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AmCham Shanghai latest Viewpoint - US Export Competitiveness in China - 2010 Washington DC Door Knock http://www.hkchcc.org/viewpointusexport.pdf 成功之道 武进制造 Wujin - Changzhou - Jiangsu Province - China http://www.hkchcc.org/wujin.htm
Hong Kong is bracing for more finance-sector job cuts as Western banks, many of which base their regional operations in this business hub, scale back their Asian expansion amid the fallout from Europe's debt crisis and a generally weaker global economy. Yet while economists and analysts expect the layoffs—predominantly at European financial institutions—to continue well into the first half of this year, they see limited impact on other sectors of the city's economy over the coming months, in part because of the strength of the flow of money from mainland China to both the retail and financial markets. Hong Kong's finance sector, which employs roughly 180,000 people, or 4.9% of the city's working population. A bigger concern, they say, is the threat that cuts in banking jobs could put a heavier strain on Hong Kong's already sluggish property market. In the past few months, prices have declined for the first time since 2008. Jobless bankers may be more inclined to sell property, possibly triggering bigger price declines. Already, banks with a major presence in the city, such as Royal Bank of Scotland Group PLC and Morgan Stanley, have announced thousands of job cuts globally, although the final number of those affected in Hong Kong isn't yet clear. Those layoffs would add to U.K. banking giant HSBC Holdings PLC's ongoing move to eliminate 3,000 jobs in the city, representing roughly 10% of its local work force. European banks have expanded significantly in the region over the last few years to capitalize on the China growth story. Now, with the ongoing debt crisis at home, many are forced to shift their focus and halt investments in Asia. For example, Spanish lender Banco Bilbao Vizcaya Argentaria SA—which has been ramping up its presence in Asia by boosting its investment in China's seventh-biggest bank and opening branches in several countries— in December laid off nearly 30 Asia-based employees, representing a third of its global-markets staff in the region, with the bulk of the cuts in Hong Kong, a person familiar with the situation said last month. BBVA said the layoffs were part of global cutbacks. Daiwa Capital Markets senior economist Kevin Lai said he expects more European banks operating in the city to reduce their staff numbers and freeze hiring as the euro zone's problems squeeze liquidity from them. Further cutbacks in European bank lending in the city could affect small and medium-size enterprises, he said, though the impact, if any, remains to be seen. European bank loans account for less than 10% of the city's total loans outstanding. To be sure, Hong Kong's latest unemployment statistics have yet to show any signs of an economic slowdown, with the jobless rate falling to 3.3% in the October-December period, from 3.4% in the September- November period. Meanwhile, the unemployment rate in the financial-services professions remained constant at 2.4% during the fourth quarter. For the city's finance sector, which employs roughly 180,000 people, or 4.9% of Hong Kong's working population, any rise in unemployment from layoffs will likely be temporary, economists say, underpinned by growing demand for financial services from China-related businesses. "Unemployment in Hong Kong is more likely to be frictional for now, as some job seekers don't mind waiting a while to find positions that are a better match for their skills given a high savings rate," said Crédit Agricole CIB senior strategist Frances Cheung. Frictional unemployment, which refers to the temporary transitions of employees from one job to another, is present in any economy during good times and in bad. Illustrating Ms. Cheung's argument, the local website of eFinancialCareers showed more than 4,000 finance-sector job postings, with positions ranging from asset management and capital markets to private banking. Ms. Cheung said she expects banks operating in the city to allocate more resources to the booming yuan business or traditional retail operations, thereby absorbing finance-sector talent. If bank layoffs do accelerate, the city's property market could feel the impact. In the last round of major bank cuts during the 2008 global financial crisis, some bankers unable to keep paying on large mortgages sold property at steep discounts, contributing to a retreat in prices at the time. Denys Kwan, president of the Society of Hong Kong Real Estate Agents Ltd., said transaction volume has been low in recent months partly because property owners are holding onto their flats in the hope that the market may go up again. "But if there are massive job cuts in the financial sectors and no positive external economic indicators in the coming months, some of these owners may be forced to sell their flats low. If that's the case, we won't be surprised to see a 20%-30% price correction in the residential market this year," Mr. Kwan said. Home rental prices could also be affected as expatriate bankers move out of the city, said Wong Leung-sing, associate director of the research department of Centaline Property Agency, the city's largest real-estate agent. "Most of the overseas bankers choose to rent apartments because they have no intention to stay here for good. We only see a single-digit percentage drop in residential rentals in recent months. But the fall could well be much more substantial if there are massive job cuts in the financial sector over the next few months," Mr. Wong said. Meanwhile, office rents in Central, the city's central business district, eased 5.8% in the fourth quarter of 2011 from the previous three months, according to real-estate brokers CBRE. Rhodri James, CBRE's executive director for office services, expects office rents in Central to fall as much as 20% in 2012, partly due to increases in vacancy rates amid downsizing of banks.
Bringing the big beef East - The entrance to Morton's Steakhouse on State Street in Chicago. Restaurant group looks to Asia for expansion drive as US division saw losses - Starting from chopping onions and making salads in the kitchen 16 years ago, Christopher Artinian knows Morton's like the back of his own hand. Now, Artinian, 41, who is the president and chief executive officer of Morton's Restaurant Group Inc, is leading the company in an attempt to escape the economic downturn and go for further expansion in Asia. Morton's, the world's largest owner and operator of a company-owned fine dining restaurant, opened its first steakhouse in 1978 in downtown Chicago, where Morton's corporate office is still located. Since then, the company has grown to 77 steakhouses and one Trevi restaurant. Morton's has 71 domestic steakhouses and six in international locations: Toronto, Hong Kong, Shanghai, Macao, Mexico City and Singapore. The restaurant industry, especially fine dining, largely relies on general economic conditions. Morton's, where the average per-person check is more than $99, is one of the high-end restaurants that have been affected by the global economic recession. "There is no secret that the US economy has been difficult. It was incredibly difficult in our business in 2008 and 2009. But things started to really pick up again in 2010. Morton's has reported seven quarters of positive comparable sales, which is very exciting," said Artinian. The company suffered a loss of $77.5 million net of tax from continuing operations in 2009 and $61.8 million in 2008. The restaurant revenues decreased when compared with the previous year by 19.5 percent for 2009 and 4.9 percent for 2008. In fiscal year 2010, the company reported net income from continuing operations, net of tax of $4.6 million. "What was really great for Morton's is that luxury hotel, luxury retail and business entertaining have been on the rise for the last seven or eight quarters and continue to forecast positive," he said. Artinian has recently completed his tour of Asian cities including Seoul, Tokyo, Taipei, Beijing and Shanghai to look for possible locations for new restaurants. Sitting in Morton's The Steakhouse in Shanghai, which has just celebrated its first anniversary, Artinian said that he is leading the group in an aggressive expansion in Asia. "Our plan is to open two locations in Asia a year for the foreseeable future. We have nothing to announce definitively, but we are incredibly close on several locations," he said. "We are already actively looking in two other locations for Shanghai and at least two locations in Beijing. I would not be surprised if we have at least one, if not two, open in 2012," he said, adding that the company is also looking for a second location in Hong Kong. While the United States is Morton's No 1 for business, because that is where the company originated, Artinian said he believes the company's operations in China can easily come a very close second. "China is our No 1 area for growth," he said. The company has moved its regional director of operations from Honolulu to Hong Kong and the vice-president of construction and development is now based in Shanghai. "We are excited about the growth. We want to make decisions faster," Artinian said. In November 2010 when the Morton's restaurant opened in Shanghai IFC Mall in the Lujiazui area, a commercial center of the city, Artinian said that it might be the most important one among all Morton's restaurants. "Hong Kong and Singapore were well-traveled international cities. They have more Western influence than Shanghai does today. We were a little unsure if we would really grow on the Chinese mainland. And we knew that if we could be successful here, it would open up the doors for other cities such as Beijing, Guangzhou, so on and so forth," he said. He added that so far they are off to a terrific start because the restaurant's performance in the first year was beyond their expectations. "Our four restaurants in Asia are all in the top core tile of all of Morton's. They are some of our fiscal year's most profitable restaurants," he said. The company's financial report for the third quarter in 2011 showed that the company's six restaurants overseas realized more than $3.91 million in income before tax in the first nine months, while its domestic restaurants suffered a $2.86 million loss.
A landmark ruling by the European Court of Justice is expected to result in lower anti-dumping duties on Chinese goods exported to the EU. The judgment by the EU's top court meant that in future, Chinese goods heading to the EU would in general face lower anti-dumping duties, said Edmund Sim, a partner at international law firm Appleton Luff. On Thursday, the court annulled anti-dumping duties the EU slapped on Hong Kong shoemakers Brosmann Footwear and Risen Footwear and Guangdong shoemakers Seasonable Footwear (Zhongshan) and Lung Pao Footwear (Guangzhou). They are among 400 to 500 Chinese and Vietnamese shoemakers which have been paying anti-dumping duties since 2006. Most Chinese shoemakers have been paying duty of 16.5 per cent. Since 2006, the Chinese and Vietnamese shoemakers had paid more than US$1 billion in such duties, said Arnoud Willems, a partner at US law firm Sidley Austin. Willems, who represented the shoemakers, said the companies could expect to gain millions of dollars in tax refunds. The court also ruled that any Chinese exporter requesting an individual assessment of an anti-dumping duty imposed on it is entitled to receive one. Individual assessments increase the likelihood of anti-dumping duties being lowered. "This is an important development," Willems said. He said China, as the world's biggest exporter, was also the biggest victim of EU anti-dumping duties, with at least eight in 10 of such actions directed against its companies. If the EU argued that it was unable to look into the appeals of all exporters because there were too many of them, it must take a representative sample of exporters and calculate the anti-dumping rates accordingly, said Sim, who has also helped some Chinese and Vietnamese shoemakers in anti-dumping cases. The EU uses only one Chinese company to calculate the anti-dumping rate for all Chinese companies. This lead to higher duties than would be the case if the rate been based on several companies, Sim said. The EU adopted this practice because it treated China as a non-market economy and assumed all companies were controlled by the state, Sim said. "The Court of Justice says the EU cannot do it anymore. It increases the legal obligations of the EU." The judgment overturned an earlier ruling by the General Court of the EU. It was the fourth time the European Court of Justice had overturned a lower-court ruling, Willems said. According to Sim, EU courts are independent of the politics of China-EU relations. The judgment came on a day when Premier Wen Jiabao told German Chancellor Angela Merkel in Beijing that China was considering getting more deeply involved in tackling the EU's debt crisis. The EU anti-dumping action against Chinese and Vietnamese shoemakers in 2006 was the result of political pressure by rivals from southern European nations including Italy and Spain, according to Sim. Many of these nations are now looking to China to help resolve their debt problems.
Moutai's status provides a headache - Liquor products made by Kweichow Moutai Distillery Co are becoming increasingly expensive. Kweichow Moutai Distillery Co, which makes baijiu, China's most famous white spirit, is a little miffed about its status as a luxury brand. Or perhaps the company is upset that its Moutai brand isn't as beloved by Chinese millionaires as the fashion brands Louis Vuitton, Cartier and Hermes. The company's source of animosity is the Hurun Best of the Best Awards 2012, issued by the Hurun Research Institute in January. In the press release, the institute ranks Moutai as the fourth most expensive luxury brand in the world. The Hurun Report, a publication that studies China's upper class and its lifestyle, surveyed 503 Chinese whose individual wealth is more than 10 million yuan ($1.58 million). The report also lists Moutai as the fourth-most valuable brand behind the LVHM SA unit Louis Vuitton, Hermes Group and BMW AG, but higher than Daimler AG's Mercedes-Benz and Chanel SA. Moutai officials were quick to criticize the survey, partly because it doesn't want to be seen as a brand that is getting more and more expensive for the average consumer. Nonetheless, the fact is that Moutai is experiencing a strange paradox at the moment. In December 2010, the company raised prices of most of its bottles to be released in 2011 by 20 percent. After the price hike, the average price for a bottle of Moutai jumped by 300 yuan for a 0.5-liter bottle to about 1,900 yuan. Liquor evaluators are also attempting to put the prices of vintage bottles of Moutai (the spelling for the generic name of the white spirit) from various Chinese producers of baijiu on an even footing with some of the most sought-after bottles of French wine. In a recent auction at Beijing Googut Auction Co, devoted only to aged Moutai, Liu Xiaowei, the chairman of the auction house, put the price of a 1982 vintage bottle of Moutai at between 10,000 yuan and 20,000 yuan. Moutai is therefore in a quandary: How does it market itself as being affordable to consumers as China's rising affluence and growing demand for the product as an ideal gift inflates the price? During this year's Spring Festival, salespeople for Beijing stores that carry Moutai were trying to sell the company's flagship beverage 53-degree Flying Moutai at more than 2,000 yuan per bottle. What's more, a salesperson for the company, who would only give his surname Yang, said the company expects to raise its current ex-factory price of 53-degree to wholesalers from 620 yuan per bottle to more than 900 yuan. The increasing enthusiasm has been a boon to Moutai. According to the stock information site Hexun.com, in January the company's share price stood at 190 yuan per share, resulting in a market capitalization of approximately 194 billion yuan. On Jan 18, the company estimated that profit would grow by 65 percent. Its net profit in the first three quarters of 2011 was 6.93 billion yuan, 57 percent higher compared with the same period in 2010. Moutai is also quickly expanding its production capacity. In 2003, the company's annual output was about 10,000 tons. In the past eight years, output has been growing steadily. "Output in 2011 was 26,000 tons," said Wu Hua, a press officer with Moutai. Last year, Yuan Renguo, Moutai's general manager and board chairman, told China Business News that the company's revenue should grow by 8 percent year-on-year in the next five to 10 years. But drinkers are complaining that the liquor is becoming too expensive. "Rising costs are a reason (to explain the price hike)," said Liu Wenke, an official with the economic development office of Maotai Town in Guizhou province. Liu said the price of the locally produced, high-quality sorghum used in the production of Moutai has tripled since 2008, from 2.4 yuan per kilogram to 7.2 yuan. There is also limited land in the town, which liquor experts say is the ideal area to produce baijiu because of the local mountain waters. That means every time Moutai expands its workshop areas and factories, a large amount of compensation has to be paid to families whose homes are demolished to make way for the expansion. The company said that, in return for the demolition, it hires one member of each uprooted household. "A new employee earns 60,000 to 70,000 yuan per annum," Liu said. He said that in 2011 some 900 households were relocated; in 2012, the figure will be close to 400.
The MTR Corporation (SEHK: 0066), which operates the Lantau cable car, may lose as much as HK$35 million in revenue, because services will be suspended for at least two more months to allow worn ball bearings to be replaced. Operations at the Ngong Ping 360 cable car have been suspended since an incident left patrons dangling in mid-air for two chilly hours during the Lunar New Year holidays. Temperatures of about 3 degrees Celsius made the delay highly unpleasant for the more than 800 trapped passengers. The January 25 incident was the latest in a series of mechanical failures that have hit the troubled tourist attraction in recent months. A preliminary investigation blamed the disruption on a faulty ball bearing inside a "bullwheel" - which drives and redirects the cable - at the Airport Island Angle station. The bearing had been used for 25,000 hours; its lifespan is 90,000 hours. Signs of irregular wear were found between some of the faulty bearing's rollers and the contact surface, said Wilson Shao Shing-ming, managing director of Ngong Ping 360. "Such irregular wear would cause cable cars not to operate smoothly," Shao said yesterday. "A lack of smooth operation may cause the cable cars to stop periodically." The bearing would be sent for tests to determine the cause, Shao said. He said Ngong Ping 360 had offered to refund 4,000 tickets. He said the average daily patronage was 4,000 during weekdays and 7,000 on Saturdays and on Sundays. Assuming passengers all buy adult round-trip tickets at HK$125, the operator could suffer revenue losses of about HK35 million. Shao said the problem had not affected the safety of the cable car, but all seven bearings should be replaced to ensure reliability. Five of them have been in use since the cable cars went into service in 2006, while two were replaced last year. He said engineers regularly conducted visual checks on the bearings and used computers to monitor vibration and noise. Two months were needed for the overhaul since frames must be erected to raise the bullwheels, which weigh four to eight tonnes, Shao said. Helicopters will take the lifting frames to the cable car's station on Nei Lak Shan, which may take weeks and could be delayed by weather. The government said it "will only approve the resumption of the cable car service when the inspection result is satisfactory". Adi Lau Tin-shing, board chairman of Ngong Ping 360, pledged to improve checks and to better inform the public about incidents. Alan Ling, a teahouse tenant in Ngong Ping market, said shopkeepers might consider collective action if a special allowance offered by the MTR Corp during the shutdown was not satisfactory. "Business has almost dried up in the past week when the cable car was closed," he said. Legislator Paul Tse Wai-chun of the tourism sector said MTR Corp could arrange free shuttle bus services to ferry visitors.
Tramy Ng (left) from Dragonair and Wing Luk from Cathay Pacific show details of boarding passes on their smartphones. Helter-skelter dashes to the airport check-in desk will now be a thing of the past for many passengers, with nine airlines offering smartphone boarding passes in Hong Kong from this month. The system "uses less paper and will be more convenient for business travellers", said Rocky Kwok, the assistant general manager of terminal operations at Chek Lap Kok airport. Apart from that, it will be no different from issuing of paper boarding passes. About half of all passengers departing from the airport can now choose to have their boarding passes sent to their smartphones by SMS or e-mail when they check in online. If they have no checked baggage and are travelling on a direct flight to their ultimate destination, they will not have to visit a check-in counter. Passengers will receive a form of barcode, known as a QR code, on their smartphone screens, which they will hold up to a scanner at the airport. The machine will flash a green light on approving the code. US-based Continental Airlines piloted the programme in 2007 and the system became mainstream at US airports in 2010. There have been a few glitches. Passengers have in the past had to return to a ticketing desk for a paper ticket after faulty scanners were unable to recognise the QR code. But Kwok said this was unlikely to cause much of a holdup at Chek Lap Kok airport. "The person at immigration or the security post would just call the airline to check the details of the boarding pass and name." The procedure would be exactly the same as what would happen if the barcode on a paper boarding pass was to malfunction, he said. The system promotes less dependency on paper and is especially suitable in a place like Hong Kong, which, according to research by Google and Ipsos, has a 35 per cent smartphone penetration. Sixty per cent of 18- to 29-year-olds and 47 per cent of 30- to 49-year-olds have smartphones in the city. The participating airlines are Cathay Pacific (SEHK: 0293), Dragonair, United Airlines, British Airways, KLM, Lufthansa, Delta, Air France and Emirates. Cathay recommends that passengers with luggage who opt for the mobile boarding pass should check in at least 45 minutes before departure. But passengers should beware if their phone is finicky or running low on battery power, an article in The New York Times warned in a review of the system in the United States. In such cases, it might pay to stick to paper passes.
Middle-market retailers including the Yata department store have been rushed off their feet. Total sales hit HK$43.05 million in December. After years of steady growth thanks to strong demand from deep-pocketed mainland tourists, jewellery shops should brace for tougher times, with sales growth in luxury goods including jewellery and watches slowing for a seventh straight month. Local retail sales jumped 23.4 per cent year on year to HK$43.05 billion in December, bringing the total for last year to a record HK$405.7 billion, up 24.8 per cent on 2010. Sales of jewellery and watches, which made up nearly a quarter of sales in terms of value, jumped 46.6 per cent in value and 32.1 per cent in volume last year. But on a monthly basis, growth in the sector has fallen from 61.3 per cent year-on-year growth in May in terms of value to just 29.2 per cent in December. Since August the luxury goods sector has reported a fall in sales of big ticket items - such as multi-carat diamond rings and watches that cost millions of dollars - although this has been partly offset by ballooning sales in medium- and lower-priced items, backed by a growing number of mainland tourists. According to the Census and Statistics Department, year-on-year growth in sales volume of jewellery and watches fell from 46.2 per cent in May to 15.9 per cent in December. Caroline Mak Shui-king, chairwoman of the Hong Kong Retail Management Association, said low- and medium-priced jewellery might not be selling as strongly as before. "Recently we saw slackening growth in the number of mainland tourists - and we haven't seen that in a very long time," she said. Mak warned that some luxury goods shops, which have overexpanded in districts with sky-high rents over the past year, may face falling profits and even shop closures. "In some areas, jewellery shops are as common as convenient stores, It's not healthy for any business to operate like this with such high costs," she said. A total of 706,748 mainland visitors, including those in tour groups and individual travellers, arrived during the Lunar New Year holiday between January 22 and January 28, up 6.6 per cent from last year. But out of this total, the number of individual visitors, who tend to be the big spenders, grew only 4.4 per cent. Retail sales during the festival were weaker than expected, and the association said it had adjusted its expected sales growth in the two months to February to 18 per cent year on year. It said some jewellery chains reported minor growth during Lunar New Year, although vendors of durable goods and smartphones reported continued strong growth. "Given a slowing economy and sharp growth in retail sales over the past three years, it would be unrealistic to expect another year of 25 per cent retail sales growth," Mak said. "We should be very happy if we could achieve 15 per cent in 2012." The Lantau cable car will be shut down for two months – for a major overhaul of its bearings, managers said on Friday. This follows an incident that left patrons dangling in mid-air for two hours during the Lunar New Year holidays, Operations at the Ngong Ping 360 cable car have been suspended since the incident on January 25, when an air temperature of three degrees Celsius made the delay highly uncomfortable for the more than 800 passengers suspended in the air. That was the latest in a series of mechanical failures that have plagued the troubled MTR Corporation (SEHK: 0066)-managed attraction in recent months. A preliminary probe into the incident blamed the disruption on a faulty bearing of a bullwheel – a key piece of machinery that drives and redirects the cable – at the Airport Island Angle Station. Managing director Wilson Shao Shing-ming said some of the bearing’s rollers showed signs of wear, and would be sent for tests to determine the cause. Shao said the problem had not affected the safety of the cable car system, but all seven bearings should be replaced to ensure reliability. They have been in use since the cable car went into service in 2006. The operation will take so long since lifting frames must first be erected to raise the bullwheels, which weigh four to eight tonnes, Shao said. Only then can the bearings be replaced. Helicopters will have to transport the lifting frame to the cable car’s station on remote Nei Lak Shan, which may take weeks to complete and could be delayed by bad weather. Board chairman Adi Lau pledged to improve check-ups and communication with passengers in future, but refused to say if anyone in management would be held accountable for the recent incident. The stranded riders complained about not being told the reason for their long stranding in mid-air.
