Posts tagged ‘Business’

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23/11/2012

* Atlas Copco nears buy of Shandong Rock

So, we see that acquisitions are not all one way. Swedish firm buys major stake in Chinese partner.

Reuters; “Swedish compressor and mining gear maker Atlas Copco is close to a deal to buy a 75 percent stake in Shandong Rock Drilling Tools Co Ltd from China’s Shandong Sanshan Group, sources in China familiar with the matter told Reuters.

The sources did not disclose any purchase price.

The deal for the stake in the rock drilling gear maker, based in the eastern province of Shandong and which has about 400 staff, included a stake in a steel mill, a source said.

“An agreement is expected to be finalized soon,” a Sanshan official said on Thursday, declining to be identified because they are not authorized to comment.

An Atlas Copco spokesman declined to comment.

Shandong Sanshan Group, of which Shandong Rock Drilling Tools is a major part, is a privately controlled Chinese firm with annual revenue of 400-500 million yuan ($65-$80 million), an official at the group said.”

via Exclusive: Atlas Copco nears buy of Shandong Rock – sources | Reuters.

Posted in China alert, Economics, mergers and acquisitions | Leave a Comment »

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21/11/2012

* India to miss export target

Bad news for ruling Congress Party as national general elections are scheduled for next year.

WSJ: “India’s merchandise exports are set to fall way short of initial estimates because of a demand slowdown in key markets, shows a government projection that is likely to deepen concerns on the country’s financial health and hurt its currency.

India’s exports could be as low as $291 billion in the fiscal year through March, compared with the initial target of $360 billion, according to a trade ministry document. At best, that if market conditions improve dramatically from now, exports could total $300 billion to $320 billion.

via India to Miss Export Target – WSJ.com.

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06/11/2012

* India Is Clamping Down on Spending

WSJ: “India’s government has started to tighten its belt as it strives to meet the revised budget deficit target of 5.3% of gross domestic product for the year through March 2013.

It’s not that spending is decreasing: it’s still increasing –  only a lot less. So in September, government spending rose by a “paltry” 1.4% from a year earlier, according to a new report by brokerage Nomura.  By comparison, in August, spending had increased by a whopping 32% from a year earlier, Nomura economist Sonal Varma told India Real Time.

To look at it another way, public spending rose by 0.47% between August and September compared to a 30.7% increase in the same period last year.

Nomura’s Ms. Varma told India Real Time said that the government has cut spending on sectors such as defense. A recent increase in fuel prices means the government is also saving money on subsidies. In September, the government raised the price of diesel by 14% to about 47 rupees to reduce its expenses on fuel subsidy. The government estimates this will save it around 150 billion rupees in the year ending March 31, 2013.

One of the reasons why public spending has slowed down, says Ms. Verma, is because the government has delayed paying subsidies to oil marketing companies. These are costs that may be partly rolled over to next year.

A senior finance ministry official told India Real Time that the government expects to cut at least 500 billion rupees, or about 4% of the 14.9 trillion rupees that it had planned to spend this year. The official said spending cut will be across the board, but did not want to single out any particular area.

Despite spending cuts, public expenditure remains high, mainly due to subsidies on fuel, food and fertilizers, and on social sector schemes.

To meet its budget deficit target, India needs to slash government expenditure as well as raise funds through stake sales in state-run companies and the sale of radio bandwidth.

These are the governments priorities as laid out by Finance Minister P. Chidambaram last week, when he announced a fiscal roadmap aimed at lowering the budget gap from 5.3% in the year through March 2013 to 3% by 2017.”

via India Is Clamping Down on Spending – India Real Time – WSJ.

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20/10/2012

* Indian Govt wants to use technology to curb dishonesty

If only corruption can be solved so easily with technology.

Times of India: “With United Progressive Alliance(UPA) facing allegations of corruption, Prime Minister Manmohan Singh on Saturday said his government wants to use new technology to curb dishonesty and bring transparency in governance.

Aadhaar to help millions get benefits of government schemes

Speaking at the launch of Aadhar-enabled Service Delivery system, he said the unique identity numbers will help 1.5 crore students get scholarships, two crore elderly get old age pensions, three crore to avail health insurance and five crore people get the benefits of MNREGA.

The scheme is aimed at directly transferring cash to beneficiaries under social schemes such as MNREGA and pension.

“By giving benefits directly to the needy, complaints of dishonesty and delay will reduce,” Singh said at a function where he handed over Aadhar number ’21 crore’ to a villager here.

“Our government wants to use new technology in a big way to curb dishonesty and bring transparency in governance. Aadhar is an important step in this direction,” he said.

