Intel's remarked chips.

The pages of the business press last week were abuzz with stinging indictments of Intel and its "faked chips" - rebranded Pentium M were found in notebook computers on the mainland. Other news of the week included Microsoft outfoxing the domestic owner of the "live.cn" domain, and the Ministry of Agriculture yanking Jinyu's pharmaceutical license after it produced a fake bird flu vaccine. And a CASS report says that private companies are more competitive before they go public.

Intel in "fake chip" scandal

Intel's reputation was hit hard this past week when remarked Pentium M chips were found in circulation in domestic notebook computers. Remarking chips is an "open secret" within the industry, according to reports carried in the Chinese media as well as papers overseas, but what really hurt Intel wasn't the existence of the chips themselves. Intel reacted by dismissal, then denial, then grudging recognition of the possibility it may have been the source of the problem chips, a process that many in the tech media sector saw as lack of respect for Chinese consumers. This comes shortly after Intel insulted Chinese technological development by calling AMD's x86 deal with the Chinese government "ten-year-old technology."

Intel is currently preparing an official statement for release in the near future. As the media investigates further it is uncovering evidence of widespread resale of engineering samples, especially in low-low-end notebooks, so Intel may not suffer too much.

Microsoft gets Live.cn for a steal

Microsoft launched its "Windows Live" service across the globe on 1 November. In China, the domains it used were "live.cn" and "live.com.cn," which had originally been owned by the Chinese company Cinet. It lost out on the chance to profit like cyber-squatters had done to Google earlier in the year since Microsoft acquired the domains through a third party, Melbourne IT. The Australian company paid five figures for the two names in a purchase that only last week was revealed to be done for MS.

Fake flu vaccines hurt Jinyu Pharma

Earlier this year, the Inner Mongolia BioPharmaceutical Factory manufactured fake bird flu vaccine and sold it in Liaoning Province. The Ministry of Agriculture, never one to let things slip by, reacted last week by pulling the license to manufacture drugs for livestock from IMBF's parent company, the Jinyu Group. This punishment could be serious for Jinyu, since its medical arm generates more than half of the Group's operating income. On the other hand, the suspension is only so that the Ministry of Agriculture can perform a further investigation before determining the Group's ultimate punishment, so it's hard to tell what the final effect will be.

Competition and small-scale companies

Private companies out-compete public ones, according to a report on the competitiveness of Chinese business released by the Institute of Industrial Economics of the Chinese Academy of Social Sciences. When companies operating in sectors where there are no clear economies of scale go public, their competitiveness drops. Jin Bei, vice director of the institute and editor of the weekly China Business, ascribes the gap to a view that financing received from an IPO is basically free money, tallied up under revenue, so the companies don't feel as pressed to improve their operations. The report also noted that public companies operating with clear economies of scale outcompete private ones; the top five public companies named - Sinopec, China Unicom, CIMC, Conch Cement, and Baosteel - bear this out.

These summaries were collected from the The China Perspective, which covers major business news and trends in the China marketplace.