Cheer on the 70,000 runners (in particular Fauja Singh, the 100-year-old British Indian man who is the world’s oldest marathoner) who will be taking to the streets for the 16th annual race. The finish line is at Victoria Park, and don’t forget to set your alarm clock — the first runners start pounding the pavement at 5:30am Sunday February 5 2012
Travelers get urge to splurge - Chinese consumers were big buyers of luxury goods worldwide during the recent Spring Festival holiday, an industry report showed. Mainland tourists queuing at a luxury store in Hong Kong. According to the World Luxury Association, Europe, North America and Hong Kong, Macao and Taiwan were the main destinations for Chinese mainland shoppers during the Lunar New Year holiday. Chinese tourists' spending on luxury goods overseas reached $7.2 billion in January, driven by holiday trips during the Spring Festival holiday that began on Jan 23, the World Luxury Association said in a report on Wednesday. The figure was a record for Chinese residents buying luxury goods overseas, and was 15 percent higher than the association's pre-holiday forecast, the report said. Lower prices overseas were the key attraction, with about 72 percent of those surveyed citing that factor, said Ouyang Kun, chief executive officer of the association's China office. The report said that Europe, North America, Hong Kong, Macao and Taiwan were the main destinations of these shoppers. Chinese consumers contributed as much as 62 percent of the total sales in Europe's luxury market during the festival, the association found. Total sales of luxury goods in the Chinese mainland in January totaled only $1.75 billion, less than one-fourth of the amount spent overseas, according to the association's report. The growth rate for luxury goods sales overseas will exceed that of domestic sales in 2012, lifted by a stronger yuan and increased overseas travel, according to consultancy, Bain & Co China Inc. It's common for overseas luxury sales to get a boost with big Chinese holidays such as the Lunar New Year or National Day, when long vacations make foreign travel easier. But the boom in overseas sales was at the expense of the domestic market, some business insiders said. "Our revenue is much less than that of the shopping malls in Hong Kong during the holidays, although similar brands are available," said Kuang Zhenxing, vice-president of Beijing Modern Plaza, which features high-end brands including luxury brands. Kuang said the rush of consumers to overseas stores during the holidays made it tough to further develop the domestic luxury market. However, other experts noted that, regardless of what happened overseas, China's luxury market is still growing fast. "The surge is just during the holidays and it doesn't represent the whole market," said Zhou Ting, executive director of the Research Center for Luxury Goods and Services at the University of International Business and Economics. The overseas sales boom during holidays reflected the rise in foreign tourism, and the group of consumers buying luxury goods abroad weren't the core consumers for the segment, she said. These travelers only bought luxury goods "incidentally" during their holidays and don't have a fixed consumption of such items. From a long-term perspective, Chinese residents consume almost the same share of luxury goods in the mainland, the West and Hong Kong and Macao, Zhou added. "The only thing we can say is that the Chinese have already become the main driver of the worldwide luxury market's development, especially with the West mired in a financial crisis," she said.
Little Sheep officially off HK Stock Exchange - Logos of Yum! Brands Inc and Chinese hotpot chain Little Sheep Group Ltd on display in Shanghai, May 26, 2011. Little Sheep Group Ltd was officially delisted from the Hong Kong Stock Exchange as of Feb 2. US-based Yum! Brands Inc announced plans last April to make Little Sheep private in a deal that valued it at more than $860 million. Li Ka-shing's Hutchison 3G will buy Orange Austria from France Telecom and a private equity fund in a deal valued at 1.3 billion euros (US$1.7 billion) including debt, expanding the corporate footprint in Europe of one of Asia’s richest men. The deal by the unit of Hutchison Whampoa (SEHK: 0013) follows a cluster of outbound M&A transactions from Asia in early this year as firms with large cash piles and low debt buy assets in Europe, where economies are struggling with the debt crisis. Hutchison said on Friday it would buy 100 per cent of Orange Austria. Hutchison shares rose as much as 3.8 per cent to HK$76.20 on the news, bucking a flat overall market. Hutchison, controlled by Hong Kong billionaire Li Ka-shing, has been shopping for regulated infrastructure and utility assets in developed countries, especially Britain, which is open to foreign ownership of its infrastructure assets. “It is definitely a positive for the future development as the acquisition cost can be lower in the current economic climate,” said Conita Hung, head of equity research at Delta Asia Financial Group. “It is a good opportunity for those financially strong companies to buy assets in Europe, especially if they believe in the strong growth prospect,” she said. Li’s business empire bought British utility Northumbrian Water Group for 2.41 billion pounds (US$3.81 billion) last year, having paid 5.8 billion pounds to buy the British electricity distribution network of France EDF in 2010. Li, a high-school drop-out nicknamed “Superman” by Hong Kong media for his deal-making savvy, started out with a plastic flower business and now has a global empire with 26,000 employees in 55 countries. So far this year, Asian corporates have launched about US$9.3 billion worth of outbound deals, compared with US$181 billion worth transactions attempted the whole of last year, according to Thomson Reuters data. High-profile deals this year include Shandong Heavy Industry Group’s purchase of a 75 per cent stake in debt-laden Italian yacht-maker Ferretti Group and China Investment’s purchase of an 8.7 per cent stake in the holding company of Thames Water, the privately held UK utility. Hutchison 3G Austria already operates under the ‘3’ brand, competing against Deutsche Telekom’s T-Mobile and A1. Hutchison said the deal would make it Austria’s third-biggest mobile phone operator, with 2.8 million customers and a 22 per cent market share. The two units had combined revenues of more than 700 million euros last year. “Overall, we do think the deal offers one of the few relatively visible paths to long-term sustained profitability for 3 Austria,” Bank of America/Merrill Lynch said in a report. As a second leg of the deal, Hutchison will sell some of Orange Austria’s assets to Telekom Austria for 390 million euros, Telekom said separately. The assets comprise frequencies, base station sites, mobile phone operator YESSS! Telekommunikation GmbH and certain intellectual property rights, the statement added. Hutch’s net consideration is 900 million euros, giving the business an enterprise value to EBITDA multiple of 6.9 times. Bank of America/Merrill Lynch said that the multiple paid by Hutch “is at the high end of comparable private transaction multiples, but below the 7.6 previously speculated.” For France Telecom, the sale is the second deal in an ongoing portfolio review aimed at exiting low-growth mature markets and returning cash to shareholders. It recently agreed to sell Orange Switzerland to private equity group Apax Partners for about 1.6 billion euros. Orange Austria is jointly owned by France Telecom and Mid-Europa Partners. France Telecom said it expected cash proceeds of 70 million euros from the sale of its 35 per cent equity stake in the Austrian business, which had around 1 billion euros of debt. It described the move as “another milestone in the optimisation” of its asset portfolio following the Swiss transaction. The French company will likely now announce a share buyback programme for up to around 800 million euros, or half of the proceeds of the two sales, according to Raymond James analysts. “This would also leave more than enough to pay for half of the acquisition of minority interests in Mobistar while the other half would be paid by potential tax synergies,” the analysts said, referring to the Belgian mobile phone operator in which France Telecom is majority shareholder. Shares in France Telecom were down slightly, in line with the French bluechip CAC 40 index, and have fallen about 5.5 per cent so far this year. Hutchison also owns 3G wireless network operations in Britain, Italy and Australia, among other countries. It competes with Britain’s biggest mobile operator, Everything Everywhere – a joint venture of Orange and T-Mobile – Telefonica’s O2 and Vodafone Group. The wireless business had been losing money over the past decade, but broke even in the second half of 2010 and recovered further last year. Hutchison said it was expected to contribute to the conglomerate’s profits in the second half of last year. J.P. Morgan advised Hutchison group on the purchase, while Morgan Stanley advised the sellers, a source familiar with the process said. The source was not authorised to speak to the media. The solution to the right of abode controversy lies with the Hong Kong government - or even the British government - rather than amending the law, a Basic Law expert says. Alan Hoo QC, chairman of the Basic Law Institute, said the Hong Kong government should correct a 2002 change to immigration rules that is at the root of the row over mainlanders giving birth in the city. The rules were changed to bring them into line with a 2001 ruling on the Basic Law by the Court of Final Appeal that gave permanent residency to a boy, Chong Fong-yuen, born in the city while his parents were visiting from the mainland. Hoo said Beijing could not amend or reinterpret the Basic Law concerning right of abode because it had al-ready done so in 1999, effectively saying mainlanders did not have right of abode in Hong Kong unless at least one parent was a permanent resident of the city at the time of birth. Hoo said a 1993 Sino-British Joint Liaison agreement clearly stated that a child born in Hong Kong would only be entitled to right of abode if at least one parent was a resident at the time of birth. He believes if a way could be found to bring the issue before the city's top court again, the government could convince it to side with the 1993 agreement. The way to achieve that, he says, is for the government to ask the Legisla-tive Council to approve changing the immigration rules to comply with the 1999 interpretation. Then it could properly claim that children born of mainland parents did not enjoy automatic right of abode, rather than resorting to administrative measures to stop mainland births in the city. If that triggered legal challenges, Hoo believes the top court would reach a judgment in line with the 1999 interpretation. The government would need to provide "enhanced evidence", Hoo said, and that would mean providing a more authoritative version of the 1993 agreement - a pamphlet version of that agreement was given in evidence to the top court in 1999 but was rejected. Hoo said that the court might take it more seriously if Britain mentioned the contents of the 1993 agreement in one of its regular parliamentary reports on Hong Kong - perhaps as a result of some lobbying from Hong Kong.
China not out to purchase Europe - Premier Wen Jiabao said on Friday that China has neither the intention nor the ability to buy up Europe, answering concerns over the country's increasing investment in debt-stricken eurozone economies. German Chancellor Angela Merkel and Chinese Premier Wen Jiabao (R) pose in front of a model of a tunnelling system during their visit to a plant of the Herrenknecht Tunnelling Equipment company in Guangzhou Feb 3, 2012. China is "willing to cooperate with Europe to fight the current crisis. Some people say this means China wants to buy Europe", the premier told a business forum in the southern city of Guangzhou. Such a worry is unnecessary, although the nation encourages its companies to invest in the region, he said. "This isn't a concern and doesn't fit reality. China doesn't have this intention and doesn't have this ability." Wen stressed that China's investments in European nations are only at the fledgling stage, and China's investment creates benefits for both sides. "If we join hands to combat the financial crisis and the debt woes, all the problems will be addressed," he said. German Chancellor Angela Merkel, in China for a three-day visit to boost her host's confidence in Europe, also attended the forum along with executives from the energy, chemicals, engineering, banking and electronics sectors. There are growing concerns in Europe that a recent wave of investment by Chinese companies and government-backed funds will give Beijing too much influence over struggling European economies.
United Energy, a firm controlled by mainland tycoon Zhang Hongwei and supported by a US$5 billion credit facility from China Development Bank, is seeking to buy oil-and-gas assets in Asia, the Middle East, Africa and the United States. The company, 68-per-cent-owned by Zhang, is eyeing opportunities to buy mature producing projects in both developed and emerging markets, chief financial officer Thomas Pang Pui-yin said. "Valuation of assets in developed markets have become more attractive amid the sovereign debt crisis, while emerging nations are still hotbeds for energy assets acquisitions although political risks are higher and valuations have not changed much." Last September, United completed a US$750 million acquisition of oil-and-gas assets in Pakistan from BP, as part of the latter's assets sale to finance a US$20 billion fund to compensate victims of a major oil spill in the Gulf of Mexico. State-owned China Development Bank (CDB) had granted United a five-year, US$5 billion credit facility to fund its overseas oil-and-gas business, Pang said. In the Pakistan acquisition, the CDB has lent United HK$5 billion for 10 years at an interest rate of about 5 per cent. United said in September it was in early talks on two possible acquisition deals, whose size was unlikely to be less than the Pakistan purchase. Zhang chairs the Orient Group, one of the mainland's largest private firms, whose businesses span transportation, construction, manufacturing and property. He took over garment maker and property developer Orient Resources Group in 1997, and renamed it United Energy in 2008, when it diversified into the oil sector. Pang said United planned to spend up to US$190 million this year to develop the Pakistan projects and add reserves, up from US$40 million last year. The projects have proved and probable oil-and-gas reserves of 73.9 million barrels-of-oil equivalent (boe), of which 75 per cent is gas. Average daily output is expected to be 24,000 to 26,000 barrels by December, up from 21,400 barrels last year, while operating profit margin is expected to fall to US$20 per boe from US$26 as it ramps up drilling and seismic data collection. United budgeted US$23 million this year for its oil-output enhancement project in Liaohe, northeastern China, a joint venture with PetroChina (SEHK: 0857). It expects to book output of 1,100 to 1,200 barrels a day, up from 1,024 in last year's second half. Its operating margin is expected to be at least US$24 a barrel, compared to US$27.50 in last year's second half.
German Chancellor Angela Merkel, left, shakes hands with President Hu Jintao at the Great Hall of the People in Beijing on Friday. The leaders held discussions on the euro zone crisis. German Chancellor Angela Merkel met China's president Hu Jintao on Friday as she seeks to lift Beijing’s confidence in Europe where the sovereign debt crisis threatens to tip the region into recession. China, the world’s second-largest economy, has watched with increasing concern as euro zone economies have deteriorated, and has repeatedly urged European leaders to get a grip on the situation. Merkel’s meeting with Hu came a day after talks with Premier Wen Jiabao, who said Beijing was looking at ways it could contribute to Europe’s bailout funds and warned of an “urgent” need to solve the debt crisis. “China is investigating and evaluating ways, through the International Monetary Fund, to be more deeply involved in solving the European debt problem via ESM/EFSF channels,” Wen said at a news conference with Merkel. Wen was referring to the European Financial Stability Facility, a temporary rescue fund that was established to help struggling economies in Europe, and the European Stability Mechanism -- a newer, permanent fund. Hu told Merkel before their closed-door meeting on Friday that her visit would “increase mutual understanding” between the two countries, whose bilateral trade reached US$169 billion last year, an 18.9 per cent increase on the previous year. Merkel, who will return to Germany on Saturday, said in a speech on Thursday she would raise the issue of human rights during her visit. After meeting Hu she flew south to Guangdong – where German companies have a significant presence – with Wen and executives from the energy, chemicals, engineering, banking and electronics sectors. Her visit to the manufacturing hub will include a meeting with Gan Junqiu, the state-backed Catholic bishop of the provincial capital Guangzhou, according to a German diplomatic source. Premier Wen Jiabao said yesterday that China was considering "involving itself more deeply" in efforts to address Europe's debt crisis - the first time a Chinese leader has said Beijing could aid the cash-strapped continent. "It is urgent to solve the European debt crisis," Wen said at a joint news conference with visiting German Chancellor Dr Angela Merkel after talks in Beijing yesterday, where he called on the international community to co-operate. "China is considering greater involvement in resolving Europe's debt crisis by participating in the European Financial Stability Facility [EFSF] and the European Stability Mechanism [ESM]." The ESM fund was to be set up next year, but European leaders agreed at a summit in Brussels on Monday that the fund would come into force this year. Unlike the EFSF, which comprises only guarantees by participating countries on bonds issued by the fund, the countries will have to inject funds into the ESM, which is worth €500 billion (HK$5.09 trillion). Wen said China's confidence in the European economy was firm and it would not change its view that Europe is a major pillar of the world economy. He said Beijing was studying how it might help in Europe's efforts to stabilise the euro, but he also reiterated that Europe should help itself through its crisis by cutting its debt load and introducing structural reforms. Merkel said China had given her a message that Europe must "do its homework" on the crisis before getting help from elsewhere. She also called on China, the biggest buyer of Iranian oil, to use its influence to persuade Tehran to renounce possible nuclear weapons ambitions. Merkel said Germany wanted the resumption of talks among six world powers and Iran. Wen said he supported the idea for a dialogue and said Beijing did not support any Middle East nation developing nuclear weapons. The United States and European Union have imposed sanctions against Iran's oil sector over its continued defiance of UN resolutions demanding that it give up its nuclear programme. "The question is more how China can use its influence to make Iran understand that the world should not have another nuclear power," Merkel told an audience at the Chinese Academy of Social Sciences. China - which gets 10 per cent of its oil from Iran - has so far refused to impose sanctions against the nation. Merkel said she also discussed with Chinese leaders "more sensitive topics" including human rights and the rule of law. Merkel will meet President Hu Jintao today before heading to Guangzhou. In an interview with the Guangzhou-based Southern Weekly, Merkel stressed the importance of communication in economics and technology, but also in "politics, values and civil society". Analysts say China has cemented harmonious relations with Germany. In her previous visit, in July 2010, the two nations issued a communique to declare a strategic partnership. In the interview, Merkel said such a partnership meant "we can discuss issues with divergent views", such as "what is viewed as unquestionable values - the respect of human rights and the individual's role and respect in a society". Foreign media said yesterday that Merkel, a Protestant, will meet the Catholic Bishop of Guangzhou, Joseph Gan Junqiu, in Guangzhou tomorrow. Merkel and Wen are also scheduled to meet business executives at a forum in Guangzhou. A unit of China National Petroleum Corp. agreed to buy a big slice of a shale-gas play in Canada from Royal Dutch Shell PLC, bolstering Beijing's footprint in North America's energy patch, as two other Chinese companies sealed energy deals in the U.S. and Europe. After tiptoeing into North America in recent years, Chinese companies have ratcheted up their energy deal-making as unconventional extraction methods—from oil sands to shale gas—have transformed the continent's energy market. PetroChina Co., a Hong Kong-listed unit of CNPC, said Thursday that it bought a 20% stake in Shell's Groundbirch natural-gas development in northeastern British Columbia. Facebook mentioned China several times in its initial public offering filing document, as the company races to expand its footprint in Asia. What are the chances the soon-to-be public social networking giant can tap the world’s largest Internet population? A leading rural policymaker yesterday defended China's rapid expansion in agricultural investment overseas, arguing it is about more than just acquiring land. To meet future domestic demand, China is trying to boost agricultural investments abroad, such as by establishing food-processing factories and helping build infrastructure in grain-exporting countries. But there have been accusations that China's leasing of land overseas is a form of neo-colonialism, especially in Africa. At a press conference yesterday, Chen Xiwen, deputy head of the Central Rural Work Leading Group under the State Council, said that China helping agriculturally underdeveloped countries to reach their farming potential was good not only for China's food-supply needs, but also the world's. He said that as more Chinese agricultural firms have started farming overseas, they are also being encouraged to provide technical and financial support to local farmers, while helping improve infrastructure. But Chen said that, judging from its total grain output and current population, China is secure in its food needs. "The more than 570 million tonnes of grain [produced by China last year] accounted for about 22 per cent of the world's total output, and China's population last year accounted for 19 per cent of the world's," he said. However, despite the government's ongoing commitment to research into genetically modified crops, Chen said China will not produce genetically modified crops this year, as the government has not yet approved large-scale commercialisation. He also ruled out any major changes in agricultural trading policies this year, saying China will continue with moderate imports and exports based on gaps in the domestic market. Although the government imported grain last year, Chen said there was no shortage of corn. Some southern parts of the country imported corn from abroad because it cost less than hauling it from major production areas in the far northeast. He also said China has been exporting a large amount of corn by-products. In response to concerns about a gradual reduction in China's arable land, he said the country is still expected to retain more than 120 million hectares of farmland - a level that central authorities have vowed since 2006 not to dip below, to ensure sufficient food production.
An Esprit store in New York gives an indication of the company's situation. Its business in North America are running significant losses. Esprit Holdings (SEHK: 0330), the Hong Kong-listed fashion retailer struggling to recover from an earnings slump, may close all its stores in North America, if it fails to find a buyer or licence partner for the unprofitable business. The company, which was founded by Susie and Doug Tompkins in San Francisco in 1968, said it "intends to focus on finding one or more licence partners to maintain and reinvigorate the presence of the Esprit brand." However it will have to close all stores in North America if no one is interested in taking them over, a spokesman of the company said in an emailed statement yesterday. Esprit's US and Canadian subsidiaries haven't decided on whether to file for Chapter 11 (or equivalent Canadian) proceedings, he added. Esprit currently operates around 90 stores in Canada and the United States, among its 1,100-plus stores worldwide. "We are not surprised they have found it difficult to find a buyer for the stores as the US retail market remains in a difficult position," said Aaron Fischer, head of consumer and gaming research at CLSA. The company made provision for the possible store closures in its annual report for the year to last June, estimating the divestment cost in North America would total around HK$1.268 billion. Esprit's business in North America has been in the red since it acquired trademark rights in the US and the Caribbean Islands in 2002. Its retail operation in the region recorded an earning before interest and tax loss of HK$308 million for the year to last June. Its poor performance in this market was also one of the reasons that the company's net profit plunged by 98 per cent to HK$79 million last financial year. It has also been troubled by sluggish demand from European markets, which account for nearly 80 per cent of its revenue. Esprit said earlier that it had three options when divesting from North America. It would prefer to sell out or find license partners. Otherwise it will close the stores there. The retailer has been investing significantly in the hope of turning the business around, improving its designs to revive earnings in Europe while doubling sales in China. Chief executive Van der Vis is setting up design teams in Paris and China and has hired managers and designers from Adidas, Puma and Hennes & Mauritz. Esprit shares, which lost 73 per cent last year, have risen 17 per cent this year, better than the benchmark Hang Seng Index's 11 per cent gain. Its share price rose 1.05 per cent to close at HK$11.56 yesterday. Gabriel Chan, an analyst at Credit Suisse, said the European business would still represent the major challenge for the company as it seeks to recover its image and profit. "Esprit has many franchise stores in Europe," said Chan. "Many of the franchisees would be reluctant to follow the company's transformation, which require extra cost."