In the past two years, he said, the government has enrolled 24 crore people for Aadhar and “we expect to give Aadhar cards to around 60 crore by 2014”.

Addressing the function, UPA Chairperson Sonia Gandhi said the Aadhar scheme gives identity to the common man and is a tool to claim benefits.

Using the Aadhar card, she said, the common man can claim his rights anywhere in the country.

“The Aadhar card will help the government in ensuring that subsidy reaches its intended beneficiaries directly and the poor will not have to run from pillar to post to claim their rights,” she said.”

via Govt wants to use technology to curb dishonesty: PM – The Times of India.

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05/10/2012

* India Moves Again to Ease Way for Foreign Investment

It’s a case of “in for a penny in for a pound”. If the Opposition is stirred up already against the opening up of retail business to FDI, why not jump in with insurance and pensions too.

New York Times: “In their second major effort in two months to revive a flagging economy, Indian policy makers on Thursday proposed letting foreign investors take a bigger stake in insurance and pension companies.

The measures, which were approved by the cabinet, will now go to the Parliament, where their passage is far from certain. The national governing coalition led by the Indian National Congress Party does not have a majority in the legislature, and opposition parties and even some of its own allies have said they do not support greater foreign investment.

Still, anticipation of the changes sent the India’s benchmark stock index Sensex up 1 percent to its highest close in more than a year.

The index has rallied about 5 percent since the middle of September, when the government allowed greater foreign investment in retailing and aviation and reduced government energy subsidies.

Under the proposal approved by the cabinet, foreign companies would be allowed to acquire up to 49 percent in Indian insurance and pension firms, a change that both Indian and overseas firms have long lobbied for, saying that the sectors needed more capital to grow.

Foreign companies are now allowed to hold a 26 percent stake in insurance companies but are not allowed to invest in pension firms. India’s insurance premiums total about $40 billion a year and its pension industry has assets of $300 million.

The changes will most likely face stiff opposition in Parliament, which was paralyzed during its last session after the opposition Bharatiya Janata Party repeatedly interrupted proceedings to demand the resignation of the prime minister, Manmohan Singh, in connection with a scandal involving the allocation of coal concessions. The next session of Parliament begins in November.

Opposition officials, who were involved in drafting the proposals at an earlier stage of the lawmaking process, have said that they would not support an increase in foreign investment to 49 percent. Some of the government’s allies have also said they do not support the change.

“Legislation in democracy is a process of negotiation and discussion,” Palaniappan Chidambaram, India’s finance minister, said at a news conference.

“Obviously, we need to talk. We will sit and talk to all parties, especially the principal opposition.””

via India Moves Again to Ease Way for Foreign Investment – NYTimes.com.

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29/09/2012

* All that glitters is sold

China Daily: “With the rapid development of China’s economy, Chinese consumers’ appetite for jewellery has continued to grow, resulting in consistent sales growth in the domestic market.

All that glitters is sold

In 2011, spending in China’s retail jewellery market reached 40 billion yuan ($6.3 billion), making it the world’s largest consumer market for platinum and jade, and the second-largest diamond jewellery consumer after the US. But in addition to being one of the world’s largest jewellery consumers, China has gradually emerged as a competitive jewellery maker in the international market.

In fewer than 20 years, China’s jewellery industry has grown rapidly, and Shenzhen, a booming city in South China’s Guangdong province, has played a crucial role in leading this industry.

Thanks to the influence of Hong Kong’s industry, the past two decades have seen Shenzhen evolve into China’s jewellery capital. Since the 1990s, the city has been acknowledged as China’s biggest jewellery manufacturing base and trade distribution center.

According to the Gems and Jewellery Trade Association of Shenzhen, more than 2,000 jewellery companies now call the city home, and their annual output value of more than 50 billion yuan accounts for more than 70 percent of China’s overall jewellery production. In fact, the sales revenue of Shenzhen’s jewellery enterprises is not just ranked first in terms of domestic market share, it makes up about one-third of China’s total.

But jewellers in Shenzhen are no longer content to remain the largest outsourcing base for brands from Hong Kong or other parts of the world. They are trying to reshape old business models by investing heavily in branding their own independently designed products, aspiring to upgrade Shenzhen from an international hub of original equipment manufacturers to the birthplace of famous jewellery brands.

…

Some jewellers in Shenzhen have taken the lead in brand-building campaign. One of the most successful is Chow Tai Seng Jewelry Co Ltd, a large jewellery producer based in the city.

Established in 1966, Chow Tai Seng Jewelry is now one of the largest diamond-jewellery retailers and wholesalers in China. It currently has the largest jewellery chain in the country, with more than 2,000 shops in more than 300 Chinese cities.

