Archive for ‘Economics’

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07/08/2012

* DreamWorks Plans Studio in Shanghai

WSJ: “DreamWorks Animation SKG Inc. on Tuesday signed plans with Chinese partners to build a $350 million movie studio in Shanghai to capitalize on the success of its Kung Fu Panda film franchise as the studio looks to build up its presence in a fast-growing Chinese movie market.

The studio will be 45% owned by the California animation company, with the remainder held by media-related companies controlled by the Shanghai government. The partners also plan an entertainment zone that could bring the total investment to 20 billion yuan (US$3.14 billion) to be largely funded in China.

The foundation of the project is the animation studio, DreamWorks CEO Jeffrey Katzenberg said in an interview. “The talent must exist here in China if only they had the knowledge, training and opportunity,” he said.

The partners said the film “Kung Fu Panda 3″ will be co-produced in Shanghai for a 2015 or 2016 release. The Shanghai studio plans its first film by 2017 and would build toward one to three major films a year, with an aim to build an animation base in China that can produce films for a world-wide market.

The joint venture said on Tuesday that it plans to build a tourism and entertainment complex that it calls the Dream Center with an opening date of 2016 in Shanghai’s Xuhui district. The facility near an abandoned airport will include tourist attractions, restaurants and commercial space, the joint venture said. Mr. Katzenberg said his company will help design that aspect of the business but be a small minority partner in the park, which represents the largest share of the investment plans.

The moves—which were announced in part earlier this year—come as rival Walt Disney Co. also looks to build up its presence in Shanghai. The U.S. entertainment company last year began construction of its own $4.4 billion theme park with Shanghai-government partners that will also include hotels, restaurants and other amenities.

Western entertainment companies are looking for ways to tap the fast-growing Chinese entertainment market. China’s box-office revenue surged 42% in the first half of the year to $1.28 billion as increasingly affluent consumers head to the movies. But the domestic industry is still underdeveloped, with foreign productions dominating the business. Mr. Katzenberg said American movies have represented 70% of the Chinese box office so far this year.”

via DreamWorks Plans Studio in Shanghai – WSJ.com.

Posted in Affluence, China alert, Economics | 2 Comments »

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06/08/2012

* Chinese Consumer Products Get More Competitive

WSJ: “Gone are the days when big multinationals in China could easily dominate every consumer segment from toothpaste to laundry detergent.

For years, companies such as Procter & Gamble Co. PG mainly had to worry about counterfeits, as their brands, such as Crest, were the hot items for the newly expanding consumer market.

That isn’t always the case anymore.

Take for instance a Chinese herbal toothpaste for whitening and sensitive gums. It sells for the equivalent of about $8.60, roughly double the price of Crest 3D White Vivid, one of P&G’s pricier brands. Yet the herbal toothpaste’s market share in China grew to 8.8% in 2011 from 1.1% five years ago, according to market research firm Euromonitor International. Over that same period, P&G’s market share in the toothpaste category fell to 19.7% from 20.8%. Toothpaste market share in China for Unilever NV, which sells the Zhonghua brand there, fell to 9.9% from 12%, according to Euromonitor. (In other markets, Unilever produces Close Up and Signal brand toothpastes.)

Industry insiders say losses of a point or two are small enough in the short term for foreign companies to manage. But the Chinese brand, made by Yunnan Baiyao Group Co., one of many local competitors gaining market share at the expense of foreign giants, is a sign of a changing consumer environment, some people say.

“P&G and Unilever will have to fight harder for shelf space and fight harder to differentiate from domestic brands that are now offering a wider range of products and features,” said Ben Cavender, a senior analyst at China Market Research Group.

Chinese companies like Yunnan Baiyao are gaining as they sharpen their branding.”

via Chinese Consumer Products Get More Competitive – WSJ.com.

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03/08/2012

* China Heads to Soccer Field

WSJ: “Chinese investors will take an undisclosed stake in one of Italy’s most famous soccer teams, and a Chinese construction company intends to erect a stadium for the club, in China’s latest step to raise its profile in Europe.

Europe’s soccer leagues have attracted Asian investors. Diego Milito, right, of Inter Milan in action Thursday.

Internazionale Milano SpA, also known as Inter Milan, said Thursday that a group of Chinese investors plans to buy a stake in the club to become its second-largest shareholder. The company didn’t disclose financial terms or the identities of the buyers.

