European Pressphoto Agency

Your daily roundup of the best of The Wall Street Journal’s China coverage:

Car Makers Gauge Shift In China’s Auto Policy: Global auto makers are sizing up the impact of China’s decision to stop encouraging growth among foreign car companies, a move that appears to give domestic makers greater protection from outside rivals. (Subscriber Content)

Gulls Test Positive for Bird Flu in Hong Kong: The Hong Kong government said Friday that two dead birds found in the New Territories earlier this week have tested positive for a lethal strain of bird flu, the latest development in the global resurgence of the deadly virus. (Free)

Lenovo to Restructure Units: Lenovo said it will reorganize its geographical business units in an effort to fuel growth by better tailoring its approach to different markets. (Subscriber Content)

China Injects Cash Into Railway-Equipment Makers: The listed subsidiaries of China’s two largest railway-equipment manufacturers, which have had trouble raising funds, confirmed that their parents have each received government cash injections of $317 million. (Subscriber Content)

News:

* IBM sold its PC business to Lenovo with an eye on winning more Chinese business. (New York Times)

* The Obama administration gives the China portfolio to Vice President Joe Biden. (The Atlantic)

* Activist Ni Yulan could become China’s next human-rights example. (New York Times)

* Protesters march over investment scams. (Radio Free Asia)

* Authorities and villagers in a northwestern town clash over a mosque. (Los Angeles Times)

Analysis & Commentary

* The preposterous rise and fall of antiradiation maternity clothes, and what they say about China’s health worries. (Bloomberg View)

Just Because:

* How a one-legged Chinese admiral and his British companions escaped Japanese-occupied Hong Kong. (Daily Telegraph)

* A suspect in the death of a top businessman and public official allegedly poisoned the victim’s meal of cat hot pot. (The Nanfang/Southern Metropolis Daily)

News:

* Money keeps flowing out of China (Bloomberg)

* China and India, not getting along so well these days (L.A. Times)

* How Chinese-language media are covering the Wukan protests (China Media Project)

* Indigenous innovation: China invents self-cleaning cotton (BBC)

* That Lenovo game console you’ve had your eye on? It’s been delayed (PC World)

Analysis and Commentary:

* A dose of dread for China in Kim Jong-il’s death (Reuters)

* Paul Krugman worries that China might break? (NYT)

Just Because:

* Lessons in weight loss from Kim’s demise (Sinocism)

* A cartoon rendering of Christian Bale’s encounter with Chinese security forces last week (Behind the Wall)

MillwardBrown

Baidu, China’s 6th most valuable brand according to MillwardBrown.

China's Top 20 Brands in 2011

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A list of the top 20 most valuable brands in China as determined by MillwardBrown in the 2011 edition of "BrandZ Most Value Chinese Brands."

Outside of China, the majority of consumers can’t name a single Chinese brand.

According to research from agency Millward Brown and media company WPP on the top 50 most valuable Chinese brands, 83% of consumers beyond China’s borders couldn’t recall a Chinese brand or company.

That message is significant, given that China wants badly to create its own global brands, said Adrian Gonzalez, head of Greater China at Millward Brown. Chinese companies like appliance maker Haier and computer electronics company Lenovo that aspire to global household names will need to better distinguish themselves to become more recognizable to the world’s consumers, Mr. Gonzalez said.

At home, it’s a different story.

The brand study, which analyzed financial information of listed companies’ brands and paired it with data from a survey of 35,000 consumers, reveals that value of Chinese brands has grown by to $325 billion in the past year, up 16% from a year earlier.

The top Chinese brands–ranging from banks and telecommunications to fashion and food companies– are not only competitive in pricing, but are resonating and connecting emotionally with Chinese shoppers, the study said. Chinese companies are also narrowing the wide gap they once had with multi-national counterparts, which had for years built better trust and service for Chinese consumers.

Dairy giant Mengniu (18) and its rival Yi Li (22) have proven themselves, even after having been implicated in a 2008 scandal in which the chemical melamine added to milk caused the death of an infant and illnesses in 300,000 others, to be on par with foreign competitors, such as Swiss food company Nestle SA, and are offering products of similar quality, Mr. Gonzalez said. Technology companies, such as Sina (25) and Baidu (6), are creating new programs and products specific to Chinese needs.

Sina, which operates China’s most popular Weibo microblogging service, saw its brand value increase 244% compared with last year, according to the report.

