Flashpoint

MOP 6.00 Closing editor: Sara Farr Publisher: Paulo A. Azevedo Number 546 Monday May 26, 2014 Year III

Flashpoint

Over 10,000 people took to the streets yesterday in what was Macau’s biggest ever demonstration.

The proposed bill detailing the welfare package for outgoing officials has enraged swathes of the population – and some legislators - who say terms are too generous. The bill has not been submitted for public consultation as is the case with most bills. Officials benefiting from the bill include the Chief Executive, the five secretaries, the Commissioner against Corruption, the Commissioner of Audit and the chief of the Unitary Police Service

www.macaubusinessdaily.com

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Dearly departed

LRT progressing Deputy director of Transportation Infrastructure Office Ho Cheong Kei says routing the metro along Avenida 24 de Junho – packed with casinos – should “pose more advantages” in terms of railway coverage and construction terms.

Open bidding on earthworks could start this year

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Shun Tak’s Taipa Hills Memorial Garden columbarium and its funeral services operation have been sold for HK$627.1 million. The HK$16.7 million gain the group anticipates making will be used as ‘general working capital and to finance new investment opportunities’ Page 2

HSI - Movers May 23

Name

%Day

China Overseas Land

5.49

China Resources Ent

4.14

Gaming gangster sentenced to death

China Resources Lan

3.93

Wharf Holdings Ltd

2.62

Li & Fung Ltd

2.15

Tingyi Cayman Islan

-0.91

China Mobile Ltd

-0.96

A former mining mogul, linked by the Chinese media to money laundering in Macau via the territory’s casinos, has been sentenced to death. Liu Han, with 34 others, was found guilty of a raft of serious crimes by Hubei authorities. Liu and nine others face capital punishment on charges of murder and mafia-style crimes

China Unicom Hong K

-1.03

Tencent Holdings Ltd

-1.07

Bank of East Asia Lt

-1.38

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Remedial action

Source: Bloomberg

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Day trippers dominate

The pharmaceutical industry’s profit margins in China are sharply declining. The government is pushing lower prices, whilst combating endemic corruption surrounding the medical industry

There were 10 percent more visitors in April than in the same month last year. As many as 2.6 million people visited Macau last month, of which 54 percent were same-day visitors

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May 26, 2014

Macau

Caution advised Dynam extends MOU with IGG for Thai travel Sara Farr

sarafarr@macaubusinessdaily.com

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uthorities in Macau are urging residents to be cautious when travelling to Thailand, or while already there, following the declared state of emergency in the country and a nationwide curfew from 10:00pm to 5:00am. The Chinese embassy has already urged its citizens to ‘critically assess security risks and cautiously consider travel plans to Thailand.’

In Macau, the Tourism Crisis Management Office said it would monitor the latest developments there and urged residents to cautiously assess travel plans, while those already there are urged to ‘strengthen security precautions and protect their personal safety,’ authorities here said.

According to the Macao tourism industry, five Macao tour groups totalling some 70 persons are currently travelling in Thailand. So far, the Office has received six enquiries but no requests for assistance.

Consumer Council compares drug prices

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he Consumer Council announced late last week that it is investigating a menu of non-prescription medicines in order to compare prices with drugs in Macau.

Consumers can consult, and make comparisons between, the medicines on its website. The report is available for iPhone and Android via an app called ‘Tour Information Prices of products for sale in supermarkets’, the Council announced on Friday.

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apanese pachinko hall operator Dynam Japan Holdings Co Ltd has entered into a six-month extension agreement of its memorandum of understanding with I Got Games Inc (IGG) Singapore.

According to a company filing with the Hong Kong Stock Exchange, the MOU amendment and extension expires November 25, 2014 ‘unless otherwise extended by a formal agreement between the company and IGG Singapore,’ Dynam Japan said in its filing, adding that ‘except for this additional period of six months, all other provisions of the MOU remain unchanged.’

In the filing, Dynam Japan declares it has finished making a prototype of the next generation pachinko machines.

‘The company is now in discussions with, and is undergoing preparation for making an application for the approval of the Gaming Inspection and Coordination Bureau of Macau [DICJ] and other competent authorities,” the filing reads. But because more testing and preparation works are necessary before the start of the potential cooperation Dynam Japan and IGG Singapore have decided to extend the term of the memorandum of understanding for another six months.

Last November, Dynam Japan announced its ambition to work with a partner to produce ‘online casino games in Macau, provided that such games comply with all applicable laws and regulations of Macau’.

A Macau bylaw gazetted in November 2012 foresaw the possibility of ‘mobile’ gaming inside some of the city’s bricks and mortar gambling

Corporate

premises. This particular bylaw was primarily concerned with conventional slot machines and slot parlours. It also mentioned the possibility of mobile gambling using wireless networks but ‘only inside gambling areas especially authorised’ by the city’s regulator, the Gaming Inspection and

Shun Tak sells columbarium, funeral service

S CEM, Guangdong prepare for summer surge Macau electricity company CEM and Guangdong Power Grid Corporation Zhuhai Power Supply Bureau are preparing for a surge in power consumption over the summer months. Both companies recently held an ‘anti-incident drill’, the objective of which was to improve the responsiveness of both parties’ operation and maintenance personnel in dealing with power grid incidents in order to ensure the reliable supply of electricity. CEM said in a statement that the drill primarily ‘targeted the emergency repair of 220kV networking cables.’ Unlike previous drills, both parties sent their technicians to each other’s site for coordination and operation so that they could speedily identify faults and conduct troubleshooting exercises without delay in order to bring the power grid back to normal.

Coordination Bureau.

A month earlier, in October 2013, Dynam Japan announced it would invest US$15 million (119.8 million patacas) in the Singapore-based online games provider IGG to help it develop software for ‘next generation pachinko machines’ to be operated in Macau.

hun Tak Holdings Ltd has sold its columbarium, Taipa Hills Memorial Garden, for HK$624.1 million, in conjunction with its funeral service for HK$3 million.

According to a filing with the Hong Kong Stock Exchange, the purchaser is Joyous Park, a wholly-owned subsidiary of Shun Tak incorporated in the British Virgin Islands, and whose principal activity is investment holding and ‘engagement in the provision of funeral services,’ the filing reads.

Once all the formalities are complete and disposed of, Shun Tak ‘will no longer have any interest in the business of columbarium operation and funeral services,’ the company said in the filing.

In addition, the agreement will only be complete once the remaining 21 percent of the issued shares by

property owner Tin Wai Development Co Ltd are purchased by a company owned by Lam In Wai, the guarantor and an independent third party to Shun Tak. Shun Tak said in the filing that the group is ‘expected to record a gain (net of transaction costs) of about HK$16.7 million upon completion of the disposals,’ the proceeds of which will be used for ‘general working capital and to finance new investment opportunities.’

Shun Tak Holdings Ltd opened the private Taipa Hills Memorial Garden columbarium in 2011. Over 3,900 niches of the 40,000-niche complex were sold soon after. The columbarium is located at no.1-7 Avenida Son On, and according to its website has over 40,000 niches on five levels, occupying a gross floor area of around 88,700 square feet.

S.F.

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May 26, 2014

Macau

Top officials’ welfare bill brings thousands onto streets Parading demonstrators protest that outgoing officials are entitled to too generous a welfare package upon departing their post Stephanie Lai

sw.lai@macaubusinessdaily.com

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ver 10,000 people marched from Tap Seac Square to Nam Van Lake yesterday afternoon in protest against a bill advocating a welfare package for outgoing principal officials, a record number that exceeds any previous demonstrations held on Labour Day holiday or the annual handover parade on December 20.

Police put the total number of demonstrators at around 8,000.

The white-shirted protesters, led by prodemocrat legislators Antonio Ng Kuok Cheong, Au Kam San and civil servants’ representative José Pereira Coutinho and Leong Veng Chai, yesterday charged that the bill offers too generous welfare terms for the city’s outgoing principal officials without gauging public opinion.

The latest edition of the controversial bill, pending final approval by the Assembly tomorrow, suggests that the one-off compensation for outgoing top officials without a civil service background shall receive 30 percent of their monthly salary; for those from the civil service, the one-off compensation would amount to 14 percent of their monthly salary. The bill defines top officials as the Chief Executive, the secretaries, the Commissioner Against Corruption, Commissioner

of Audit and the chief of the Unitary Police Service.

On top of the one-off compensation, the bill also states that outgoing officials can receive an additional compensation for the suspension of their official duties, calculated on 70 percent of the monthly salary the outgoing top official received; this additional compensation covers the period when these officals are prohibited from assuming posts with private entities.

“The bill has basically set up a brand-new [welfare] system which should undergo a public consultation first, but now that’s not the case,” legislator Antonio Ng told Business Daily on the sidelines of yesterday’s march. “There are many articles in the bill that need more public debate; for example, the one that mentions the Chief Executive’s immunity from criminal prosecution whilst in office.”

The pro-democrat legislator has previously been turned down by the second permanent committee of the Legislative Assembly on his request for a public consultation on the bill. The committee was responsible for the deliberation of the bill content, which passed the Assembly’s first reading in December.

At the conclusion of the march to Nam Van Lake,

the protesting crowd also called upon Chief Executive Fernando Chui Sai On to step down prior to around 750 of them moving on for an assembly at Penha Garden.

The opinion of the bill signed by committee members states that the initial version of the bill - which suggests 14 percent of monthly salary be offered to the outgoing officials not from a civil service background as a oneoff compensation - is “not sufficient to attract talent” to the top officials’ posts.

The crowd complained that the bill is offering “unreasonably” high welfare terms for top officials.

They echoed the call of demonstration organisers that they would besiege the Legislative Assembly on Tuesday afternoon if the bill has not been withdrawn by that time. Speaking to media at an unrelated event

yesterday, government spokesperson Alexis Tam Chon Weng noted that the MSAR Government was aware of the protesters’ claims, adding that the government “respected public opinion”.

Mr Tam did not, however, directly respond to whether the bill will be withdrawn.

Chui’s supporters Prior to the anti-bill demonstration that started at 3:00pm yesterday, progovernment association Jiangmen Communal Society also marched in their own parade to defend the bill.

Led by a dragon dance, the parading society members shouted out their support for Chui Sai On to be re-elected and marched along the same route from Tap Seac Square to Nam Van Lake that the bill protesters walked. Mr Chui has already expressed

his wish on previous occasions to serve for another five years in the territory’s top job once his five-year tenure ends on December 19.

