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PERSON: MICHAEL MCMAHON (84%)
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LOAD-DATE: August 2, 2008
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The New York Times
August 1, 2008 Friday

Correction Appended

Late Edition - Final
China's Industrial Ambition Soars to High-Tech
BYLINE: By DAVID BARBOZA
SECTION: Section A; Column 0; Business/Financial Desk; Pg. 1
LENGTH: 1238 words
DATELINE: SHENZHEN, China
Few people have heard of the BYD Corporation -- BYD for Build Your Dream -- but this little-known company has grown into the world's second-largest battery producer in less than a decade of existence. Now it plans to make a great leap forward: ''We'd like to make a green energy car, a plug-in,'' said Paul Lin, a BYD marketing executive. ''We think we can do that.''

Even in go-go China, such lofty aspirations may sound far-fetched. But BYD has built a 1.6-million-square-foot auto assembly plant here and hired a team of Italian-trained car designers; it plans to build a green hybrid by the end of the year.

No longer content to be the home of low-skilled, low-cost, low-margin manufacturing for toys, pens, clothes and other goods, Chinese companies are trying to move up the value chain, hoping eventually to challenge the world's biggest corporations for business, customers, power and recognition.

The government is backing the drive with a two-pronged approach: using incentives to encourage companies to innovate, but also moving to discourage low-end manufacturers from operating in southern China. That step would reverse one of the crucial engines of this country's spectacular economic rise.

But by introducing tougher labor and environmental standards and ending tax breaks for thousands of factories here, the government has sent a powerful signal about its global ambitions, and helped encourage an exodus of factories from an area long considered the world's shop floor.

President Hu Jintao hinted at China's vaulting ambitions during a meeting of China's scientific elite last June at the Chinese Academy of Sciences, where he called on scientists to challenge other countries in high technology. ''We are ready for a fight,'' he said, ''to control the scientific high ground and earn a seat on the world's high technology board. We will make some serious efforts to strengthen our nation's competence.''

Government policies now favor high-tech economic zones, research and development centers and companies that promise higher salaries and more skills. A computer chip plant being built by Intel in the northern city of Dalian is welcomed; a textile mill churning out $1 pairs of socks is not.

''When a country is in its early stages of development, as China was 20 years ago, having an export processing center is good for growth,'' said Andy Rothman, a longtime China analyst at CLSA, the investment bank. ''But there's a point when that's no longer appropriate. Now, China's saying, 'We don't want to be the world's sweatshop for junk any more.' ''

Chinese firms are expanding into (or buying companies that work in) software and biotechnology, automobiles, medical devices and supercomputers. This year, a government-backed corporation even introduced its first commercial passenger jet, a move Beijing hopes will allow it to some day compete with Boeing and Airbus.

In some ways, the government is only riding the economic currents that come with development and high growth. For instance, many manufacturers in southern China -- the country's biggest export zone -- are moving to the interior because land and labor costs are cheaper, or expanding operations to include in lower-cost countries, like India, Vietnam or Bangladesh.

World-class brands that have grown dependent on outsourcing labor-intensive production to China are now searching for alternatives. Even the retail behemoth Wal-Mart, which moved its global procurement center here to Shenzhen in 2002, is going to be forced to find new sourcing channels to fill its 5,000 stores worldwide.

For millions of consumers around the world, experts say the policy shift could also mean higher prices for a broad array of goods, from pens and hammers to Barbie dolls and running shoes.

''Basically the cost of things China produces for Home Depot and Wal-Mart are going up,'' said Dong Tao, an economist at Credit Suisse. ''But there is another side. In some areas that China's going to grab, like telecom equipment, they'll push prices lower.''

Economists say China's development is following in the footsteps of Japan and South Korea, which successfully evolved from low-skilled manufacturing to high technology, services and the creation of global brands.

There are still plenty of obstacles here, including weak intellectual property rights enforcement and a culture of copying or stealing technology from foreign companies or joint venture partners. But experts point to positives like a rising aggressive entrepreneurial class, legions of newly minted science and engineering graduates and a fiercely competitive domestic marketplace.

Peter J. Williamson, a professor of management at Cambridge University, challenges the notion that China does not have technological know-how.

''They are some of the biggest in launching satellites. They have a lot of technology locked up in the military, and now the government is reducing budgets and pressing agencies to privatize,'' he said. ''So suddenly, a lot of technology people thought didn't exist has come out from behind the curtain.''