The company posted sales revenue of 13 billion yuan (US$2 billion) in 2011, accounting for 7.1 percent of the market. Zhou Zongwen, board chairman of Chow Tai Seng Jewelry, said sales this year are expected to increase by about 30 percent over the previous year, and the company will maintain this robust growth momentum in the next few years.”

via All that glitters is sold |Economy |chinadaily.com.cn.

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Posted in Affluence, China alert, Chinese labels, Consumer, Economics, exports, fashion, luxury brand | 1 Comment »

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19/09/2012

* CIC Invested About $2 Billion in Alibaba

WSJ: “China’s sovereign wealth fund invested about $2 billion in Alibaba Group Holding Ltd. as the Chinese Internet company bought back a large stake owned by Yahoo Inc., according to people with knowledge of the deal.

image

Alibaba said late Tuesday that it had completed an initial buyback of half of Yahoo’s 40% stake in Alibaba in a deal valued at approximately $7.6 billion. China Investment Corp. led a consortium of Chinese investors including buyout funds Boyu Capital, Citic Capital, and China Development Bank Corp.’s private-equity arm.

Alibaba’s deal with Yahoo valued the Chinese e-commerce company, which includes Alibaba.com, payment service Alipay and other properties, at about $40 billion.

Under terms of the deal, Yahoo is receiving about $6.3 billion in cash, $800 million in preferred stock in Alibaba and $550 million as a result of amending the firms’ technology and intellectual-property licensing agreement.

Yahoo retains about a 23% stake in Alibaba, following the transaction announced Tuesday. Alibaba said it has the right to repurchase half of Yahoo’s remaining stake.

CIC, which has about $410 billion in assets under management, said in June interview that it had confidence in China’s economic growth and was actively scouting overseas investment opportunities leveraged to China’s growth prospects.”

via CIC Invested About $2 Billion in Alibaba – WSJ.com.

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17/09/2012

* Boots in China pharmaceuticals deal

FT: “Just months after striking a £10bn deal to sell eventually the whole of Alliance Boots, chairman Stefano Pessina has taken a minority stake in a Chinese pharmaceutical wholesaler.

Alliance Boots

Alliance Boots (Photo credit: Wikipedia)

Alliance Boots said on Sunday that it had spent £56m to acquire a 12 per cent holding in Nanjing Pharmaceutical, the fifth largest pharmaceutical wholesaler in China by sales.

It comes hard on the heels of Mr Pessina’s deal in June to initially sell a 45 per cent stake in Alliance Boots to Walgreens, with the option for the US pharmacy chain to buy the whole of Alliance Boots.

Mr Pessina said the latest acquisition would give Alliance Boots “a further presence in China”.

Nanjing Pharmaceutical, which is listed on the Shanghai Stock Exchange, had sales of about £2bn in 2011. Alliance Boots said it had a strong market position in its home province of Jiangsu, operating distribution centres in 12 cities across eight provinces.

Alliance Boots already has a position in China through its joint venture with Guangzhou Pharmaceuticals, the sixth largest pharmaceutical wholesaler in China, which operates in complementary geographies.

“Together they represent more or less 5 per cent of the Chinese market, [which is] not negligible,” said Mr Pessina.

He said Alliance Boots was keen to develop its position in China, because it was a big market, which was likely to consolidate over the coming years. “We must be part of this consolidation process,” said Mr Pessina.

As well as seeking a presence in the US, Mr Pessina has long been keen to build Alliance Boots’s reach in China.”

via Boots in China pharmaceuticals deal – FT.com.

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17/09/2012

* For Beijing, expansion is not a big deal, it’s lots of them

The Times: “China’s slowing economy has failed to dent its global ambitions, with an increasingly hungry dragon scouring the globe for higher-value corporate deals, according to new research.

It made 177 outbound acquisitions worth a combined $63.1 billion last year, five times more than in 2005, the study by Mergermarket and Squire Sanders, the law firm, found. Deals are also growing in value, with the planned $15.1 billion takeover of Nexen, the Canadian oil sands explorer, by the state-owned CNOOC set to be China’s biggest-ever foreign acquisition, if it goes ahead.

Next month China will release its third-quarter GDP data, with some economists suggesting that growth could fall below the 7.6 per cent it brushed in the second quarter, despite assurances from Beijing that the economy would stabilise in the second half.

Natural resources and energy, the sectors most critical to China’s future growth, continue to dominate purchases, accounting for almost one in three M&A targets between 2011 and the year to date. Almost all these buyers are state-owned companies making investments at the behest of the Government.