Inter Milan also said that China Railway 15th Bureau Group Co., a company controlled by listed China Railway Construction Corp., 1186.HK -3.28% will build a stadium for the club that is expected to be completed by 2017. Inter Milan currently shares the San Siro stadium with rival team A.C. Milan, owned by former Italian Prime Minister Silvio Berlusconi.

China Railway Construction said in a filing that it isn’t part of the Chinese consortium buying the equity stake. It said its China Railway 15th Bureau unit is in talks with the team over building a soccer stadium and that it will make an announcement when a contract is signed.

The move is the latest by well-funded Asian investors into Europe’s soccer leagues. Hong Kong businessman Carson Yeung bought Birmingham City of the U.K.’s Premier League in 2009, and AirAsia Bhd. Chief Executive Tony Fernandes bought the Premier League’s Queens Park Rangers last year.

It also marks China’s latest step to win construction projects in the West, broadening from the country’s sizable role in big-ticket projects in Africa and other parts of the developing world.”

via China Heads to Soccer Field – WSJ.com.

See also: https://chindia-alert.org/2012/02/13/pattern-of-chinese-overseas-investments/

Posted in China alert, Economics, Foreign acquisition, international sport, Uncategorized | Leave a Comment »

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03/08/2012

* China-Made Electronics Pour Into India

WSJ: “India is more concerned than ever about its yawning trade gap with China, as The Wall Street Journal detailed in a front-page story today.

But it isn’t just the volume of trade that’s at issue. It’s the mix.

While India exports mostly raw materials to its neighbor, China is selling more sophisticated manufactured goods – translating into better profit margins and higher paying jobs for workers. That disparity underscores India’s lack of manufacturing capabilities – and, for some national security hawks, it’s raising questions about whether India is too reliant on its rival for vital technologies.

One clear example of the trend is electronics. Overall electronics-related exports from China to India jumped from $2.8 billion to nearly $12 billion in the five years ending March 31, 2011. Computer hardware from laptops to accessories like USB dongles accounted for $1.5 billion in China’s exports.”

via China-Made Electronics Pour Into India – China Real Time Report – WSJ.

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03/08/2012

* China: The paradox of foreign education

BBC News: “There was a time when Chinese students who obtained higher education abroad were considered to be the most fortunate of their generation.

After graduating from elite universities in the US and Britain, they were virtually guaranteed the best career prospects upon their return.

Those students were colloquially referred to as sea turtles – returning home with the world on their backs.

But things are different now.These very students are now referred to as seaweed – washed up on the shore, with little or no prospect of finding work once they return home.

So why are foreign education qualifications not valued as highly as they once were?

“The reason employers valued them in the past has probably changed,” says the regional director of the specialist recruitment company Hays.

According to Simon Lance, the main turning point centres around speaking another language.

“Previously, studying abroad brought with it some very strong language skills,” he says.

But Chinese universities have come a long way in the past decade in the teaching of languages, and the skills obtained abroad are therefore less crucial.

Some people question whether it now makes sense to seek education abroad.

“If the expectation is that the qualification itself will automatically guarantee a high-paying job, then the answer is no,” says Mr Lance.

“But as part of a long-term career plan with a multinational company then it is a very good starting point,” he says.

However, Mr Lance also suggests any graduate studying abroad should seek work experience overseas as well.

“That would give them a much better competitive advantage when they return to China as opposed to just having the qualification itself,” he says.”

via BBC News – China: The paradox of foreign education.

Posted in China alert, Economics, education | 2 Comments »

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02/08/2012

* India allows Pakistan investment

BBC News: “India has announced that it will allow investment from Pakistan in what is seen as a boost for bilateral economic ties.

The commerce ministry said a citizen or a company of Pakistan is permitted to make investments in India.

However, no such investments can be made in defence, space or atomic energy, the ministry said.

India and Pakistan resumed formal peace talks last year after they were broken off following the 2008 Mumbai attacks.

India blamed the attacks on Pakistan-based militants.

A commerce ministry release on Wednesday said all foreign direct investment proposals from Pakistan would need the clearance of the country’s Foreign Investment Promotion Board (FIPB).

“It is a great decision… Now Pakistan should also implement the most favoured nation (MFN) trading status to India,” Rajiv Kumar of the Federation of Indian Chambers of Commerce and Industry (FICCI) was quoted as saying by the state-run Doordarshan news channel.

Earlier this year, Pakistan indicated that it would offer India MFN trading status, which India has already extended to Pakistan.

