Archive for ‘Economics’

01/08/2015

China’s Bohai bids $2.6 billion for aircraft leasing firm Avolon | Reuters

China’s Bohai Leasing Co Ltd 000415.SZ has offered to buy Irish rival Avolon (AVOL.N) for $2.55 billion, a 55 percent premium over its December initial public offering, the Irish firm said on Friday.

Traders gather for the IPO of Avolon Holdings Ltd. on the floor of the New York Stock Exchange December 12, 2014. REUTERS/Brendan McDermid

Avolon said it was considering Bohai’s $31 per share offer and a rival $30 per share bid from an unidentified bidder and was in contact with both parties.

Shares in U.S.-listed Avolon opened up 20 percent on Friday at $29.8, before falling back to $28, compared to a price of $20 when it listed in December.

Bohai, a unit of aviation and shipping conglomerate HNA Group, earlier this month offered to buy 20 percent of Avolon for $429 million at $26 per share, an offer that is now being put to shareholders.

But it offered to buy the whole company when it was informed of the third party bid.

“Avolon’s Board of Directors has not accepted or rejected either offer and continues to carefully evaluate these … and has authorized its financial advisors to continue negotiations with both,” Avolon said in a statement.

The purchase would boost HNA’s access to a global aircraft leasing market dominated by GE Capital and AerCap Holdings NV (AER.N).

Chinese lessors, mostly backed by state-owned banks, have been expanding in recent years as large carriers such as Hainan Airlines Co Ltd (600221.SS), Air China Ltd (0753.HK), China Eastern Airlines Corp Ltd (0670.HK) and China Southern Airlines Co Ltd (1055.HK) opened more routes at home and overseas.

Ahead of Avolon’s IPO, China Investment Corp (CIC) and AVIC Capital Co Ltd (600705.SS) were in talks to acquire Avolon.

Avolon, which was founded by leasing entrepreneurs Domhnal Slattery and John Higgins in 2010, owns or managed 152 aircraft at the end of June and had over 100 more on order.

via China’s Bohai bids $2.6 billion for aircraft leasing firm Avolon | Reuters.

30/07/2015

Chinese potatoes to chip in as water shortages hit staple crops | Reuters

Once seen as food for the poor, the humble potato is being pushed in China as a tasty, nutritious part of any meal as the world’s most populous country struggles with water shortages and looks for alternatives to the traditional rice and noodles.

China already produces 95 million tonnes of potatoes a year, a quarter of the global total, and is aiming to raise that to 130 million tonnes by 2020, government officials said at the World Potato Congress on the outskirts of Beijing this week.

“In China, the potato industry is no longer an industry for underdeveloped areas or the poor, but highlights the country’s modern agricultural drive and enriches people’s dining tables,” Agriculture Minister Han Changfu told the conference.

Beijing has begun this year to promote the potato as more of a staple food, particularly as a substitute foodstuff for grain, an idea that has taken on urgency as water problems threaten to undermine food security, vital for political legitimacy.

The North China Plain is suffering as a result of decades of excessive underground water use by both industry and wheat farmers.

In some parts of Hebei, the third-largest wheat-producing region, farmers have been banned from growing wheat in order to preserve underground water. Excessive digging for irrigation has caused subsidence and even landslides, the local government has said.

David A. Thompson, president of the World Potato Congress, told reporters that potatoes would serve China’s plans to improve agricultural sustainability.

“Potatoes provide more energy and protein per acre than other crops,” he said.

The congress was held in Yanqing, a suburb of Beijing around 100 km (62 miles) northwest of the city center, where a 12,000-square-metre international potato center has been built along with a museum for the vegetable and a potato breeding center.

“Small potatoes, stand up and become a staple to ensure the country’s grain security,” urges a banner outside the museum.

In an exhibition hall, potatoes are used to make dozens of different types of food, including popular local fare such as steamed bread, noodles and dumplings as well as western-style pizza and even cookies.

“Potatoes can make hundreds or even thousands of dishes, as well as more than 200 types of staple and western-style food,” said Zhang Aiguo, a cook at the exhibition.

“If more and more consumers get to know that potatoes have more nutrition, they are willing to take them. People nowadays care more about quality and healthy food,” said Zhang, holding a big plate of steamed bread made with potatoes.

via Chinese potatoes to chip in as water shortages hit staple crops | Reuters.

30/07/2015

Behind the Surge in Chinese Tech Startups – China Real Time Report – WSJ

In 2009, then-Google executive Kai-Fu Lee wrote a letter to Chinese college students discouraging them from the start-up world. Young people then simply weren’t ready to strike out on their own, he said. The gist, he said: “Don’t start a company. It’s tough. There are wolves out there.”