This is what China is betting on.

At BYD, executives are ramping up research and development spending, and studying global marketing strategies. Founded in 1995 by a scientist who studied metallurgy, the company has made lithium batteries, cellphones, camera equipment, auto parts and other components for Nokia, Motorola and Sony, among others, gaining experience in producing high-quality goods.

''The technology for a car is not that sophisticated,'' Mr. Lin said. ''It's big, but a lot of low technology.'' Five years ago BYD bought a state-owned carmaker to help make the transition.

Another company hoping to make the leap is Hasee, a fast-growing computer maker also based in Shenzhen.

Founded just six years ago, Hasee is already selling 100,000 laptops a month and is the second biggest Chinese computer maker behind Lenovo, with revenue forecast to reach $800 million this year.

Hasee executives say the company is spending heavily on research and development, and that by focusing on innovative computers and laptops that now sell for just $370, it is on track to become the world's biggest computer maker within a decade.

''Our strategy in China is to always focus on innovation,'' said Zhang Xianyong, a Hasee vice president and sales manager for greater China. ''We're now in the domestic market, but we'll spare no effort to grab overseas expansion.''

The government is pressing companies to move up the value chain for economic, but also political reasons, analysts say. Promoting innovation and brand-name companies would probably bolster the economy and create better jobs.

In April, Credit Suisse forecast that one-third of all export-oriented manufacturers could close within three years. And a study released in March by the American Chamber of Commerce Shanghai and Booz & Company, the consulting firm, says foreign investors are growing bearish on China and that rising costs are driving American manufacturing out of the country.

For many Chinese economists, that is just fine. ''The low-end industries used to make a great contribution to Guangdong,'' said Liang Guiquan, an economist at the Guangdong Academy of Social Sciences, a government think tank. ''But an enterprise is like a creation. They must get used to changes in the environment. If the environment changes, they must die out.''
URL: http://www.nytimes.com
SUBJECT: RESEARCH & DEVELOPMENT (78%); AUTOMOTIVE MFG (77%); SEMICONDUCTOR MFG (77%); BATTERY MFG (77%); ENVIRONMENTALISM (76%); CONSTRUCTION (74%); MANUFACTURING FACILITIES (74%); ENTERPRISE GLOBALIZATION (73%); TEXTILE MILLS (72%); FABRIC MILLS (72%); TEXTILE MFG (72%); RENEWABLE ENERGY (71%); PUBLIC POLICY (71%); TAXES & TAXATION (67%); WAGES & SALARIES (66%); TALKS & MEETINGS (65%); LAPTOP COMPUTERS (64%); EXPORT TRADE (62%); COMPUTER CHIPS (60%)
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LOAD-DATE: August 1, 2008
LANGUAGE: ENGLISH
CORRECTION-DATE: August 8, 2008

CORRECTION: An article last Friday about Chinese aspirations for high-value manufacturing industries misstated the size of an auto assembly plant built by the BYD Corporation in Shenzhen. It is 16 million square feet, not 1.6 million square feet.
GRAPHIC: PHOTOS: The assembly line at a BYD auto plant in Shenzhen, China. Cars are part of the company's shift toward higher-end products.

A PC being assembled at Hasee. The company, founded six years ago, is already selling 100,000 laptops a month.(PHOTOGRAPHS BY RYAN PYLE FOR THE NEW YORK TIMES) CHART: NEW CORPORATE CHALLENGERS FROM. Chart details bar graph.(Source: ''Globality: Competing with Everyone From Everywhere for Everything,'' by Harold L. Sirkin, James W. Hemerling and Arindam K. Bhattacharya, 2008 (Business Plus))(pg. C5)

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530 of 1231 DOCUMENTS

The New York Times
July 31, 2008 Thursday

Late Edition - Final

A Farm Boy Reflects
BYLINE: By NICHOLAS D. KRISTOF
SECTION: Section A; Column 0; Editorial Desk; OP-ED COLUMNIST; Pg. 21
LENGTH: 793 words
DATELINE: YAMHILL, Ore.
In a world in which animal rights are gaining ground, barbecue season should make me feel guilty. My hunch is that in a century or two, our descendants will look back on our factory farms with uncomprehending revulsion. But in the meantime, I love a good burger.