CSL chief marketing officer Mark Liversidge (left) and Tony Li, vice-president for North Asia marketing at HTC, stand with a model as they unveil the HTC Velocity 4G. CSL, the largest wireless network operator in Hong Kong, has teamed up with Taiwanese handset maker HTC to offer local mobile subscribers the first of a wave of new 4G smartphones set to reach the city this year. The carrier, a unit of Australian telecommunications giant Telstra, is currently the sole network operator in Hong Kong that runs a high-speed 4G mobile infrastructure based on the industry standard called Long Term Evolution (LTE). "We will have a full suite of 4G devices this year, including new smartphones, media tablets and routers," said Mark Liversidge, the chief marketing officer at CSL. "We expect to provide the new HTC device within this month." CSL was the first in Asia to launch a commercial 4G mobile network in November 2010, when it signed up key corporate customers as early adopters. Its LTE infrastructure was designed and built by ZTE (SEHK: 0763), the mainland's second-biggest telecommunications equipment manufacturer, which also supplied the initial batch of 4G dongles used on laptop computers to access the network. HTC, the world's largest maker of smartphones that run the Google-developed Android operating system, agreed to have its Velocity 4G handset exclusively available for pre-order from yesterday to subscribers on CSL's premium 1010 service. The Velocity 4G features an 11.4cm touch screen, 1.5-gigahertz dual-core processor, an 8-megapixel camera on the back and 1.3-megapixel camera in front, Bluetooth and Wi-fi support, 16 gigabytes of storage and an expansion slot for a memory card. On an LTE network connection, the HTC smartphone can deliver an internet download speed of up 100 megabits per second. It also works on CSL's existing 3G network, which provides a download speed of up to 42Mbps. Liversidge said the Velocity 4G, which is expected to cost around HK$5,000, will eventually be made available to subscribers on CSL's mass-market one2free service. Macquarie Securities analyst Lisa Soh said CSL's aggressive rollout of new 4G devices this year may prompt Hong Kong's other 3G mobile network operators to step up their own LTE infrastructure development plans. "CSL has apparently resolved the issue about the lack of 4G devices to support its LTE network," Soh said. Hutchison (SEHK: 0013) Telecom and fixed-line network HKT, through their joint venture called Genius Brand, last year signed a contract with Huawei Technologies to build and deploy their 4G LTE infrastructure in Hong Kong.
The government has added 24 residential sites to its land sale list, bringing the total number of sites available in the coming fiscal year to 47. Secretary for Development Carrie Lam Cheng Yuet-ngor said the sites could provide a total of 13,500 flats. The new sites will include projects by the MTR Corporation (SEHK: 0066), the Urban Renewal Authority and private developers. Four of the sites, which will be sold between April and June, are in Tseung Kwon O, Sha Tin and North Point and will generate up to 1,400 flats. Two more of the sites are part of the Kai Tak development project. This is the first time private residential sites in the area are being released for sale. These sites will provide a total of 1,000 flats. Lam said the government was also set to release four sites for commercial use and two hotel sites in the new financial year.
Alvin Lee Chi-wing's family of three, who make about HK$60,000 a month, have welcomed the tax relief measures. The secondary school teacher, who conducts liberal studies classes, said he pays almost HK$100,000 in salaries tax - close to two months of his family income. Lee also has to pay HK$40,000 a year for his daughter's university education. The relief measures means his tax bill will be around HK$14,750 less. Of this, the bulk of his savings will come from the HK$12,000 tax rebate, while another HK$2,000 flows from the increased tax allowance for married people and basic tax. Rounding up his savings will be the around HK$750 he does not have to cough up as a result of increased allowances for supporting his parents and daughter. Coupled with the HK$2,500 rates waiver for each quarter - or HK$10,000 a year - and the HK$1,800 electricity subsidy, savings for the family add up to around HK$26,550. Lee, chairman of the Voice of Middle Class, said although the measures and sweeteners are able to soothe the middle-class hardship to a certain extent, more can be done. He called for the introduction of a tax allowance for those who need to pay mortgages. "I am lucky that I have already paid off my mortgages," Lee said. "But life is difficult for those who still have to pay for their mortgages." He said some of his friends who are on a monthly household income of about HK$40,000, especially those with children and who need to pay off mortgages, are having a hard time making ends meet. Another in the middle-class bracket, Lai Chung- ming, expressed satisfaction with the budget, saying it supports people like him and those earning less. "However, I find that John Tsang is not keen on carrying out long-term measures," said Lai, who works in the financial sector and paid HK$40,000 in taxes last year. Lawyer Stanley Chan Wing-leung was another who was appeased, saying the budget is better than last year's and helps the middle class. Middle-class citizens are rubbing their hands in anticipation after the financial secretary delivered an HK$80 billion package of one-off sweeteners and relief measures in his parting budget yesterday. But John Tsang Chun-wah also played it safe - the HK$662.1 billion in reserves he is leaving to the next administration offers a reasonably secure safety net if the economy tanks this year. Chief Executive Donald Tsang Yam- kuen said the budget was well thought out and urged lawmakers to support it. The relief measures are, in dollar terms, about 30 percent more than those John Tsang undertook in last year's budget when Hong Kong was caught in an inflationary spiral. Tax relief includes a 75 percent reduction in salaries tax and tax under personal assessment, capped at HK$12,000. Tsang said the move will benefit 1.5 million taxpayers and cost HK$8.9 billion. The basic allowance and single-parent allowance will be raised from HK$108,000 to HK$120,000. The married person's allowance will be raised to HK$240,000 from HK$216,000. It is understood the steps will see about 130,000 people leaving the tax net. "Many in the middle class expressed to me their wish for the government to understand their hardship and to ease their burden," Tsang said in his budget speech in the Legislative Council. "Their voices have come across loud and clear." He will also add a surplus of HK$66.7 billion to the reserves - much higher than the projected HK$3.9 billion. This is from record-high land sales and profits and salaries tax revenues, he said. Tsang forecast there will be a deficit of HK$3.4 billion in the next financial year, partly because of the European debt crisis. Government expenditure for the next financial year will reach HK$393.7 billion, about 7 percent more than the current year. On concerns that increasing allowances will narrow the tax base, which may not be healthy for Hong Kong in the long run, Tsang said it is not the right time to broaden the base because the economic forecast for this year is not optimistic. "The economy this year will be very difficult. I hope the different measures will help the public shoulder some of its burden. This will narrow the tax base in the short term, but we have to do it and it will be worth it," he said. Donald Tsang said the budget has catered for the needs of Hongkongers from all walks of life. The budget shows that the government is determined to maintain economic growth. Bernard Wu Tak-lung, chairman of the Association of Chartered Certified Accountants and former chairman of the Taxation Institute of Hong Kong, said the measures to help the middle class show progress from last year's budget. However, the government needs to consider restructuring the system so that more people pay tax, but the progressive tax rate should be lowered. A snap poll by The Standard shows that most middle-class people are satisfied with the budget as the measures will ease the impact of inflation. The increase in tax allowances is the most popular. "The government set the amount of basic tax allowance according to local financial conditions so it is reasonable," said Ho Ting, who works in the financial sector. However, Labour Party chairman Lee Cheuk-yan said the budget fails to help middle-class people who have to pay high rent, and lacks long-term measures to help the underprivileged. He criticized the government for knowing only how to give away sweeteners every year. HK$100b committed to help SMEs thrive - Small businesses, which employ half the private sector workforce, will get a helping hand including loan guarantees of up to 80 percent to weather the economic downturn and be eligible for tax rebates. The measures were generally welcomed. John Tsang said he is concerned about difficulties owners of small and medium-sized businesses will face. To help with funding, the Hong Kong Mortgage Corp will lift the ratio of its SME Financing Guarantee Scheme to 80 percent from 70 percent with the government committing HK$100 billion. This, he said, will lift banks' confidence "in offering loans to SMEs." Tsang proposes to slash the loan guarantee fee by more than two-thirds to 10-12 percent of the loan's interest. For example, it now costs HK$16,000 to insure 70 percent of a HK$1 million loan, compared with HK$5,000 under the new scheme to cover 80 percent of the loan. He tipped a default ratio of 12 percent, or spending of HK$11 billion. But in 2008-10, only 0.69 percent of loans turned bad, costing HK$510 million. Hang Seng Bank (0011) chief executive Margaret Leung Ko May-yee believes the proposals will ease financing needs and cut costs of SMEs. Tsang also proposed a profits tax rebate for fiscal 2011-12 of 75 percent, up to HK$12,000, and to waive business registration fees for 2012-13. Charges for import and export declarations will be halved. "We welcome the tax rebate. But it's better to lower the profits tax rate to 15 percent for corporations [from the current 16.5 percent]," Hong Kong SME Association chairman Stephen Kwok Chun-pong said. Hong Kong's total retail sales value in December 2011, provisionally estimated at 43 billion HK dollars (about 5.5 billion U.S. dollars), increased 23.4 percent over a year earlier, the city's Census and Statistics Department announced here Thursday.
The China Securities Regulatory Commission (CSRC) on Wednesday released the examination and approval processes for the initial public offering of stocks, empathizing regulations on distributors and intermediary agencies would be more timely and strict. The export and import value of China-made electronics rose 11.5 percent year-on-year to 1.13 trillion U.S. dollars in 2011, the Ministry of Industry and Information Technology (MIIT) said on Thursday.
Chinese Premier Wen Jiabao (R) shakes hands with visiting German Chancellor Angela Merkel at the welcoming ceremony before their talks in Beijing, capital of China, Feb. 2, 2012. Chinese Premier Wen Jiabao on Thursday exchanged views with German Chancellor Angela Merkel on major bilateral issues. After the closed-door meeting, Wen said this year, the 40th anniversary of diplomatic ties between the two countries, was very important for bilateral relations. The two countries have arranged a variety of high-level visits as well as a series of large scale economic and cultural exchange activities for 2012. These exchanges programs have great significance for deepening bilateral mutual trust and improving bilateral coordination on coping with the complicated international political and economic situation, so as to safeguard common interests of the two countries, said Wen. Calling Merkel's visit is focusing on future, Wen said he was willing to work with Merkel to advance bilateral friendly cooperation. Merkel said Germany will host the Chinese Culture Year, which is an opportunity to promote mutual understanding and exchanges between the two countries. She praised the sound economic cooperation between Germany and China and called on the two sides to create good conditions for business operations in each other's country. Merkel arrived in Beijing on Thursday, starting a three-day official visit to China. China is the first country that Merkel has visited this year outside Europe, while she is the first foreign leader China has received after the traditional Chinese New Year which began on Jan. 23.
Wealthy Chinese have been paying record prices for contemporary art and top wines while shelling out for some the world’s most expensive cars. Turns out they’re also the driving force behind the princely sums being paid for top-quality pigeons. A Chinese shipping magnate last weekend spent 250,400 euros ($328,000) for a Dutch pigeon, a new world record according to Pipa, the firm that ran the online auction. These aren’t your ordinary birds that eat scraps in the park but ones bred for the arcane sport of pigeon racing, which has a cult following in England, Belgium, Netherlands, Germany and, increasingly, China. The buyer, Hu Zhen Yu, runs Zhenyu Holding Group in Wenzhou. He told Pipa that he wants to “focus more and more on the pigeon sport.” Zhenyu last year sponsored a pigeon race in Wenzhou that awarded 7 million yuan ($1.1 million) in prize money. Pigeon racing has traditionally been a rural pastime, and the entrance of wealthy Chinese hobbyists is ruffling some feathers. The Telegraph quoted veterans of the sport complaining about the high bids and loss of the birds to another continent. A Chinese buyer was responsible for the previous pigeon auction record, set last year: $200,000 for a Belgian pigeon named Blue Prince. “We must not forget pigeon racing is a simple sport to be enjoyed by all who wish to become involved for the right reasons,” Ken Ambler, a pigeon fancier who took up the sport 70 years ago, wrote in a comment on Pipa’s auction announcement.
What Acer Inc. really needs is a star product, not a star to promote its products. That was the reaction from tech watchers after the Taiwanese PC maker named the world’s top professional female golfer Yani Tseng, a Taiwan national, as its “global brand ambassador.” The contract will ask Tseng to wear a cap sporting Acer’s logo in future tournaments and to be featured in commercials as well. Following quarters of net losses due to the cannibalization of tablets and its internal accounting and inventory issues, Acer is hoping to turn itself around by selling more high-end (and thus higher-margin) products–such as the up-and-coming ultrathin laptops–and spending more money on brand-building. “By associating Tseng’s characteristics such as efficacy, speed, precision and stability, we hope to enhance consumers’ recognition of Acer’s products,” Acer said in statement. Acer declined to say how much it will pay Tseng. Whatever the sum, critics seem unconvinced it will be money well spent. “Brand image is more based on the word of month from user experience. So any company which would like to raise its brand image has to improve its product competitiveness first,” said Raymond Wen, columnist of marketing magazine Brain. “We can’t name any flagship product for Acer so far.” Yuanta analyst Vincent Chen added: “Investment in building brand awareness doesn’t necessarily translate to sales. What Acer really needs is a star or game-changing product.” Although Acer has said it will strengthen its in-house hardware and software design, it still relies heavily on external contract designers. Analysts say that explains why it has been slower than its peers, such as Asustek Computer Inc., in responding to fast-changing market needs. Asustek is widely credited with creating the market for lightweight mini-notebook PCs with the launch of Eee netbook PCs in 2007. The company has continued to try out new things with its latest tablet, the Transformer, which comes with a detachable keyboard. Acer spent less than 0.4% of its revenue on research and development in 2010, according to the latest data available from the company — significantly less than the 3% Asustek spent for the same period. Thousands of residents of a restive Guangdong village cast their ballots yesterday, marking the start of a gradual restoration of grassroots rights following violent confrontations with authorities over land grabs. The rebellion last year against abuse of power and the illegal sale of hundreds of hectares of farmland in coastal Wukan became a benchmark of rural defiance against land grabs and corruption that blight villages nationwide. Villagers gathered in the morning sunshine outside a school where the election is being held. Seven steel ballot boxes were laid out in the concrete school courtyard before a red election banner as patriotic songs poured from speakers. Xue Jianwan, daughter of protest organizer Xue Jinbo, 42, who died in police custody in December - sparking further protests - visited his memorial in the village square before voting. "This is something my father would have hoped for," she said, bursting into tears. "We just want to do our best to fulfil his final wishes." The poll will select an independent election committee to oversee upcoming ballots, including one for the village committee on March 1. With China's top leadership jockeying for power ahead of a succession in the fall that will usher in a new generation of leaders, the smooth handling of the Wukan unrest has been paramount for Guangdong's Communist Party boss Wang Yang. Several dozen uniformed police officers guarded the entrance of the school, with several police vans nearby. Wukan villagers had looked forward to yesterday's ballot after suffering years under the previous Communist Party village secretary, who was toppled in last year's turmoil after decades in the post. "For 40 years we've never had a proper election," said villager Chen Junchao, clutching a white ballot registration slip stamped with an official red ink government seal. "I've never seen these papers before. I was crying when I saw this." Polling appeared smooth, amid some underlying bitterness and suspicion.
Financial Secretary John Tsang Chun-wah attends a radio phone-in on Thursday program to answer budget question at the Central Government Offices a day after he announced the budget. Middle-class callers praised the new budget – and the poorest condemned it – when the financial secretary spoke with Hongkongers on a Thursday morning radio show. John Tsang Chun-wah, who delivered his budget in the legislature on Wednesday, heard from one caller who was crying, saying she and other poor people had one more been ignored. She was a single mother surnamed Cheung, in her 30s, who is raising a young daughter and living in a partitioned flat. “I can’t benefit from the budget,” she said. “I sought help from the Social Welfare Department but they said they could help [by giving her welfare payments] only if I quit my job.” Cheung, who said she earns about HK$9,000 a month, continued: “The financial secretary said the budget helped all people. Does that mean we – at least 300,000 to 400,000 of us – are not Hong Kong residents? So you don’t need to help us?” Many measures Tsang announced on Wednesday for lower-income people – such as subsidies for public housing rent and electricity bills – do not apply to those who live in subdivided flats and do not receive welfare. Some low-income callers like Cheung called for cash handouts, as in last year’s budget. Many middle-class callers, meanwhile, thanked Tsang for the wide range of tax relief measures, which they said would ease their burden. Some of them urged the government to roll out more measures to help the poor. Tsang said they would be helped through recurrent government spending on such areas as education. Officials decided against cash handouts because of the criticism it generated last year, he said, adding that the new measures would benefit various classes of people.
Brands spend HK$36b (US$4.6 billion) to lift sales - Banking, cosmetics and pharmaceuticals drive 16 per cent increase in marketing campaign budgets as influx of mainland tourist arrivals boosts retailers' takings - Advertising spending in Hong Kong reached a record HK$36.03 billion last year, driven by the continued growth of marketing campaigns in the banking, cosmetics and pharmaceutical industries. Market-monitoring firm admanGo said that was a 16 per cent increase from HK$30.98 billion in 2010 and 38 per cent higher than the HK$26.1 billion the market posted in 2009. It said a steady influx of mainland tourists in the city had boosted sales for many retailers, underpinning increased advertising spending. There were also new advertising vehicles launched last year, including two free newspapers, which encouraged more companies to advertise and prompted more rate discounts. Television, newspapers and magazines seized the biggest share {minus} about 79.77 per cent {minus} of all advertising dollars spent in Hong Kong last year. Jennifer Ma, the director of sales and marketing at admanGo, said the expected launch of more advertising vehicles, such as a new free-to-air terrestrial television network, and the development of campaigns targeting internet-linked smartphones and media tablets augured well for increased advertising spending this year. "But top-spending advertisers, especially in the banking industry, were more cautious towards the end of last year due to the economic uncertainty brought on by the European financial crisis," Ma said. "We expect that exercise of caution to continue this year." Advertisers in the market-leading banking and investment services sector saw their spending rise 14 per cent year on year to HK$3.63 billion, on the back of increased campaigns for personal loans and credit cards. They were led by HSBC, the perennial No1 advertiser in Hong Kong, with total marketing campaigns worth HK$278.81 million last year. The cosmetics and skin care sector had the second-highest spending group of advertisers last year, with total campaigns up 22 per cent to HK$2.78 billion. SK-II, a Procter & Gamble brand, invested HK$252.78 million in campaigns last year to lead its sector and jump to No3 from tenth place in 2010 in the overall ranking of Hong Kong's top advertisers. The pharmaceuticals and health care sector saw advertising spending advance 9 per cent to HK$2.63 billion. Abbott Laboratories led this group with campaigns worth HK$215.94 million last year after it increased its budget to promote baby milk products. That pushed it to No7 among the city's top advertisers this year from No41 in 2010. Fast-food giant McDonald's remained the No2 spender with campaigns worth HK$252.78 million. Samsung Electronics emerged as No5 behind ParknShop, with campaigns that reached HK$229.38 million. The Korean firm, which was No28 in 2010, bolstered promotions for its Galaxy Tab media tablet to compete against Apple's iPad.
Chief executive candidate Leung Chun-ying yesterday refused to give an assurance the controversial functional constituencies would be abolished by 2020 if he won the top job. He also declined to discuss the matter despite unveiling his manifestos for executive and political structures and social welfare. "We still have eight years to reach a consensus on this rather controversial subject and it is difficult to predict the social situation at that time," said Leung. "This is not the right time to explain my stance on that." Functional constituencies are chosen by a narrow electorate but Leung proposes increasing the number of voters for the 30 trade-based seats for the legislature in 2016. The next chief executive, who will take over from Donald Tsang Yam-kuen in July, will be expected to spell out his views on the formation of the 2016 Legislative Council election, paving the way for the public election of all lawmakers by universal suffrage in 2020. But both Leung and his main rival, former chief secretary Henry Tang Ying-yen, have been coy on the issue of functional constituencies. Repeatedly asked by the media whether the "reformed" functional seats under his regime would stay in 2020 - in whatever format - Leung said only: "I can assure you this is not a trap." In a 22-item constitutional chapter, Leung made no mention of the proposed national security legislation - as stated in Article 23 of the Basic Law. "Discussion of Article 23 will not appear in my remaining policy manifestos," said Leung, referring to the sports, culture and environment chapters. Tang's campaign office also refused to comment on the issue yesterday. The universal pension fund and standard working-hours legislation, two controversial topics, were also both unmentioned in Leung's social welfare manifesto. Instead, he proposed creating a special old-age allowance with a simple means test to improve livelihoods for poor elderly people. Elderly people who passed the test could get around double the current HK$1,035 monthly allowance. Meanwhile, the top Beijing official in the city said the central government has no preferred candidate in Hong Kong's chief executive election, after weeks of rumours suggesting Henry Tang Ying-yen was favoured in the mainland's corridors of power. Dr Peng Qinghua , head of the central government's liaison office in Hong Kong, fended off the notion that Beijing had a desired candidate in the leadership race. "[The] elections have to be held in a fair and just manner in accordance with the law," he said. "It is impossible that the central government has a favourite."