“We’re seeing in many cases now that foreign companies feel the best way to succeed in China now is through acquiring a Chinese company,” Mr. Gonzalez said, adding that a decade ago that was not the case.

Results of the study reveal another shift occurring within China: a fall of the country’s state-owned enterprises. While China Mobile, the top Chinese brand, and state-owned banks still dominate the Chinese brand landscape, seven of the 14 brands on the list that lost ground with consumers were state-owned. China Mobile held on to its No. 1 ranking from last year but dropped 4% in value in 2011. Bank of China (4) fell 17%.

“Government protectionism is starting to wear thin,” the study said – a marked contrast with the study’s 2010 results.

Don’t expect the fall to transfer beyond state-companies, the study’s authors said. If there’s any wake up call to foreign brands—even outside of China— it’s that Chinese brands are on the rise.

To see a list of the top 20 Chinese brands and how much they’re worth, click on the slideshow tab above.

– Laurie Burkitt. Follow her on Twitter @lburkitt

Reports of ramped-up border control in southern China has forced smugglers of high-in-demand Apple products to get creative, according to a report by local newspaper Southern Metropolis Daily.

Customs officials discovered people sending iPhones and iPads from Hong Kong to Shenzhen by placing the devices in tote bags and hooking them to a pulley that reached across the border, according to the Chinese news report over the weekend, which was also posted on Youtube. The smugglers, who allegedly did the exchanges overnight, were caught with more than 50 iPhones and 50 iPad 2s, worth some 300,000 yuan ($47,000).

The video report features interviews with mainland China customs officials and includes footage of a table stacked with Apple products. The officials in the video say the smugglers sent the devices from the ground in Hong Kong to a building in Shenzhen over the Shatoujiao River using a cable and pulley. Shenzhen officials have apprehended six suspects, according to Southern Metropolis Daily.

Authorities were tipped off about the smugglers’ high-wire act, the video report says.

Apple products sold in China, including by unofficial resellers such as the fake Apple Store discovered by a blogger in Kunming , often go for the same price as products sold officially by Apple’s four Apple Stores and numerous authorized resellers. Many of the products are brought in from Hong Kong, one of the cheapest places in the world to buy them. For example, a 64-gigabyte Wi-Fi iPad 2 costs HK$5,488 ($703) in Hong Kong and 5,288 yuan ($821) in mainland China, or 17% more. IPads that can be used with third-generation data services are not officially available in China.

If properly declared, electronics taken into China require a 20% border tax.

This is not the first time Apple smugglers have gone out of their way to evade checks at the Hong Kong-Shenzhen border. In December 2010, customs officials in Shenzhen arrested 14 mainland Chinese housewives trying to mule 88 iPads and 340 mobile phones into the country without paying taxes, presumably because they had clean criminal records and were less likely to arouse suspicion.

Nor are Apple products the only electronics brought in from other regions. A number of devices running Google’s Android operating system and other gadgets can also be found in China’s sprawling electronics markets, in some cases because there is demand for devices that are not released in China. China has the most mobile subscribers of any nation and is also the world’s second largest PC market after the U.S.

– Loretta Chao, with contributions from Kersten Zhang. Follow Loretta on Twitter @lorettac

BirdAbroad

Suddenly, one of the most famous Apple stores in the world is one that not only isn’t a real Apple Store, but apparently isn’t even an authorized Apple reseller.

As noted earlier on China Real Time, the fake Apple Store, located in the southwestern Chinese city of Kunming, was spotted by an expatriate blogger in the city who uses the handle BirdAbroad. It has since gotten widespread international attention for the remarkable lengths to which its proprietors seem to have gone to mimic the look and feel of a real Apple Store.

Trying to reach the store’s owners has been tough. Repeated calls to the manager on Thursday went unanswered. But a store employee reached by phone confirmed that the store is not an authorized Apple reseller. The salesman said products in the store are genuine Apple products sold at the same prices as those advertised on Apple’s website.

BirdAbroad said in a post Wednesday that store staff she spoke to appeared to believe they were employees of Apple. The staffer reached by phone was under no such illusion. “It doesn’t make much of a difference for us whether we’re authorized or not,” he said. “I just care that what I sell every day are authentic Apple products, and that our customers don’t come back to me to complain about the quality of the products.”

