intellectual property officer, complained that New Delhi had “routinely flouted trade rules to bolster the Indian generics industry”.

Indian generics executives and patients activists say the reality is more nuanced. They argue that India’s courts are trying to balance drug companies’ intellectual property rights against the need for affordable medicine for 1.2bn Indians. India’s public healthcare system has virtually collapsed, with Indians paying 60 per cent of their healthcare costs from their own pockets.

This stand-off is taking place within the framework of a new patent law crafted to preserve India’s manoeuvring room to keep medicines affordable at home – and protect its exports of drugs abroad.

“The portrayal is that India doesn’t respect intellectual property rights but the reality is that it is balanced,” says Leena Menghaney, a lawyer with Médecins Sans Frontières, the humanitarian organisation. “The decisions that go in favour of the MNCs [multinational corporations] never get reported and decisions against them always hit the headlines.”

D.G. Shah, secretary-general of the Indian Pharmaceutical Alliance, which represents India’s biggest generics firms, rejects suggestions of protectionism for domestic companies.

via India: Patents and precedents – FT.com.

Posted in Economics, Health, India alert, Intellectual Property Rights, Pharma | Leave a Comment »

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