This comes up because the most important election this November that you've never heard of is a referendum on animal rights in California, the vanguard state for social movements. Proposition 2 would ban factory farms from raising chickens, calves or hogs in small pens or cages.

Livestock rights are already enshrined in the law in Florida, Arizona, Colorado and here in Oregon, but California's referendum would go further and would be a major gain for the animal rights movement. And it's part of a broader trend. Burger King announced last year that it would give preference to suppliers that treat animals better, and when a hamburger empire expostulates tenderly about the living conditions of cattle, you know public attitudes are changing.

Harvard Law School now offers a course on animal rights. Spain's Parliament has taken a first step in granting rights to apes, and Austrian activists are campaigning to have a chimpanzee declared a person. Among philosophers, a sophisticated literature of animals rights has emerged.

I'm a farm boy who grew up here in the hills outside Yamhill, Ore., raising sheep for my F.F.A. and 4-H projects. At various times, my family also raised modest numbers of pigs, cattle, goats, chickens and geese, although they were never tightly confined.

Our cattle, sheep, chickens and goats certainly had individual personalities, but not such interesting ones that it bothered me that they might end up in a stew. Pigs were more troubling because of their unforgettable characters and obvious intelligence. To this day, when tucking into a pork chop, I always feel as if it is my intellectual equal.

Then there were the geese, the most admirable creatures I've ever met. We raised Chinese white geese, a common breed, and they have distinctive personalities. They mate for life and adhere to family values that would shame most of those who dine on them.

While one of our geese was sitting on her eggs, her gander would go out foraging for food -- and if he found some delicacy, he would rush back to give it to his mate. Sometimes I would offer males a dish of corn to fatten them up -- but it was impossible, for they would take it all home to their true loves.

Once a month or so, we would slaughter the geese. When I was 10 years old, my job was to lock the geese in the barn and then rush and grab one. Then I would take it out and hold it by its wings on the chopping block while my Dad or someone else swung the ax.

The 150 geese knew that something dreadful was happening and would cower in a far corner of the barn, and run away in terror as I approached. Then I would grab one and carry it away as it screeched and struggled in my arms.

Very often, one goose would bravely step away from the panicked flock and walk tremulously toward me. It would be the mate of the one I had caught, male or female, and it would step right up to me, protesting pitifully. It would be frightened out of its wits, but still determined to stand with and comfort its lover.

We eventually grew so impressed with our geese -- they had virtually become family friends -- that we gave the remaining ones to a local park. (Unfortunately, some entrepreneurial thief took advantage of their friendliness by kidnapping them all -- just before the next Thanksgiving.)

So, yes, I eat meat (even, hesitantly, goose). But I draw the line at animals being raised in cruel conditions. The law punishes teenage boys who tie up and abuse a stray cat. So why allow industrialists to run factory farms that keep pigs almost all their lives in tiny pens that are barely bigger than they are?

Defining what is cruel is, of course, extraordinarily difficult. But penning pigs or veal calves so tightly that they cannot turn around seems to cross that line.

More broadly, the tide of history is moving toward the protection of animal rights, and the brutal conditions in which they are sometimes now raised will eventually be banned. Someday, vegetarianism may even be the norm.

Perhaps it seems like soggy sentimentality as well as hypocrisy to stand up for animal rights, particularly when I enjoy dining on these same animals. But my view was shaped by those days in the barn as a kid, scrambling after geese I gradually came to admire.

So I'll enjoy the barbecues this summer, but I'll also know that every hamburger patty has a back story, and that every tin of goose liver pate could tell its own rich tale of love and loyalty.

Gail Collins is off today.

URL: http://www.nytimes.com
SUBJECT: ANIMAL RIGHTS (91%); FACTORY FARMS (90%); EDITORIALS & OPINIONS (90%); ANIMAL FARMING & BREEDING (90%); REFERENDUMS (90%); POULTRY & EGG PRODUCTION (77%); SHEEP & GOAT FARMING (77%); CHICKEN FARMING (77%); SHEEP FARMING (77%); LEGISLATIVE BODIES (76%); LAWYERS (74%); HUMANITIES & SOCIAL SCIENCE (72%); LAW SCHOOLS (70%); FAMILY (69%); PRIMATES (66%); MAMMALS (89%)
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The New York Times
July 31, 2008 Thursday

Late Edition - Final

Strong Economy Propels Brazil to World Stage
BYLINE: By ALEXEI BARRIONUEVO; Mery Galanternick contributed reporting from Rio de Janeiro.
SECTION: Section A; Column 0; Foreign Desk; Pg. 1
LENGTH: 1698 words
DATELINE: FORTALEZA, Brazil
Desperate to escape her hand-to-mouth existence in one of Brazil's poorest regions, Maria Benedita Sousa used a small loan five years ago to buy two sewing machines and start her own business making women's underwear.