The store is one of many unofficial resellers with Apple products on display around China. BirdAbroad’s post said there were two other Apple retailers around the corner from the featured fake store, one of which has a misspelled sign calling itself “Apple Stoer.” Many of the Apple products carried by resellers are purchased from the company’s retail outlets in China, while others are bought overseas and smuggled in. In some cases, the products on offer are second-hand or even knock-offs. It’s unclear where the Kunming fake Apple Store sources its products,

“I think in Yunnan, our store should be one of the best in terms of scale and the level of professionalism,” the Kunming salesman said. The Kunming store’s winding staircase, blue employee t-shirts and official looking name tags help give it the look and feel of one of Apple’s iconic Apple Stores, of which there are only four in China—two in Beijing, and two in Shanghai. While valuable as retail channels, Apple’s highly stylized stores are also an important marketing tool, analysts say.

Now that it has undoubtedly gotten Apple’s attention, one option for the Kunming store could be to apply to be part of Apple’s network of authorized resellers. But it’s unclear how kindly Apple would respond to such a request under the circumstances. Matters relating to Apple’s intellectual property are not usually taken lightly, as illustrated last year by a police probe into an iPhone 4 prototype purchased by technology website Gizmodo before the device’s launch, and this year by prison terms handed down to three people in Shenzhen after police discovered they had collaborated to steal pre-release photos of the iPad 2 in order to make accessories for it.

An Apple spokeswoman declined to comment.

Official Apple resellers, labeled as “Apple Shops” on the company’s website, are granted authorized status after going through an application process for certification to sell or provide specific Apple products and technical support services.

Photos of the authorized resellers’ stores on Apple’s website show that some of its official resellers also nod to Apple’s trademark, minimalist look and feel, and also feature giant posters of Apple products. But there are guidelines, including on how to use the company’s logos. One authorized Apple reseller in Beijing said Thursday that his store’s design and the placement of Apple’s logos are all “done according to Apple’s requirements.”

–Loretta Chao and Sue Feng

Adrian Bradshaw/European Pressphoto Agency

Hundreds queue for the chance to buy a white iPhone 4 on the first day of sale at the Sanlitun Apple Store in Beijing, April 28, 2011. Apple stores in China have had trouble keeping the white iPhone 4 in stock.

Beijing Apple Store Scuffle

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A fight broke out at the Apple store in Beijing's upscale Sanlitun shopping area on Saturday as shoppers lined up to get their hands on the recently restocked white iPhone 4, which has been repeatedly selling out since it's mainland China launch in late April.

What would you do for a white iPhone 4?

In Beijing this weekend, a group of people who were trying to get in line to purchase the device decided the recently launched handset was worth fighting for, and clashed with Apple Store employees in a fight that caused the store to close down for several hours.

Apple spokeswoman Carolyn Wu said the group “became unruly” and employees “acted to protect themselves and our customers by closing the doors and preventing the group from entering.”

The scuffle was vigorous enough that one of the store’s glass doors ended up shattered.

Beginning Sunday, customers who want to purchase the white iPhone 4 from an Apple store must first make a reservation online. Black iPhone 4s are still available to walk-in customers.

It wasn’t the first time the race to buy an iPhone has led to a scuffle in Beijing, but it was certainly the most dramatic showing of the fast-growing demand for Apple products outside the company’s first China store. Photos of the Sanlitun Apple Store’s shattered door and of a man lying on the ground with a small wound on his back have been circulating online.

Chinese consumers’ appetite for Apple products has grown substantially over the past year as the company has opened a number of new stores and made an effort to release new products more quickly in the country. In January, Apple reported that its China sales in its fiscal first quarter, which ended Dec. 25, quadrupled to $2.6 billion.

Analysts say the long-delayed white version of the white iPhone 4 has been more in demand in Asia than in the U.S. The white iPhone 4 has drawn long lines and crowds of scalpers to Apple’s Sanlitun store in Beijing since its launch in China last month. Scalpers have taken to buying up the devices then hovering outside the store’s doors. As of this past weekend, some were offering the 16-gigabyte iPhone 4 for as much as 5,500 yuan, or a 501 yuan markup.

Apple launched the Wi-Fi only version of the iPad 2 in China on Friday, but the tablets have not sold out as quickly and frequently as the white iPhone 4.

– Loretta Chao. Follow her on Twitter @lorettac

WSJ Highlights:

• Search giant Baidu takes heat from Chinese authors over its document download service.
• Chinese web portal Sina has removed Google’s search service from its website, ending another of the U.S. company’s deals in China.
• Lenovo announces it has started selling its tablet computer, the LePad, despite concerns over chip supplies stemming from the Japanese earthquake.