A surplus bonanza is prompting a host of sweeteners as the cash-rich government gives us a budget boost today. Financial Secretary John Tsang Chun-wah is set to raise tax rebates to HK$12,000 and the personal allowance to HK$120,000 in the last budget of the administration. The sweeteners, in what is expected to be a bullish projection of Hong Kong's economic affairs, follow yesterday's announcement that the surplus for December was HK$38.3 billion - bringing the total for the first nine months to HK$59.5 billion. The figure for the full year to the end of March may reach HK$100 billion. A spokesman for the Financial Services and the Treasury Bureau said the December surplus is mainly due to HK$37 billion in investment income on fiscal reserves. The reserves stood at HK$654.9 billion at the end of last year. Tsang is also expected to raise the tax allowances for parents and children, even though such a move will narrow the city's tax base. Other sweeteners include a HK$1,800 electricity subsidy and an extra month's "fruit money" for the elderly. There will also be an extra month of social security allowance. Rent for people in public housing is expected to be waived for two months, and there will also be a waiver on rates. To help small and medium-size enterprises, the government is expected to waive business registration fees. Tsang may also beef up guarantees on bank loans to 80 percent for SMEs. He is expected to include matching funds to encourage tertiary educational institutions to raise money from the private sector. The fund-matching program, announced in 2003, sees the government matching donations, dollar for dollar, up to HK$45 million, and half that amount on figures above that. A scholarship scheme that saw HK$250 million injected last year is expected to continue. The tax rebate last year was HK$6,000, while the personal allowance - the general baseline at which everybody is exempt from salaries tax - is HK$108,000. The HK$100 billion estimate for the whole financial year was made by Chinese University of Hong Kong economics professor Terence Chong Tai-leung. It was HK$71.3 billion in the last financial year. He based the figure on the fact that the current quarter is the peak period for tax payments. He suggested the government should give away half the surplus as sweeteners. The rest should be reserved for later. But he warned that increasing the tax allowances will narrow the tax base and this may hurt funding for future development. "Only about a third of the population pays tax at present," he said. "The tax base should be broadened instead." This is necessary as the government's main source of income is from land sales. "It means that the government will have less income if land sales drop," he said. Many small to medium enterprises do not need to pay tax at present, he said, and regular contributions from them will create a broader tax base. Bernard Wu Tak-lung, chairman of the Association of Chartered Certified Accountants and former chairman of the Taxation Institute of Hong Kong, agreed on the need for a broader base. He also forecast the surplus this year to be bigger than last year but did not give a figure. Chief executive candidate Leung Chun-ying has been accused of a conflict of interest involving the West Kowloon Cultural District project. In an exclusive report, East Week magazine said Leung was one of 10 judges in the 2001 concept planning competition - despite his company acting as a consultant for one of the competitors. Financial Secretary John Tsang Chun-wah, the former secretary for planning and lands bureau, was quoted as saying he was shocked when he stumbled across the alleged conflict of interest while checking nearly 160 competition entries. He then met with Leung, asking him to step down as judge. Liberal Party vice chairwoman Selina Chow Liang Shuk-yee, who was on the judges' panel, recalled Leung was excluded in the final stage. Lawmaker Ronny Tong Ka-wah said if the conflict accusation is true, Leung's role was unreasonable even if unintentional. Tong called on the government to release the relevant information in accordance with the Power and Privileges Act. Another legislator, Cheung Man-kwong, urged the government to clearly explain what happened, as Leung's credibility is at stake. Reacting yesterday, Leung was at first unwilling to comment, saying: "Let me check first." Later, when asked why he had provided consultation services to candidates, he said: "It happened 10 years ago. Several professional teams participated in the competition, but neither my company nor I joined any of the teams. "One quantity surveyor under a particular professional team asked our company about related comments and information on land prices in West Kowloon. But we did not take any money in return. "There was no business relationship, or conflict of interest. I have already reported the case to the jury committee chairman and government bodies." Meanwhile, the Federation of Trade Unions has threatened to boycott Leung and rival Henry Tang Ying-yen if they do not reveal their positions on statutory working hours. Federation chairman Cheng Yiu-tong accused them of behaving worse than Chief Executive Donald Tsang Yam-kuen on the issue. "Tsang, at least, is studying the issue, but Leung and Tang only say they will let the public discuss it first," Cheng said. The federation holds 60 votes in the 1,200-member election committee. Hong Kong's burgeoning population of millionaires has at least one addition. Last night's Jockey Club Mark Six draw saw one ticket taking the first prize of HK$86 million. It was the second-largest draw after the HK$133.5 million jackpot last year, shared by three individuals. Tens of thousands were drawn to the lottery as punters laid down a total of HK$201,428,850 yesterday. Some of the hopefuls shared their dreams of winning big. "I seldom bet on the Mark Six but I bought a few tickets with my husband because I noticed that the draw was worth much more than normal. I will donate a part of the huge sum of money and go traveling if I win the first prize," said Chui Hang-ping. Another punter, To King-lok, said: "I am used to betting on the same numbers for every 10 draws but I spent an extra HK$60 on this draw. I will probably buy a Mercedes-Benz if I am lucky enough to win." Housewife Maria Chan Siu-ling said she would buy another home and make donations. "Actually, I don't think I could really win. However, I will not be disappointed and will pretend it's donating money to a charity - the Jockey Club," she said. The rich lottery draw also attracted teenagers, some buying tickets for the first time. "I spent HK$20 on the draw as I saw the first prize was worth [at least] HK$70 million," said first-time Mark Six punter Chow Cheuk-ting. "I will purchase a sports car and musical instruments, like a guitar, if I win." The richest draw, held in May, saw three individuals winning HK$44.5 million each. Punters put in a total of HK$342 million into that draw. One of the winners, Indian delivery driver Jagpal Singh, 32, was also a first-time bettor. The Hong Kong Monetary Authority Tuesday announced that the city's total assets of the Exchange Fund increased by 2.3 billion HK dollars to 2.4927 trillion HK dollars at the end of December, on November 2011. The Monetary Authority said that foreign-currency assets increased by 10.4 billion HK dollars and Hong Kong dollar assets decreased by 8.1 billion HK dollars. The Currency Board Account showed the Monetary Base at the end of December was 1.076 trillion HK dollars, up 15.8 billion HK dollars, or 1.49 percent, on November. The rise was mainly due to an increase in Certificates of Indebtedness. Backing Assets increased by 16.8 billion HK dollars, or 1.46 percent, to 1.172 trillion HK dollars. At the end of December, the backing ratio stood at 108.92 percent, compared with 108.95 percent in November. (One U.S. dollar is equivalent to 7.758 HK dollars) The Hong Kong Government announced Tuesday that there was a surplus of 38.3 billion HK dollars (about 4.94 billion U.S. dollars) in the month of December, thereby bringing a surplus of 59.5 billion HK dollars up to the end of December, 2011. Expenditure for the nine-month period amounted to 264.8 billion HK dollars and revenue 324.3 billion HK dollars, according to the government. A government spokesman said that the surplus in December was mainly due to the receipt of 37 billion HK dollars in investment income on fiscal reserves. On the other hand, the 7 billion HK dollars injection into the Elite Athletes Development Fund had not been reflected in the December figures. The revised estimates for the current financial year will be published along with the 2012-13 Budget Feb. 1. The fiscal reserves stood at 654.9 billion HK dollars as at Dec. 31, 2011. (One U.S. dollar is equivalent to 7.758 HK dollars.) APPLE Inc has introduced a lottery system for iPhone reservations in Hong Kong to combat scalpers who were blamed for disrupting the iPhone 4S launch on the Chinese mainland. But, so far, the system is not being introduced in Shanghai or other mainland cities, an official at Apple Shanghai confirmed with Shanghai Daily yesterday. Apple's online store in Hong Kong requires customers to submit their personal details for a chance to reserve an iPhone between 9am and 12pm each day, Apple said. Those lucky enough to be awarded a reservation will be notified via e-mail before 9pm and told when and where they can pick up the phone. Those who don't receive an e-mail can try their luck again the next day, the company said. "Due to high demand, we are accepting a limited number of iPhone reservations per day," an announcement on the website said. "If you don't receive an e-mail, we were unable to reserve an iPhone for you, and you can try again another time. Only those who receive an e-mail confirming their reservation will be able to purchase an iPhone. We will not be selling the iPhone 4 or iPhone 4S to walk-in customers." Previously, iPhones were sold on Apple's online stores on a "first come, first served" basis. But as the phones are getting more and more popular in China, many scalpers use the system by hiring batches of people to reserve iPhones as soon as they become available. An official at Apple Shanghai, who asked not to be named, said: "We haven't received any information that Apple's online store on the mainland would use the lottery system. Customers who want to purchase one still have to wait till the next batch of items arrive." Apple canceled sales of its iPhone 4S at Apple Stores in Shanghai and Beijing on January 13 "to ensure customer safety" after it said all the phones sold out the day its latest smartphone model was launched on the mainland. At least several hundred people, including Apple fans and scalpers, gathered at each of the five Apple Store outlets on the mainland - three in Shanghai and two in Beijing - waiting all night for the iPhone 4S debut. In Beijing, some migrant scalpers who had waited all night long only to see the stores remained closed threw eggs and shouted at employees through the windows. The new lottery reservation system has sparked heated discussion online. "How does the craze start? I'm quite stunned by the popularity of the expensive smartphone which can only be purchased in the lucky draw," was a comment left by "Seasons" on Weibo.com. Others doubted if the lottery system would combat scalpers as "they can still hire hundreds of students clicking their mouse to try their luck every day," was one comment. New premier Sean Chen (left) and his deputy, Jiang Yi-huah. Taiwanese President Ma Ying-jeou has named a financial expert as the head of his cabinet, in the hope of steering the island through economic uncertainty brought on by the European debt crisis. Sean Chen, 62, the outgoing vice-premier known for his strong financial expertise, would replace Wu Den-yih as premier, effective from Monday, government spokesman Philip Yang said yesterday. "With his expertise, capability and experience, I believe [Chen] is able to properly tackle a possible crisis brought by the European debt turmoil," Ma said in a statement yesterday, as the island cut back its economic growth rate for this year to an estimated 3.91 per cent, down from 4.19 per cent projected in November amid the global recession. Wu, the president's running mate in the January 14 election, will become vice-president. Ma, the mainland-friendly incumbent, has won a second four-year term, and both he and Wu will be sworn in on May 20. As a sign of respect to members of the newly elected legislature, who will assume their posts today, Wu and the rest of the cabinet under Ma's first term resigned yesterday. After the mass resignation, Chen announced the first round of cabinet selection, featuring a line-up heavy in economic and financial experts. "I insist on putting the right people in the right positions, regardless of whether they are old or new faces," Chen said. The new cabinet officially assumes power on Monday. Among the newly appointed ministers are Christina Liu, the outgoing head of the Council for Economic Planning and Development, who will replace Lee Shuh-der as finance chief. Former economic minister Yin Chii-ming will take Liu's old post. Also helping Chen will be economics Professor Kuan Chung-ming and Simon Chang, Google's former head of Asia-Pacific hardware operations. Both were named ministers without portfolio. Appointed with them was Yang Chiu-hsing, an ex-judge who helped Ma's campaign. Interior Minister Jiang Yi-huah will move up as vice-premier and will be succeeded by civil engineering expert Lee Hong-yuan. Former Taipei city cultural director Dr Lung Ying-tai, who teaches at the University of Hong Kong, will be the culture minister. Those staying in their posts include Defence Minister Kao Hua-chu, Foreign Minister Timothy Yang Chin-tien and Mainland Affairs Council chairwoman Lai Shin-yuan. The ministers of justice, economics, transport, environment, labour affairs and health were also not included in the reshuffle. But the opposition has criticised Chen's cabinet for having too many holdovers. Of the 47 cabinet and ministerial-level positions in the reshuffle, only 16 officials were newly appointed - three of whom were part of the previous cabinet. Ke Chien-min, head of the opposition DPP caucus in the legislature, called the line-up "full of political rewards and old faces rather than professionals". But most Taiwanese media and analysts applauded the revamp, saying they were more or less the proper choices.
Casino-resort developer Las Vegas Sands Corporation said its fourth-quarter net income rose 17 per cent to US$320.1 million as the company set an internal record for revenue, thanks mainly to more people gambling at its resorts in Macau and Singapore, company officials said on Wednesday. The company’s billionaire CEO, Sheldon Adelson, who has made headlines recently for his and his wife’s combined donation of US$10 million to a political action committee supporting Republican Presidential candidate Newt Gingrich, said the company is seriously considering building resorts in Japan, South Korea, Taiwan and Vietnam. “Our most recent conversations have advanced to the point where details such as site selection ... have been discussed,” Adelson told investors during a conference call on Wednesday. Adelson said the company hopes to build one resort each in the two most populous cities in each country. Sands’ net income amounted to 39 cents per share. Its revenue for the quarter rose 26.3 per cent to US$2.54 billion. The company reported adjusted earnings of 57 cents per share, in line with an average forecast from analysts, while its revenue beat the average forecast for revenue of US$2.46 billion. After hours, its shares fell 90 cents to US$49.28, after finishing the day up US$1.07, or 2.2 per cent, at US$50.18. Analyst Robin Farley of UBS Investment Research said Sands’ earnings before taxes, interest, depreciation and amortisation (EBITDA) in Las Vegas missed Wall Street’s targets. She said the company also got a lucky bump in Singapore, where it won more money from high rollers than it should have given the amount the gamblers wagered. “Luck may have added about US$22 million or more to the reported US$427 million (in EBITDA),” Farley told investors in a note. Adelson said he thinks analysts underappreciate Sands’ growth potential and standing in the industry. Sands declared an annual dividend of US$1 per share to be paid in four parts, starting March 30. The company said that in Macau, more middle-income gamblers played slots and table games. They wagered at lower limits than high rollers, but with lower costs – so their bets were more profitable. Fourth-quarter revenue for the subsidiary Sands China increased 22 per cent to US$1.33 billion. In Singapore, revenue rose 44 per cent to US$806.9 million. And in Las Vegas, Sands’ revenue climbed 9.3 per cent to US$339.5 million, while it rose 25.9 per cent in Bethlehem, Pennsylvania, to US$105 million. Adelson said the company now has just under one-fifth of the Macau market, and he expects that share to rise as Sands revamps its relationships with junket representatives who bring in high rollers and after Sands Cotai, a new casino development, opens in eight weeks. Adelson said Macau’s eye-popping gambling tourism will keep growing as transportation infrastructure improves and more urban Chinese people have the disposable income and hotel rooms are built. Sands also has asked the Chinese government for permission to build a new 4,000-room themed casino on land Sands owns in Macau’s Cotai peninsula; it would have separate towers for mass-market gamblers and high rollers. Adelson said he thinks Sands is ahead of other companies wanting to expand in Cotai because it already owns the land it wants to build on. He said he has also talked with the Singapore government about buying land adjacent to its Marina Bay Sands resort and building an additional 1,000 to 1,500 rooms there. More rooms could significantly increase revenue at the resort, where occupancy is above 90 per cent. “We’re turning people away,” he said.
Beijing and Berlin taking friendship to next level - German chancellor Merkel arriving in China today for her fifth visit in as many years. China has long seen itself as being confronted by a dominant global power, either as enemy No1 or chief competitor. Today, that role is played by the United States. And under its united front strategy, Beijing is seeking friendly relationships with other powers to check and balance that dominant power and seek to build a multi-polar world. That is why China has cemented harmonious relations with Germany, Europe's largest economy, in recent years. When German Chancellor Dr Angela Merkel arrives in Beijing today for a two-day visit it will be her fifth trip to China in five years. "Among China's relations with major powers, the Sino-German one is the best," said Professor Zhang Xiaojin , a European affairs expert at Tsinghua University. Feng Zhongping , director of European studies at the China Institute of Contemporary International Relations, said: "Germany under Merkel has adopted a very pragmatic approach towards China, particularly since her second term as head of government beginning in 2009." Merkel, who came to office in 2005, angered China's leadership when she welcomed Tibet's spiritual leader, the Dalai Lama, in 2007. But relations have improved in recent years, as economic co-operation between the world's second- and fourth-largest economies outweighed tensions over long-standing political issues, such as human rights and Tibet, that were once prominent obstacles to improved ties. In her previous visit, in July 2010, the two nations issued a communique to declare a strategic partnership, the first between China and a Western power. Besides her talks with President Hu Jintao and Premier Wen Jiabao , Merkel will deliver a speech on "financial and currency policy issues" at the Chinese Academy of Social Sciences before heading to Guangzhou tomorrow, where she is scheduled to visit companies and attend an economic forum in an effort to help establish a stronger foothold for German business. This year also marks the 40th year of diplomatic relations between the two countries. Germany and China, the world's top two exporters, enjoy vibrant trade relations. China is Germany's largest Asian trading partner, and Germany is China's top trade partner within the European Union, with business equivalent to its trade with Britain, France and Italy combined. Germany's imports from China reached €77.27 billion (HK$788 billion) in 2010, while it exported €53.79 billion worth of goods to China in the same year. Neither Beijing nor Berlin has detailed the issues that will be discussed between Merkel and Chinese leaders, but analysts expect the euro-zone crisis, climate change, Iran's nuclear ambitions and the ongoing unrest in Syria to top the list, along with trade and investment. Germany's top concerns include China's moves to make the yuan more flexible, intellectual property rights - with many of its firms involved in hi-tech areas ranging from cars to chemicals - market access and rule of law. China wants the European Union to accord it market economy status and end an embargo on arms sales imposed after the military crackdown on the pro-democracy movement on June 4, 1989. With EU leaders having reached a deal to tackle the debt crisis, many are looking at China as a potential saviour, thanks to its US$3.2 trillion in exchange reserves. "With all developed economies in debt crises, the EU is looking at the cash-rich emerging economies and China is the first among them," said Hu Yifan, chief economist with Haitong International Research. Zhang said Merkel's chief mission was to explain the EU rescue plan to Chinese leaders and lobby for Beijing's participation because Beijing was still suspicious about the effectiveness of the plan and worried about the safety of any investment. He said China would rather seek investment opportunities as an indirect way to help the struggling continent. Europe's financial crisis has created buying opportunities for cash-rich investors, and China is leading the charge. Beijing has provided billions of dollars in state financing for key public works projects in Europe. Exchange rates have been a big issue between the US and the euro zone on the one side and China on the other, with critics saying an undervalued yuan gives Chinese exporters an unfair competitive edge. Analysts said China's increased trade and investment with Germany would ease economic disputes and encourage Berlin to support China's position on issues where it was at odds with the US, such as the value of the yuan and trade disputes at the World Trade Organisation. Beijing is also looking to Germany to take the first step to recognising China as a market economy. With the EU adopting its harshest sanctions yet against Iran, Merkel is eager to secure Beijing's co-operation. China is the largest importer of Iranian oil and has openly dismissed US sanctions. China also has almost US$120 billion in investments in Iran.
The production line at the Mainland Headwear Holdings factory in Shenzhen will soon be 50 per cent smaller. Sky-rocketing wages in Shenzhen will force Mainland Headwear Holdings, one of the world's largest cap makers, to relocate as much as 50 per cent of its output to Bangladesh over the next two years. The relocation was being fast-tracked after the special economic zone lifted the monthly minimum wage by 13.6 per cent to 1,500 yuan (HK$1,845) today, the nation's highest and the third increase in two years, managing director Pauline Ngan Po-ling said yesterday. On top of that fewer migrant workers had returned to work at the group's factory in Shenzhen on Monday, the first working day after the Lunar New Year break, indicating dwindling labour supply, she said. "A production line can't operate properly if it is missing one worker," she said. "My core mission in the next two years is migrating half of the production to Bangladesh." Labour issues are aggravating manufacturers' growing woes, which range from deteriorating demand in the United States and European Union to yuan appreciation and industrial reform in Guangdong. Some factory owners have opted to move production to remoter parts of China, but Mainland Headwear chose Bangladesh, because average salaries are far lower there than in its Shenzhen plant. Ngan said workers at the Shenzhen factory took home about 3,000 yuan a month on average, but those in Bangladesh only earned US$60. On top of the pay, the Shenzhen factory offers three meals a day and accommodation, but no such provision is made in Bangladesh factories. Mainland Headwear planned to form a joint-venture with a local Bangladesh factory, with the business ultimately to be 51 per cent-owned by the Hong Kong company, Ngan said after she visited the country last week. Meanwhile, factory buildings were under construction in Bangladesh near the capital of Dhaka and completion would be scheduled in May. "Bangladesh is like China 50 years ago," she said. "I want to move as soon as possible. It is an effort to keep workers at the Shenzhen plant." On Monday, 1,600 migrant workers, or 65 per cent of the total workforce of 2,500, returned to work at the Shenzhen plant after the Lunar New Year holidays, compared with 80 per cent the same time last year. This was despite offers of perks such as cash bonuses and a dinner banquet with wine and lucky draw prizes of iPhones, television sets, washing machines and smart-phones made two weeks before the Lunar New Year. "The lower show-up rate means the offerings are not attractive enough," Ngan said. "Those who have returned to work after the holidays are older, it is so hard to keep the younger ones." Danny Lau Tat-pong, the head of Kam Pin Industrial and chairman of the Hong Kong Small and Medium Enterprises Association, said the industrial and architectural coating firm only had 10 per cent of its migrant workers fail to show up at its Dongguan plant yesterday, about the same as last year. But he said this year's economic outlook was just as bad as it was last year. Lau estimated that less than one-third of Hong Kong manufacturers across the border made profits last year, with the remainder suffering losses or just breaking even. One garment-manufacturing member of the association produced a smaller number of samples for customers during November and December last year. "This is a clear signal of poor demand for the first half of this year," Lau said. Yuan deposits shrank in December at the same pace at which the mainland currency exited the banking system during the 2008 financial tsunami. But the Hong Kong Monetary Authority said the level of deposits is not a reflection of Hong Kong's status as an offshore yuan hub. Yuan deposits declined 6.18 percent to 588.53 billion yuan (HK$723.48 billion) after reaching a high of 627.30 billion yuan in November, according to the de-facto central bank. Following the Lehman Brothers collapse in September 2008, monthly yuan deposits fell at a rate of 5.54 percent, 6.27 percent and 9.48 percent in three consecutive months. The HKMA said total remittances of yuan for cross-border trade settlement jumped to 239.04 billion from 184.99 billion yuan, up 29.22 percent. "This shows that there are more two- way flows of trade settlement between Hong Kong and China,"said Frances Cheung, senior strategist for Asia ex- Japan at Credit Agricole CIB in Hong Kong. "Yuan may also be repatriated to the mainland via the foreign direct investment mechanism." The currency's pace of appreciation has slowed since the fourth quarter last year. Also, some firms have moved yuan from Hong Kong to China for some bill settlements at year-end. Meanwhile, local lenders are continuing to entice depositors. From today, HSBC (0005) is offering up to 1.5 percent interest rate for a minimum 20,000 yuan, three-month deposit. And DBS offers one-month and six- month time deposits for 1.55 percent and 2.05 percent interest rates, respectively. The Hong Kong dollar loan-to- deposit ratio slipped to 84.5 percent in December, versus 85.5 percent in November as total loans fell while deposits, especially time deposits, increased.