Over 1,400 members from Jiangmen Communal Society joined the parade yesterday, of which a good portion was formed of elderly members, organisers told Business Daily. Police, however, put this figure at 1,000. The Society’s leading members and legislators Mak Soi Kun and Zheng Anting, however, were absent from the parade yesterday.

Despite having no clear knowledge of the welfare bill’s content, some of the parading Society members told Business Daily that they were joining the action merely to support their own association.

Vice-president of Jiangmen Communal Society Mr Chan Pou Sam insisted that his association had not offered any incentives or benefits to members to join the parade yesterday, although he admitted that some of their members did not have a clear understanding of the welfare bill for the top officials.

“I can loudly declare that Jiangmen Communal Society offered not even a single cent to these parading members,” Mr Chan proclaimed to media. “Anyone that suggests this notion is just spreading unfounded rumours.”

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May 26, 2014

Macau Brought to you by

HOSPITALITY Mass growth Total spending by visitors has increased in the last four years at an annual growth rate roughly equivalent to 16.5 percent. That growth is the outcome of changes in two kinds of figures: the growth in the total number of visitors and the changes in amount of goods each of them buys on average; that is, their spending per capita. In money terms, the figures for the last full quarter show that most of the growth in the period was the result of rising expenditure per capita. It went up by more than 46 percent in the period observed, while the number of visitors increased by the noticeably lower figure of 25 percent.

Open bid for Peninsula-south LRT earthworks

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he government is planning to finalise the light rapid transit (LRT) route for the southern Macau Peninsula and start the open bidding for the related earthworks within this year, deputy director of Transportation Infrastructure Office Ho Cheong Kei told media on Saturday.

Speaking on the sidelines of an LRT construction site check in Taipa, Mr Ho remarked that routing the metro along Avenida 24 de Junho – a road lined with MGM, Wynn, L’Arc Macau and StarWorld Macau casinos – should “pose more advantages” in terms of the railway coverage and construction terms. This proposed

route is designed to connect Golden Lotus Square, the abutting Kun Iam statue and eventually Jardim das Artes to Nam Van, Sai Van and the station at Barra on the west of Macau Peninsula – the station that connects the Macau route to Taipa.

Proposals presented by the government call for the metro line to run along the NAPE waterfront and the Governor Nobre de Carvalho Bridge before reaching Sai Van and Barra. But these proposals rule out a station being sited at Nam Van Lake.

The official did not confirm media questions on whether a public consultation would still be held for the southern Macau peninsula route

Polluting cement plants liable to hefty fines

Visitor arrivals increase 10 percent in April

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However, stated this way, without further qualification, these figures may be misleading.

The expenditure per capita varies with both the amount of goods and services that visitors buy and the changes in their prices. We can get a rough estimate of the real changes in their spending using the Tourism Price Index, which measures the changes in prices for the goods bought by visitors. If we deflate the spending figures according to that price index, the panorama changes noticeably. Total spending, in real terms, rose by the much lower figure of 25.9 percent, which is only marginally bigger than the growth in the number of visitors. The latter increased by 25.8 percent in the period. That is, most of the real growth has been the result of increasing numbers of visitors and rising prices. The actual amount of goods and services bought hardly changed. In fact, in the first quarter it was almost on a level with the value recorded in the same quarter in 2010 and about 5.5 percent below the value one year earlier.

10.2 %

Q1 total visitors spending rise on previous year

rom June 1, the Macau Government will impose air emission limits on cement factories and start regulating the management of the plants.

The new control measures will be determined by the Administrative Regulations following the rules of mainland China that provides, for example, reduction of pollution limits until mid-2015.

Stressing the new criteria as positive, Executive Council spokesman Leong Heng Teng also considers the timing chosen by the government to introduce this measure as ‘appropriate’, following the application of other rules.

The new control measures arise in the wake of villagers from Ka-Ho, on the island of Coloane, challenging the existence of a cement factory that leaves everything ‘covered with dust’, harming the health of residents in the vicinity. The head of government announced measures to improve the quality of life of the residents following a visit to Ka-Ho with senior officials.

The new regulation mandates that production, loading and transportation have to be made in closed areas to prevent the release of dust. The industrial units are also obliged to deliver a report on these procedures and other control mechanisms every six months to the Department of Environmental Protection.

Cement plants that fail to follow these new rules will face fines of 100,000 and 400,000 patacas in the case of emission limits for pollutants and 10,000-20,000 patacas for noncompliance with management rules of the premises.

design. “I believe people are aware that the light rapid transit [for Macau Peninsula] construction should be implemented as soon as possible,” Mr Ho noted, reiterating that the proposal of having the metro line run through Avenida 24 de Junho has legislators’ backing.

Mr Ho also mentioned on Saturday that the government was now collecting geological information for the southern Peninsula route, adding that this route design should be finalised within this year. The open bidding for the related earthworks can start by the end of this year or early next year, he added.

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Since the beginning of the year more than 10 million people have visited Macau.

The Easter holidays fuelled the April jump, the Statistics and Census Service said Alex Lee

Alex.lee@macaubusinessdaily.com

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he number of visitor arrivals in Macau hit 2.6 million in April, an increase of 10 percent compared to a year ago, when 2.4 million visited the territory. According to data published yesterday by the Statistics and Census Service (DSEC), the growth in this year’s number of visitors is primarily explained by the Easter holidays.

Same-day visitors reached 1.4 million people and accounted for 54 percent of the total, a value that increased 9.9 percent in comparison to 2013. Since the beginning of the year, 10.3 million tourists have visited the former Portuguese enclave, of which more than half (5.5 million) were sameday visitors.

Mainland China was the primary source of visitors, who increased 14 percent to 1,743,766 year-on-year with 707,085 (41 percent of the total number) travelling to Macau under the Individual Visit Scheme (IVS). The vast majority came from Guangdong Province (685,796), followed by Fujian (72,282), Hunan (63,972) and Zeijiang (55,262).

In April, the number of tourists from Hong Kong increased 9 percent (to 585,824) while the total number of visitors from the Republic of Korea (33,975) increased 11 percent. Visitor arrivals from Taiwan (75,645) and Japan (19,264) diminished 7.3 and 3.9 percent, respectively.

1.4 million

same-day visitors in April

Long-haul tourists from the United States (15,968; 1.3 percent), Australia (11,544; 15.8 percent) and the United Kingdom (5,579; 1.8 percent) increased year-on-year, while the number of visitors from Canada (5,906: 13.4 percent) and France (3,494; 9.4 percent) declined.

All in all, mainland China accounts for 66 percent of the total number of visitors, Hong Kong for 22 percent and Taiwan 3 percent; all the other countries represent 9 percent of tourists.

The average length of stay of visitors remained unchanged from a year earlier, at one day in April 2014. Overnight and same-day visitors stayed in the Special Administrative Region of Macau for an average of 1.9 and 0.2 days, respectively.

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May 26, 2014

Macau

Macau gaming gangster sentenced to death Liu Han, the former mining mogul that the Chinese media have linked to money laundering in Macau via the territory’s casinos has been sentenced to death on charges of murder and mafia-style crimes

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iu Han, the former mining tycoon that according to Chinese media is allegedly connected to a money-laundering scheme using casinos in Macau was sentenced to death on Friday for murder and mafia-style crimes.

News agency Xinhua reports that Han and his brother Liu We were convicted of organising and leading a criminal organisation as well as murder, said a court statement. They were deprived of political rights for life and the court will confiscate all their personal property, the statement said.

Mr. Liu made the headlines last February when Xinhua reported that the former tycoon and his associates had made more than HK$230 million taking mainland citizens to gamble in Macau.

The Xianning Intermediate People’s Court in central China’s Hubei Province announced that the Liu brothers and 34 other defendants were accused of crimes including organising, leading and participating in a criminal gang and murder.

The 36 defendants were prosecuted in seven trials, the last of which

ended on April 19. It is the largest criminal group of its kind to have been arraigned on trial in China in recent years.

In addition to the Liu brothers, three other members were sentenced to death, five were sentenced to death with a two-year reprieve, four to life imprisonment and 22 to imprisonment of different terms.

There were three former civil servants among them. Liu Xuejun and Lyu Bin, former police officers, and Liu Zhongwei, a former prosecutor, were sentenced to 16 years, 11 years and 13 years in prison, respectively, for harboring Liu’s organisation and accepting bribes.

The organisation led by Liu was identified as a criminal organisation as it had an established hierarchy and regular members, profited from criminal activities and carried out multiple murders, assaults and illegal detentions in an organised way, the court said.

The organisation, which was protected and indulged in by government officials, illegally monopolised the gaming business in Guanghan City in southwest China’s

Liu Han

Sichuan Province, tyrannized local people and seriously harmed local economic and social order, the court said.

It is unknown whether the Liu brothers and others convicted will appeal.

Liu Han was chairman of the board of the Hanlong Group, the biggest private enterprise in Sichuan. He

owned subsidiary companies involved in electricity, energy, finance, mining, real estate and securities.

Starting in 1993, Liu Han, Liu Wei and Sun Xiaodong, who was not among the 36 tried, made money running gambling dens and dealing in construction materials and futures in the Sichuan cities of Guanghan and Chengdu as well as Shanghai and Chongqing municipalities, according to a prosecutor’s statement released when the trials began on March 31.

Since 1997, when Liu Han and Sun Xiaodong set up the Hanlong Group in Mianyang, the two cooperated with Liu Wei in recruiting a gang of thugs, which gradually developed into a relatively stable criminal organisation. The organisation had ten steady members and another 20 followers. Liu Han, Liu Wei and Sun were the organisers and leaders of the group.

The group boasted a clear division of labour with Liu Han responsible for commanding the group and decision making. Sun implemented Liu’s instructions and managed Hanlong’s daily operations, while Liu Wei led the hatchet men or ‘bodyguards.’

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6

May 26, 2014

Macau

Promoting culture to foster business Having just been created, the Macau African Chamber of Commerce seeks to promote business and investment within Macau/China and countries throughout Africa - not only the Portuguese-speaking regions. To achieve this, they will also focus on promoting cultural activities, so that people are more informed about the different countries.

Hoping to function as a complement to the Forum for Cooperation between China and Portuguese-speaking Countries, Chamber president Francis Nwachukwu said in an interview with Business Daily that contrary to the Forum’s remit the Chamber will not work at government level but more on a businessmen plane. Mr. Nwachukwu says the aim is to extend activities to Hong Kong and Guangdong province, covering the region.