News Items:

• Australian political blogger Yang Hengjun has gone missing in China. (Guardian)
• Chinese agriculture authorities announce a crackdown on pig feed contaminated with the fat-burning chemical clenbuterol. (Xinhua)
• A new study from the UK’s national science academy projects China will overtake the U.S. in scientific productivity by 2013. (BBC)

Digging Deeper:

• Relax: In an interview with the Financial Times, the chairman of the Industrial & Commercial Bank of China insists that a recent spate of unbridled lending by Chinese banks does not pose a threat to the country’s banking system. (Financial Times)
• Strategic friendship: Time goes searching for reasons why a top Chinese general decided to visit Nepal last week and comes up with two: India and Tibet.

Comment Watch:

• Rebalancing Roundtable: The IMF’s Steven Barnett, Peking University finance professor Michael Pettis and Johns Hopkins China scholar Pieter Bottelier square off over the wisdom and dangers of China’s plans to move its economy away from a reliance on exports. (video)
• A new old foreign policy? Tsinghua University political scientist Yan Xuetong argues that devotees of traditional Chinese political thought are challenging mainstream thought about what role China should play in the world.

–compiled by Josh Chin. Follow him on Twitter @joshchin

The two devices enter an increasingly crowded space as a range of gadget and computer makers look to diversify their product lines and fuel growth by offering tablet devices.

Both Lenovo’s LePad tablet and Asustek’s product, called Eee Pad Transformer, have 10-inch screens and use Google’s Android operating system. Their pricing is also similar. The LePad starts at 3,499 yuan ($533) for a version with Wi-Fi wireless Internet connectivity and 16 gigabytes of memory. Asustek is taking pre-orders for a 16-gigabyte model of its tablet for $505.

Those price levels are close to those of competing products. Apple’s iPad 2, which began selling in March, and Research In Motion’s PlayBook tablet, which will go on sale in North America on April 19, both start at $499 for a 16-gigabyte model. The lowest price of Motorola Mobility Holdings’ Xoom tablet, another competing device, is $599.

But analysts say the features of the Lenovo and Asustek tablets don’t stand out from the crowd of competing tablets.

“LePad is just another Android-based tablet PC, and I can’t find any difference between the one that’s from Motorola, one from Lenovo or one from Samsung,” said Mark Po, an analyst at UOB Kay Hian. Still, Lenovo does have the advantage of strong distribution channels in China, and the company’s market share goal for the LePad “would be no problem” if Chinese mobile operators support its sales, Po said.

Lenova aims for its tablet computer’s market share in China to company’s personal computer market within three years. Lenovo ranks first in China with a 32.2% share of the country’s 15.7 million PC shipments in the fourth quarter, according to market research firm IDC. The company hasn’t said whether Chinese mobile operators will offer the LePad.

Analysts said Transformer is not competitive in terms of design, operating system and applications because Asustek hasn’t had much time to improve and customize Honeycomb, the most recent version of Android and the one Asustek is using.

“They just got the source code for Honeycomb in February. The new operating system is immature. That’s why the user experience and performance are much weaker than that on iPad 2 and even on the first generation of iPad,” said Calvin Huang, analyst at Daiwa.

In terms of appearance, Asustek’s Transformer is a bit clunky – it is 12.98 millimeters thick and it weighs 680 grams. The iPad 2 weighs 600 grams and is 8.8mm thick.

The way Lenovo decided to launch the LePad didn’t seem fine-tuned to win global publicity for the product. The company held a launch event with executives in Shanghai but it didn’t invite foreign media and declined China Real Time’s requests for an interview. Lenovo did send out a press release after 7:00 p.m. local time, but it wasn’t fully clear from the document when the company had started selling the LePad.

Lenovo’s announcement also left unclear when a companion device for the LePad — the IdeaPad U1, a hybrid notebook-and-tablet product allowing the LePad to slide into a keyboard base to switch to operating Windows 7 – would go on sale. A company spokesman likewise was unable to say when Lenovo would begin selling the IdeaPad U1, which was unveiled in January last year and had originally been slated to hit retail shelves that June.

Asustek’s Transformer has a docking station to convert the device into a full notebook PC.

– Owen Fletcher and Lorraine Luk