Today Ms. Sousa, a mother of three who started out working in a jeans factory making minimum wage, employs 25 people in a modest two-room factory that produces 55,000 pairs of cotton underwear a month. She bought and renovated a house for her family and is now thinking of buying a second car. Her daughter, who is studying to be a pharmacist, could be the first family member to finish college.

''You can't imagine the happiness I am feeling,'' Ms. Sousa, 43, said from the floor of her business, Big Mateus, named after a son. ''I am someone who came from the countryside to the city. I battled and battled, and today my children are studying, with one in college and two others in school. It's a gift from God.''

Today her country is lifting itself up in much the same way. Brazil, South America's largest economy, is finally poised to realize its long-anticipated potential as a global player, economists say, as the country rides its biggest economic expansion in three decades.

That growth is being felt in nearly all parts of the economy, creating a new class of super rich even as people like Ms. Sousa lift themselves into an expanding middle class.

It has also given Brazil new swagger, providing it, for instance, with greater leverage to push for a tougher bargain with the United States and Europe in global trade talks. After seven years, those negotiations finally broke down this week over demands by India and China for safeguards for their farmers, a clear sign of the rising clout of these emerging economies.

Despite investor fears about the leftist bent of President Luiz Inacio Lula da Silva when he was elected to lead Brazil in 2002, he has demonstrated a light touch when it comes to economic stewardship, avoiding the populist impulses of leaders in Venezuela and Bolivia.

Instead, he has fueled Brazil's growth through a deft combination of respect for financial markets and targeted social programs, which are lifting millions out of poverty, said David Fleischer, a political analyst and emeritus professor at the University of Brasilia. Ms. Sousa is one such beneficiary.

Long famous for its unequal distribution of wealth, Brazil has shrunk its income gap by six percentage points since 2001, more than any other country in South America this decade, said Francisco Ferreira, a lead economist at the World Bank.

While the top 10 percent of Brazil's earners saw their cumulative income rise by 7 percent from 2001 to 2006, the bottom 10 percent shot up by 58 percent, according to Marcelo Cortes Neri, the director of the Center for Social Policies at the Getulio Vargas Foundation in Rio de Janeiro.

But Brazil is also outspending most of its neighbors on social programs, and overall public spending continues to be nearly four times as high as what Mexico spends as a percentage of its gross national product, Mr. Ferreira said.

The momentum of its economic expansion is expected to last. As the United States and parts of Europe struggle with recession and the fallout from housing crises, Brazil's economy shows few of the vulnerabilities of other emerging powers.

It has greatly diversified its industrial base, has huge potential to expand a booming agricultural sector into virgin fields and holds a tremendous pool of untapped natural resources. New oil discoveries will thrust Brazil into the ranks of the global oil powers within the next decade.

Yet while exports of commodities like oil and agricultural goods have driven much of its recent growth, Brazil is less and less dependent on them, economists say, having the advantage of a huge domestic market -- 185 million people -- that has grown wealthier with the success of people like Ms. Sousa.

In fact, with a stronger currency and inflation mostly in check, Brazilians are on a spending spree that has become a prime motor for the economy, which grew 5.4 percent last year.

They are buying both Brazilian goods and a rising flood of imported products. Many businesses have relaxed credit terms to allow Brazilians to pay for refrigerators, cars and even plastic surgery over years instead of months, despite some of the highest interest rates in the world. In June the country reached 100 million credit cards issued, a 17 percent jump over last year.

At Casas Bahia, a modestly priced Brazilian furniture-store chain, the number of customers buying items on installment nearly tripled to 29.3 million from 2002 to 2007, said Sonia Mitaini, a company spokeswoman.

Other signs of new wealth abound. In Macae, an oil boomtown near Rio de Janeiro, contractors are racing to finish new shopping malls and luxury housing to keep up with demand from oil-service firms. At a port in Angra dos Reis, a town known for its spectacular islands, some 25,000 workers have found jobs building oil platforms.