Airline stewardesses in cheongsam - Many airline companies in China also provide the cheongsam as uniforms for their stewardess and ladies ground workers. A US solar industry group opposed to a rival coalition's request for steep import duties on Chinese-made solar cells and modules warned in a report on Monday that more than 60,000 US jobs could be lost if such duties were imposed. "We cannot allow one company's anti-China crusade to threaten the US solar industry and tens of thousands of American jobs," said Jigar Shah, president of the Coalition for Affordable Solar Energy (CASE). The CASE report, commissioned from The Brattle Group, an economics consulting firm, says the job losses would come in the solar industry and in the broader US economy, even though there would be a gain in domestic solar manufacturing jobs. CASE says it represents companies responsible for 97 percent to 98 percent of US solar industry jobs, which it defines to include residential and commercial installation of solar panels as well as domestic manufacturing. The group strongly opposes a request for anti-dumping and countervailing duties on Chinese-made solar cells and panel filed by SolarWorld Industries America, the US arm of one of Germany's largest solar manufacturers. SolarWorld, along with six other US solar energy companies who have remained anonymous, has asked the US Commerce Department to impose duties of more than 100 percent on their Chinese competitors to offset alleged government subsidies and unfair pricing practices. The department had been expected to announce preliminary countervailing duties in the case on Feb 14, when China's Vice President Xi Jinping, meets with President Barack Obama at the White House. A Commerce Department official said on Monday the initial ruling has been delayed until March 5. But the department has made a preliminary finding of "critical circumstances" in the countervailing duty investigation, meaning any duties announced on March 5 would be applied retroactively from early December, the aide said. A second critical circumstances finding would have to be made for any anti-dumping duties to be applied retroactively, the aide added. Commerce is expected to announce preliminary anti-dumping duties in late March. US imports of the solar energy products from China have soared in recent years and were expected to exceed $2.4 billion in 2011, up from about $1.5 billion in 2010. The Solar Foundation, a nonprofit education and research organization, estimated in August there were slightly more than 100,000 Americans working in the solar industry and forecast 24,000 new jobs would be added in the coming year The Brattle Group study estimated a 50-percent tariff would shut out most imports from China, driving up prices for solar panels, pushing down demand and resulting in 14,877 to 43,178 fewer US jobs by 2014 than would be expected without duties. A 100-percent tariff would completely block imports from China, threatening 16,917 to 49,589 jobs by 2014, it said. Polysilicon is a key material used to make photovoltaic solar cells. China's government debt is at an "overall safe and controllable" level, said Premier Wen Jiabao, who pledged that funding for key projects would be ensured and steps would be taken to gradually digest the risks. "Through clean-ups and regulation, the trend of expanding investment vehicles has been effectively contained," Wen said. Wen's comments, reported in the People's Daily on Monday, were made in a speech at the Central Financial Work Conference in early January. The National Audit Office said earlier this month it had uncovered 531 billion yuan ($83.8 billion) in irregularities involving local government debt, which amounted to 10.7 trillion yuan as of the end of 2010. The scale of China's local debt has aroused concerns among investors, and some fear that defaults would cause a chain reaction and threaten the stability of the country's banking system. But Wen said the majority of local debt was in the form of "high-quality assets", such as infrastructure, that had healthy cash flow and promising returns. Wen warned against a simple approach of hitting the brakes on local debt and called for gradual solutions to the problem. "We must avoid turning local risks into comprehensive, systemic risks," he said. Meanwhile, the funding needs of key construction projects approved by the government, such as affordable housing projects, must be ensured, he said. He urged greater attention to, and control of, systemically important financial institutions, and stressed the role of private credit in the world's second-largest economy, given that it was properly regulated. Wen reiterated that the nation would "further improve the renminbi exchange rate formation mechanism and strengthen the flexibility of the renminbi exchange rate in both directions". "Declining revenue for local governments and a large volume of maturing debt have made local debt a focus of emphasis in China's financial stability this year," said Guo Tianyong, director of the Banking Research Center at the Central University of Finance and Economics. "While properly handling the debt stock, authorities should regulate the mechanism for further financing of local governments" and consolidate their debt payments into the budget, Guo said. Wang Tao, an economist at UBS AG, said that declines in the property market and the risks of local debt would not generate systemic risk in the near future, because the nation's policy stance had shifted to stopping the growth rate from falling too fast. "The government is seeking a balance between maintaining growth and dealing with the negative effects left over from the last round of fiscal stimulus," Wang said. China has set a target of 8 trillion yuan in new local-currency loans and 14 percent growth in broad M2 money supply for 2012, Reuters reported, citing sources familiar with government plans. This suggests a rise from 7.47 trillion yuan in new bank loans and annual M2 growth of 13.6 percent achieved in 2011, implying a further loosening of policy by the People's Bank of China to support the economy as growth weakens and inflation eases.
A Louis Vuitton store in Causeway Bay, among the luxury brands that are popular with mainland shoppers in the city. Luxury goods such as Louis Vuitton handbags, Gucci couture or Harry Winston jewellery watches could be taxed as a viable option to widen Hong Kong's narrow tax base. Indeed, a 3 per cent tax on luxury goods should be introduced, according to a survey earlier this month of 200 Hong Kong-based members of CPA Australia, a global accounting organisation. The proposal, which comes ahead of the government's budget announcement tomorrow, is not expected to affect low-income earners. Loretta Shuen Leung Lai-sheung, chairwoman of the Greater China tax division of CPA Australia, said the proposed tax on luxury goods - roughly defined as branded consumer goods - would not deter mainland shoppers in the city. That's in view of the 30 to 50 per cent tax on imported luxury goods and the 17 per cent value-added tax on the mainland, she said. "This is a far cry from the levy across the border," Shuen said yesterday. "Another reason they [mainlanders] shop here is because of the authenticity and high quality of goods." Sales of luxury goods in the city amounted to HK$50 billion in 2010. A 3 per cent tax on that amount would yield HK$1.5 billion in revenue to the government, Shuen added. She said it was time for the government to look for long-term measures to improve the tax system. A review of the tax base was necessary, she said, because only one in five people in Hong Kong paid taxes in 2010, with most from the middle class. Financial Secretary John Tsang Chun-wah, who is due to deliver his last budget speech tomorrow, wrote in his official blog on Sunday that a series of measures would be introduced to strengthen companies' ability to withstand economic downturns, as well as lifting spending on education, social welfare and health care. Calls are also growing to broaden the city's tax base. For instance, accounting firms such as KPMG, Ernst & Young, and Deloitte have recommended a goods and services tax (GST). Yvonne Law Shing Mo-han, Deloitte's national chief knowledge officer, yesterday said while there was a need to broaden the city's tax base, taxing luxury goods was potentially as controversial as introducing a GST. She said luxury goods must be clearly defined and that any tax rate must be carefully considered, because a definition that is too broad and a rate that is too high would affect the general public. Conversely, a definition that is too narrow and a rate that is too low would not generate significant tax revenue. "There are many issues needing to be addressed. For example, should we tax tourists or local shoppers or both? Should we tax local brands or foreign brands?" Law asked. "A plasma TV is a necessity to many families, but it may cost tens of thousands of dollars. A branded handbag is a necessity to many ladies, but it may be a luxury to others. How should we define luxury goods?" Chief executive candidate Henry Tang Ying-yen supported introducing a GST in 2006 when he was the financial secretary. However, the plan did not proceed due to public opposition. CPA Australia expects the government to post a HK$58 billion surplus for the fiscal year ending on March 31. Shuen said the government should also support small- and medium-sized firms by cutting their corporate tax rate to 13.5 per cent from the current 16.5 per cent.
The top Beijing official in charge of Hong Kong affairs has fended off suggestions that the central government has a favoured candidate in the chief executive election campaign. Peng Qinghua, director of the central government’s liaison office, said on Tuesday morning: “Hong Kong’s elections have to be held in a fair and just manner in accordance with the law. It is impossible that the central government has a favourite now for the [next] chief executive.” He was speaking before a Federation of Trade Unions’ reception in To Kwa Wan. Further pressed by the media as to whether both Henry Tang Ying-yen and Leung Chun-ying were suitable candidates, Peng said: “Everything has to be done in accordance with the law.” His comments echo those made by a top mainland leader in mid-January at a meeting of nearly 100 city deputies to the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) in Zhuhai. Li Jianguo, vice-chairman of the NPC Standing Committee, praised Tang and Leung for having done “plenty of work” for Hong Kong. His remarks, widely interpreted as a dismissal of claims that Beijing had a favoured candidate, marked the first time that an official confirmed the central government’s neutral stance on the chief executive contest. Several deputies at the meeting said Li, who is also the Standing Committee’s secretary general, described Tang and Leung as men who “love the motherland and love Hong Kong”. Li listed these qualities as the top of three criteria for judging chief executive hopefuls.
Kam Kwan-lai (left), younger son of Yung Kee Restaurant founder Kam Shui-fai, leaves the High Court in Admiralty with his son Carrel Kam Lin-wang on Tuesday. The older brother in a family feud involving the famous Yung Kee restaurant was portrayed by his siblings as "dominating and always wanting to be in charge", in court on Tuesday. That description of Kinsen Kam Kwan-sing was heard at the Court of First Instance as his younger brother, Kam Kwan-lai, rejected the accusation that he was trying to grab control of Yung Kee Holdings. Kinsen Kam is asking the court to issue a winding-up order of the holding company, which could result in liquidators selling the shares on the open market or one brother buying out the other’s stock. The two brothers, who own the Yung Kee restaurant in Central, fell out in a row over shares after the death of their father, the court has heard. Kinsen Kam, 64, through his lawyer, said winding up the company was not his primary goal: rather, he could buy out his brother’s 55 per cent share or his brother could buy out his 45 per cent share for HK$669 million. The valuation of Yung Kee Holdings, at up to HK$1.5 billion, does not include the value of antiques, fine paintings, furniture and cutlery, the court heard. Jat Sew-tong SC, for Kinsen Kam, said his client would pursue a winding-up order only if the court ruled the shares should be sold at a discount in the event of a buyout. Kinsen Kam is arguing that he has been running the company in a quasi-partnership with his younger brother, and therefore his shares should be sold at full value – in contrast to a case where a shareholder sells his stake to another shareholder at a discount. If the company is wound up, its shares would be sold at full value by the liquidator and anyone – including Kinsen Kam – could bid for it, Jat said. John Bleach SC, for Kam Kwan-lai, cited a description given by his client’s sister, Kelly Kam, of their older brother. “Even as a child, Kinsen Kam was dominating, always wanting to be in charge,” Bleach said, reading from a court document. “I have also seen how he can be bullying and trying to intimidate in business and at the restaurant. In particular, he does not like his decisions or authority to be questioned, and if they are he can be very stubborn,” according to evidence by Kelly Kam. “He seems to me to have no thoughts or ideas on how to develop the business,” the evidence went on. Kelly Kam also said Kinsen Kam’s children were lazy, lacking in motivation and expertise in running the business. Describing Kam Kwan-lai, Kelly Kam stated in her evidence: “My brother … is not dominant and forceful. He has a down-to-earth personality.” “He has greater skill and expertise than Kinsen Kwan,” she stated. Lawyers for Kam Kwan-lai stressed that the proceedings only concern Yung Kee Holdings, which has no involvement with the business of the restaurant other than being its holding company. “Whatever happens in this proceeding, it will have absolutely no impact on the business of the restaurant, which continues to be very successful,” solicitor Nigel Francis said. The hearing continues before Mr Justice Jonathan Harris. Samsung Securities, the largest brokerage firm in South Korea in terms of market value, said on Tuesday it would downsize its Hong Kong office as part of its restructuring plans. The Hong Kong office, with more than 80 staff members, is the biggest overseas office of Samsung Securities and will be the only overseas office affected by the restructuring, a spokesman from the company’s Seoul headquarters said. “The downsizing will be limited to Hong Kong,” he said. “A challenging market environment is the main reason. Some global investment banks have already announced the downsizing of their Asia businesses these days.” The spokesman said there were no plans to completely shut down its business in Hong Kong, or to downsize the company’s other offices in Tokyo, Shanghai, New York and London. “Our HK business has three major divisions,” he said. “They are a Hong Kong equities brokerage, Korean equities brokerage and Hong Kong investment banking...some divisions may close temporarily.” About 20 of the Hong Kong staff are in brokerage services. Samsung Securities employ 3,200 people in Korea and 160 its overseas offices as of the end of last year. The Hong Kong office was opened in 2001, according to the company’s website. It was renamed Samsung Securities Asia in 2009 when the company injected an additional US$100 million into the office, aggressively hiring more than 50 extra staff to expand into investment banking, proprietary trading, hedge funds and Asian equities brokerage. A source said the money invested in the Hong Kong office had almost dried up because of “challenging market environments”. He said the company had decided to slow down its overseas expansion and turn its attention to business at home, especially high net-worth individuals in Korea. Another independent source said the brokerage would probably close down because of ebbing interest in Asia stocks, which fell farther than developed market stocks when the eurozone debt crisis hit global stock markets last year. An insider at the company said the staff was told about the downsizing at a townhall meeting late on Tuesday. The entire equity sales and research teams would be laid off, the source said. Samsung Securities declined to confirm or comment on the actual number of job cuts, but said it would release further details on Wednesday. China's top economic planning agency and the Shanghai government yesterday jointly announced plans to establish a huge, onshore market for the yuan within three years, directly competing with Hong Kong's own ambitions for offshore trading in the mainland currency - The National Development and Reform Commission (NDRC) and the Shanghai government said the plan to make Shanghai the global centre for yuan trading, clearing and pricing was part of broader efforts to make the city a financial centre like London or New York by 2020. Shanghai's yuan-trading hub will aim to lift its annual non-forex financial market volume to 1,000 trillion yuan (HK$1,228 trillion) by 2015 from less than 400 trillion yuan in 2010, but Hong Kong-based analysts said the city's markets should comfortably meet the challenge from Shanghai. Hong Kong economists were also sceptical, saying the plan paid lip service to bolster the investment community's confidence in Shanghai's long-term effort to transform itself into a global financial centre. "The term `yuan trading centre' easily stokes fears in Hong Kong, but obviously Shanghai will focus on the onshore market while it doesn't necessarily mean Hong Kong's importance should be played down," said Gu Weiyong, chief investment officer at Ucon Investment Management. "The plan looks extremely ambitious. It is a statement to established Western financial hubs like London and New York that China, including Hong Kong, will begin to compete with them in attracting capital thanks to the yuan's rising profile," Gu said. The NDRC said it wanted the Shanghai market to set benchmark levels for the yuan prices and yuan lending rate worldwide, which bankers said showed that China wanted to tell the world that the mainland government would decide on the yuan's level - not offshore markets. The NDRC also wants overseas companies to sell yuan-denominated shares on mainland stock markets. Although it has not yet submitted a timetable or other details, such a change would directly compete with the Hong Kong stock market which has been encouraging companies to issue yuan shares since September. The NDRC-Shanghai statement, however, played down the challenge to Hong Kong, saying Shanghai's plan would "strengthen co-operation with Hong Kong" as the two cities were important to China and "complementary to each other." "Hong Kong could beat Shanghai in terms of attracting international traders as Hong Kong has free flow of capital, a good legal system as well as many international banks and brokers," said Joseph Tong Tang, of Sun Hung Kai Financial. "International investors cannot freely trade in the Shanghai market, while the mainland legal system is different from international practice. It's more likely that Shanghai will act as an onshore yuan trading centre for mainland firms and Hong Kong will be the offshore trading centre for yuan for international investors." Earlier this month, Britain said it was teaming up with Hong Kong to secure London a top spot as an offshore trading centre for the yuan.
Hong Kong’s coffers are full again as the city’s government prepares to announce another hefty budget surplus Wednesday, with calls for sweeteners to support the slowing economy and the city’s low-income groups. But any budget plans are likely to be constrained by political reality: a change of government in a few months. Financial Secretary John Tsang will deliver the speech at 11am, with economists forecasting goodies similar to previous budgets like one-off tax rebates and temporary waivers of public housing rental, but no big surprises. The government is likely to report about HK$65 billion (US$8.4 billion) budget surplus for the current fiscal year ending March 31, 2012, a person familiar with the situation said Monday, adding that Tsang will also say Hong Kong’s GDP rose about 5% in 2011, but forecasts slower growth, of below 3%, this year due to the weakening global economy. “Given the imminent change in top government posts, we expect the upcoming budget to be long on one-off concessions and short on new vision,” Standard Chartered economist Kelvin Lau said. “One-off relief measures should prove timely given that growth is set to slow further in 2012.” For the property market, Citigroup also believes the Hong Kong government is unlikely to announce any new measures in the upcoming budget that may hurt the property market, given prices stopped rising in June. “Hong Kong government officials have no intention of causing a home price collapse, especially when senior government officials are worried about the European debt crisis,” Citigroup said in a report. While Mr. Tsang is expected to push forward infrastructure projects that have been widely flagged to create jobs as an economic slowdown starts to bite, Hong Kongers probably can’t count too much on other measures.
China lost an appeal at the World Trade Organisation on Monday after complaints about its restrictions on raw material exports, but will be able to maintain its supply stranglehold on rare earths, crucial ingredients in many high-tech products. A WTO panel on Monday said Beijing violated global trading rules by restricting exports of raw materials like bauxite, coke, magnesium, manganese and zinc, which inflated prices and gave domestic Chinese firms an unfair competitive advantage. Many countries later accused China of choking off global supplies of rare earth metals, causing prices to rocket. Although rare earth metals were not part of Monday’s ruling, a number of US lawmakers urged the United States to use the decision to launch a new case to force Beijing to lift its rare earth export restrictions. “The decision of the appellate body is a huge victory for the United States,” said Michael Silver, chief executive of American Elements, a US-based rare earth processor. “It confirms the existence of the two-tiered price structure that has caused so much concern.” EU Trade Commissioner Karel De Gucht said the decision would force China to drop export restrictions for the materials mentioned in the case and for rare earths. But while China might be forced to tweak some of its export policies, analysts said Beijing’s strategy to restrict rare earth supplies and control prices would likely remain unchanged. “It is still too early to say what the impact will be but I can’t see it having a big impact on prices – the main issue will still be supply and demand,” said Vivian Pang, an analyst with the Asian Metal consultancy in Beijing. China controls 95 per cent of global rare earth supplies – a group of 17 elements used in new industries like renewables and hybrid cars – and its dominance means that it is in a strong position to disregard WTO rulings if it so wishes. The United States, European Union and Mexico had all launched WTO legal cases in 2009, challenging China’s right to restrict raw material exports. “The question is whether China will actually stop or at least reduce export taxes,” said Silver. “I expect they will, so they remain WTO members in good standing.” China’s Ministry of Commerce said on Monday that it “deeply regrets” the ruling but would comply. Tu Xinquan, associate director of the China Institute of WTO Studies, said Beijing was likely to have to adjust its policies in order to comply – but its overall strategy need not change. “There are other ways it can meet its objectives,” he said. WTO provisions allow a country to limit trade on health and environmental grounds, but it said on Monday that China had so far been “unable to demonstrate” that its restrictions helped conserve resources, cut pollution or improve public health. Beijing has said that unregulated rare earth exploitation had caused untold damage in big producing regions like Inner Mongolia. It has also said it should not have to bear so much of the global output burden, especially as domestic demand grows. The idea is to continue to play up the environmental impact – the issue is whether it can convince the WTO that its policies are applied equally to foreign and domestic firms, hence the emphasis on the domestic output cap. China deployed similar arguments in 2004 when imposing quotas on coking coal exports. Despite the threat of WTO action, exports have dwindled from 10 million tonnes a decade ago to 3.6 million tonnes last year, and it is now a huge net importer. In the last few years, Beijing has banned dozens of unlicensed rare earth miners and raised entry thresholds. It has also imposed strict export limits and cracked down on smuggling. It issued export quotas amounting to 30,184 tonnes last year, and said the figure for this year would remain unchanged in order to “guarantee international demand”. Exporters used just 56 per cent of their allocations last year. China has rejected claims that local firms have gained an unfair advantage, saying nationwide output caps – which are compliant with WTO rules – have also raised domestic prices and forced local users to scale back operations. The question for the WTO is whether or not Chinese firms gain an unfair advantage, but there is nothing it can do to stop domestic rare earth producers from selling to domestic consumers at a cheaper price, said Tu of the Institute of WTO Studies. “I don’t know if domestic firms get cheaper supplies but if it is just enterprises setting prices, rather than the government, there is nothing anyone can say about it.”
Being able to afford pork was once a symbol of wealth for Chinese. Today, the mainland produces half of the world's pork and because pork prices weigh so heavily on the nation's inflation data, some internet commenters even refer to the CPI as the "China Pig Index". Steadily growing demand for the meat and widespread concerns for food safety across the mainland has attracted more investors to dabble in the pig-raising industry in recent years, among other agriculture-related sectors. The best-known example may be the plan by Chinese internet company NetEase to run its own pig farm in order to produce "safe, delicious" pork. More than two years after company founder Ding Lei announced the plan in 2009, NetEase recently released the design of its pig farm, which it started building in the mountains of Anji , Zhejiang , in March. Bai Lei , director of marketing for NetEase's agriculture department, said the decision to locate the farm in the mountains was made because the area has an advantage in terms of epidemic prevention - the company had promised to not medicate pigs. The farm, covering about 80 hectares of mountain land, features more than 30 buildings, including offices, feed-storage facilities and pigsties, which will house around 100,000 pigs when the farm is operational, Bai said, without giving a starting date. "To protect the local ecology, we haven't ruined the vegetation or altered the original terrain," he said, "so not all of the 80 hectares of land is used. We used just a small portion of it to construct buildings". The pigs will live in overhead structures built on stilts in order to keep vegetation where it is. Unlike traditional pigsties, which are dirty and crowded, the NetEase pig farm will provide an average of two square metres of space for each pig, it said, adding that these measures provide a safer environment for the pigs so they are kept healthy enough to not need medication. Ding's motivation to raise pigs reportedly came as a way to provide safe meat after a hotpot restaurant served him pig-blood pudding that he believed to be unsafe. He told the Nanfang Daily in a report early last year that the mainland's breeding industry used 97,000 tonnes of antibiotics in 2010. "Can you imagine how many antibiotics each chicken and pig has eaten?" he said. According to the National Bureau of Statistics, the mainland produced more than 50 million tonnes of pork in 2010, accounting for 64 per cent of all the meat it produced. Li Shuilong , head of the China Meat Association, said in November that the massive figure accounted for 49 per cent of the world's pork production that year. NetEase has not said how it will price its pigs, but Bai said the prices would definitely be high enough to ensure profits. "Because our initial plan was to extend [the pig farm gradually], we would definitely need profits to make this happen," Bai said, adding that a detailed pricing scheme would be released when the time is right. He Zhonghua , an analyst from Chinameat.cn, a website under the China Meat Association, said NetEase's way of raising pigs was not worth expanding. "The market for high-end pork is limited, and this makes it hard to enlarge its production," he warned, adding that many businesses in the meat industry had tried to be different in management, but none of them had achieved large outputs. "Besides, it's basically impossible to always keep domestic animals away from illnesses," he said. "One has to consider everything in the raising process, from the selection of species to the feed, which might contain residual pesticide." He believed that the solution to providing safe pork was the replacement of individual pig farmers by large corporate pig farms. "When the number of pigs raised on a farm is big, the potential profits are higher, and the owner won't bother taking the risk of using `lean meat powder' to lower the pigs' fat content," he said.