Today, he says, China’s young people are themselves proving to be an innovative pack. Internet availability, manufacturing know-how and the smartphone revolution have fueled a surge of Chinese startups in China over the past few years, many run by members of a post-digital generation of youngsters. The rush has led to a wave of investment in Chinese startups by investors looking for the next Alibaba, and thrown into question China’s longtime reputation as a market dependent on copycatting.

Back then, “there were so few serial entrepreneurs in China,” he said on Thursday at Converge, a technology conference co-hosted by The Wall Street Journal and f.ounders. “We really had to find either very young people or find professional managers or senior engineers out of companies like Google and Baidu and help them start a company.” Now, he says, “there are serial entrepreneurs everywhere.”

In some places, the rush may be getting ahead of itself. Mr. Lee—now chairman and chief executive of investment firm and tech incubator Innovation Works—sees “totally crazy” valuations among Chinese tech initial public offerings. Many of the best already went public overseas, including in the U.S. The few left in China “have been blown out of proportion,” he said, adding, “everybody’s chasing those few stocks.”

But overall, he says, “I’m very bullish about the future.”

Mr. Lee, famous in China for his roles at Google and Innovation Works, is also a social-media presence. He says that since forming Innovation Works in 2009 he has seen attitudes change among young Chinese.

“They grew up their total lives on the Internet, unlike us, who have all this baggage,” he said.

That’s potentially good news for Beijing, which is looking to sustain growth by broadening the world’s No. 2 economy, making it more than the world’s factory floor.

Innovation may take a different form than what the U.S. expects, Mr. Lee said. Innovators in China and elsewhere, rather than inventing the next iPhone, “can change the world because of a very clever business idea.”

“China is completely ready to build a Facebook-equivalent type of company, an Uber-equivalent type of company, in many other areas, because the market is very large and the people are very innovative,” he said.

Innovation Works currently sees promise in startups with products like a piano that can teach the user how to play, a household robot and even an online joke platform “for people to share the embarrassing moments in their lives.” And then there’s a venture built around a Chinese girl band, SNH48, that takes a page from Japan’s AKB48 and hopes to make money selling virtual products to an online community of fans.

Even if many of the ideas from China’s startups are themselves derivative, he said, “they will wow people.”

via Behind the Surge in Chinese Tech Startups – China Real Time Report – WSJ.

29/07/2015

GIFT, the Indian Smart City That Would Cost $23,500 a Person – India Real Time – WSJ

Two 29-story steel-and-glass office buildings rise above a dusty wasteland in the Indian state of Gujarat, the most conspicuous sign of progress on an ambitious project conceived by the man who is now India’s prime minister, Narendra Modi.

More than seven years ago, Mr. Modi, at the time the state’s top elected official, decided to push the construction of an entirely new city—dubbed the Gujarat International Finance Tec-City, or GIFT—about a 40-minute drive from Ahmedabad, the historic commercial hub here.

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The if-you-build-it-they-will-come idea was to create a magnet for banks, securities firms and information-technology companies akin to Canary Wharf in London or La Defense outside Paris. But construction work has moved slowly and few private enterprises have signed up. Of the two office towers, the first is about 50% occupied and the second one is empty.

Critics say the undertaking’s halting progress is a cautionary tale as Mr. Modi’s federal administration moves ahead with plans for 100 “smart cities,” which, among other things, would use technology to improve public services such as waste disposal and save energy.

Ramakant Jha, managing director of the company building the city, says that offices and retail stores and other businesses at GIFT will help create one million direct and indirect jobs. The city will also have homes, allowing employees to walk to work, and social infrastructure like a school, hospital and malls.

With central air-conditioning in all buildings, filtered tap water and municipal waste collection (a rarity in urban India), GIFT, as planners envision it, would be far more advanced than existing Indian cities.

But all this comes at a cost. If 100,000 people live in a city, the cost of building the city’s infrastructure comes to around $23,500 per person. In comparison, India’s gross national income per capita is around $1,600, according to the World Bank.

via GIFT, the Indian Smart City That Would Cost $23,500 a Person – India Real Time – WSJ.

28/07/2015

Apple ‘fake factory’ raided in China – BBC News

A factory which allegedly made up to 41,000 fake Apple iPhones has been raided in China, with nine arrests.

iphone 6

The operation reportedly involved “hundreds” of workers repackaging second hand smartphone parts as new iPhones for export, with counterfeit phones produced worth 120m yuan ($19m).

The factory was discovered on 14 May but was revealed on social media by Beijing’s public security bureau on Sunday, according to reports.

The operation was set up in January.

It was led by a husband and wife team, on the northern outskirts of the Chinese capital, according to Beijing authorities.

They said they had been alerted to the factory by US authorities which had seized some of the fake phones.