Luciana Leitão leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

Why did you create a Chamber of Commerce?

Actually, we have the Forum, but it’s about the Portuguesespeaking countries in Africa.

We also would like Macau people to know more about African countries, not only Portuguesespeaking countries. So, we decided that this Chamber of Commerce would be a very good platform for businesses eager to know more about African countries. Our Chamber will have to provide more information and this can help promote more business between Macau/China and the African countries.

So, the focus of the Chamber will be the non-Portuguese speaking countries?

Not really; all African countries.

The Central Government is asking Macau to deepen the relationship between China and the Portuguese-speaking countries.

In line with this, we would also like to use our network, connecting the Chambers of Commerce and all these Portuguese-speaking countries, for them to know we exist and [know more about] the African countries. We’re already establishing contacts: businessmen may want to go to China and finding it a bit difficult, so they may use Macau as a platform.

Will there exist any type of cooperation between you and the Forum for Cooperation between China and Portuguese-speaking Countries?

Yes. Actually, what we’re doing is just to complement what the Forum is doing. We will definitely work closely with the Forum because it’s already established and it has all the support of the government. In some of our programmes, we’ll stay in touch with the Forum. For logistical reasons, we may not be able to do all we want to do but with the support of the Forum we can.

But you will focus only on business?

We’ll try not to just focus on business; [also] a little bit on culture.

We found out that the locals barely know much about Africa, so we try to promote business but we will try to promote more African culture in Macau and we’re coming up with some programmes, such as what we did for Africa Day.

The Chamber’s goals are to promote investment and trade between Macau/China and the African countries?

Yes. That’s why initially we made an effort to get in touch with all the African consulates in Macau and also in Hong Kong. What we want to do is to provide reliable information to all the people, to investors who want to know more about Africa. We want to make our Chamber a reliable source.

Culture cultivates business You’re saying it’s not only about business. By organising more cultural events, do you believe more trade and investment with Africa may occur?

This is actually one of the reasons why, in part of our programme, we talk about education. That’s very important for us. In future, we’ll try to coordinate with some learning centres to organise short courses about doing business in Africa.

If we don’t know a place, it’s difficult. So, the cultural part is to introduce to Macau who we are, the way we live our lives; when the locals get to understand a bit about Africa, then we can talk about business.

Will you also work as a lobbyist with the government, promoting African companies?

Yes. Most of these companies, when they come to us for some information and regulations and also about their concerns regarding tax, we can also lobby on their behalf.

We found out that the locals barely know much about Africa, so we try to promote business but we’ll try to promote more African culture in Macau

Have you had any contact from people in Africa interested in coming here?

For now, we had one from Angola — someone asking to use Macau as an office, with an interest in Mainland China.

The platform Verde, Kenya, there are very good opportunities for those people in tourism here. It depends on what you are doing and your target market.

All these members are individuals or companies?

Both. And not only African, we are open to everyone. Some locals, actually, want to know more about Africa, that is why they join. In the future, we will also be organising some business trips to Africa in collaboration with the government.

One of the criticisms people level at the Forum is that it mostly works at a governmental level, neglecting the business level. Will that also happen with you?

Our target is real businessmen.

We’re not so much looking at government level officials - we only go to the government when there are some policies we want them to assist us with, otherwise we work directly with entrepreneurs.

We intend to touch the real people in the business, so, for us, if they know we exist, for example, in Angola and if they want to come to Macau, the Chamber of Commerce is the easiest way. They may want to talk to the Forum but they may feel it’s easier with us.

Where do you see the potential for investment in Africa?

For Macau, because it has already developed the tourism sector, most of the investors will be looking at areas to invest in, in terms of tourism, hotels and hospitality.

In countries like São Tomé, Cape

How about the investment from Africa in Macau/China: will you also facilitate that?

Yes. We’ll always encourage businesses who want to come to Macau or use Macau as a platform to enter China, so we can also help them keep up with the Macau

How many members do you have?

We have about 30.

regulations, what is needed to register a company, what they can bring in here and what the taxes are for each product.

Do you still believe Macau is the best way to reach Mainland China?

Yes, especially for the Portuguesespeaking countries, it’s easier for them. Because the language and the laws are already similar, it’s not so difficult for them to use Macau to enter Mainland China.

For other countries, some may fear to go directly to Mainland China, maybe because of language or because they don’t have the right networks. We’re still developing our association and we hope in the near future to have very good networks in terms of government officials, so that when we have requests we can really know whom to address.

What areas do you identify now that African companies are interested in, in Macau/China?

For those who are into agriculture, they might bring cocoa and agricultural products; it’s an area they’re still exploring.

Currently, what are the main obstacles for an African company wanting to do business in Macau?

Is the restriction on imported labour one of them?

The labour and also the high rents.

The increase in rents is too high, so it’s already becoming an issue.

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May 26, 2014

Macau

That may prevent companies from coming here?

That depends on the financial capacity of the company. Some companies can just try. For companies who are into diamonds and gold, they can afford to come to Macau and set up an office.

We’re also talking with these kind of people to come to Macau. Macau actually wants to diversify and this is also an area in which our Chamber can help.

Have you received any requests from locals asking for information about other African countries?

They keep asking me about my country. For now, they’re just kind of curious.

With an interest to doing business?

Probably, in the future, when they know more.

Our Chamber is not just limited to Macau. Because there isn’t any chamber in Hong Kong or in Guangdong, we’ll be visiting Guangdong and Hong Kong.

When you talk about business, it’s not Macau. We’re just trying to promote Macau as a place to use as a platform to get to Hong Kong or Mainland China.

Macau can also play a big role, for example, in the financial services - African banks. I still need to study more about how to bring money from China, so this is an area that if we have more information on we can also do it through Macau banks. There are still some areas in which Macau can play a big role in linking China and Africa.

How about in Hong Kong; are people asking you about investing in Africa?

We were in Hong Kong a few weeks ago and to our surprise a lot of people

For Macau, because it has already developed the tourism sector, most of the investors will be looking at areas in Africa to invest in, in terms of tourism, hotels and hospitality

came to see us. Some of them have already visited Africa, some were already doing business, some have not but they want to know about Africa. Africa may be the new hotspot for investment in the near future because Africa can also provide an opportunity for investment.

Africa is a big continent with several countries, many of which are still politically unstable. Are businessmen afraid to invest because of this?

To some extent, it affects [investment] but it still doesn’t

deter people who really want to invest. There’s a lot of instability, not only in Africa but everywhere.

You can see what is happening in Europe and Ukraine. Who could have predicted this? Some African countries are also facing some challenges. Recently, especially due to the issue of terrorism, for sure people are concerned — they don’t want to put their money where there is instability. But, in respect to this, there are still opportunities.

If the investment coming to Africa is really increasing it means that there is confidence from the investors that sooner or later these challenges will end. Figures show people are willing to invest, regardless of the challenges.

Underneath these challenges lie opportunities - so, the earlier you come in, the better.

companies, those who attended our inauguration asked a few questions but probably they will communicate with us more. We also plan to join some forums and exhibitions, which will give us an opportunity to get to know more people, and also join some of the IPIM activities.

Complementary work

Why, up to now, has there been no African Chamber of Commerce in Hong Kong?

That answer I will leave to the Hong Kong people to answer. It never occurred to someone to try this.

One of our mega projects is to come up with a directory with African businesses and Chinese businesses in Macau, Hong Kong and Guangdong. We’ll work closely with them. We need their contacts.

How do you evaluate the work being done by the Forum?

I can say its been doing a great job in deepening the relationship between China and the Portuguese-speaking Countries.

From the Macau perspective, with so many conferences and engagements between the Forum and the Portuguese-speaking countries it’s doing a good job because it’s part of what Mainland China wants.

The Forum works under the Central Government. Is your Chamber independent?

Yes. You can approach us and you can talk to us. Businessmen can call us and ask questions.

Have you had any feedback from Mainland China’s companies?

If you’re talking about Chinese

What kind of activities do you intend to organise?

We’ll come up with monthly seminars – we’ll choose one African country, invite one businessman from that country to come up and speak to us, to tell Macau people about opportunities. We’re already planning one about South Africa in July.

For next year, we will organise some trade exhibitions. We’ll also work closely with IPIM and how to be successful with this idea.

When do you expect to have this database?

We’re working on it. The first step is to sell this idea to businesses in Hong Kong and also in Guangzhou. In Guangzhou, there’re a lot of African businesses.

The committee in charge of this is already doing the work now and probably the first issue will be published at the beginning of next year.

8

May 26, 2014

Macau

Mike Leven throws in his chips Las Vegas Sands Corp President and Chief Operating Officer (COO) will retire at the end of the year when his contract expires. While Sheldon Adelson maintains the levers of power, the company is now looking for a new president

M

ike Leven, President and Chief Operating Officer (COO) of Las Vegas Sands Corporation, will step down at the end of the year when his contract expires, the US-based gaming company has announced. Mr Leven, who turns 77 this year, will continue in his role as member of the Las Vegas Sands and Sands China Ltd. Board of Directors following his retirement.

“I’m grateful to Sheldon [Adelson] and his family for allowing me to help him lead the company during such a tremendous period of growth. I’ve enjoyed working with the finest team in the industry and look forward to continuing to serve the company, its shareholders and its team members from my position on the Board of Directors”, Leven said about his decision. “For me, this is truly a storybook ending to a more than 50year career in the hospitality industry.

I wouldn’t want it to end any other way,” he added.

Sheldon Adelson praised Mike Leven’s work integrating Las Vegas Sands in early 2009. “On behalf of the entire LVS family, I want to convey our deepest appreciation for Mike’s tireless work and dedication during his tenure. Mike started in this role at one of the most challenging times in our company’s history

and we appreciate his efforts and leadership in helping LVS experience unprecedented success as we’ve grown,” he said.

A Board-led committee will now embark on the hunt for a new president and COO for the company and will recommend candidates to the Board for its consideration.

‘Bullish’ Sheldon Adelson maintains his position Despite rumours that Sheldon Adelson, aged 80, may step down as CEO, the gaming tycoon denies it.

“As the supposed Mark Twain quote goes, the rumours of my demise have been greatly exaggerated”, he said.

Mr Adelson emphasised that he has never been more committed to the company’s future. “I am as bullish about this company as I’ve ever been, and I have no plans of slowing down or passing the CEO title or job to anyone. We have taken an important leadership position in the gaming and hospitality industry, and I plan on spending year after year building on that success. Whether it’s driving financial results, working with governments to open up new markets, securing new development opportunities in emerging markets, spearheading regulatory compliance

Mike Leven

or anything else, I am intently focused on building on the momentum we have established over the past several years,” he said.