Two customers enter a Starbucks cafe in Shanghai yesterday. Starbucks Corp yesterday said it will raise prices on certain coffee products in China from today to offset higher cost. The price increase, ranging from 1 yuan (16 US cents) to 2 yuan, will mainly cover "several" coffee drinks, including espresso-based beverages and fresh-brewed coffees. Price of food items, tea drinks and blended beverages such as hot chocolate and juice will remain unchanged. 81,000 foreign experts were working in Shanghai at the end of last year - a third more than in 2005, the local labor authority said yesterday. Shanghai has more foreign experts - overseas professionals recognized by a government certificate - than any other city in China, said the local human resources and social security bureau. Indeed, one in six of foreign experts in China are based in Shanghai. Certified foreign experts mostly work in cultural, educational and research sectors. This category does not include other foreigners legally hired to work locally on work permits. At the end of 2010, some 210,000 foreign nationals were living in Shanghai, according to the latest population census. Over the past five years, 370,000 foreign expert employment contacts were established or renewed, officials said. Meanwhile, the city is attracting growing numbers of Chinese graduating from overseas institutes and returning to China to begin their careers. The bureau said there are currently about 95,000 returned Chinese being employed or running their own businesses in Shanghai - up by more than 30,000 from 2005. Officials said in recent years, Chinese graduates from overseas schools have set up 4,400 companies in Shanghai with investment of US$620 million. The city is also aiming to attract 1,000 more senior professionals from foreign countries over the next five years. Incentives will include supporting the opening of more international schools in Shanghai, lowering tuitions for children of foreign professionals and cutting visa red tape, officials said. The government also plans to develop more hospitals accredited by foreign insurers so foreigners working in Shanghai can have local medical bills covered by insurance policies bought overseas. German Chancellor Angela Merkel will use her trip to China to lobby for trust in a euro zone that is struggling hard to solve its debt crisis by imposing tougher budget rules and implementing bigger rescue funds, a senior government official said Tuesday. The chancellor will seek to restore confidence in European leaders' efforts to stabilize the situation in the single currency bloc, said the official, who declined to be identified, during a briefing on Ms. Merkel's trip. Apple Inc recently released its fiscal 2012 first quarter results. The company posted record quarterly revenue of $46.33 billion, with iPhone sales totaling 37 million units. At the earnings call, Apple CEO Tim Cook said China is an "extremely important market" for the company, and it will continue to look at how to grow its presence in the country. But China is not simply seen as a potential growth market for Apple products. The country often is regarded as the company's main production base. US consumers could be misled when they turn over an iPhone and see the "Made in China" label. They often think that means China is taking US jobs and making money from US products. The reality is that this impression is not an accurate reflection of the situation. A report written by three US professors - who attempted to capture value in global networks by using Apple's iPad and iPhone as research examples - shows that only about "$10 or less in direct labor wages that go into an iPhone or iPad is paid to Chinese workers". The report points out that while the Apple products - including components - are manufactured in China, the primary benefits go to the US economy. That's because Apple continues to keep most of its product design, software development, product management, marketing and other high-wage functions in the US. China's role, the report concludes, is much smaller than the casual observer would think. The supply chain for the iPhone 4 actually presents a good example of how it works: The device was designed by Apple engineers in the US, sourced with components from different parts of the world and is only assembled in China factories owned by the Taiwan-based company Hon Hai Precision Industry Co Ltd, also known as Foxconn Technology Group. One of the report's authors, Jason Dedrick, a professor at Syracuse University, said that China makes very little money from these products. Rather, much of the value in high-end products such as Apple's, is captured by the brand, distributors and retailers - the beginning and the end of the process. The report said that each unit sold in the US - at a price of around $600 - adds between $229 and $275 to the US-China trade deficit (the estimated factory costs of an iPhone or iPad). However, the portion retained by the Chinese economy is "a tiny fraction of that amount". Another of the report's authors, Kenneth L. Kraemer, a professor from the University of California, said that most consumers simply don't quite understand how global supply chains work in this case. "They (people who think China's role is bigger in the production of Apple products) focus only on the trade deficit with China, and therefore they think China has a bigger role. What they don't understand is that China gets all sorts of input from other countries from Japan, the US, Malaysia and so on. So China's contribution is really a small amount of labor," Kraemer said. "They think China's role is bigger simply because they don't understand how global supply chains work. They think everything from an iPad and iPhone is made in China rather than just shipped (components) and assembled there," Kraemer said.
Business on a handshake fits Ferragamo just fine - Italian luxury giant's old-fashioned way of operating won't change despite cost pressures to shift factories to China. Italian luxury fashion house Ferragamo has done business the old-fashioned way for decades with the factories that make its goods - "a firm handshake and a look in the eye". And this very Italian way of doing business will continue even amid technological change and cost pressures, according to company chairman Ferruccio Ferragamo, who visited Hong Kong late last year. With some blaming expensive production costs for Italy's economic troubles, the pressure for the country's highly regarded manufacturers to outsource to cheaper countries such as China is enormous. But Ferragamo, chairman of Florence-based Salvatore Ferragamo Italia, a luxury goods company founded by his father, Salvatore Ferragamo in 1928, is standing firm. "Because we are 100 per cent made in Italy the market is worried about the high costs and all that," Ferragamo said, noting that his competitors had relocated part of their production outside Italy, either officially or unofficially. "But we have a very flexible structure that means we can compete very well. We have many factories that produce exclusively for Ferragamo. The agreement is a handshake, a look at them in the eyes, but no contract." Such an arrangement, he argued, was time-tested and a win-win formula because Ferragamo could walk out when the factories failed to perform, and the factories did not have to worry about losing contracts to others because the partnership would continue indefinitely. One factory has worked for Ferragamo for 58 straight years. In addition, when the market fluctuated, quantities could be varied more flexibly in the absence of a contract, Ferragamo said, which helped both factories and the company. "Their problem is our problem because they are our factories," he said. "If their mentality is very good and they are very much committed to us, we respect that and we try to improve them. "We try to make them evolve. We are not looking to move production outside Italy where it might be a lot cheaper because they belong to a family." Ferragamo is not blind to the problems of his country: the government was too slow and not practical enough, and the business community faced high costs and little flexibility. He also said finance had increasingly become an issue for many companies because bankers were very strict about making loans to avoid risks. In the manufacturing sector, liquidity has become difficult because not many firms paid on time. More Italian businesses might have moved to Asia to control output costs and raise funds through a stock market listing, Ferragamo said. China, meanwhile, has expressed increasing interest in acquiring Italian brands and industrial know-how since the unfolding of the euro-zone debt crisis. In January, machinery maker Shandong Heavy Industry Group-Weichai Group of Jinan reached a deal with the debtors of Italian luxury yacht group Ferretti to acquire 75 per cent of its share at €374 million (HK$4.1 million), more than half of which would finance debt. Small and medium enterprises are also seeking deals in Italy. Sitoy, a Hong Kong-listed luxury leather goods manufacturer for Prada and Coach, acquired Italian brand Tuscany in February last year. It said the economic conditions opened more potential acquisition targets in Italy. Ferragamo said his company's listing on the Milan stock exchange last year was more for management reasons - the family has 25 grandchildren of the founder competing for three places in the firm. Ferragamo's shares have advanced 30 per cent since it went public in Milan in June. The stock closed at €12.53 on Friday. Ferragamo said it chose not to list in Hong Kong even though mainland China remained an important market for the brand. It planned to enter as many as eight new mainland cities over the next three to five years. "We are 100 per cent made in Italy. It will be funny not to have the listing certificate in Milan but somewhere else," he said. "If I could go back I would have done exactly the same thing."
Private jet operators are warning that Hong Kong will lose out to Shenzhen if it ignores the acute shortage of aircraft parking space at Chek Lap Kok. The number of business jets registered in the city has surged to 50 from two since 1998 when the airport's Business Aviation Centre (BAC), catering to mainland firms and wealthy clients, opened. But the BAC has not expanded as rapidly, forcing customers to park their planes at a remote area. "Sometimes we have to park our clients' jets on the tarmac between the two runways at the far end of the airport island," said Wyn Li, director of marketing and client relations for Metrojet, one of Asia's largest private jet operators. It takes several hours to tow aircraft back to BAC for take-off, according to Li. Business Aviation Asia (BAA), a Shenzhen-based business jet operator, recently struggled to find a bay at the city's airport to change an aircraft engine's waste oil. The overhaul, which usually takes eight hours, took three days to complete and made the owner very frustrated, said Jeffrey Lowe, a former director of sales and marketing at BAA. "If Hong Kong continues not to address the [lack of] space issue, it is quite logical for the owners to look for alternative airports in the Pearl River Delta," Lowe said. Metrojet is seeking to persuade its clients to park their jets at Clark International Airport in the Philippines, where it has invested in a maintenance facility. The additional costs arising from parking overseas could easily be offset by the lower labour costs, parking fees and jet fuel prices at Clark, Li said. Private jet operators want the Airport Authority to consider their needs and incorporate the development of business aviation into their expansion plans. The authority recently completed its public consultation on the development of a third runway, which included plans for a new business jet facility. "Airport planning is a constraint to business aviation in Hong Kong, said Chris Buchholz, chief executive of newly formed Hong Kong Jet, a unit of HNA Group. "I think common sense will prevail and we will have a second FBO [fixed-base operator] in Chek Lap Kok," Buchhloz said. Hong Kong Jet is among the interested participants in the upcoming bidding to be the second fixed-base operator - like BAC for business aviation. In theory, the existing two hangars and apron area at BAC can accommodate up to 40 private jets. But private jets will occasionally be instructed to park at a remote area when the number exceeds 30, according to Ng Chi-kee, BAC's deputy director of airport operations. "Parking a private jet, which will not be in use for a few days, at the remote parking base could enhance the efficiency and movement of aircraft in the ramp area," Ng said. Unlike commercial jets, which have a tight turnaround time, business jet operators usually have lead time of several days. Ng said BAC was unaware of private jet operators' complaints, but they had been in constant contact with BAC to enhance their operation. Private jet operators say that a second fixed-based operator would ease the lack of parking space at the current facility. About two-thirds of the 50 private jets in Hong Kong have to park outside of the two hangars. BAC's third hangar is due to open in the first quarter of next year, but it can only provide limited relief from the overcrowding. A new operator for a business jet facility could bring about competition that could lower the handling fee that BAC, which has a market monopoly, levies. BAC charges hangar rates of HK$100,000 to HK$1 million a month, depending on the size of the aircraft. The city’s cold snap discouraged many mainlanders from visiting Hong Kong over the Lunar New Year holidays, the Tourism Board chief said on Monday morning. James Tien Pei-chun said the total of 700,000 mainland visitors to the city was well below expectations – it was only a 6 per cent increase from last year, while a 10 per cent rise – over 1.1 million visitors – had been expected. “Preliminary analysis shows that it was due to the weather. The second to the fourth day of the Lunar New Year was especially cold,” Tien said during a radio interview on Monday morning. The number of visitors arriving as individuals increased 4.7 per cent while those travelling with tours grew by 17 per cent, he said. Another reason for the shortfall is an increase in the price of hotel rooms, he said. That rise was caused by a shortage of rooms, he said, disagreeing with recent remarks by a spokesman for the hotel industry. Michael Li Hon-sing, executive director of the Federation of Hong Kong Hotel Owners, said recently that hotel room occupancy was not at saturation level. Tien said Li’s figures were wrong, and that hotel room occupancy during this year’s Lunar New Year was over 90 per cent. Hong Kong currently has about 62,000 hotel rooms, and in a year’s time there will be an estimated 10,000 more, Tien said. But that will still leave a shortage, since the number of visitors next year is expected to grow by 2 million, he said. Most visitors during Lunar New Year are from the mainland. The financial secretary yesterday pledged to expand spending on education, welfare and health care and hinted at more tax breaks and concessions ahead of his last budget speech on Wednesday. John Tsang Chun-wah wrote in his official blog that a host of policies were needed to boost the financial well-being of Hong Kong people before an impending economic storm caused by the European debt crisis. "I would ... adopt a series of measures to stabilise the economy and strengthen businesses' ability to resist adversities," Tsang wrote. His comments came as Chief Executive Donald Tsang Yam-kuen yesterday repeated his warning of the severity of the European economic crisis at the World Economic Forum being held in Davos, Switzerland. "Now, what is happening in Europe is not only the lack of discipline of the market ... [it has been] expanding too quickly," he said in a TVB (SEHK: 0511) interview from Davos. "What is more, there are also problems in monetary management [and] problems with the fiscal systems, fiscal management in [the European countries]." The situation today was more worrying than that during the Asian financial crisis in 1998, as "it's rare to see all these three problems emerge at the same time", Donald Tsang said. The chief executive earlier told an audience in Davos that he had "never been as scared as now" about the gravity of the crisis. Echoing those remarks, the finance chief said the government would be "preventive" in its approach and "ready" for the economic crisis, and would implement measures "as soon as possible" to minimise its impact on the city. John Tsang also said this year's budget would refer to the policies he introduced in 2009, including specific measures to help the middle class and the underprivileged. He wrote that there would be more investment in areas including education, health care and social welfare, in order to "relieve the burden on the next administration". He would also "increase pragmatically all expenses related to livelihoods" by implementing one-off relief measures included in Donald Tsang's policy address in October. Donald Tsang said he would rather the economic meltdown plagued the city sooner rather than later. "If it really bursts, I would like to see it take place during my term so that I have the chance to deal with it," he said. "If it takes place during the government transition, it could be more troublesome to us." He quickly added: "I didn't mean that I want it to burst ... But we have to be prepared [for the worst]." The budget is likely to include measures such as waiving property rates, lifting the ceiling for mortgage relief, and extending the entitlement period for tax deduction from 10 to 15 years, the Post has learned. But cash handouts would not be given to adult permanent residents as they were last year, a government source said. After what felt like an endless holiday season, the initial-public-offerings market in Hong Kong is finally stirring to life once again. But companies had better act before it cruelly shuts again. Hong Kong shares have been on a tear in 2012, ratcheting up 11% of gains, with one of last year’s big losers, Li & Fung, up 24%. The Hang Seng Index is taking a slight breather on Monday, the eighth day of the Lunar New Year, as investors take profits after six consecutive sessions of gains. For now, the horror of 2011 seems to have been forgotten. “If I could annualize the [year-to-date] return I’d lock up shop now!” writes Citigroup Asia Pacific strategist Markus Rosgen, quoting an investor. Call it the effect of the dragon if you will, but as Citi notes, markets in Hong Kong and Taiwan have tended to move higher after the Lunar New Year holiday. The gains are being magnified this time as Hong Kong stocks claw their way back up from very cheap levels, with the prospect of a prolonged low-rate environment giving them a shot in the arm. Plus, there is just a lot of cash to be put to work. Trading volumes in 2011 were depressed, flirting with 2009 lows, according to Citi, while bank deposits piled up. In Hong Kong, bank deposits at the end of November were up 10% from a year earlier; for Asia excluding Japan, they were up 14%. That Asian total is the equivalent of $2.2 trillion, no chump change. Bankers last year said their pipelines were just bursting with stalled equity, debt and M&A deals, with 146 IPOs worth $25.4 billion postponed in Asia in 2011, according to Dealogic. Some of the more eagerly anticipated IPOs include offerings by China Everbright Bank Co., Manchester United Ltd. and Mongolia’s Erdenes-Tavan Tolgoi Co. One of the first major IPOs could be that of Canada’s Sunshine Oilsands Ltd., which Dow Jones Newswires reports is kicking off its pre-IPO marketing this week as it seeks to raise up to $700 million. There are just some slight obstacles ahead that could derail things again—like, Greece’s defaulting on its debt payments in March.
Hong Kong's gross domestic product likely grew 5% in 2011, in line with government forecasts, a person familiar with the situation said Monday. Financial Secretary John Tsang is due to report the GDP data and forecast economic growth for this year on Wednesday, when he presents the government's budget for the fiscal year starting April 1. The person familiar with the situation said the growth forecast for 2012 is likely to be below 3%, given the weakening global economy. Economists say the global slowdown will be more visible during the first half of 2012, dragging on the city's economy—though strong domestic consumption and tourism spending could lessen the effect. The Hong Kong government will likely report a budget surplus of around 65 billion Hong Kong dollars (US$8.38 billion) for the current financial year ending March 31, due to surprisingly strong land sales and stamp-duty receipts, the person said. That compares with a surplus of HK$75.1 billion in the previous fiscal year. The city's economy expanded 7.5% in 2010, after contracting 3.3% in 2009.
Beijing has moved to outlaw foreign investment in the construction and management of villas on the mainland - though the definition of a villa remains to be clarified. In an amendment to foreign investment rules just published by the National Development and Reform Commission (NDRC) and the Ministry of Commerce, villa construction and management was re-categorised from "restricted" to "prohibited". The change, contained in the revised Catalogue of Industries for Guiding Foreign Investment (2011 Amendments), means that foreign investment in this type of real estate business is banned in the future. The amended catalogue will become effective today. The new catalogue lists industries in which foreign investment is either "encouraged", "restricted", or "prohibited". It replaces the catalogue that took effect in December 2007. But in the absence of a clear definition, there is no certainty in the property industry about what qualifies as a villa. In the past, the central government appeared to have accepted the concept that a villa meant a single detached court villa, global law firm Mayer Brown noted in a commentary on the revised catalogue. This indicated that any semi-detached villa, townhouse, overlapped villa or penthouse might not be categorised as a villa real estate project. However, there is now talk in the market of the likelihood that the Ministry of Land and Resources is considering an official definition of the term "villa" that might embrace semi-detached villas or townhouses, thus banning foreign investment in such "quasi-villa" projects. "It is yet to be seen how and when such a legal definition would be formulated and officially released," Mayer Brown said. Against the background of uncertainty, analysts said the amended catalogue could have a negative effect on new foreign investments in the real estate sector over the next few years, although they believed the impact would not be severe. "Since the prohibition of any land supply for villas has been provided for in various rules since 2003, the impact of the [revised] Catalogue on the real estate industry may not be huge in this regard," Mayer Brown said. The prohibition of land supply for villa projects was issued in February 2003 by the Ministry of Land and Resources. Later, in December 2006, the ministry and the NDRC issued the catalogue on prohibited land use projects, which categorised a "villa real estate project" as a "prohibited land use project". Amendments to the foreign investment rules contained in the revised catalogue affect a number of industries including mines, food processing, and textile manufacturing. Law firm Morgan Lewis said the revisions showed the central government's increasing desire to encourage foreign investment in high technology, high-end manufacturing, clean energy, energy saving, environmental protection and modern services.
Kate Moss modelling for Mango, which is moving into China. With an eye on the rising spending power of China's middle class, international fast-fashion retailers are rushing to open stores there, particularly in second-tier cities. Among the latest to declare their expansion plans is Spanish clothing retailer Mango, which plans to open a further 800 stores in China as part of a global expansion programme, according to media reports. The fashion label already has 200 stores in China and is reported to be targeting a 10 per cent contribution to its total global revenue from China by next year. European fashion company C&A is also expanding aggressively in China. It has already opened 11 stores there and plans to have 150 stores distributed all over the country by 2015. US-based fashion retailer the Gap has expanded to Tianjin after opening in Beijing, Shanghai, and Hangzhou; while another fashion retailer, Forever 21, has also leased a 2,500 square metre store in Sun Hung Kai Properties (SEHK: 0016)' Beijing apm shopping mall. The lure of strong and growing retail sales in the country is proving irresistible to international retailers, and the latest sales data released by the Ministry of Commerce showed that sales at China's main retailers and restaurants during the week-long Lunar New Year holiday rose 16.2 per cent from a year earlier to 470 billion yuan (HK$576 billion). The data showed that sales of clothes, jewellery and food by value jumped 18.7 per cent, 16.4 per cent and 16.2 per cent on year, respectively. Ada Nip, head of retail at property consultancy DTZ's North China division, said fast-fashion retailers were expanding the most aggressively, targeting such second-tier cites as Qingdao. "The retail markets of the second-tier cities are becoming mature and the spending power of shoppers is rising. Also, more new shopping malls have been completed." Though rents were similar to those charged in first-tier cities, operating costs were lower, as was competition, Nip said. Simon Lam, executive director of retail services for the mainland at consultancy Colliers International, said more new retailers from Europe and Russia had begun to study the development potential of China's retail market since the European debt crisis. "Most are fashion retailers. But it will take at least one or two years to finalise their expansion plans." Tom Gaffney, national director and head of the retail department at Jones Lang LaSalle, said many international brands had by now established or identified target locations in first-tier cities and were looking at prime locations in second- and even third-tier cities. "Working with numerous luxury groups they are also looking for the same opportunities. These cities provide the next wave of opportunities and growth for these retailers." Gaffney said that given relatively depressed markets in Europe and in the USA, many international retailers and luxury brands were allocating large amounts of capital and budgets to Hong Kong and the mainland. Lam said the development of a high-speed rail network had also encouraged international brands to expand into second-tier cites. So far, however, the expansion had not driven retail rents in second-tier cities higher, according to Nip. "The malls are newly-developed. And asking rents will be low if they all launch at the same time. I do not think we will see significant growth in rents until leases come up for renewal in two or three years' time."
European Union Trade Commissioner Karel De Gucht addressing trade talks at the EU-Belgium pavilion in Shanghai in July 2010. The EU is drafting a law in response to protectionism in China's public markets, De Gucht told the German magazine in an interview published on Monday. The European Union is drafting a law in response to Chinese protectionism in public markets, EU trade commissioner Karel De Gucht told the German Focus magazine in an interview published on Monday. “My colleague, internal market commissioner Michel Barnier, and I are preparing a draft law on public markets so that we can respond if the Chinese continue to deny European companies access to certain segments of the market,” he said. The law would also make it possible for the European Commission to close access to public markets to Chinese companies in return. The draft should be ready by March, the magazine said. De Gucht criticised China for what he called “nationalist commercial practices”, “massive subsidies” and “monopolistic access to raw materials”. “All of this makes it very difficult to do business there,” the commissioner said. Negotiations for China’s adhesion to a World Trade Organisation government procurement agreement have stalled on Beijing’s refusal to allow EU firms the same access to public markets as that enjoyed by Chinese companies in Europe. The WTO’s appeal organ is due to make a ruling later on Monday on a challenge by China, which was found guilty by the body last year for restricting exports of raw materials crucial for European industry.
China's Yu Jing (centre) broke the women's 500m speed skating world record in Calgary on Sunday, becoming the first woman to break the 37-second barrier. China's Yu Jing broke the 500 metre world record at the World Sprint Speed Skating Championships on Sunday. The 26-year-old, who competed for China at the 2010 Vancouver Olympics, clocked 36.94 seconds at the Olympic Oval facility to become the first woman to break the 37-second barrier. The previous world recod of 37.0sec was set in December of 2009 at Salt Lake City by Germany’s Jenny Wolf. It was the second world record in as many days here, after Canadian Christine Nesbitt broke the 1,000m world record on Saturday. Yu earned the sprint world title at the end of the weekend’s four races with a total of 148.610 points, just edging defending champion Nesbitt who finished with 148.630 points. China’s Zhang Hong was third with 149.700 points. On the men’s side, South Korea’s two-time sprint world champion Lee Kyou-hyuk was dethroned by Stefan Groothuis of the Netherlands. The Dutch skater emerged from the four races with a total of 136.820 points with Lee second on 137.000. South Korea’s Mo Tae-bum was third. Two other speed skating world championships are on the slate for this year – the all-around worlds at Moscow February 18-19 and the distance worlds at Heerenveen in the Netherlands March 22-25.