The move is part of a pledge made last year to liberalise trade with India. Formal trade between the countries is worth $2.7bn a year, while informal trade, by way of smuggling, is believed to be three times that, experts say.”

via BBC News – India allows Pakistan investment.

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01/08/2012

* China approves Hanlong’s $1.3 billion bid for Australia’s Sundance

reuters: “China has approved Hanlong Mining’s long-delayed $1.3 billion takeover bid for Australian iron ore developer Sundance Resources (SDL.AX), a vote of confidence for a sector grappling with falling prices and weak demand as the global economy cools.

Sundance Resources Limited

Sundance Resources Limited (Photo credit: Wikipedia)

Hanlong, which already owns 17 percent of Sundance, wants the company for its $4.7 billion Mbalam iron ore project on the border of the republics of Congo and Cameroon in western Africa. The region is seen as a major new source of iron ore that could cut China’s dependence on Australia and Brazil.

“We have gotten approval from the National Development and Reform Commission. It was approved yesterday,” a media officer from Hanlong told Reuters on Wednesday.

With the approval from the top economic planner, Hanlong now needs finance from China Development Bank to complete the deal that was agreed a year ago, when the iron ore price outlook was far more positive.

The deal’s lengthy delays had pointed to China’s reluctance to make big bets on risky resources projects offshore amid uncertainty over economic growth at home.

China, the world’s second-largest economy, has seen six consecutive quarters of slower growth and commodity stockpiles mushroom, weighing on prices.

Iron ore prices are languishing near their lowest level in more than two and a half years.

Under the agreement, Hanlong must secure China Development Bank’s blessings by Aug 31 to buy the shares it does not already own at A$0.57 per share, valuing the company at A$1.74 billion.

Media reports in Australia on Wednesday said Hanlong had reduced the deal to 50 cents a share and Sundance board was expected to recommend the new offer. It was not immediately clear whether the offer had been cut. A Sundance spokeswoman declined to comment.

Sundance shares last traded at A$0.335 cents, 41 percent below Hanlong’s offer, reflecting concerns the deal would not proceed. The stock was placed on a trading halt on Tuesday.

Australia’s Foreign Investment Review Board approved Hanlong’s bid for Sundance in June.”

via China approves Hanlong’s $1.3 billion bid for Australia’s Sundance | Reuters.

See also: https://chindia-alert.org/2012/02/13/pattern-of-chinese-overseas-investments/

Posted in China alert, Economics, Foreign acquisition, Natural resources | 2 Comments »

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31/07/2012

* Powerless again: Northern, eastern grids fail

The Hindu: “The northern and eastern grids tripped on Tuesday, leading to power failure in several States of the country affecting hundreds of millions of people.

The northern grid collapsed for a second day on Tuesday afternoon, hours after the power supply was restored in the entire northern region following a disruption on Monday. The eastern transmission lines too failed on Tuesday afternoon, said officials at the Power Ministry and electricity companies.

Services in the national capital came to a grinding halt as power supply snapped around 1.30 p.m. The load fell to 40 MW and all of Delhi’s generation station stopped working, because of the cascading effect of the fault in the grid.

“We don’t have the details yet, but yes, there is a problem with the Grid again. Right now, the priority is to secure power supply for emergency services,” said a senior official of the Delhi Government’s Power Department.

On Monday, eight states attached to the Norther Region plunged into darkness after a grid collapse.

…

PTI adds:

Power supply was disrupted in Delhi, Uttar Pradesh, Haryana, West Bengal, Assam and Punjab, among other States.

“Yes, I’ve heard that the northern and eastern grids have failed. We are looking into the matter. We are inquiring,” Power Minister Sushilkumar Shinde said.

The power crisis led to immediate shutdown of Delhi Metro lines in the national capital, while a host of other services including railways were also affected.

“We are again having problems in northern grid,” K. Soonee, CEO of Power System Operating Co said.

Power Ministry officials said that eastern grid has also failed. The reasons for the grid failure were not immediately known.

While an almost 15-hour power crisis was seen in the northern part on Monday, the crisis on Tuesday reached the eastern region as well.”

via The Hindu : News / National : Powerless again: Northern, eastern grids fail.

Posted in Economics, Electricity, India alert | 1 Comment »

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30/07/2012

* Northern India hit by one of the worst power breakdowns

The Hindu: “In what was one of the worst power breakdowns in the country, the Northern Grid crashed early Monday morning plunging eight states into complete darkness, disrupting inter-state train services, adversely hitting health services and impacting millions of lives.