The reports come amid an official Chinese crackdown on counterfeit goods, with authorities pushing firms to trademark their goods.

China has also agreed to work with the US authorities to try to stem the large quantities of fake goods flowing between the two countries.

The discovery of the factory comes four years after fake Apple stores were found in Kunming city, China.

Discovered by blogger BirdAbroad, the fakes were so convincing she said many of the staff themselves were convinced that they were employed by the US electronics firm.

via Apple ‘fake factory’ raided in China – BBC News.

28/07/2015

SpiceJet reports $11.2 million net profit in Q1 | Reuters

Budget airline SpiceJet Ltd(SPJT.BO) reported on Tuesday a net profit of 718 million rupees ($11.2 million) for the three months ending June, after cutting costs and flying more passengers.

SpiceJet aircrafts prepare for landing and take-off at the airport in Mumbai July 15, 2008. REUTERS/Punit Paranjpe/Files

SpiceJet made a net loss of 1.24 billion rupees in the same quarter a year earlier.

India’s second biggest budget carrier by market share, which last quarter made its first profit since 2013, is in the midst of a recovery plan after it almost collapsed late last year.

Under new Chairman Ajay Singh, the airline has cut routes – its capacity is down a third since last year – and costs.

It said on Tuesday that its load factor – the percentage of an airline’s carrying capacity it has filled – rose to 89.8 percent in the quarter, a rise of almost 15 percent from last year.

Sustained profitability has eluded most of India’s airlines for the last few years amid fierce competition for fares and high operating costs, despite the country’s aviation market growing at one of the fastest rates worldwide.

SpiceJet shares jumped after news of the results, ending up 7.4 percent as the wider market .BSESN fell 0.4 percent.

($1 = 63.9400 rupees)

via SpiceJet reports $11.2 million net profit in Q1 | Reuters.

28/07/2015

Maruti Suzuki Q1 profit jumps 56 percent; lower costs, higher sales | Reuters

Maruti Suzuki India Ltd(MRTI.NS), India’s top-selling carmaker, said on Tuesday first-quarter net profit rose 56 percent helped by lower costs, favourable foreign exchange rates and higher sales, but still missed bullish analyst estimates.

A Suzuki badge is reflected on the body of a Maruti Suzuki Eeco car at a Maruti Suzuki stockyard on the outskirts of Ahmedabad April 26, 2013. REUTERS/Amit Dave/Files

Maruti, controlled by Japan’s Suzuki Motor Corp (7269.T), said profit for the April-June quarter was 11.9 billion rupees ($185.94 million), up from 7.6 billion rupees in the same period a year earlier. Analysts had expected a profit of 12.35 billion rupees, according to Thomson Reuters I/B/E/S.

Net sales rose about 18 percent to 130.8 billion rupees, the company said, as India’s car trade continues to grow. India is expected to become the world’s third-largest car market by 2020, moving up three places.

“During the quarter, higher volumes, cost reduction efforts, lower sales promotion expenses, and favourable foreign exchange helped improve the performance,” the company said in a stock exchange statement.

Total expenses as a percentage of net sales fell to 91 percent during the quarter from about 96 percent in the year ago period, while finance costs were halved to 190.4 million rupees. Maruti, which imports certain car components from Japan and also pays royalty to its Japanese parent, Suzuki, is benefiting from the yen’s weakening.

The carmaker, which sells about one in every two cars in India, wants to increase its share of the premium car segment at a time when rivals like Honda Motor Co (7267.T) and Ford Motor Co (F.N) are launching cheaper, compact cars – Maruti’s mainstay.

Maruti has had little prior success in the premium segment and is now planning an aggressive rollout of new vehicles and dealerships to capture buyers with deeper pockets – a move that is expected to boost margins and profits, say analysts.

Next week Maruti will launch the S-Cross – a crossover between a sport-utility vehicle and a hatchback – the first car to be sold at its new Nexa showrooms. These spruced-up showrooms will differ from existing dealerships in design and service, managing director Kenichi Ayukawa said recently.

“It is a very good strategy because as income levels rise we will see that more and more consumers will prefer premium vehicles,” said Nitesh Sharma, auto analyst at Mumbai-based brokerage, Phillip Capital, adding that it will boost margins.

Shares in Maruti, valued by the market at about $20 billion at Monday’s close, were trading 0.5 percent higher at 4,200 rupees a share at 0850 GMT in a weak Mumbai market.

Maruti’s shares have risen more than 25 percent since January – the highest among major automobile companies in India.

($1 = 64.0000 rupees)

via Maruti Suzuki Q1 profit jumps 56 percent; lower costs, higher sales | Reuters.

28/07/2015

Delta to buy 3.55 percent stake of China Eastern for $450 million | Reuters

Delta Air Lines Inc (DAL.N) has agreed to buy 3.55 percent of China Eastern Airlines Corp Ltd (600115.SS)(0670.HK), a move that would make it the first U.S. carrier to own part of a Chinese airline.