The business magnate has also revealed that he is going to continue to push his team to achieve greater results. “We have developed a

strong track record for securing the most coveted new development opportunities in our business and returning capital to our shareholders at a pace never before seen in our industry. I’m not going to let that change, not even for a second” he stated.

THERE ARE THINGS WE DON’T DO BUT WE DO••• • Advertising • Branding & marketing consulting • Marketing strategy • Creativity • Design There are men and women who give human kind their perseverance, their genius, their generosity and, in some cases, their own life.

Those people and their actions are our inspiration.

info@goldfishmacau.com +853 2833 1258 www.goldfishmacau.com

9

May 26, 2014

Greater China

Gas deal repercussion minimized The sum will be spread out over 30 years

T

he US$400 billion gas deal Russia signed with China was a symbolic victory for Moscow as it is locked in a dispute with the West over Ukraine, but the scale of the deal is not as massive as it seems at first blush, according to analysts.

The volumes to be shipped east won’t cut Russia’s dependence on selling gas to the West, nor would they lead to shortages in Europe.

Under the 30-year deal signed Wednesday Russia’s Gazprom will begin supplying China’s CNPC with up to 38 billion cubic metres of gas per year from 2018, with the agreement said to be worth some US$400 billion (300 billion euros) overall.

Russian President Vladimir Putin and Gazprom chief Alexei Miller didn’t lose any time in hailing the agreement that is the largest in the state-controlled gas company’s history.

However analysts at Capital Economics said “the importance of the deal is largely symbolic.” First the sum will be spread out over 30 years, making it an additional US$13 billion in exports that reached US$593 billion last year. Analysts also pointed out that the amount of gas to be delivered to China, up to 38 billion cubic metres per year, is still far behind the 160 billion cubic meters it shipped to Europe last year.

Although by signing the deal in the midst of the Ukraine crisis Moscow was seeking to signal a shift in “focus away from Europe and towards Asia.... in short, for now Europe will remain by far the most important market for Russia’s energy,”

That won’t affect Europe’s energy supply security: there is so much gas in Russia that it can very well supply not only Europe, but China and other countries as well Samuele Furfari, Free University of Brussels lecturer

Russian President Vladimir Putin (L) shakes hands with Chinese President Xi Jinping (R) prior to the opening ceremony of the fourth Conference on Interaction and Confidence-Building Measures in Asia (CICA) summit in Shanghai

said Capital Economics.

Europe, which depends upon Russian gas for about a quarter of its consumption has been concerned about another possible disruption to supplies that transit Ukraine, as happened in 2006 and 2009 when Moscow and Kiev argued over prices.

‘Symbolic gesture to Europe’ EU nations have again begun to look how they could reduce their dependence on Russian gas. “It is more a symbolic gesture Russia sent to Europe, to say that

it has other options” to sell its gas, said Guy Maisonnier, an economist at alternative energy research firm IFP EN in Paris.

However the volumes of gas Russia will be selling to China don’t pose a risk of shortages to Europe, said analysts.

“That won’t affect Europe’s energy supply security: there is so much gas in Russia that it can very well supply not only Europe, but China and other countries as well,” said Samuele Furfari, who teaches a course on the geopolitics of energy supply and distribution at the Free

University of Brussels.

Moreover to ensure its energy security China insisted that its supplies will come from largely undeveloped fields in eastern Siberia, while European supplies come from fields further west.

“The Russians agreed to dedicate specific fields and new ones for the Chinese,” said Thierry Bros, an analyst of European gas markets at Societe Generale.

Although the price of gas was not disclosed, Russian officials were quick to say it is a good deal. Fitch estimated the price at or above US$350 per thousand cubic metres,

U.S. wins WTO case on car duties China argued the duties were imposed because U.S. automakers had received U.S. government subsidies and dumped their vehicles into the Chinese market, harming China’s auto industry

T

Jeep Grand Cherokee, one of the cars affected by duties

he United States has won a trade dispute with China over duties slapped on U.S. exports of large cars and sport utility vehicles, the World Trade Organization said on Friday.

China, the second-biggest market for U.S. auto exports, in 2011 started levying punitive duties on vehicles with engines of 2.5 litres and above, in retaliation for U.S. trade policies.

The duties have since expired.

China, which only joined the WTO in 2001, is the second most common target of U.S. disputes at the trade body after the European Union.

U.S. Trade Representative Michael Froman said the duties affected US$5.1 billion in U.S. auto exports in 2013, including popular models such as the Jeep Grand Cherokee,

compared to US$378 per thousand cubic metres for Western European customers in 2013. Analysts at VTB Capital in Moscow estimated the breakeven price to supply China from Siberian fields at US$280 per thousand cubic metres, not including tax and investment costs.

Moreover the deal is not as good as could be for the Russian budget at a time when growth has stagnated and the economy is at risk of falling into recession due to the uncertainty generated by the Ukraine crisis and Western sanctions.

AFP

Buick Enclave and Cadillac Escalade.

Total U.S. auto exports to China totalled US$8.6 billion.

Although Froman said he was pleased China had dropped the duties, which ranged up to 21.5 percent, he said it was worrying the United States had brought, and won, three WTO cases against China over unfair import duties.

“We remain deeply concerned by the troubling pattern of China’s misuse of anti-dumping and countervailing duty measures,” Froman said at a news conference, flanked by Michigan lawmakers Sander Levin and Debbie Stabenow, whose state is home to U.S. car makers Chrysler Group LLC, Ford Motor Co and General Motors Co. China argued the duties were imposed because U.S. automakers had received U.S. government subsidies and dumped their vehicles into the Chinese market, harming China’s auto industry.

A spokesman for China’s Embassy in Washington noted that the WTO rejected some arguments by the United States and supported some of Beijing’s. China also had reservations about some elements of the WTO decision, such as the calculation of the dumping margin, spokesman Geng Shuang said in an emailed statement.

Reuters

10

May 26, 2014

Greater China Energy to lead Silk Road belt Energy cooperation including exploitation of oil and gas reserves will boost the development of the Silk Road economic belt covering China and central Asia, industrial experts have said. Exploitation of energy resources will serve as the major force driving the economic belt, said Zeng Xingqiu, deputy head of the Energy Research Center under the Investment Association of China, during an ongoing forum held in west China’s Xi’an City on promoting cooperation in the belt.

Fitch hails local bonds decision

President wants more competitiveness in Shanghai Xi visits the Pilot Free Trade Zone, saying the decision to build the zone was an important step of China’s reform and opening up in modern times

C

hinese President Xi Jinping has urged Shanghai to push forward reform, pursue scientific development and improve its competitiveness.

Xi made the remarks during his inspection in Shanghai from

Friday to Saturday after attending the Conference on Interaction and Confidence Building Measures in Asia.

He visited the China (Shanghai) Pilot Free Trade Zone (FTZ), saying the decision to build the zone was an important step of China’s reform and

opening up in modern times.

He was told that more than 16,000 enterprises with 280,000 employees have entered the zone in the past eight months, which have seen transparency of investment management, convenience of trading,

Fitch Ratings hailed the decision by the Chinese authorities to allow local governments to issue bonds directly on their own credit profile as a “significant step forward.” The move by the Ministry of Finance (MOF) is set to help reform local and regional governments’ budget management and ensure greater fiscal transparency, Fitch said in a research note on Saturday. The ministry announced on Wednesday that four more Chinese local governments -- Beijing, Jiangxi, Ningxia and Qingdao -- had been given autonomy to issue bonds directly as part of a pilot program, bringing the total number to ten.

Trade barriers hamper China ties with Central Asia As China and Central Asian countries contemplate a Silk Road economic belt, a trade group urged solving trade disputes and unbalanced investment between the two sides. Zhang Wei, vice president of the China Council for the Promotion of International Trade, said Friday that the organization has been working on such problems since Chinese President Xi Jinping proposed the belt and greater regional cooperation last year. Zhang urges removal of trade barriers that “constantly occur” in customs clearing, technical standards and service trade.

Ex ARATS president to visit Taiwan Chen Yunlin, former president of mainland-based Association for Relations Across the Taiwan Straits (ARATS), will head an art and calligraphy delegation to Taiwan. The delegation will arrive in Taiwan today and hold symposiums on arts with Taiwan experts and scholars. The delegation will also visit eastern Taiwan for outings and sketching. According to the Taiwan-based Straits Exchange Foundation (SEF), art communication is an annual exchange between ARATS and SEF. SEF chairman Lin Join-sane will meet Chen and members of the delegation on May 26. The delegation, composed of mainland artists and experts, will conclude its tour on June 2

Foreign countries ban Zongzi More than 20 countries and regions have banned the traditional Chinese food Zongzi over fears of infectious diseases, Beijing Entry-Exit Inspection and Quarantine Bureau said on Saturday. According to the bureau, since some meat-filled Zongzi, also known as rice dumplings, have the risk of carrying viruses like bird flu and foot-andmouth disease, countries and regions including Germany and France have banned any kind of Zongzi. Another six countries, including Australia, New Zealand and Britain, have banned Zongzi containing meat or yolk, the bureau said.

Entrance to the Pilot Free Trade Zone in Shanghai

Pharma industry sees margins China has been a magnet for the big global pharmaceutical companies firms as growth slows in Europe and the United States

A

crackdown on corruption and pricing in China’s fast-growing pharmaceutical market has squeezed profits and margins, raising a red flag to global Big Pharma that the days of easy growth in the country may be over.

A Reuters’ analysis of more than 60 listed Chinese healthcare firms shows average profit margins declined to around 10 percent last year from 15 percent in 2012. Average net profits fell 2.1 percent, down from close to 20 percent growth in previous years.

China has been a magnet for the big global pharmaceutical companies and other healthcare firms as growth slows in Europe and the United States.

It is the largest emerging drugs market and is set to be the global number two overall within three years, according to consultancy IMS Health.

While global drug makers withhold their China profit figures, the analysis suggests profit growth is harder to come by - a concern as many global firms look to China as a future growth driver.

“Most companies, local and foreign, have enjoyed an easy growth phase for 5-6 years as money was thrown at the healthcare system to improve access,” said Alexander Ng, Hong Kong-based associate principal at McKinsey & Co. “Now China is more into cost containment mode... and the squeeze on pricing and margins is a lot more apparent.”