For generations, Chinese men looking for a dose of vigor have sworn by a traditional remedy: fungus harvested from dead caterpillars, known in some quarters these days as Himalayan Viagra. Now Chinese investors are using the rare fungus to try to boost something else—their investment returns. The fungus has doubled in price over the past two years and the top grade now fetches more than $11,500 a pound, according to Fuzhou-based brokerage firm Industrial Securities. With Chinese stocks falling, real-estate markets flat and bank deposits offering measly returns, Chinese investors have been looking for help in strange places. Besides traditional medicinal products, they are plowing money into art-based stock markets, homegrown liquors, mahogany furniture and jade, among other decidedly non-Western asset classes. "On a micro level, speculation has appeared," says Long Xingchao, president of the information center of the China Association of Traditional Chinese Medicine. The association says prices of traditional medicines, including red ginseng and false starwort, have surged since 2010, partly because of speculators. Mr. Long insists, however, that a price bubble isn't forming. "There's nothing to pop," he says. Newfangled exchanges are sprouting across China to take advantage of the excitement. Nanjing Pharmaceutical Co. set up an exchange last year for trading traditional medicines such as deer antler. In November it extended hours so investors could trade when they get home from work. "Expanding the hours gives investors more time to make a profit," the exchange said on its website. Exchanges have popped up that allow investors to buy and sell shares of individual works of art. In the city of Tianjin last summer, an unnamed seller floated about 30 million shares of a painting called "Eternal Lotus Wind," at an initial price of 1.61 yuan apiece—about 25 cents. Within two days, investors had bid the shares up 52%, valuing the painting at about $11.5 million. Then the shares began sliding; they now trade at 36% below the initial offering price. Cui Ruzhuo, who painted "Eternal Lotus Wind" but didn't profit from the offering, says the art market still has legs. "We still haven't arrived at the high point," he says. Investors are taking to drink, as well. Maotai—the most popular variant of a homegrown liquor called baijiu, and once a favorite of Chairman Mao—now sells for more than $300 a bottle, double the price a year ago. "In the past, baijiu was only for consumption," says Liu Xiaowei, chairman of auction house Beijing Googut Auction Co., which held a baijiu action last month. "But now it's also a collectors' item and for investment." At the December auction, a businessman from Jiangsu province dropped $8,300 on two dozen bottles of liquor of uncertain vintage—their water-stained cardboard packaging suggested they were old—almost four times the starting price on the auction docket. "If I held these for a while, I could definitely make some money," said the buyer, who didn't provide his full name. China's banks are getting in on the action. Industrial & Commercial Bank of China Ltd., China's biggest state-owned lender by assets, set up a fund for customers to invest in high-end pu'er tea, marketing it as a low-risk investment. China Merchants Bank Co. is planning to allow some customers to trade diamonds through its website. Auction house Googut helped three banks set up bank-run investment funds for customers to invest in baijiu and other liquors. Mr. Liu, Googut's chairman, said the funds are eyeing an annual return of about 20%. The problem for Chinese investors is that returns have evaporated from more traditional markets. Real estate was once China's favorite investment, but government efforts to contain price increases and keep housing affordable have led to price stagnation and even declines in some cities. China's major stock exchange in Shanghai is down almost 20% since the beginning of 2011. Bank deposit rates are lower than the pace of inflation, meaning savers effectively pay banks for the privilege of handling their money. "There really are very few investment channels," says Ren Jun, a 30-year-old media entrepreneur with investments in contemporary art, antiques, gold and silver. "That's why I'm kind of forcing myself to be brave in trying new options." China's central government is less than intoxicated by the investment party. It said in November it would tighten oversight of Chinese asset exchanges, warning of "serious speculation and price manipulation" among some and adding that some "managers have run off with clients' funds." Some of the biggest boom-and-busts have taken place at art exchanges. "Roaring Yellow River," a traditional landscape painting by the late artist Bai Gengyan, was the first work listed last year by the Tianjin Cultural Artwork Exchange. Within two months of the offering, shares were trading at nearly $3 each, up from about 15 cents, valuing the painting at about $18 million. The previous auction high for the artist's work was a bit more than $600,000. About two months after the offering, the Tianjin city government suspended trading in "Roaring Yellow River" and another painting, and the exchange imposed limits on daily and monthly price changes. Shares of "Roaring Yellow River" now trade at about 20 cents, down more than 90% from their peak. Shanghai financial-software designer Jimmy Wang sunk about $790,000 into shares of a pink diamond and a jade pendant traded on the same exchange, putting up his house as collateral to finance the investment. He says he has lost as much as 2.7 million yuan. "So basically I've lost my house to the bank and I am struggling to pay the interest," he says. Such hard-luck stories haven't slowed the hunt for the next great investment. Wang Jingbo, chief executive of wealth-management company Noah Holdings Ltd. in Shanghai, said late last year she was considering recommending to clients a fund that invests in high-end watches. Googut's Mr. Liu believes the next market to watch is white jade. Mr. Ren, the media entrepreneur, says he is looking at diamonds. "While silver and gold may see fluctuations depending on international markets," he contends, "the price of diamonds never drops." A record number of tourists swarmed into the city of Yichang, home of the Three Gorges Dam in central China's Hubei province, during the seven-day Spring Festival holiday. From January 22 to 28, over 565,000 tourists visited the city, bringing in 192 million yuan ($30.45 million) in tourism-related revenues, according to statistics frmo the city's tourism bureau. The city touts the scenic Three Gorges Dam, as well as the Gezhouba Dam and Xiling Gorge, as major tourist attractions. The Three Gorges Dam is a multi-functional water control system, consisting of a 2,309-meter-long, 185-meter-high dam, a five-tier ship lock and 26 hydropower generators. The construction of the $22.5-billion Three Gorges project began in 1993 and was finished in 2009. It started generating electricity in 2003.
Fishermen, scientists and green campaigners have joined forces to prevent the rare Yangtze finless porpoise from disappearing from Dongting Lake in Central China - YUEYANG, Hunan - He Daming may only have received eight months of education as a child, but he is smart enough to realize that the fate of the fishermen in his village is closely tied to that of the rare finless porpoise. The 43-year-old, who has been fishing Dongting Lake in Hunan province since he was 11, recently handed out 2,000 copies of a letter he wrote urging fellow villagers to protect the endangered mammals. Researchers from the Institute of Hydrobiology in Wuhan, capital of Hubei province, check the health of a rare finless porpoise that was shipped from Poyang Lake on May 25. A severe drought last year posed a serious threat to the mammals' survival. "We used to regard them as river gods; we'd never hunt or hurt them," he said, explaining that they are seen as "guides" because they are usually spotted in areas where fish are in abundance. "We all depend on fish to survive," he said. "If the lake environment worsens and there are fewer fish, the porpoises die and we won't be able to make a living." Since April, He and another 10 friends have been patrolling the lake, hoping to protect the animal from illegal fishing techniques, such as electrofishing. "These destructive methods kill all the life, including small fish, which are the main food source for finless porpoises. Sometimes the porpoises are injured or killed, too," said He, who has already persuaded several fishermen to be more eco-friendly. Yet, fishermen alone cannot solve the problem. Studies show that the porpoises, which are found only in the Yangtze River and Poyang and Dongting lakes, have also been affected by pollution, busy water traffic, extreme weather conditions (mainly droughts) and the construction of hydropower projects. A three-year field survey recently completed by the Institute of Hydrobiology of the Chinese Academy of Sciences and the World Wide Fund for Nature (WWF), the international wildlife NGO, found about 1,000 finless porpoises, down from an estimated 1,800 in 2006. The findings suggest the population is reducing by 6.4 percent every year, although the rate is much higher in Dongting Lake, where only about 120 now remain. Although the animals have a history dating back more than 25 million years, Wang Ding, former deputy director of the institute, predicted that the species could be extinct in a decade if measures are not taken to protect them.
Four MTR stations are being given a new look to make them more accessible to the public at a cost of HK$160 million. While work at Mong Kok East is now complete, renovations at Sha Tin, Fan Ling and Sheung Shui stations are ongoing, and should be completed by the middle of next year. Chief architect Wilfred Yeung Sze-wai said the aim of the work is to improve the appearance of stations and make them more accessible. Increasing shop space is not a consideration, Yeung said. "`In Touch with Nature' was the main theme adopted when renovating the four stations," he said. "In Mong Kok East station, natural materials and colors have been used to give it a brighter, more spacious and comfortable look, and to provide a natural atmosphere for passengers to get closer to nature." For Sheung Shui and Fan Ling stations, Yeung was inspired by the River Beas, which flows across the northern New Territories. In all of the stations ticket machines are being removed from the center of concourses and mounted on walls to create more space for larger flows of passengers. Customer service centers are also being revamped to make them more accessible to all passengers, including the disabled, and will be placed in the center of concourses, closer to the entry and exit gates. Passengers have welcomed the work being carried out but are concerned at the cost of up to HK$40 million for each station. Clara Cheuk said the renovations are far too expensive. "It would be fine just to improve the facilities, but I do not think it is worth spending on artifacts just to brighten up a station." However, Cheuk is worried the cost will result in higher ticket prices. Yeung said MTR Corp will set aside HK$4 billion each year to upgrade, revitalize and maintain facilities at stations. Before Lunar New Year, the consumer market was booming. Small businesses interviewed by the media all said business had grown a lot compared to the previous year. Citizens said because the government handed out HK$6,000, they were more ready to spend. Being hard hit by the European debt crisis and correction in property prices, the consumer market should in theory not have done so well. The power of HK$6,000 is indeed great. Last year, I was against the handing out HK$6,000 under pressure, thinking that once the government set a precedent, it would come under great political pressure when the scheme was scrapped or the handout made smaller. The economic benefit of the cash handout is beyond my expectations. The effect has been better than that of a tax rebate. This is because the HK$6,000 is not a small sum to the grassroots. It increases their daily spending. But a tax rebate only benefits those in the middle class who pay tax and the amount rebated is only a very small portion of their income. Also, the upper limit of a tax rebate covers only those with higher income levels. It would be even more difficult for a tax rebate to make them spend more. The HK$6,000 serves to send out a clear message, too. If tax is returned in certain proportions, different people will get different amounts and a very small section of the people will get the maximum rebate, which means it will be difficult to have a unified and clear message. In addition to the handout, there was also a maximum of HK$6,000 in tax rebates last year. But how many people talked about the rebates? It could be seen that the cash handout worked much better. As the message was clear, businesses were more willing to create spending opportunities tailored to the handout, which further stimulated spending. The economy in the Year of the Dragon will not produce a stellar performance as the European debt issue has not yet been solved. Hong Kong and the mainland are also still trying to curb their property markets. If the government wants to continue giving out sweeteners in the coming budget, it must not only continue with the cash handout but also consider making a bigger handout while cutting the tax rebate. Media guru KK Tsang, CEO of GroupM, takes a candid look at life.
People visit Yuyuan Garden yesterday in Shanghai despite the rain to take a look at dragon lanterns and soak up the holiday atmosphere. Yuyuan Garden once again was the city's most popular tourist attraction during the Spring Festival. More than 2.7 million visited the site in the past seven days.
The Chinese zodiac's 12 animal signs are always popular symbols in both East and West. And when the Lunar New Year arrives, enthusiasts all over the world are eager to get their hands on the best collections. This year, the focus is on stamps. Han Bingbin reports. As a zodiac mascot, the dragon soars above its peers as the symbol of the year. Compared to the rabbit (which just gave up its one-year reign), the ox, rat, snake, monkey, pig, goat, rooster, tiger, horse and dog, the dragon is a notch above. Why? Because it is the only mystical beast in the zodiac barnyard and it also bears the aura of aristocracy. Its fire-breathing looks sometimes give rise to a misunderstanding. For example, the official dragon stamp released to commemorate the Spring Festival this year was criticized for its ferocious demeanor. Chinese netizens were quick to criticize the image on the stamp as "overbearing" and asked if it should not have been more benign. Designer Chen Shaohua say his dragon stamp this year was inspired by the motifs on the imperial Qing robes and Nine Dragon Wall in the Forbidden City. The stamp's creator, designer Chen Shaohua defended his design online in his blog, carefully avoiding confrontation by refusing media interviews. The dragon's role in mythology was to ward off evil, he says. As a deified image passed down through generations, it deserves the respect and dignity of preserving its legendary reputation, and should not be subjected to arbitrary changes.
Chief Executive Donald Tsang spells out his warning to Europe's leaders in Davos yesterday. Chief Executive Donald Tsang Yam-kuen underlined yesterday the gravity of the crisis gripping the world economy, admitting he has "never been as scared as now". Tsang and other policymakers from around the globe used the last full day of the World Economic Forum in Davos, Switzerland, to press Europe's leaders to halt its financial meltdown. At the forefront of concerns were debt write-down talks in Greece, which dragged into the weekend and threaten to overshadow a European Union summit tomorrow designed to showcase the continent's plans to escape its mountain of debt. "You need decisive action, you need overkill. You need to inspire confidence," Tsang told Europe. "That confidence must come from the decisive action of governments working together and doing it quickly," he added, saying that delays had already cost billions in debt that was mounting unnecessarily. "Two months ago in Greece you can do with 20 per cent haircut. Now even 50 per cent is not easy, maybe 70 per cent is needed. So do it quickly. "You need resolution and you need decisiveness," he said, talking of the reduction in payments on Greek sovereign debt that private creditors will need to accept. Tsang has four decades in public service that spanned other serious economic downturns such as the 1997-98 East Asian financial crisis. As financial secretary in August 1998, at the height of that crisis and with Hong Kong's currency under speculative attack, he poured billions of dollars of government money into the city's stock and futures markets, sparking a rebound in investor confidence. The hugely controversial move was later widely praised. Other global financial officials were also critical of Europe's leaders, saying failure to deliver home-grown solutions would rule out any chance of further outside support. It would also undermine the International Monetary Fund's push for more crisis-fighting resources of its own. The concern tempered earlier optimism that Europe had succeeded in calming financial markets. On Friday, Fitch Ratings downgraded the sovereign debt of Spain, Italy and three other euro countries. IMF managing director Christine Lagarde said: "It's a crisis that could have spillover effects around the world. It is critical the euro zone members develop a clear, simple firewall that can limit the contagion." As the officials debated in Davos, the Greek government was in talks with private lenders on a €100 billion (HK$1 trillion) debt write-down designed to return the country to solvency and contain the problem. A failure could force Greece, which is now in its fifth year of recession, to default on its debt and quit the euro, potentially triggering another wave of mayhem. "The fact that we're still, at the start of 2012, talking about Greece again is a sign that this problem has not been dealt with," British finance minister George Osborne told his fellow senior finance officials. "The danger here is that the tail wags the dog throughout this crisis." Tomorrow, the leaders of the 27 EU member states will meet in Brussels, Belgium, at a summit called to agree details of their "fiscal compact" deficit-reduction plan.
Eric Wong, boss of Galaxy Stars, gets comfy in one his capsules, while a possible future customer gets some sleep one "floor" below. Wong expects the city's first capsule hotel to open within six months. Visitors to Hong Kong will soon be able to bag a single "room" for as little as HK$240 per night - but it will be no place for the claustrophobic. The city's first capsule hotel will be aimed at budget travellers and cash-strapped students, offering accommodation at a fraction of Hong Kong's average nightly rate. Eric Wong Wai-lun, boss of Galaxy Stars, spent a year modifying the standard capsule bed design so it would suit the market in the city. His company will supply the beds to hoteliers and he expects the first hotel to be ready within six months, subject to government approval. Capsule hotels first appeared in Japan more than 30 years ago and the country now has more than 300, with up to 700 capsules in each. While some liken the capsules to the cage homes inhabited by Hong Kong's poorest people, Wong says his stays at the hotels are always fun. "It's like you're an astronaut going up in a spaceship. When you're travelling, you are out all day and only need a place to sleep at night." Each capsule is made of plastic with steel reinforcements and is about the size of a single bed, measuring 1.9 metres long, 1.15 metres high and one metre wide. They come with a two-inch foam mattress and for fire safety reasons the capsules have no doors. They just have a simple screen that can be pulled down for privacy. Each capsule, weighing about 100kg, is fitted with air-conditioning, a smoke alarm, power outlets, light switches, a TV and small shelves. For every six beds, there will be a shared toilet and shower and the hotel will provide a communal area and lockers for luggage. Compared to capsule hotels across the Asia-Pacific region and Europe, Wong says prices in Hong Kong will be among the cheapest. He set up his business a month ago and says he has been approached by the owner of a three-star hotel who is negotiating to find a site in Yau Ma Tei, Mong Kok or Tsim Sha Tsui. "Over the past few years, the supply of hotel rooms has been very tight so I think there's a big market for cheaper hotels," Wong said. "There will be lots of tourists from the mainland when the [Guangzhou-Shenzhen-Hong Kong] high-speed rail is completed [in 2015]." The average price of a hotel room in the city last year was HK$1,343, according to the Federation of Hong Kong Hotel Owners, and room rates are expected to rise between six and 10 per cent this year. Wong has also spoken to several university student associations and if at least 15 students sign up to the idea, he will fit out a flat and rent them the capsules for HK$1,000 per month. Cheryl Yan, a student at the University of Hong Kong, pays about the same price to share a small room with another student. She said she would consider a capsule bed only if facilities such as the kitchen and storage area were better. Wheelock (SEHK: 0020) said on Friday that it has appointed Stewart Leung Chi-kin as chairman of subsidiary Wheelock Properties, and as a vice-chairman and board member of the parent company. Leung, 73, takes over the role at Wheelock Properties from Peter Woo, who remains as chairman of the parent, according to a filing with the Hong Kong stock exchange. The appointments are effective as of February 1. Leung previously held a senior management position at New World Development, but resigned as a board member and adviser to the company as of January 1. He is also chairman of the executive committee of the Real Estate Developers Association of Hong Kong. The filing said Leung would receive a salary of HK$5.4 million per year, plus a discretionary bonus and a director’s fee of HK$60,000. Wheelock shares closed up 1.23 per cent on Friday ahead of the announcement, which came after the close of trade, outstripping a 0.31 per cent gain on the benchmark Hang Seng Index.
According to Chinese tradition, the Year of the Dragon starts strong before tailing off into something more mediocre. Shares listed in Hong Kong are fulfilling the first part. The Hang Seng Index is up 1.9% since it reopened Thursday after the three-day Lunar New Year break. A shift in the Chinese zodiac provides a nifty explanation—but there are earthly causes, especially the prospects of policy easing in China and more positive signs from the U.S. and Europe. Among the big gainers is sourcing giant Li & Fung, which is quickly putting a bad Year of the Rabbit behind it. Shares in the company, which sources products for retailers such as Wal-Mart, lost about a third of their value in 2011 on concerns about rising labor and commodity costs and weak consumer sentiment in the U.S., where most of its sales come from. But Li & Fung's shares are staging a rally lately, up 28% so far this year, including a 3.4% jump on Friday. Healthier indications from the U.S. are the main factor. But the company also announced, just before the New Year break, that one of its divisions—LF Asia—bought a sourcing and merchandising business for children's clothes and toys in China, including the brand licenses for Disney and Sesame Street. The $41 million acquisition is not a big deal at first glance. But it represents the first step in a smart strategy by Li & Fung aimed at customers closer to home. "We don't think that the market is as yet fully appreciating the opportunity that LF Asia represents," says Daiwa Capital Markets analyst Matthew Marsden. "Li & Fung is building a new long-term earnings stream based on Asian brand consumption." A downturn in the U.S. economy or a hard landing in China could still see Li & Fung's Year of the Dragon take a turn for the worse. So far, though, the company is off to a flyer.
Jia Qinglin held meetings in Ethiopia with African leaders. China's top political adviser, Jia Qinglin, was at the opening ceremony of the 18th African Union (AU) summit in Addis Ababa yesterday to inaugurate its new, Beijing-funded headquarters there. The US$200 million, 113-metre-high complex was built on 110,000 square metres of land provided by the Ethiopian government, according to the AU website. "The AU Conference and Office Complex, built with China's assistance, is a symbol of our profound friendship that will go down in the history of China-Africa friendly relations," Jia, chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), said on Friday. "Since the establishment of diplomatic ties 42 years ago ... China and Ethiopia have had fruitful exchanges and co-operation in political, economic, trade, cultural and other fields and enjoyed ever closer co-operation in international and regional affairs," he said. Construction of the building - which now dominates the skyline of the Ethiopian capital and is the city's tallest - began in January 2009, with some 1,200 Chinese and Ethiopian workers involved. Most of the building materials used were imported from China and even the furnishings were paid for by Beijing, earlier reports said. The centre will offer all the facilities of an international-standard conference centre and the AU will host key meetings there. Jia is the most senior official from Beijing to attend the summit. The Foreign Ministry said he would also hold talks with Teodoro Obiang Nguema Mbasogo, the president of oil-rich Equatorial Guinea and current holder of the AU's rotating presidency. Jia held talks with Ethiopian president Girma Woldegiorgis and Prime Minister Meles Zenawi and pledged more investment in the country. Jiang Yuechun , a professor at the China Institute of International Studies, a foreign ministry think tank, said Jia's high-profile presence at the summit indicated that both sides were willing to develop long-term diplomatic and economic ties. "Beijing has good experience dealing with our African friends, not only getting their votes in the United Nations, but also in terms of economic co-operation," Jiang said. "China holds the biggest foreign-exchange reserves and we need to find an overseas market for our investment. Africa is the biggest potential market because of its rich resources and land." He said many Chinese enterprises, such as Haier - the world's largest refrigerator and washing machine maker - were also looking to Africa as a potential new market. "This is a win-win because China has the money, the labour and the experience of building infrastructure, which our African friends need, and we need their rich resources to help us to boost our economy," he said. Sino-African trade rose more than 23.5 per cent to over US$160 billion in 2011, up from US$129.6 billion in 2010, deputy commerce minister Gao Hucheng said on Friday. China overtook the United States as Africa's biggest trading partner in 2009. China's cumulative investment in Africa totals US$40 billion, including US$14.7 billion of direct investment, with more than 2,000 Chinese-invested firms there, Gao said.