Mao Tong, a Hong Kong-based partner at Squire Sanders, said: “We are seeing companies becoming more interested in making a strategic play, rather than just adding to their portfolio. These are big deals designed to position them in a global context.

“Even if the Chinese economy slows sharply, I think this will continue for a while. China is still the world’s most important manufacturing base, using huge amounts of iron ore, for example.”

China is eager to deploy its $3 trillion of foreign exchange reserves, mainly held in dollars, to counter the gradual depreciation of the currency and put its national wealth to good use. Yet the number of private sector deals is also expected to increase as the Government encourages state-owned banks to step up lending to the corporate sector.Britain is the favoured destination for Chinese dealmaking in Western Europe, accounting for a third of deals and two thirds of all outbound investment to the region, thanks to its reputation for transparency and a large number of Russian and Central Asian resources companies, Mr Mao suggested.

China has shown an increasing taste for European luxury brands, such as Shandong Heavy Industry’s buyout of the Italian yacht group Ferretti this year. Recent British brands going East include Weetabix, bought by the Shanghai dairy group Bright Food, and the $7.8 billion buyout of Northumbrian Water by Cheung Kong Infrastructure, a Hong Kong group chaired by Li Ka-shing.

The Dragon Index, a quarterly measure of China’s overseas direct investment by the private equity firm A Capital, which was released last week, hit an historic high in the second quarter, with ODI said to grow by 67 per cent between April and June on the previous quarter, to $24 billion.

André Loesekrug-Pietri, founder of A Capital, said: “State-owned enterprises remain the dominant force behind China’s ODI, with 90 per cent of the total deal value in the second quarter 2012.”

European companies accounted for 95 per cent of all non-resources deals in the quarter, the figures suggested. China’s share of US deals has slowed this year, owing to the sensitive political climate before the presidential election.”

via For Beijing, expansion is not a big deal, it’s lots of them | The Times.

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

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15/09/2012

* Home Depot closes stores as it shifts focus

Home Depot closes stores as it shifts focusChina Daily: “Home Depot Inc, the largest home-improvement retailer in the United States, said it is closing its remaining seven big box stores in China as it shifts its focus to specialty and online outlets in the world’s second-largest economy.

The move will affect about 850 employees, and the company will record an after-tax charge of about $160 million, or 10 cents per diluted share, in the third quarter, it said in a statement issued on Thursday.

Employees of Home Depot gather outside the company’s Xi’an store on Friday as the home-improvement retailer declared that it will close all its seven stores in China. [Photo/China Daily]

“Closing stores is always a difficult decision,” said Frank Blake, the company’s chairman and CEO. “We’ve learned a great deal over the last six years in China, and our new approach leverages that experience.”

The company said it will keep its two recently launched specialty outlets – a paint and flooring store and a home decoration shop – in Tianjin.

It is also in talks with several Chinese e-commerce websites to explore selling its products online, it said, a combination believed to be more adequate to Chinese customers’ needs and shopping preferences.

The Atlanta-based seller of building materials and home-improvement products will also keep its R&D team in China, as well as the 170 workers in its sourcing offices in Shanghai and Shenzhen, the statement said.

Home Depot has 2,249 retail stores in operation globally. Excluding the charges related to the store closures, Home Depot expects its fiscal 2012 diluted earnings per share to rise 19 percent to $2.95 for the year.

The company’s success story in the global market did not translate well in China, where the do-it-yourself home decoration-retailing concept has failed to inspire Chinese homeowners, industry analysts said.

The US company acquired a local peer, The Home Way, in 2006 and took over its 12 outlets in China. However, it has closed five outlets since 2009. The company has also replaced three top executives since its establishment in the country, a move that did not alter its sales decline.

Though specialized home-improvement retail is an upcoming trend, Home Depot arrived in China too early, at a time when the country’s decoration culture and consumption behaviors were not ready for the concept, said Chen Lei, a retail analyst at China Galaxy Securities. Despite the construction boom, the low labor costs made the DIY decoration concept irrelevant, he said.

Chinese homeowners rarely paint houses or lay out wooden floors themselves. Rather, they prefer to hire decoration companies, which often find products with more competitive prices from local building material stores, Chen said.

In addition, the company’s strengths in the United States, including its lower prices due to its global sourcing channels, have been diluted in China.

“You can always find local brands that are cheaper, and consumers in various regions have very different preferences,” Chen said. “Winning the market through a price war is not going to work for a foreign retailer in China.””

via Home Depot closes stores as it shifts focus |Companies |chinadaily.com.cn.

Posted in Affluence, China alert, Construction, Economics, Housing, Retail | Leave a Comment »

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