Over the past year, China has cracked down on high prices and

corruption in the healthcare sector.

Authorities probed drug makers over pricing in July, while a high-profile investigation into British drug maker GlaxoSmithKline Plc led to executives at the company being charged with bribery earlier this month.

Industry and legal sources said the investigations into the sector are

likely to grow more intense, meaning downward pressure on profits is likely to remain.

Sales drag The climate of investigation has stymied sales growth, with some doctors saying they are worried to

11

May 26, 2014

Greater China

16,000

Number of enterprises in Pilot Free Trade Zone in Shanghai financial innovation and reform of governmental administration.

The president stressed that the FTZ in Shanghai is a large pilot that needs careful management.

The management should combine structural reform and the exploration of new methods, while controlling risks and gradually making improvements.

Institutional innovation should be focused on to create a fair and efficient international business environment, the president said.

Risk control is the bottom line to guarantee the whole process of constructing the zone, and the demands of various businesses for institutional improvement should be emphasized, he said.

The president also visited a cultural trade base in the zone and called on the staff to contribute more to the development and promotion of the country’s cultural industries.

After leaving the FTZ, Xi visited the design and research centre of China’s state-owned Commercial Aircraft Corporation (COMAC), praising the company’s technological breakthroughs in the past six years since it was founded in 2008.

China’s largest home made passenger aircraft C919 was designed by the COMAC. Xi said that the

reducing and other healthcare

Most companies, local and foreign, have enjoyed an easy growth phase for 5-6 years as money was thrown at the healthcare system to improve access Alexander Ng, McKinsey & Co

meet pharmaceutical reps, fearing being caught in the glare of China’s watchdogs.

In 2013, Chinese authorities visited global drugmakers including Novartis AG, AstraZeneca Plc, Sanofi SA, Eli Lilly & Co and Bayer AG as part of a broad investigation into the sector.

research and production of large airliners represent the competitiveness of a country’s aviation industry and demonstrate the national power.

China still has a long way to go in developing the industry of large airliners, which calls for perseverance and confidence, the president said.

On Saturday, Xi inspected a medical science company and an automobile company, and expected more independent intellectual property rights and innovation in Chinese enterprises.

He urged more domestic production of modern medical equipment and faster development of new energy vehicles.

The president pointed out that technological innovation has become a pillar in improving a country’s strength and boosting reforms in modern times.

China should strive for breakthroughs in advanced technologies and take opportunities to update industrial structure, improve the system of applying and protecting intellectual property rights, and value the wisdom of talents, he said.

Xi urged Shanghai to lead the country in cultivating and practicing the socialist core values and promoting the values into people’s daily life.

He stressed the importance of Shanghai in bolstering the exchanges and cooperation in the Yangtze River Delta, one of China’s richest areas, and called on the metropolis to continue enhancing regional cooperation and integration and achieving fast economic growth.

Local officials should improve their work abilities and update their knowledge with higher vision and thought, and guard against corruption, the president added.

Xinhua

GSK, which saw its China revenues plunge 61 percent in the third quarter last year, has since overhauled its management structure in China, stopped payments to healthcare professionals and changed its incentive systems for drug reps.

“Of course there will be an impact on sales. The pattern of selling through bribing definitely won’t work anymore,” said a Shanghaibased sales executive at another global drug maker, speaking on condition of anonymity.

The Reuters’ analysis showed combined revenue growth in the sector fell to 17.9 percent last year, from 22.6 percent in 2012 and more than 28.8 percent in 2011.

Pricing pressure Price cuts are also putting a strain on profits and margins as China’s leaders look to cut a healthcare bill that is set to hit US$1 trillion by 2020, according to McKinsey & Co. Combined profit growth dropped to around 5.2 percent last year from 23.9 percent in 2011, according to the Reuters’ analysis.

While authorities have made some moves to step back on price caps, Chinese healthcare procurement still puts the main emphasis on cost, creating an incentive for firms to push prices lower to beat rivals to contracts.

“The industry is in a very competitive stage, where firms want to take market share to stay in the game, but at the same time can’t deal with the low prices,” said Yu Mingde, president of the Chinese Pharmaceutical Enterprises Association, an organisation supervised by China’s cabinet.

Reuters

Banks halt Afghan banking deals over Xinjiang unrest Afghanistan’s central bank governor Noorullah Delawari said on Thursday that Chinese banks had stopped dollar transactions with most Afghan banks

A

move by some Chinese commercial lenders to stop doing dollar business with most Afghan banks is connected to Beijing’s concern over recent unrest in China’s western Xinjiang region, two senior Chinese banking sources said.

But in Kabul, senior industry officials said the move came as a result of U.S. pressure on banks to stop clearing dollar transactions originating from Afghanistan due to money laundering concerns.

Afghanistan’s central bank governor Noorullah Delawari said on Thursday that Chinese banks had stopped dollar transactions with most Afghan banks, making it difficult for businesses to pay for imports from one of Afghanistan’s biggest trading partners.

The two Chinese banking sources, from two separate commercial lenders, confirmed that their banks had effectively stopped doing such business with Afghan banks.

They declined to be identified, including the names of their banks, as they were not authorised to speak to media.

It was not immediately clear

whether authorities in Beijing had evidence that the Afghan banking system was being used to channel funds to groups such as the East Turkestan Islamic Movement (ETIM).

But such a clampdown would mark a new front in Beijing’s battle with groups such as ETIM, which it says are separatists seeking to form their own state that have been responsible for many of the militant attacks to have hit Xinjiang and elsewhere in China.

China is also concerned over reports that there are hundreds of Uighur separatists hiding in the lawless tribal region straddling Afghanistan’s border with Pakistan who have repeatedly vowed to attack Chinese targets from their hideouts.

ETIM was designated as a terrorist organisation by the United States in 2002, and China has said before that it has proof that ETIM fighters have received training in Afghanistan.

There is, however, disagreement among security experts of the nature of ETIM. Neither the two Chinese sources, nor another from a third bank who said the bank had slowed business with Afghanistan to a trickle.

Reuters

Investment moves to Russia as U.S. interest fades Numerous U.S. financiers avoided the annual investment conference in St Petersburg on advice from the White House

S

overeign wealth funds in China and Qatar on Friday signalled their increased commitment to Russia, boosting Moscow’s hopes of strengthening ties with Asia and the Middle East as relations with the West deteriorate.

Major sovereign wealth funds in the Middle East and Asia have invested in Russian businesses and backed its state-funded private equity fund, the Russian Direct Investment Fund (RDIF). By contrast, U.S. financial investors in the country remain few.

“CIC has invested several billions of dollars in Russia,” said Ding Xuedong, chairman of the US$575 billion CIC, on the side-lines of the country’s main annual investment conference in St Petersburg.

“We will continue to increase our investment in Russia, not only in the public markets, but in direct investments,” he said.

Russia’s RDIF separately announced that Qatar’s sovereign wealth fund, the Qatar Investment Authority, is allocating US$2 billion to investments with the fund.

Numerous U.S. financiers avoided the annual investment conference in St Petersburg on advice from

the White House. Washington and the European Union have imposed sanctions against various individuals deemed close to Russian President Vladimir Putin in response to the situation in Ukraine.

“In our platforms -we raised US$10 billion from our partnersaround 90 percent came from Asia and the Middle East,” said Kirill Dmitriev, the RDIF chief executive.

“Those longer-term investors ... take a longer-term view on Russia. They see some turbulence but realise it is impossible to isolate the sixth-largest economy in the world.”

Among those present on a panel discussion on Friday were senior executives at Korea Investment Corporation and Kuwait Investment Authority (KIA). European funds, facing less government pressure than their U.S. counterparts, also showed commitment to Russia.

“We think there is a lot of potential in this country,” said Laurent Vigier, CEO at France’s CDC International Capital. “We are looking actively at the moment at opportunities in this country and are optimistic about the medium and long term.”

Reuters

12

May 26, 2014

Asia BoJ chief voices impatience with Abe’s policy Japan’s central bank chief has forecast victory in his battle against stubborn deflation that has sapped growth for years, but expressed impatience over the pace of Premier Shinzo Abe’s policy blitz aimed at jump-starting the long-laggard economy. Bank of Japan Governor Haruhiko Kuroda said stimulus measures had boosted economic activity and produced durable inflation.

But he warned that Abe’s government needed to step up its campaign for deeper, structural reforms that go beyond monetary policy to achieve more sustainable longer-term success.

Australian gold output declines Gold output in Australia, the world’s second-biggest producer, fell in the first quarter after a key mining region was inundated by heavy rainfall, industry consultant Surbiton Associates Pty said. Production was 68 metric tons in the three months through March, about 7 percent less than in the fourth quarter of 2013, Melbourne-based Surbiton said in a statement. Output was 8 percent higher than in the same period a year earlier, it said. Full mining may resume in June, the Perth-based producer said last month in a statement.

Samsung may unveil ‘watch-phone’ in June The firm is developing a smartwatch that can make or receive calls without having to be tethered to a mobile phone, the Wall Street Journal reported. Samsung, the world’s largest maker of smartphones, is in discussions with unidentified U.S., Korean and European telecommunications carriers about a so-called “watchphone” that it hopes to unveil between June and July, the Journal reported, citing people familiar with the company’s plans. The current crop of smartwatches, such as Samsung’s own Galaxy Gear, have to be linked to a phone to receive and send messages and perform other basic functions.

Panasonic to be sole Tesla producer The company said it expected to become the sole manufacturer in Tesla Motors Inc’s planned multibillion-dollar U.S. battery factory, firming up its commitment to the electric car maker’s project. The Japanese electronics conglomerate had until this week made only cautious comments about Tesla’s plans, for which the carmaker is seeking total investment of around US$3 billion in addition to the US$2 billion it has pledged to contribute directly. Panasonic does not have a timeframe for a decision on its investment but any expenditure this year would be small, Yoshio Ito, senior managing executive said.

Asian millionaires turn to independent wealth advisers Without pushing clients to buy financial assets, they offer an alternative to wealth managers working for private banks

W

hen the value of his US$20 million portfolio plunged in the 2008 global financial crisis, luxury car enthusiast Gerard Tan followed a growing trend among Asia’s elite investors by turning to an independent adviser for help.

His bank had put most of his cash in volatile emerging market bonds, which were hammered by the financial turmoil.

Tan, who asked that his real name not be used, kept his money in the bank, but engaged the services of an adviser unrelated to the institution in order to staunch the losses.