A Chanel store in Beijing. Before the Christmas period, many luxury companies began to increase the prices of their goods. However, this won't do much to affect the demand from wealthy consumers. Many luxury brands have made their annual price adjustments for certain products, with increases of more than 10 percent since November, but that hasn't dented Chinese customers' taste for upmarket items. The price hikes for bags and cosmetics began before the annual sale period for Christmas in December, led by well-known brands such as Chanel, Gucci, Celine and Bottega Veneta. The price on a bag made by Celine known as the "IT bag" went up in the middle of November in Europe, America and the Asia-Pacific region. In China, the price went to 17,500 yuan ($2,770) from 16,000 yuan. The New York-based NGO Human Rights Watch issued its World Report 2012 on Jan 22, observing China's human rights conditions from angles of defendant rights, judicial reform, freedom of speech and religious freedom. The report seriously lacks in objectivity and impartiality. Its conclusion intentionally distorts China's human rights conditions. Its observation of China's judicial reform is extremely inconsistent with facts and one-sided. The report says the public security departments dominate the criminal justice system and rely excessively on the defendant's confession. The weak courts and seriously limited rights of defense mean forced confession is still universal and judicial partiality is common. This is serious distortion. It is known that China's criminal justice system is not controlled by public security departments, but consists of investigation and procuratorial organs as well as people's courts. China's Criminal Procedural Law clearly stipulates the labor distribution among the three parties. They work with and check against one another. The proposal for prosecution by public security departments must be examined by procuratorial organs before it is recommended to the court to initiate a public prosecution. The public prosecution of the investigating organs must go through the court's open and fair trial, during which the defendant's opinions and all kinds of testimony must be verified, before becoming part of the court's decision. In this process, it is common for the procuratorial organs to require public security departments to file a case (or not), the procuratorial organs decide to prosecute (or not), and the people's courts declare the accused guilty (or not). These possibilities all restrict the power of public security departments. In judicial practices, public security departments must follow or respond to the procuratorial organs' procuratorial proposals and supervision of filing a criminal case. According to the Supreme People's Procuratorate's work report to the National People's Congress in 2011, all procuratorial organs proposed 33,863 times and cases to correct the public security departments' illegal practices of investigation. The number of cases in which the procuratorial organs do not ratify an arrest, do not prosecute, withdraw a lawsuit, and the people's courts decide the accused innocent, is increasing proportionally year by year. All of these actions are restricting the public security departments' power effectively. Besides, according to the seventh article of the Regulation on Exclusion of Illegal Evidence issued in June 2011, if the courts are doubtful of the legitimacy of the defendants' confessions obtained before trial, the courts can insist that the questioners take the stand in courts. All these examples prove that China's criminal justice system is not controlled by the public security departments. It is an integral system made up of the three parties, each with clear duties, with the people's courts' rights of sentencing and measurement of penalty as the core. Excessive dependence on defendants' confessions is decreasing remarkably. The role and rights of defense counsels are increasing steadily. Forced confession is strictly forbidden. The regulations on the exclusion of illegal evidence and on evidence in death penalty cases issued in June 2010, as well as the draft amendment to the Criminal Procedural Law released in Aug 2011, all reflect important progress in the protection of human rights. But the Human Rights Watch report fabricates and speculates on "an article of secret detention" of the draft amendment, which no longer exists. In fact the draft amendment issued in August 2011 includes an article about notice of detention. That is big progress compared with related articles of the law in 1996. According to the 84th article of the draft amendment, the public security departments must present detention warrants when detaining anyone, who should be sent to the detention center within 24 hours after being detained. The detained person's family should be notified about the detention reason and the detention center location within 24 hours after detention, except for serious crimes such as those endangering national security, terrorist crimes. There are exceptions, if it is impossible to notify, or if the notice may obstruct investigation. The 64th article of the Criminal Procedural Law of 1996 only stipulated that the public security departments must present detention warrants while detaining anyone. The detained person's family or work units should be noticed about the detention reason and detention center within 24 hours after detention, except if it is impossible to notify, or the notice may obstruct investigation. This amendment of the 84th article is just to strengthen the public security departments' obligation to notify and protect the suspects' families' rights to know. The report of Human Rights Watch does not mention progress in the draft amendment at all and only fabricates non-existent misleading articles. In the draft amendment, forced confession is prevented; exclusion of illegal evidence and its procedure are added, standard of proof of criminal procedure is clarified; the definition of "social danger" is clarified; the obligation of persons obtaining guarantor pending trial is regulated to lower detention rate; designated monitored residence can be converted to prison term; technical investigation is authorized and regulated; the recording system in inquest is strengthened, investigation defense system is formed and clarified, the number of remand for retrial is limited, the criminal reconciliation procedure is clarified; the system of sealing up criminal record of juvenile crimes and deferred prosecution is regulated; mental illness treatment procedure is regulated, and inspection and supervision of implementation are strengthened. These active changes reflect the main progress in China's judicial reform in 2011. Compared with the former one in 1996, more than 60 articles are added and more than 90 articles are amended in the draft amendment. Remarkable breakthroughs in judicial reform have been made in 2011 in measurement of penalty, State compensation, mediation, trial management and implementation procedure. It is a pity the report of Human Rights Watch turned a blind eye to all these positive steps and Chinese authorities' effort to promote judicial reforms, and only focuses on some non-existent articles.
Attention to detail defines the experience at Mokihi, one of a bevy of Japanese whiskey bars that have taken root in Beijing. Single-malt, 18-year-old Scotch mixed with bottled green tea, anyone? The concoction — the subject of many a nightlife horror story by visitors to China — isn’t as popular as it used to be, but it remains an apt metaphor for Beijing’s nightlife, which prefers its high with a splash of low. That distinguishes the city from the more Westernized Shanghai. “In Shanghai, it’s about how much money you can spend,” says Leon Lee, a San Franciscan who owns bars in both Shanghai and Beijing. “Beijing is edgier, a little rough around the edges,” he adds. “It’s more fun to go out in Beijing.” As money and mixologists have streamed into the city, its upscale options have grown. Start by checking out Sanlitun, Beijing’s preeminent drinking district. Once a sweaty Babylon where shadowy figures tried to beckon male visitors to “lady bars,” Sanlitun is now home to Nali Patio, a six-story, Mediterranean-themed courtyard complex that houses several bars and restaurants. Here, the main attraction is Apothecary, a sleek, third-floor speakeasy. Run by Mr. Lee, its extensive drinks menu doubles as a cocktail-history textbook and includes an expertly executed Old Fashioned (with optional bacon-infused bourbon) and an Earl Grey martini made with handcrafted bitters and topped with whipped egg whites. Prices are reminiscent of Manhattan, but so is the quality. Other Nali Patio options include Enoterra, a welcoming wine bar on the fourth floor, and Migas, a Spanish restaurant and bar with an industrial-chic dining room and an expansive rooftop patio. For a quieter night out, go east of the Third Ring Road to an entertainment district known as Lucky Street. There you’ll find Mokihi, an unassuming Japanese whiskey bar located on an upper floor along the southern end of the street. Bypass the main room for the back area, where bartenders ply their trade in a room lined with bottles of single-malt whiskey and infused liquors. If you’re hungry, order a plate of Wagyu sashimi from K’s Kitchen next door, and pair it with a wasabi martini. To go deeper into Beijing’s soul, head inside the Second Ring Road to Dongcheng. An older part of the city, Dongcheng is one of the last repositories of the city’s beloved hutong — maze-like alleyways where history, politics and culture brush up against each other to fascinating effect. Few nightlife spots epitomize that better than Yugong Yishan, a music venue inside a complex that once housed the government of warlord Duan Qirui. It hosts everything from punk rock shows to film screenings to underground rebel bingo and keeps its patrons well lubricated with cheap Tsingtao. A few kilometers away is Gulou Dongdajie, a street teeming with pubs, guitar shops and vintage clothing stores that serves as Beijing’s answer to San Francisco’s Haight Ashbury neighborhood. In a courtyard house tucked away in an alley, you’ll find Amilal, one of the favorite haunts of the city’s expatriate literati. Run by a Mongolian photographer who uses the space to host exhibitions of his friends’ work, it’s an excellent place to decompress after taking in a live show. Another hutong option is Mao Mao Chong, a five-table bar that does a steady trade in China-themed mixed drinks such as the Maojito, a gingery take on the Mojito, and the Jing Fling, a cocktail based on China’s not-for-the-faint-of-heart baijiu liquor. If you’re still going strong at midnight, two after-hours destinations, Lantern and Haze, beckon. Lantern, run by Beijing electronic-music label Acupuncture Records, ministers to heaving weekend crowds. Haze caters to hipsters and offers the added late-night challenge of being located at the bottom of one of the city’s most perilous staircases. Federal Bureau of Investigation agents earlier this week searched the New York offices of private-equity investment and corporate-advisory firm New York Global Group, which has played a role in Chinese companies that list their securities in the U.S. through reverse mergers, a New York FBI spokesman said Friday. The spokesman, James Margolin, said the search was conducted Wednesday in connection with a continuing investigation. He declined to comment on the scope of the investigation or whether New York Global Group was a target of the probe. A spokeswoman for New York Global Group didn't immediately return a phone call seeking comment Friday. Reverse mergers are a way for small private companies to obtain U.S. listings without going through the more rigorous methods of going public, such as an initial public offering. In a reverse merger, the private firm merges with a public shell company. There have been questions about accounting practices at dozens of Chinese companies that have gained U.S. listings through such mergers. Last year, Securities and Exchange Commission Chairwoman Mary Schapiro said the regulator was weighing several options to address concerns about the proliferation of the practice, used frequently by Chinese firms. On its website, New York Global Group touts the expertise of its president, Benjamin Wey, and the firm, in China-related transactions, saying the firm has executed more than 200 such projects "in the areas of M&A, research, direct investments, market entry and due diligence." Mr. Wey, who at one point spelled his last name as Wei, has previously run afoul of U.S. securities regulators. In 2002, Mr. Wey, without admitting nor denying wrongdoing, was fined and briefly suspended by the National Association of Securities Dealers, a former self-regulatory organization. While working as a stockbroker in Oklahoma in 1999, he allegedly maintained accounts over which he had discretionary authority without providing written notification to the firm, according to the Financial Industry Regulatory Authority, the successor regulatory body to the NASD. Three years later, Mr. Wey, again without admitting nor denying wrongdoing, agreed to be censured by the Oklahoma Department of Securities and to not apply to serve as a broker-dealer or investment adviser in that state. According to the censure order, Mr. Wey allegedly made recommendations to at least two Oklahoma residents for the purchase of shares of three companies without disclosing "the risks associated with the purchase of these securities" and allegedly made at least one trade a customer claimed was unauthorized. The Oklahoma probe also found that Mr. Wey allegedly failed to disclose to his customers consulting agreements with two of the companies, including one in which Mr. Wey would serve as the "U.S. representative" of a Chinese company owned by his sister. Mr. Wey also figured prominently in a shareholder lawsuit against Bodisen Biotech Inc., a Chinese maker of organic fertilizers which was delisted in the U.S. in 2007. The shareholder suit claimed Bodisen relied heavily on Mr. Wey and New York Global Group. The lawsuit, which was dismissed in 2008, alleged that Bodisen ultimately received a deficiency letter from the American Stock Exchange in November 2006 for making insufficient or inaccurate disclosures in its public filings about its relationship with New York Global Group. Bodisen, in a news release at the time, said it had terminated its relationship with the consultancy firm before receiving the letter. At the time, the exchange also expressed concerns about internal control issues related to Bodisen's accounting and financial reporting obligations. Bodisen was ultimately delisted the next year. China's Nasdaq-style ChiNext board has raised 195.9 billion yuan($30.99 billion) for the country's start-up firms by the end of 2011, according to statistics from China Securities Regulatory Commission (CSRC). Statistics show that by the end of 2011, 281 companies were listed on the ChiNext board of Shenzhen Stock Exchange, with a combined market value of 743.4 billion yuan. During the 2008-2010 period, ChiNext-listed companies reported a 38.4 percent year-on-year rise in profits on average. Moreover, more investors have opened ChiNext trading accounts with the institutional investors holding around one third of the market value. The board has been very supportive of the development of high-growth companies and those in the strategically important emerging industries, according to the CSRC. Statistics show that companies in the strategically important emerging industries, including new energy, new-type materials, environmental protection and energy conservation, information technology and bio-pharmaceutical sectors, account for 88.19 percent of all the listed companies. The ChiNext Board, which started trading on October 30, 2009, mainly lists hi-tech companies and those with high growth potential. By the end of 2011, 630 companies applied for ChiNext IPO and 314 companies have got the IPO approval.
Firefighters spray water to put out a forest fire in Lijiang, Yunnan province. Fire broke out in forests at the foot of the Dongshan Mountain in Baisha township of Yulong County in Lijiang and thousands of firefighters are still struggling to put out the flames, the local government said. Thousands of fire fighters are battling a blaze in the forest near the famous town of Lijiang in the southwestern province of Yunnan. State media say investigators were looking into the cause of the fire in the area popular with tourists. While all visible flames had been extinguished by Friday morning, high winds continued to pose a threat of re-igniting sparks and hot spots. The Xinhua News Agency said the blaze broke out on Thursday morning and burned about 45 hectares around Lijiang’s Yulong Snow Mountain. About 3,000 people were fighting the blaze, including paramilitary troops and volunteers. Lijiang is famous for its high mountain scenery and the unique culture of the Naxi people.
Li Daokui, director of the Center for China in the World Economy and an advisor to the People's Bank of China, pictured during a TV debate at the Dalian World Expo Center in Dalian in September. China will probably engineer a soft landing, with economic growth slowing to about 8.5 per cent this year from 9.2 per cent in 2011, Li said on Thursday at the World Economic Forum in Davos, Switzerland. China will probably engineer a soft landing, with economic growth slowing to about 8.5 per cent this year from 9.2 per cent in 2011, Li Daokui, an adviser to the country’s central bank, said on Thursday. Inflation, which has troubled China for much of the past year, is also likely to ease to about 3 per cent from 4.5 per cent in 2011, said Li, who sits on a board that advises the People’s Bank of China. “Anyone who has any understanding of China will agree that we will be able to achieve a soft landing,” Li said on the sidelines of the World Economic Forum in Davos. “Real estate prices will also ease slowly, which will help cool the economy and bring down price pressures.” China’s inflation rate dropped to a 15-month low of 4.1 per cent in December, just ahead of market expectations, extending an easing trend of the past five months and raising expectations that the central bank may ease monetary policy. Beijing has already begun cutting the ratio of cash banks are required to hold in reserves, in a move to boost corporate credit lines and help companies cushion falling demand at home and abroad. Li expects China’s economy to be hit by the problems in the euro zone, although he said he was opposed to China buying Italian or Spanish sovereign debt. “How are we going to explain to the Chinese people that we are going into it alone and buying up Spanish or Italian debt? A multilateral solution is needed, and China should work together with countries like Brazil or India to help Europe,” he said.
A low-cost maglev train rolls off the assembly line yesterday in Zhuzhou, central China's Hunan Province. The three-carriage train, with a designed top speed of 100 kilometers an hour, is suitable for mass transit, inter-city travel and trips in scenic areas. CHINA'S new medium and low-speed maglev train rolled off the production line yesterday in central China's Hunan Province. The three-carriage train is designed to run at a maximum speed of 100 kilometers per hour and carry 600 passengers, Xinhua news agency reported, citing Xu Zongxiang, general manager of the manufacturer, Zhuzhou Electric Locomotive Co Ltd, a division of China South Locomotive and Rolling Stock Corp. Xu called the train "environmentally friendly," as it's much quieter than conventional trains, with zero emission. The manager said the company is in talks with some cities about future operations. China's only maglev line in commercial operation - the world's first - runs in Shanghai, connecting a Metro station to Pudong International Airport. The maglev, put into service at the end of 2002, tops out at 430 kilometers per hour. The 30-kilometer route takes less than eight minutes. Maglev is short for magnetic levitation. The train can attain high speeds and is quiet because rather than ride on the rails with wheels, it hovers centimeters above the track through the use of magnets. According to Xu, the company has minimized the risk of the new maglev train derailing or overturning. "It's ideal for mass transportation, as it is quiet and environmentally friendly," said Xu. "Its manufacturing cost is about 75 percent of a conventional light-rail train." Railway transport specialist Liu Youmei said the new train is economical and safe. "It can be used for public transport in populous areas and at scenic spots with fragile environments," Liu told Xinhua. Liu said China is one of a few countries that have applied maglev technology. "I believe that the project will be accepted by the public, and the future market is huge," Liu said. But maglev lines have met with controversy. Shanghai residents protested a plan to expand the maglev route in 2008, concerned about radiation and other issues in densely populated downtown areas. The plan was scratched until news emerged in 2010 that a maglev line connecting Shanghai to Hangzhou in neighboring Zhejiang Province had been approved. Soon the project saw another twist as construction was suspended last year amid the opening of the Shanghai-Hangzhou high-speed railway line, which opened in October 2010. The public questioned the need and high cost of the maglev. Xinhua also reported that Beijing is building a maglev route, the Daitai line, which will start at an IT center in Haidian District and end in the capital's western outskirts. The line is scheduled to begin operations next year.
Fireworks could be seen all over Shanghai from last night to the wee hours of today, which is the fifth day of the Lunar New Year. According to Chinese tradition, the God of Fortune would come down from haven on the fifth day of a new lunar year. Many Chinese people would set off fireworks and crackers to welcome the God of Fortune. However, fireworks also caused many accidents in Shanghai.
Jenny Laing-Peach sits in the Peace Hotel's Peace Gallery, which she is in charge of. For this Australian woman, Shanghai is a familiar place of family roots and culture as four generations of her family have worked on the Bund. She knows every story behind each building along the 2-km stretch of the Bund built during the last century. Despite her age of 67, she can climb up to the top of the Peace Hotel to point out exactly where these stories happened. Four generations of her family, from her grandfather to her son, have worked on the Bund, says historian Jenny Laing-Peach. To this Australian woman, Shanghai is a familiar place of family roots and culture, even though she was born, educated and worked in Sydney for the first half of her life. "I'm the third generation of my family to work as an executive on the Bund," says Laing-Peach, who came to Shanghai in 2000. "My grandfather worked in the Customs House during the 1890s and my father worked for a shipping insurance firm. It was in No 18 on the Bund, which now turned into Bund 18 (where Cartier and Zegna now sit) - that was his office on the second floor." "One of my sons has been restaurant manager of M on the Bund and I work here," says the in-house historian for Fairmont Peace Hotel, the 82-year-old symbol of the Bund. "I don't know if there are very many complete Chinese families who can do four generations on the Bund." Although Laing-Peach got her Irish face from her mother, her enthusiasm for Shanghai came from her father, who was half-Chinese. "My grandmother was Shanghainese and I could speak Shanghainese before I could speak English," she says. "It is a shame that I can't remember now." Laing-Peach says she migrated to Australia with her parents during World War II. "My father, like many people after the war, died of displacement - like a broken heart, even he managed to immigrate to Australia." "He knew he would never come back to China (for political reasons) because by then (1940s and 1950s) it was particularly difficult for those China-born with foreign wives to return to China," says Laing-Peach. "The rest of the world was very isolated of China (during the '50s). There was no news from China - I remember we could only get news in English from Hong Kong." "I also remember our garden in Sydney has been unusual - we always had those plants and flowers that were different to other people's - and I didn't know why. But as soon as I came here I understood, what my father was doing was building a beautiful Chinese garden," she says. Having lived with her husband, journalist Barry Porter, in Shanghai for 11 years, Laing-Peach said her return to Shanghai was a must. "I came here because this was my parents, uncle and auntie's home, this was what they talked about all days when they got to go to another country, where they didn't choose to go," she says. "I knew the map of Shanghai when I came here, often by old, non-Chinese names, and I knew exactly where to go." "I felt instantly a sense of belonging." With years of teaching drama in Sydney, Laing-Peach quickly found herself a job as a professor in Shanghai. "I worked at Shanghai University for eight years and I lectured in English, particularly in theater and drama," she says. "I wrote a course called Shakespeare with Chinese Characteristics and we did A Midsummer Night's Dream, where all the fairies were done in Peking Opera style, for one semester." "The pink-eye make up, costume and the singing style were all from Peking Opera. The performers were singing in both languages - English and Chinese - because who knows what language fairies speak," jokes Laing-Peach, adding that the play was staged in the Shanghai Dramatic Arts Center. Besides playing the role of theater director and teacher, she has also been involved in many culture- exchange events, such as the annual James Joyce "Bloomsday Shanghai" celebration. Laing-Peach co-founded the Shanghai International Literary Festival, where she wrote and published articles on the greatest historical figures of Shanghai, such as the renowned writer Lu Xun and the first mayor of Shanghai, Chen Yi. Starting in 2010, when the Peace Hotel - the green copper pyramid landmark of Shanghai - returned to the Bund after a three-year renovation, Laing-Peach became the legendary hotel's in-house historian. She's now in charge of the Peace Gallery, which showcases an almost 80-piece collection, ranging from antique tableware to crystal that decorated the hotel's old rooms. There is also a heritage salon and afternoon tea reading that usually features themes of Chinese literature and culture as well as a historical tour of the hotel and the Bund. In Laing-Peach's eyes, the image of the port city of Shanghai is exactly like Peace Hotel's octagonal-shaped atrium at the grand entrance - with many points of entry allowing for not only exchanging commodities but ideas. "It was no accident that jazz, film, the new way of writing (meaning left-wing writers such as Lu Xun), the new political theory and the communists' first meeting place all happened in Shanghai," she says. "Through all eight points of octagon, they all come to the middle," she says. From there, "Some go straight, some meet another line and go in a different direction. By meeting another line, they form a different shape - it's like people' lives being transformed by the experiences being in this extraordinary city." "Somebody once told me during the tour of Peace Hotel that 'You're a born storyteller'. I never thought that way," she says, "but I know one thing for sure - stories should be told. And I love sharing what I know about."
A shop assistant displays a piece of gold jewelry at a gold shop in Qingdao city, East China's Shandong province, Jan 20, 2012. Gold price continued to rally as the US Federal Reserve pledged to keep interest rates low until late 2014 and gold future on the COMEX Division of the New York Mercantile Exchange rose to over 1,700 dollars(10,769 yuan) per ounce on Jan 25, 2012.
*News information are obtained via various sources deemed reliable, but not guaranteed
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