The deal may prompt Delta’s rivals to beef up partnerships with Chinese carriers in an effort to secure their place in a country that Delta expects to become the biggest market for travel from the United States.

Delta’s purchase challenges rival United Continental Holdings Inc (UAL.N), the leading U.S. airline for service to China. United Chief Executive Jeff Smisek said Thursday during an investor call that the airline would be “keenly interested” in exploring a Chinese joint venture once the United States and China negotiate an Open Skies agreement that would ease air route restrictions.

Atlanta-based Delta said it will invest $450 million in China Eastern’s Hong Kong-traded stock, which has nearly tripled over the past 12 months even as broader Chinese stock indexes have plunged.

Delta said it will get an “observer” seat on China Eastern’s board. The move may pave the way for Delta and China Eastern to seek approval to coordinate pricing and flight capacity.

However, larger tie-ups with antitrust immunity cannot happen until an Open Skies agreement is in place, which could take years. Currently, governments specify which airlines can fly which routes, and how often.

Chinese carriers have been “launching far too much capacity across the Pacific,” industry consultant Robert Mann said. “Everybody is looking for a stronger form of joint-venture partnership for the day when China and the U.S. have Open Skies.”

For now, Delta and China Eastern say they will invest in services so travelers have a seamless experience on the airlines, which share flight codes on 80 routes including subsidiary Shanghai Airlines. The partnership will grow Delta’s foothold in China Eastern’s Shanghai hub, a key market for business travel.

The transaction is subject to approval by each company’s board.

Delta is investing in foreign carriers, taking small stakes in one airline in Mexico and one in Brazil. It also owns 49 percent of Virgin Atlantic Airways Ltd (VA.O) and has used its position to shift the UK carrier’s routes to Delta’s advantage.

via Delta to buy 3.55 percent stake of China Eastern for $450 million | Reuters.

27/07/2015

China Stocks Make Sharpest Daily Fall Since 2007 – China Real Time Report – WSJ

China stocks made their sharpest daily percentage decline since 2007, as worries mount that authorities are pulling back on its measures to prop up the market. As WSJ’s Chao Deng reports:

The Shanghai Composite Index ended down 8.5% at 3725.56, its second-straight day of losses and worst daily percentage fall since February 27, 2007. China’s main index is up 6% from its recent low on July 8, but still off 28% from its high in June.

The smaller Shenzhen Composite fell 7% to 2160.09 and the small-cap ChiNext Closed 7.4% Lower at 2683.45

Analysts say the selling came as investors fear the government is curbing its buying of blue-chip stocks—and could even be testing whether the market can support itself.

“The previous support from the government funds is apparently unsustainable,” said Jacky Zhang, an analyst at BOC International. “They may withdraw support today to test whether the market has recovered its resilience. The government wants to use state funds to stabilize the market, not to prop it back to 5,000 point overnight.”

via China Stocks Make Sharpest Daily Fall Since 2007 – China Real Time Report – WSJ.

22/07/2015

Airbus China plant plans to deliver first A330 plane in 2018 | Reuters

Airbus’ (AIR.PA) China plant is expected to deliver its first A330 wide-body passenger jet in 2018, one of the European planemaker’s Chinese partners said on Wednesday.

A worker uses a drill to screw bolts into the wing of an A320 plane that is under construction at the Airbus factory located in the northern Chinese city of Tianjin September 14, 2010.  REUTERS/David Gray

Airbus earlier this month signed an agreement to establish an A330 ‘cabin completion center’ in the northeastern Chinese city of Tianjin, where the firm already has a final assembly plant for smaller A320 jets.

The agreement was signed with the Aviation Industry Corp of China [SASADY.UL] and the Tianjin Port Free Trade Zone. Airbus hopes the increased presence in China would lead to more demand for the profitable but ageing wide-body A330 jets.

In a statement posted on its website, the Tianjin Port Free Trade Zone, said it expects construction of the plant to be completed by the fourth quarter of 2017, with the first plane to be delivered to customers in early 2018.

The plant will help further China’s goal of building its own jets to cater to what is expected to become the world’s biggest air transport market. Currently it depends mostly on imported jets from Airbus and Boeing (BA.N).

Facilities for cabin decoration, painting, and flight testing of the A330 series would also be established in the next 10 years, the Tianjin Port Free Trade Zone said.

The agreement to build the A330 plant, which will be capable of fitting out 2 planes a month, came after China placed an order for 45 A330 aircraft worth at least $11 billion, together with provisional purchases of another 30 planes.

via Airbus China plant plans to deliver first A330 plane in 2018 | Reuters.

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