Six years after the crisis, a growing number of Asia’s millionaires are turning to independent wealth advisers, who offer professional advice for a fee much like doctors and lawyers do.

Without pushing clients to buy financial assets, they offer an alternative to wealth managers working for private banks, which traditionally generate revenues on commission.

Banks put the focus on selling and this can sometimes lead to risks being overlooked in favour of revenue, according to analysts.

“My positions were restructured and portfolio risks were managed,”

said Tan, a publicity-shy father of two who owns a range of high-end cars.

“I feel a lot more comfortable now about my market exposure,” added the self-made businessman whose assets are now more than US$40 million.

Shifting client base An exporter of manufactured goods in his 40s, Tan had heard about independent wealth advisers being quite popular in Europe and readily agreed when approached by a friend to try a Singapore-based firm.

“The concept and acceptance of independent wealth managers is certainly on the growth trend,” said Justin Ong, Asia Pacific asset management leader at consultancy PriceWaterhouseCoopers (PwC).

This growth “is due to the demand for more transparency and also objective client service”, he told AFP. Most of Asia’s investing public still favour commission-based selling, but the ultra-rich and “more sophisticated families” are more open to objective advice from independents, Ong said.

Capgemini and RBC Wealth Management say the total assets of the Asia Pacific’s 3.68 million millionaires were US$12.0 trillion

US$15.9 trillion

2015 expected wealth of 3.68 million millionaires in Asia Pacific

in 2012 and were expected to reach US$15.9 trillion by 2015. That beats forecasts of US$15.0 trillion for North America.

More of the rich in the United States and Europe take independent advice than those in Asia because family businesses in the West can date back 200 years or more, according to Mandeep Nalwa, chief executive of Singapore-based Taurus Wealth Advisors.

Independent advisers manage around 30 percent of the assets of the rich in the US and Europe, but the figure is just under 3.0 percent in Asia, where most family businesses

Aussie Treasurer defends stifling budget Hockey said the budget measures were necessary to put the economy on a stronger footing and deliver future growth and employment

A

ustralia’s government says its political opponents in the Senate must be prepared to negotiate on budget legislation or they may face a public backlash.

“If the immediate answer of everyone in the Senate is ’no’, then I think the Australian people will have a low tolerance for that,” Treasurer Joe Hockey said in an interview on Sky News. “They expect their government to be able to get on with their agenda.”

Prime Minister Tony Abbott’s government faces criticism of its May 13 budget as Parliament resumes tomorrow to debate planned measures including spending cuts, a new levy on higher incomes and fees to see doctors.

Consumer confidence fell to an almost three-year low and support for Abbott as preferred prime minister dropped below that for opposition Labor Party Leader Bill Shorten for the first time following the budget.

Hockey said the budget measures were necessary to put the economy on a stronger footing and deliver future

growth and employment.

“I am confident that we will have a strong growth story in the next two to three years provided we can get what we need to get through the Parliament,” he said, referring to the Senate where the government lacks a majority. “Our measures in relation to asset recycling, infrastructure and importantly not going too hard in the next two to three years are going to help to build employment.”

The budget forecasts economic growth of 2.5 percent in the fiscal year that starts July 1, lifting to 3.5 percent by 2016-17. The jobless rate is projected to rise to 6.25 percent in 2014-15.

Consumer confidence dropped to the lowest since August 2011, according to an index from Westpac Banking Corp. and the Melbourne Institute published May 21.

A Newspoll conducted after the budget and published in The Australian newspaper May 19 showed Abbott’s support as preferred prime minister

6.25 percent 2014-15 jobless rate forecast fell to 34 percent compared with 44 percent for Shorten.

The government believes it has the best policy solution and will put it to Parliament, Hockey said. It’s unlikely to budge on some of the programs, such as the proposed Medicare copayment, he said. The government wants to impose a A$7 fee on patients when they visit a doctor, and will use the money raised for a medical research fund.

Bloomberg News

editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk Alex Lee, Luciana Leitão, Michael Armstrong, Sara Farr, Stephanie Lai, Tony Lai International editor Óscar Guijarro GROUP SENIOR ANALYST José I. Duarte Brands & Trends Raquel Dias Creative Director José Manuel Cardoso WEB & IT Janne Louhikari interns Cynthia Wong, Yvonne Wong Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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May 26, 2014

Asia

Thai military prioritize rice paying All farmers could be paid within 20 to 25 days

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Li Ka-shing, the richest person in Asia

are still run by their elderly founders, he added.

Trust deficit But the low base also means there is room to expand for both private banks and independents as the region mints more millionaires, and founders of family businesses hand over management to their children.

The 48-year-old scion of an estimated US$4.0 billion Asian fortune told AFP that patriarchs like his nearly 90-year-old father who built the business from scratch “are used to making all the final

decisions”, and are not inclined to rely on advisers.

But their children are likely to be Western-educated “so we tend to trust advisers more”. Nalwa said the 2008 crisis helped Asians realise the value of independent advice.

Independent wealth advising firms in Singapore number about 30, from about four just six years ago. Nalwa’s Taurus has expanded from only two people in 2008 to 24 now, with the value of “assets under advice” totalling US$900 million. Clients range from top-earning professionals to big family businesses.

AFP

hailand’s military junta and the finance ministry are discussing how to pay rice farmers over US$2.5 billion owed. The Finance Ministry said in a statement on Saturday that Air Chief Marshal Prajin Juntong would meet senior officials from the ministry and from state banks to set out policy. Prajin has taken charge of economic affairs under the military government.

Army chief General Prayuth Chanocha, who heads the government, addressed hundreds of civil servants at an army facility on Friday, a day after the army seized power, and told them that paying the farmers was “an urgent issue”, according to a source with knowledge of the meeting who requested anonymity.

The state rice-buying scheme was one of the key policies in the populist electoral platform that brought ousted premier Yingluck Shinawatra to power in 2011. Yingluck’s rice-buying scheme paid millions of rice farmers way above the market price for their grain.

The scheme boosted rural incomes but made it impossible for the government to sell the rice on the export market without incurring big losses. Thailand was left sitting on millions of tonnes of rice stockpiles.

The Thai scheme ran into funding problems that were exacerbated by the government’s inability to access funds from the state budget from December.

Prayuth suggested on Friday he would

Thai Army Chief General Prayuth Chan-ocha

be able to tap the state budget for funds to pay the farmers.

“The budget office reported that there is about 40 billion baht (US$1.23 billion) in the central budget that can be used to pay farmers,” the source quoted Prayuth as saying. “Some are offering another 50 billion baht in loans,” Prayuth added. “This should be sufficient to pay for farmers.”

That was an apparent reference to possible loans from banks. Commercial and state banks proved unwilling to lend to the Yingluck administration, worried about the legitimacy of such borrowing by a caretaker government and possible lawsuits.

At the end of April, farmers were still owed an estimated 90.5 billion baht. Some have been waiting since late last year for rice sold to the state from the crop harvested from October.

Prayuth was reported as saying all farmers could be paid within 20 to 25 days.

A Walkman in an iPad age Sony lost money in five of the last six years and Moody’s downgraded its credit rating on the firm to junk in January

S

ony’s latest bid to halt years of losses and resuscitate its brand has provoked snorts of derision among analysts who say it falls a long way short.

The criticism came after Sony president Kazuo Hirai on Thursday pledged to drag the electronics giant out of a painful restructuring in the current fiscal year and pointed to ultra-highdefinition technology as a possible saviour for its money-losing TV unit.

Hirai, appointed in 2012 to revive a company mired in losses, has centred his attention on shaking up a troubled consumer electronics business, including the television unit, which alone has lost about 790 billion yen (US$7.8 billion) over the past decade.

A week ago, Sony shocked investors with a US$1.26 billion annual loss -after several earnings downgradesand warned it would be in the red again in the year to March 2015.

Sony lost money in five of the last six years and Moody’s downgraded its credit rating on the firm to junk in January.

Hirai said the company was aiming for a 400 billion yen operating profit in the

The ‘revolutionary’ Walkman fuelled company’s profits for long time.

Old fashioned but highly missed

next fiscal year, but that did little to impress analysts.

Sony has long relied on profits it generated from a lesser-known insurance business, as well as movies and music operations to fill some of the yawning deficit in its higher-profile electronics segment.

“Our impression is quite negative. We believe the firm needs to engage in a radical restructuring,” said Deutsche Bank analyst Yasuo Nakane.

He added that Thursday’s session “revealed absolutely no new information, ideas or

strategies such as to change our view on the company”.

‘Earnings deterioration’ Hirai’s efforts to drag the TV business into the black have so far failed, but he has repeatedly shrugged off pleas to abandon a division that he insists remains central to Sony’s core business.

The firm also rejected a call from a US hedge fund billionaire to spin off part of its profitable entertainment arm, which includes a Hollywood studio that produced the

latest instalment of “The Amazing Spider-Man” series.

Much of the losses last year stemmed from costs tied to Sony’s exit from the personal computer business, part of its wider shakeup which has seen layoffs and asset sales - including its Manhattan headquarters for more than UA$1.0 billion.

Making money in consumer electronics has been a tough ask for Japanese manufacturers in recent years as razor-thin margins and tough competition from South Korea and Taiwanese

Reuters

competitors dented their finances.

Sony rivals Panasonic and Sharp have also suffered massive losses, although both recently reported annual profits for the first time in years after major restructurings.

Japanese firms have also trailed in the global smartphone business where Apple and Samsung dominate, while digital camera sales have been decimated as consumers turn to picturetaking phones and tablets.

Hirai argued that a plan to split up Sony’s TV business, exiting personal computers, driving into the medical equipment business and slashing costs would turn around Sony’s fortunes.

He also pointed to stronger sales of 4K ultra highresolution TVs, which tend to have better profit margins than lower-end models, as the firm shrinks losses in the beleaguered business.

Sony is a leader in the next-generation technology which is currently found on large televisions from 50 inches and above, although a high price tag has so far been a barrier to big sales.

Record sales of Sony’s new PlayStation 4 games console are a potential bright spot, but the expensive launch of the system kept its games division in the red last year. A Japanese analyst who covers the company said Sony’s goal of a 400-billion operating profit was “too ambitious”.