Petrobras, Brazil's national oil company, shocked the oil world in November when it announced that its Tupi deepwater field offshore of Rio de Janeiro could hold five billion to eight billion barrels of oil. Analysts think there could be billions of barrels more in surrounding areas.

While the oil will be expensive and complicated to extract, Petrobras has said it expects to be producing up to 100,000 barrels a day from Tupi by 2010, and hopes to produce up to a million barrels a day in about a decade.

The new oil plays are setting off an investment boom in Rio de Janeiro, with an estimated $67.6 billion expected to flow into the state by 2010, according to the Rio de Janeiro State Federation of Industries, an industry group. Petrobras alone expects to invest $40.5 billion by 2012.

Some economists say a slowdown in the rest of the world's economy, especially in Asia, which is soaking up much of Brazil's exports of soybeans and iron ore, could crimp growth here. ''But that probability is small,'' said Alfredo Coutino, the senior economist for Latin America for Moody's Economy.com.

In fact, because Brazil's economy has become so diversified in recent years, the country is less susceptible to a hangover from the struggling United States economy.

Brazil's exports to the United States represent just 2.5 percent of Brazil's gross national product, compared with 25 percent of G.N.P. for Mexican exports, according to Moody's.

''What makes Brazil more resilient is that the rest of the world matters less,'' said Don Hanna, the head of emerging market economics at Citibank.

The rest of the world certainly has helped. Soaring prices for minerals and other commodities have created a new class of super rich. The number of Brazilians with liquid fortunes exceeding $1 million grew by 19 percent last year, third behind China and India, according to a survey by Merrill Lynch and Capgemini.

At the same time, President da Silva has deepened many of the social programs begun 10 years ago under Fernando Henrique Cardoso, who as president ushered in many of the structural reforms that laid the foundations of Brazil's stable growth today.

In Ms. Sousa's case, for instance, she owes much of the success of her underwear business to loans she has received from the Bank of the Northeast, a government-financed bank that has awarded microloans to 330,000 people to develop businesses in this fast-growing region.

Other programs, like Bolsa Familia, give small subsidies to millions of poor Brazilians to buy food and other essentials. Bolsa Familia, which benefits 45 million people nationwide in distributingan annual budget of about $5.6 billion, has been far more effective at raising per-capita incomes than recent increases in the minimum wage, which has risen 36 percent since 2003.

The bottom-up nature of such social programs has helped expand formal and informal employment as well as the Brazilian middle class. The number of people under the poverty line -- defined as those earning less than $80 a month -- fell by 32 percent from 2004 to 2006, Mr. Neri said.

The programs have been particularly effective here in Brazil's northeast, historically one of poorest parts of the country. Residents here have received more than half the $15.6 billion doled out in social programs from 2003 to 2006, according to Empresa de Pesquisa Energetica, an arm of the Energy Ministry.

People here are using that new wealth to buy items like televisions and refrigerators at a faster rate than the rest of the country. The northeast, in fact, passed the country's south in electricity use this year for the first time, the energy agency said.

Many families have bridged the gap to the middle class by using Bolsa Familia to meet basic needs, and then applying for small loans to start businesses and escape the informal economy. That is what Maria Auxiliadora Sampaio and her husband did in Fortaleza, a coastal city of 2.4 million people. They were receiving Bolsa Familia payments of about $30 a month, which they used to support their three children. Then, two years ago, Ms. Sampaio used a microloan of about $190 to buy nail polish and kick-start her manicure business, which she runs from home.

Today she is making around $70 a day -- about four minimum salaries per month, she said. With her next loan she plans to put about $140 toward a stove to sterilize nail clippers, which today she does with hot water.

The fruits of her new business have allowed the couple to retile their house and buy a television and a cellphone. This month her husband, who works at a Cachaca factory, was able to realize a dream: to buy a drum set.

He plans to use it in a band that plays forro, a traditional music in the northeast. ''We always ate and paid bills, but he waited and waited,'' and finally bought the set for about $780, she said.

''I feel like we are part of this group of people that are coming up in the world,'' said Ms. Sampaio, 28. ''When you don't have anything, when you don't have a profession, don't have the means to live, you are no one, you are a mosquito. I was nothing. Today, I am in heaven.''