VZCZCXRO5905
RR RUEHCN RUEHGH
DE RUEHGH #0145/01 0910542
ZNR UUUUU ZZH
R 010542Z APR 09
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 7778
INFO RUEHBJ/AMEMBASSY BEIJING 2647
RUEHCN/AMCONSUL CHENGDU 1861
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHGZ/AMCONSUL GUANGZHOU 0317
RUEHHK/AMCONSUL HONG KONG 2029
RUEHML/AMEMBASSY MANILA 0062
RUEHUL/AMEMBASSY SEOUL 0418
RUEHGH/AMCONSUL SHANGHAI 8417
RUEHSH/AMCONSUL SHENYANG 1852
RUEHGP/AMEMBASSY SINGAPORE 0247
RUEHIN/AIT TAIPEI 1649
RUEHKO/AMEMBASSY TOKYO 0612

UNCLAS SECTION 01 OF 02 SHANGHAI 000145 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM, DAS DAVIES 
TREASURY FOR OASIA/INA -- DOHNER/HAARSAGER/WINSHIP 
TREASURY FOR IMFP -- SOBEL/CUSHMAN 
USDOC FOR ITA DAS KASOFF, MELCHER, MAC/OCEA 
NSC FOR LOI, SHRIER 
STATE PASS CEA FOR BLOCK 
STATE PASS USTR FOR STRATFORD/WINTER/MCCARTIN/KATZ/MAIN 
STATE PASS CFTC FOR OIA/GORLICK 
 
E.O. 12958: N/A 
TAGS: CH ECON EFIN ELAB
SUBJECT: (SBU) U.S.-LISTED EAST CHINA FIRMS SEE SILVER LINING IN 
ECONOMIC CLOUDS 
 
¶1.  (SBU) Summary.  A group of New York Stock Exchange-listed 
Chinese firms based in East China recently expressed a 
relatively upbeat perspective on prospects for their corporate 
growth in East China, while most also described the past winter 
as a hard one.  Many of the firms are expecting to boost sales 
in China, in part because of the Chinese Government's fiscal 
stimulus plans.  End summary. 
 
¶2.  (SBU)  On March 30, Ronald Kent, Executive Vice President, 
NYSE Euronext, hosted the Consul General at a lunch with local 
NYSE-listed companies.  Other attendees at the lunch included: 
Li-Lan Cheng, Chief Financial Officer, E-House China; Eric He, 
Chief Financial Officer, Giant Interactive Group; J. Matthew 
Szymanski, Vice President, Corporate Relations, Semiconductor 
Manufacturing International Corp. (SMIC); Gareth Kung, Senior 
Director, Accounting Division, SMIC; Thi Yip Kok, Chief 
Financial Officer, WSP Holdings Limited; Simon Li, Supervisor, 
CEO Office, Trina Solar Ltd.; Julia Xu, Vice President, Investor 
Relations, Renesolar Ltd.; and Qian Haibo, Secretary to the 
Board of Directors, Simcere Pharmaceutical Group. 
 
============================ 
Companies Anticipate Improving Sales 
============================ 
 
¶2.  (SBU) The lunch attendees all expressed a relatively upbeat 
perspective on prospects for their corporate growth in East 
China, while most also described the past winter as a hard one. 
SMIC's Szymanski said that the chip business is cyclical, so 
chip producers are used to ups and downs, but that the sharp 
slowdown in December 2008 was completely unanticipated--"it was 
as if someone had hit the emergency stop button" on sales, he 
said.  However, sales in January and February were marginally 
better, month over month, and Szymanski expects March to show 
further improvement.  Szymanski attributed this in part to 
China's economic stimulus measures, including the national 
government's Household Appliances to the Countryside (jia1dian4 
xia4xiang1) program.  Since everything has a chip in it these 
days, said Szymanski, purchases of refrigerators, clothes 
washers, and other appliances support chip sales.  SMIC's Gareth 
Kung said the deployment of 3G telecommunication technologies 
will provide a sales boost even bigger than the rural appliances 
initiative.  Looking forward three to five years, smart chips in 
medical sensors implanted in patients could be a significant new 
sales stream for SMIC, Kung said. 
 
¶3.  (SBU) Consul General Camp polled her table of company 
representatives, asking if they felt business was looking up, 
and all agreed.  Thi of WSP Holdings--a maker of special oil 
drill pipes--commented that sales were down 35 percent, but that 
WSP Holdings is hiring more staff.  The company wants to 
position itself to gain market share once the recovery takes 
hold in 2010, Thi said.  WSP's domestic Chinese sales are about 
half total sales, said Thi, and the company wants to raise this 
percentage.  Giant Interactive distributes online games, and CFO 
He said that the company is expanding fast, with most customers 
at the two ends of the income spectrum.  Young college students 
and corporate executives both like to play online games, said 
He, with the latter especially interested in wielding authority, 
and winning, over other players. 
 
¶4.  (SBU) Renesolar's Xu said that Beijing's announcement on 
March 26 of a subsidy for users of solar electricity generation 
panels is boosting her company's sales prospects.  (Note: 
According to press accounts, the Ministry of Finance will 
provide a subsidy of RMB20, or approximately US$3, per installed 
watt of capacity in an array totaling 50 kilowatts or greater. 
End note.)  Xu said stock valuations for Chinese solar-power 
related companies had immediately soared on the news, and that 
she had expected them to fall back, but investors were still 
 
SHANGHAI 00000145  002 OF 002 
 
 
holding onto them. 
 
¶5.  (SBU) Simcere's Qian was upbeat about the company's 
near-term prospects, explaining that the pharmaceutical industry 
in China has been the sector least affected by the global 
economic slowdown, since people still get sick and need medical 
treatment. Simcere employs 2,000 persons in Nanjing, and funds 
laboratories in the Lost Angeles area as well as at Beijing's 
Tsinghua University, which is a big source for new hires. 
Simcere holds a patent on an anti-cancer drug and has many other 
drugs in its development pipeline, said Qian.  It is 
establishing an office in the New York City area and is eager to 
work with major pharmaceutical companies. 
 
============================ 
Comment 
============================ 
 
¶6.  (SBU) The companies participating in the lunch are not 
representative of the range of industries in East China, being 
new technology-related companies successful enough to list on 
the New York Stock Exchange.  Therefore, their upbeat assessment 
of short-term sales growth prospects cannot be generalized to 
all East China.  On the other hand, they hail from several areas 
in the Shanghai consular district--including Changzhou and 
Nanjing of Jiangsu Province and Jiashan of Zhejiang Province, in 
addition to Shanghai--providing a sense of the bright spots 
among East China industries. 
CAMP