AFP

14

May 26, 2014

International

M&A and dividend frenzy fed by easy money

Rosneft, BP to explore in Russia amid sanctions

With the global economic crisis receding and Eurozone tensions dissipating, companies are no longer hoarding cash and the amount they have been paying out to investors has soared

M

assive dividend payments and mega mergers: with markets flush with central bank easy money companies have begun to raid their war chests, gobbling up competitors or rewarding investors.

In the first quarter of this year dividend payments jumped by nearly a third and several titanic tie-ups were announced, with the United States in the forefront.

Global growth remains sluggish, but its return is sufficient “as all over the markets there is liquidity waiting to be used as everything has been done to stimulate them, especially by the US Federal Reserve and Bank of Japan,” said Renaud Murail, a portfolio manager at Barclays Bourse in Paris.

The US, Japanese and British central banks have conducted massive purchases of assets in recent years in order to inject liquidity in the markets and jump-start stalled economies.

On top of this central bank liquidity there are the funds “accumulated by European companies as a precaution after the liquidity crunches they experienced in 2008 and 2011,” said Romain Boscher, global head of equities at asset manager Amundi.

With the global economic crisis receding and Eurozone tensions dissipating, companies are no longer hoarding cash and the amount they have been paying out to investors has soared.

Globally, it jumped by 31.4 percent in the first quarter of this year compared with the same three-month period in 2013, according to a study

by Henderson Global Investors. It hit US$228 billion (167 billion euros), the best quarter since the end of 2012.

“The lack of visibility led companies to make big restructuring efforts, especially in the United States. American companies have

Liberia: growing despite everything

Train manufacturer Alstom is being besieged by General Electric

accumulated huge war chests ...

Now there has been a break in the clouds, this cash is coming out of the vaults to finance share buybacks, dividend payments, our mergers and acquisitions,” said Murail.

But Boscher noted there is one big difference between European and US companies.

“European companies are very far from returning to their levels of profitability before 2007 and have not yet launched massive share buybacks,” he said.

Buying easier than investing US companies have also been the most generous to their shareholders.

With pay-outs to investor up by 30 percent in the first quarter, they far outpaced their European and Japanese counterparts, according to data from Henderson.

There has also been a return to the mega mergers of before the global financial crisis: General Electric has its eyes on French energy and transport company Alstom, Pfizer sought to swallow rival AstraZeneca, Omnicom and Publicis tried to create the world’s biggest advertising company, while AT&T is buying DirecTV and Comcast

is taking over Time Warner Cable in a big shake up the US market to provide Internet and TV content to US homes.

The mergers are far from being financed from the companies’ own funds.

“Companies are benefitting from their ability to borrow at ultralow rates from banks or raise large sums on the markets on very attractive terms,” said Murail.

And not only solidest companies are benefitting: with superlow interest rates prevailing, Murail said investors looking for higher returns are sacrificing a bit on the quality of their investments.

“The wave of mergers and acquisitions is just beginning,” said Boscher.

A return to more productive investments such as research and development, or expanding or modernising manufacturing capacity, will need to wait for the global recovery to pick up pace, said the investment managers.

Industrial sectors are still weighed down by overcapacity as markets still haven’t recovered to pre crisis levels, while services are fighting price wars that are eroding their margins.

AFP

Colombians vote for next president and peace A Gallup poll published May 15 showed very little distance between the two main candidates

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olombians vote today in the first round of a presidential election, with Oscar Ivan Zuluaga, who opposes the government’s peace talks with Marxist rebels, running neck and neck with President Juan Manuel Santos.

Polls published last week show Santos and Zuluaga leading three other contenders, with neither of them gaining enough votes for a first-round victory.

Zuluaga, who was finance minister from 2007-2010, supports many of the same economic policies as Santos, such as free trade and a “fiscal rule” to curb the government’s ability to run deficits. The election has instead become centred on negotiations with guerrillas from the Revolutionary Armed Forces of Colombia, or FARC, said Patricia Munoz, a professor of political science at Bogota’s Javeriana

Both companies signed an agreement on Saturday to jointly explore for hard-to-recover oil in Russia, the first major deal for the state-run Russian oil company since the West imposed sanctions over Ukraine in March. Rosneft chief executive Igor Sechin, a close ally of President Vladimir Putin, has been targeted

by U.S. sanctions along with some other members of Putin’s so-called inner circle following Russia’s annexation of Crimea from Ukraine in March.

University.

“This is the central difference between Zuluaga and Santos,” Munoz said in May 23 phone interview.

“They’ve put the peace talks at the centre of the electoral agenda.”

The Santos government has held talks in Cuba with FARC negotiators since 2012, trying to agree to a peaceful solution to an insurgency that began in 1964. Zuluaga opposes any deal that would give guerrilla leaders immunity for crimes or allow them seats in Congress.

Gallup poll A Gallup poll published May 15 showed that Zuluaga, an ally of former President Alvaro Uribe, would win 29.3 percent in the first round, versus 29 percent for Santos.

In a second round on June 15,

Zuluaga would beat Santos by 42.5 percent to 35.1 percent, according to the survey of 1,184 people, which had a margin of error of 3 percentage points.

Candidates must receive more than 50 percent of votes cast to win outright in the first round. Three other polls published May 15-16 produced results that were within the margin of error.

While the election became focused on the FARC talks, most Colombians don’t regard this as the nation’s most pressing problem, Munoz said.

Fewer than 5 percent of those polled regard reaching a peace agreement as the next government’s most important task, according to Gallup, making it a lower priority for voters than unemployment, health, crime, education, corruption and poverty.

Bloomberg News

Plagued by power shortages, an erratic water supply and spiralling inflation, many entrepreneurs in Liberia’s capital are finding their efforts to prosper in their newfound peace impossible. The poor but mineral-rich west African state is seeing rapid economic growth led by huge foreign investment in mining but Monrovia’s shops, restaurants and bars are struggling to cash in on the boom.

Liberia’s annual per capita gross domestic product of about US$700 is the seventh-lowest of 229 countries ranked by the CIA World Factbook, one place ahead of the Central African Republic.

The economy is expected to expand six percent this year after an estimated 8.7 percent growth in 2013, according to the International Monetary Fund.

Saudi Telecom sukuk managed by 3 banks StanChart, JPMorgan, NCB Capital will manage the potential sale under a 5-billion riyal (US$1.3 billion) sukuk program, Saudi Telecom said in a statement today. The size of the private local placement will depend on market conditions, it said in the statement. Saudi Arabian companies are diversifying their financing sources as the Arab world’s biggest economy spends billions of dollars to develop infrastructure. Banque Saudi Fransi, the lender part owned by Credit Agricole SA, is planning to raise about 2 billion riyals to bolster its capital base, while Saudi airliner Flynas is considering a sukuk sale to fund its expansion.

Azerbaijan signs agreement with Rosneft Russia’s top oil producer Rosneft has signed a joint-venture agreement with State Oil Company of Azerbaijan (SOCAR), Azerbaijani state media reported on Saturday. The two companies have agreed to create a joint venture on exploration and production of oil and gas in Azerbaijan, Russia and third countries, the report said. The document was signed at the St Petersburg International Economic Forum over the weekend, despite sanctions imposed on Rosneft chief executive Igor Sechin, it said.

Takeover shores up Patton Boggs Troubled U.S. lobbying giant Patton Boggs avoided a financial cliff on Friday when a larger law firm agreed to acquire many of its partners and its name, which for decades was synonymous with influence in Washington, D.C. The acquisition of Patton Boggs by Squire Sanders, a firm with roots in Ohio, followed furious talks that a day earlier appeared on the verge of collapse. Late on Friday, the two firms announced they had reached a deal, concluding negotiations that had stretched back at least to February.

15

May 26, 2014

Opinion Business

wires

Russia looks East

Leading reports from Asia’s best business newspapers

PHILSTAR

Christopher R. Hill

Former US Assistant Secretary of State for East Asia, was US Ambassador to Iraq, South Korea, Macedonia, and Poland and the chief US negotiator with North Korea from 2005-2009

High income inequality is still widely prevalent in the Philippines and government must collect more taxes from the country’s conglomerates to narrow the gap and boost revenues, the International Monetary Fund (IMF) said. The Washingtonbased fund said the government has achieved progress on the fiscal front but still needs to improve tax administration, cut tax exemptions and broaden the tax base further to boost revenues. “As we discussed, there are still issues related to inequality. There is still very high poverty. Those issues you need to tackle in the medium term,” Naoyuki Shinohara, deputy managing director of IMF told The STAR.

TAIPEI TIMES India is about to impose antidumping duties on solar panels imported from Taiwan, the US, China and Malaysia to protect domestic solar manufacturers, according to a government statement seen by reporters on Friday.

The order, almost certain to anger India’s trading partners, sets duties of between US$0.11 and US$0.81 per watt and comes after an investigation that started in 2011. The ruling by a quasi-judicial body has to be published by the Indian Ministry of Finance before it takes effect. The decision adds to India’s growing trade disputes just before Narendra Modi takes office as prime minister tomorrow.

VIETNAM NEWS Three key ministries need to kick off new integrated lending models, finish guidelines of corporate income tax deduction, credit guarantee funds and funds for development of small – and medium-sized enterprises. The instructions, which are interpreted in the newly issued Directive No11/ CT-TTg, were given by Prime Minister Nguyen Tan Dung to The State Bank of Viet Nam, the Ministry of Finance and the Ministry of Planning and Investment on Wednesday, aimed at supporting the business community to achieve socioeconomic targets towards 2015.

THE NEW ZEALAND HERALD Boxes of fruit, vegetables and even meat delivered to the door are becoming increasingly popular with time-poor Kiwi shoppers. But whether they are good value for money depends on how well you use the ingredients. A number of providers offer weekly or fortnightly delivery of fruit and vegetable boxes, often on a subscription-style basis.

Delivery outside Auckland is limited but several companies have their eyes on expansion.

Most of the boxes designed to last a family for a week cost about NZ$40-NZ$55.

Russian President Vladimir Putin (L) and Chinese President Xi Jinping (R) attend a ceremonial signing of joint Russian-Chinese documents in Shanghai, China, 21 May 2014

D

ENVER – The United States’ “pivot” to Asia, a process so delicately defined that even the name had to be changed to “rebalancing” to avoid any misunderstandings in Europe, now seems to have company, in the form of renewed Russian interest in the region.

Russia’s own “pivot” to Asia is not new; but, in the deep freeze settling over Russia’s relations with the US and Europe, it does seem to have gained the momentum of real necessity.

Russian President Vladimir Putin has long been interested in the logic of marrying Siberia’s enormous base of raw materials and energy with East Asia’s vibrant but energy-starved economies.

