How IDEO brings design to corporate America

How IDEO brings design to corporate America

By Dinah Eng @FortuneMagazine April 11, 2013: 8:06 AM ET


David Kelley in IDEO’s Palo Alto workshop

You may not know the design firm IDEO (pronounced EYE-dee-oh), but chances are you know its work. If you’ve used an Apple mouse (IDEO fashioned the company’s first, in 1980), swept with a Procter & Gamble (PGFortune 500) Swiffer (it collaborated on the hit), or even stood in line at an airport recently (the firm has worked with the Transportation Security Administration to make the process friendlier), you’ve felt the legacy of David Kelley. He founded IDEO in Palo Alto in 1978 and built it into a global operation with 600 employees and $130 million in revenue (he declines to divulge profits). IDEO brings a human-centered approach to products, services, and organizational concepts for the likes of Samsung, Eli Lilly (LLYFortune 500), and Bank of America (BACFortune 500). Kelley, 62, is also Stanford University’s resident design Yoda. The avowed “variety junkie” is proud that IDEO does everything from designing the ideal home for wounded soldiers to helping Elmo teach kids good behavior via a mobile app. His story:

I grew up in Barberton, Ohio, where my father was an engineer at Goodyear and my mother was a housewife. It was a typical Midwest upbringing, and I wasn’t really into college preparatory stuff. What was exciting to me was taking apart the car or the washing machine.

In 1973, I got a BS in electrical engineering from Carnegie Mellon University and went to work forBoeing (BAFortune 500) in Seattle, designing things for the interior of the 747. When I found out about the Stanford Product Design Program, I became interested in the human-centered side of technology, but didn’t think I’d get into the program. So I moved to Dayton and worked for National Cash Register (NCR,Fortune 500), designing new banking terminals, until I found out I was admitted.

Going to the Stanford program was a perfect fit. I love trying to understand what people want, what they value, and designing something for them. I graduated in 1977 with my MS in engineering and product design, and discovered that I really liked teaching. In 1978, I went to my mentor, professor Bob McKim, and said I wanted to keep teaching and I wanted to start my own company. He introduced me to Dean Hovey, who was studying at Stanford, and we started a company called Hovey-Kelley Design. A couple of professors who had their own companies in Silicon Valley gave us our first projects — designing a reading machine for blind people and a medical device called a differential [blood] cell counter.

Soon after Dean and I started our company, another Stanford colleague introduced us to Steve Jobs. We ended up doing a lot for Apple (AAPLFortune 500). They were technologically focused, and we focused on the human side. We’d ask [with the first Apple mouse], should you use the mouse with your fingertips or slide it like a bar of soap? Once we started doing Apple products, people wanted to know who we were.

Back then, we were paying about $300 a month for three offices. I remember flinching when I signed a 10-year lease because I still owed on student loans and I had a negative net worth. I had no interest in calculating revenue, and still don’t. We charged $25 an hour and had six employees. Half the time we worked, and half the time we didn’t. All I cared about was how much we were paid per hour, and if we had enough to keep everybody busy. Read more of this post

China bird flu death toll rises to 22; Infections rise to 108

China bird flu death toll rises to 22

9:31am EDT

BEIJING (Reuters) – An elderly man in eastern China died of bird flu on Tuesday, bringing the death toll from a strain that recently emerged in humans to 22, a provincial health agency reported. The 86-year-old man died after having been diagnosed with the H7N9 virus on April 17, the Zhejiang Health Bureau said on its website. Two others in Zhejiang have been diagnosed with the disease, including an 84-year-old man and a 62-year-old man, both of Hangzhou who fell ill on April 15, the health bureau said. In neighboring Anhui province, another case was diagnosed on Tuesday, a 91-year-old man, the state-run Xinhua news agency said. The man became sick on April 14, Xinhua said. So far 108 people have contracted the disease since the first deaths were reported in China last month. Read more of this post

Big tech is struggling with old age; Some of the world’s most well-known and powerful tech titans – IBM, Microsoft, Intel – are marked by trying to manage declining aspects of their businesses

Big tech is struggling with old age

April 23, 2013: 6:51 AM ET

Some of the world’s most well-known and powerful tech titans — IBM, Microsoft, Intel — are marked by trying to manage declining aspects of their businesses.

By Kevin Kelleher, contributor

FORTUNE — At its heart, the tech industry is about the new. Today, tech giants succeeded because of what was new yesterday. The flip side is that the new ages into the old more quickly in tech than in most other industries. And so companies that dominated tech even a decade ago can appear to be aging quickly. Such is the picture of the tech industry after a week of earnings reports that saw giants like Intel (INTC), Microsoft (MSFT), and IBM (IBM) discuss their financials in the first quarter of 2013. While the individual results and subsequent reactions among investors varied, one thread ran through all three: Each is struggling to manage older businesses in decline even as they push into promising new areas like cloud computing.