The tripping of the 400 KV Bina-Gwalior line, which flows into Agra-Bareilly at 2.35 a.m. wreaked havoc on the power generation and transmission systems leading to shut down of all major power plants including hydro power stations in the States of Punjab, Haryana, Rajasthan, Delhi, Uttrakhand, Himachal Pradesh, Jammu and Kashmir and the Union Territory of Chandigarh, which are all a part of the Northern Grid.

The immediate impact of the grid collapse was the shortage of around 32,000 MW of power. The last such collapse of the Northern Grid, which caters to around 28 per cent of the country’s population, took place in 2001. India currently faces around 8 to 12 per cent peak power deficit, according to the Central Electricity Authority (CEA).

The massive shutdown had a crippling effect on inter-state passenger and goods trains that came to a screeching halt. Early morning office goers and school children had a harrowing time as traffic signals went on the blink leading to traffic chaos in the affected States including the Capital Delhi.

Hospitals too had to scurry around for alternatives and back up supply. A majority of the hospitals claimed to have alternate supply arrangements, yet reports of services being disrupted trickled in from several places.

Operations at the major oil refineries in Panipat, Mathura and Bhatinda remained unaffected as these facilities have their own captive power plants and do not rely on the grid for supply.

While Power Minister, Sushil Kumar Shinde said he could not pin point the exact reason for the collapse, PGCIL and Northern Region Load Despatch Centre officials said that it was rampant overdrawal by Uttar Pradesh, Punjab and Haryana that led to the collapse that in turn paralysed services.

The last time the grid collapse occurred was in 2001, it has happened now after 10 years. At that time, the power breakdown took place at midnight and normalcy was restored by 4.30 pm.

PGCIL chairman and managing director, R.N. Nayak said the situation had been restored to normal by 4 pm. The Northern grid was generating around 29000 MW of power by late evening, which was about 2000 MW of the peak demand.

Hit by the sudden collapse of the grid system, the Power Grid Corporation of India Limited (PGCIL) officials swung into action with Mr. Nayak and his team of officials reaching their monitoring centre at 3 a.m. to assess the situation and work on a rescue package. By 8 a.m., PGCIL officials claimed to have restored around 40 per cent of power.”

via The Hindu : News / National : Northern India hit by one of the worst power breakdowns.

Posted in Economics, Electricity, India alert | 2 Comments »

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30/07/2012

* India’s Power Demand Fuels Bhutan’s Economy

WSJ: “When northern India was hit by its worst power outage in a decade early Monday – bringing trains to a standstill, creating massive road jams in the absence of traffic signals, and keeping thousands of offices and factories shut – the country’s leaders turned to its tiny neighbor Bhutan for help.

The Himalayan kingdom responded by releasing additional power from its hydroelectric plants, allowing New Delhi to restore some order while government officials and engineers worked to fix its electricity network.

This example of David coming to Goliath’s rescue speaks of Bhutan’s successful efforts to increase its electricity generation capacity to help boost its modest economy.

Bhutan – which is just 1% of India’s size and has fewer than 800,000 people compared with its neighbor’s 1.2 billion – now provides 1% of India’s electricity needs.

India has a deal to buy 5.480 billion kilowatt hours of power from Bhutan in the year that began April 1. The number might seem small, but it is hugely significant for Bhutan.

The electricity sector’s share of Bhutan’s economy has reached almost 20%, and it now outstrips agriculture as the single-largest contributor to gross domestic product, according to a World Bank report published in September.

Bhutan’s gross domestic product grew 8.1% in the year that ended March 31, 2011, helped by the construction of new hydropower projects, the report added. It anticipated that electricity exports will be the country’s main source of growth in the short-to-medium term.

Bhutan has hydro power potential of 30,000 megawatts, about a fifth of India’s own potential. However, the hydro projects in India aren’t making much progress due to strong protests from environmentalists and other issues.

So New Delhi is focusing on tapping the potential of land-locked Bhutan. India has helped build 96% of the kingdom’s overall hydropower capacity (1,472 megawatts.)

In July 2006, India agreed to develop and import 5,000 megawatt of electricity from Bhutan by 2020. The target was doubled to 10,000 MW in May 2008.

India also has a significant military presence in Bhutan, which it views of strategic importance as it shares a disputed border with China.”

via India’s Power Demand Fuels Bhutan’s Economy – India Real Time – WSJ.

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