For Russia, Asian countries – and especially China – seem to bring a barebones practicality to the relationship. Nobody in East Asia plans to look into Putin’s soul, à la former US President George W. Bush, or otherwise show much concern about what kind of person he is. “Business is business,” as Deng Xiaoping taught us.

Certainly, Russia’s on again, off again – and now on again – gas deal with China is a case in point. In the West, Russian gas is discussed in terms of broader political relationships – how energy dependence on Russia could give the Kremlin leverage to intimidate Europe.

Indeed, the Russia-Europe gas relationship has been discussed in Western foreignpolicy and security circles for some 30 years. For China, by contrast, the only important

issues seem to be quantity, price, and the pipelines’ proximity to the Chinese industrial and consumer heartlands.

Given the Kremlin’s fraught relations with the West, catalysed by the Ukrainian drama (now moving to a new phase with a consequential presidential election), a Russian pivot to East Asia is a move so obvious and compelling that it is hard to see why it didn’t happen sooner.

China doesn’t ask political and human rights questions of its business partners, and Russian doesn’t like to answer them.

Perfect.

Yet the landscape – and seascape of East Asia – is vast and fast-shifting. And Putin is likely to find that East Asia’s era of “business is business” has ended. China is beset by internal political conflicts that sometimes make Ukraine seem quiescent in comparison, and managing the internal churn is not for the faint of heart. Restive Western provinces, civil-military tensions, environmental issues, and problems with a growing number of neighbours combine to make China a far more difficult economic partner than Putin may realize.

Putin has no more interest in involving himself in China’s problems in Southeast Asia any more than China has in Putin’s problems in Eastern Europe. But, with the possible exception of South Korea, China’s relations with its neighbours have been trending in the wrong direction. Ties with

Putin has no more interest in involving himself in China’s problems in Southeast Asia any more than China has in Putin’s problems in Eastern Europe

the Association of Southeast Asian Nations (ASEAN) and with specific neighbours, such as the Philippines and Vietnam, have deteriorated sharply over disputed territorial claims with little economic significance. China’s leaders, so revered for their longterm strategic thinking, may simply be overwhelmed by the combination of a restive public and institutions that no longer seem capable of taking China into the future.

Putin thus will find a China for which business is not just business anymore. It is a combination of many factors, not the least of which is the environment. Russia will not have to deal with the environmental debate of the Keystone Pipeline, but such issues are very much in the Chinese public’s mind-set these days.

Putin may be content with his role in the Ukraine crisis, because all signs suggest that he believes he is righting a historical wrong. But, as a world leader of one of the United Nations’ five permanent Security Council members, he is failing to mind his international responsibilities, and historians will judge him accordingly.

As a result, in the quartercentury since the Cold War ended and the Soviet Union collapsed, relations among the “great powers” have never been worse. Their ability to work together on regional or global issues – Syria, for example, or climate change – has deteriorated substantially in the last decade. Now Putin seems to want to double down on these trends and create a new Sino-Soviet axis.

China, for all of its current problems, will be not interested. The compass for China’s journey still points clearly to international integration. But its leaders, whatever internal challenges they face today, need to rise to the occasion. That means telling Putin to keep any grand visions to himself.

The Project Syndicate 2014

16

May 26, 2014

Closing India’s iconic car output halted

Less Japanese, more Latin look for automaker

The maker of the iconic Ambassador has halted production of the car that was long the choice of Indian officialdom, citing weak demand and a lack of funds, casting doubt on the future of a vehicle that has looked essentially the same for more than five decades. Hindustan Motors Ltd said in a statement that it had suspended work at its Uttarpara plant, outside the western city of Kolkata, until further notice. Modelled after the British Morris Oxford, the Ambassador was the first car to be made in India and was once a status symbol, but began losing its dominance in the mid-1980s when Maruti Suzuki introduced its low-priced 800 hatchback. It lost further cachet and market share when global automakers began setting up shop in India in the mid-1990s, offering models with contemporary designs and technology.

Nissan Motor Co is looking to give its Infiniti premium brand a design makeover that will dilute its Japanese roots and flaunt a more “passionate” Latin feel.

The bold initiative aims to rev up an upscale brand that has struggled to establish itself in a competitive global market for premium autos. Launched a quarter of a century ago in the United States with an emphasis on its Japanese aesthetics, Infiniti sold about 180,000 cars globally in the year to end-March – about a tenth of rival Audi’s sales.

Now seeking to attract Chinese car buyers and more genuinely compete with established global premium brands such as Daimler’s Mercedes-Benz and Volkswagen’s Audi, Infiniti is quietly scaling back its Japanese roots and “going global”, says the brand’s chief Johan de Nysschen.

Liquor firms look beyond China in hunt for new Asian drinkers Dennis Chong

Y

oung middle-class drinkers from Asia’s emerging economies are being targeted as China’s voracious appetite for wine slows down, organisers said ahead of the region’s largestever wine and spirits fair, which opens Tuesday in Hong Kong.

The Vinexpo trade show, set to attract more than 1,000 exhibitors from around the world, will include a cocktail bar, talks on pairing wine with regional cuisine, and tastings of Chinese wines, such as baijiu, made from sorghum.

It comes as Chinese wine consumption saw its first decline in a decade last year, partly influenced by Beijing’s anti-corruption measures as well as a more sluggish economy.

“There was a slowdown of the economy in China last year. There was also this antiluxury message coming from Beijing,” Guillaume Deglise, chief executive Officer of Vinexpo Asia-Pacific, told AFP. Overall wine consumption in the country dropped by 2.5 percent in 2013, the

first decline after ten years of uninterrupted growth at an astonishing rate of around 25 percent per year, according to a Vinexpo survey.

Claire Henry, Hong Kongbased manager for French online wine auction company idealwine.com said that with the austerity and restriction drive led by Chinese president Xi Jinping, the country’s market “is no longer crazy”.

“It’s not an easy market now. China has closed a bit of its door,” she said.

A drop in official parties

and dinners -- part of the austerity drive - is “a sign of this evolution”, she said.

However, she added, such consolidation could result in higher market quality, with fewer counterfeit wines and less “opportunists” seeking profits rather than purchasing wine for its quality.

Spirits, beer consumption growing China overtook France as the world’s largest consumer of red wine in 2013, guzzling

more than 155 million 9-litre cases or 1.865 billion bottles that year, according to Vinexpo.

It remains the region’s leading wine consumer and the world’s fifth largest market for wine overall, overtaking the United Kingdom in 2012.

With demand growing in other Asian markets, however -- for spirits as well as wine -- drinks makers are starting to look beyond China.

“China will remain by far the number one market for the future here in Asia... (but) there are many more markets in Southeast Asia. Vinexpo is not just about China,” said Deglise.

He expected double-digit market growth in the next few years in countries such as Vietnam and Thailand, where a growing middle class is creating an aspirational new wave of drinkers.

According to Vinexpo, 40 percent of wine consumed in Asia is outside China.

“We talk about a lot of other markets like Vietnam, the Philippines, Thailand, Korea or Taiwan. All of these markets are expanding. It’s very important for... all the

E-commerce gives leg-up to ailing steel industry

A

flurry of online trading platforms have been launched as Chinese steel companies hope that branching into the Internet sphere will boost sales and help them weather the hard days.

China Minmetals Corp (CMC), the China’s largest steel trader, last week opened its e-commerce platform. It is the latest foray into e-commerce following the establishment of more than 100 such platforms by steelmakers and traders across the country since last year.

The Xinyilian platform will link commodity buyers with sellers and gradually become an online steel supermarket, said Yu Engang, deputy general manager of Minmetals Development Co Ltd, a subsidiary of the CMC group.

“During hard times, the steel sector must build an open and standard

e-commerce platform,” Mr Yu said.

Despite its much-touted advantages – transparency, efficiency and lower cost, analysts have said that bringing steel trading online is far from being a solution to China’s ailing steel industry.

The steel industry is bogged down in the mire of overcapacity, excess supply and sagging prices amid the economic slowdown.

Steel companies posted combined losses of 2.33 billion yuan (US$380 million) in the first quarter, compared with profits of 8 billion yuan a year ago, according to China Iron and Steel Association data. More than 45 percent of steel companies reported losses as economic growth dipped to 7.4 percent in the first quarter, the lowest level since the third quarter of 2012.

Traditionally, standing in the way

between steelmakers and end users are multiple hierarchies of distributors, who incurred a cost of around 50 yuan per ton of steel, according to Du Kelin, a manager in charge of the online trading platform of Wuhan Iron and Steel (Group) Corp.

“Transactions made through online trading platforms that bypass distributors can avoid that cost,” Mr Du said, noting that even saving 10 yuan per ton means an edge over competitors at the moment.

These platforms not only bring the cost down, but they provided customers with better access to information, allowing them to choose freely in steel companies’ online inventories.

While e-commerce trading platforms are catching on and offers a direction for steel companies, analysts have said that they are not a cure-

importers coming from these countries,” Deglise said.

Younger drinkers with money to spend are also driving a market in beer and spirits over expensive wines, analysts say, Global wine consumption increased by 3.2 percent in volume between 2008 and 2012, while in the same period, the volume of spirits consumption grew by 55 percent in Asia Pacific.

“The Asia Pacific region is largest in the world for spirits, China is the number one market for spirits,” Deglise said.

“Vinexpo is not just about wine, it’s also about spirits.”

The three-day fair will include a bar showcasing cocktails for the first time, he added.

“We are building up a dedicated space area for spirits and a new concept bar which has never been made in Vinexpo before,” he said.

“For youngsters, they are going to consume more beer and cocktails, these are social networking drinks,” Hong Kong-based analyst Mabel Lai said.

AFP

all and advised caution against an unbridled e-commerce rush.

“An e-commerce platform may be an effective way to sell standard and uniformed steel products but they cannot meet the needs of users who require custom-made products,” said Cheng Ming, professor of new steel technology research institute of Wuhan University of Science and Technology.

“The biggest challenge facing the steel sector is still overcapacity. Even though some steel makers may win some time with the help of e-commerce platforms, the possibility of being written off the map amid industry restructuring is still there,” he added.

“It’s unnecessary for everyone to launch their own e-commerce platform,” warned Liu Leiyun, president of China National Association of Metal Material Trade.

“Otherwise, it will become another overcapacity problem.”

Analysts have called for innovation and upgrading, saying these are key to the survival of steel companies in the long run.