The most dramatic example was IBM, which has seen its stock decline 9.3% since it reported first-quarter earnings last week. IBM, a 101-year-old company, sold its PC business in 2004 in an effort to move into higher-margin software and IT services businesses. Its growth since then has made the stock a favorite among tech investors. Even so, IBM is still struggling with aging businesses. Revenue at the company fell 5% last quarter from the same quarter a year earlier to $23.4 billion, below analyst forecasts. Much of the disappointment centered around hardware, including servers based on x86 architecture that, like PCs, have become low-margin commodities. Some reports suggested IBM may sell its x86 server business to Lenovo (LNVGY), the company that bought its PC business years ago. Read more of this post

Can Google stop the drop in mobile advertising prices?

Can Google stop the drop in mobile advertising prices?

By JP Mangalindan, Writer April 23, 2013: 6:34 AM ET

Google’s latest quarterly earnings raise concerns about its mobile ad efforts. But things may turn out just fine for the tech giant. More than fine, in fact.

FORTUNE – For Google, the money has always been in advertising.

Propelled by products like AdWords, advertising generated $43.7 billion in sales last year — a whopping 95% of Google’s (GOOG) overall revenue. Its continually lucrative ad business has allowed Google to use its cash for other less-profitable ventures: Android, self-driving cars, Glass among many others. But like most of tech, Google has been challenged by the transition from desktop to mobile computing — and how to make money from users browsing the web on smartphones and tablets. One thing is for certain: The mobile market cannot be ignored. In the U.S. alone, mobile ad spending is expected to more than double from $7 billion this year to $16 billion in 2015. JMP Securities analyst Ron Josey recently estimated that mobile ads now account for 14% of Google’s overall ad sales. An important metric for Google tied to ads is called “cost-per-click.” It measures the average amount advertisers pay Google each time a user clicks on an ad. Last quarter, the company announced it would reduce the number of ads on its mobile search page to preserve the user experience and predicted a higher cost-per-click. The latter didn’t happen. Instead, Google’s cost-per-click fell 4% compared with the same time last year and marked the sixth consecutive quarterly decline. In truth, mobile ads still command lower prices than desktop ads do, the argument being that people remain less likely to click ads on their phones or tablets than desktops. (What’s more, many users may be clicking on them accidentally.) “The saying goes that ad dollars follow eyeballs, but that’s not entirely the case,” explains Clark Frederickson, vice president of New York-based digital market research firm eMarketer. Companies may be quick to tout growing mobile sales, but at the end of the day, just over 10% of e-commerce occurs on mobile. And until mobile phones and tablets become just as much a buying device as they are say, a consumption device, Frederickson says many advertisers will continue to focus their ad dollars on the desktop for the time being — even if the desktop’s days appear numbered.

154522153074 Read more of this post

Alibaba’s billionaire founder Jack Ma: “The world is so cruel that only with much of your own efforts plus a bit of luck can you survive the black forest. Never expect anyone. Count on yourselves. ’

Jack Ma to Set up A College for Entrepreneurs in Two Years

By Chelsea Dong on April 23, 2013

Jack Ma, who is about to resign as CEO of Alibaba Group soon, revealed at an event on the past Sunday that he was planning to found a college for entrepreneurs in about two years in collaboration with some of his friends. He once said he would set up a business school with Feng Tang, a real estate tycoon. He also advised entrepreneurs not to count on big companies to save them. He said, ‘Never dream of saving your lives with help from big companies. The world is so cruel that only with much of your own efforts plus a bit of luck can you survive the black forest. Never expect anyone. Count on yourselves. ’ On May 10, Jack Ma will retire from his post as CEO and become the chairman. He seems to quite look forward that day. He said, he would do what he likes after that day and enjoy the simple relaxing life after resignation. Regarding the dreams other than the business school, he said, “I don’t want to leave much regret when I leave the world.”


Reuters: How do you spell Singapore without “LKY”?

Analysis – How do you spell Singapore without “LKY”?

Sun, Apr 21 2013

By John O‘Callaghan

SINGAPORE (Reuters) – They crammed into an art cafe in Singapore and pulled no punches, deriding authoritarian officials who ruled with an “iron fist” and complaining that government ministers with million-dollar salaries were out of touch.

One woman, a middle-aged professional, got nods of agreement when she said modern Singapore’s founding father, Lee Kuan Yew, had done great things but that new ways were needed from current leaders still practising a “do-as-I-say style of parenting”.

Singapore remains regimented but the unusually frank criticism at the recent gathering, part of a government-run national “conversation” about the city state’s future, reflects the reality that this is no longer the era of Lee Kuan Yew.

LKY, as he is widely known, built the tiny Southeast Asian island into one of the world’s wealthiest nations with a strong, pervasive role by the state and no patience for dissent. Read more of this post

Magnetic therapy may not relieve ringing in the ears; “People want a pill to make it go away, but there isn’t anything like that. There’s no cure for tinnitus.”

Magnetic therapy may not relieve ringing in the ears

Mon, Apr 22 2013

By Genevra Pittman

NEW YORK (Reuters Health) – Using a magnet to generate an electrical current in areas of the brain that control hearing does not seem to improve ringing in the ears, a new study suggests. Researchers found people reported just as much bothersome ringing after a month of so-called repetitive transcranial magnetic simulation (rTMS) as after a series of fake, magnet-free treatments.

Although it seems natural that ringing in the ears – known as tinnitus – would be a hearing-related problem, so far medications and magnetic stimulation targeting the brain’s auditory areas haven’t made the sound go away, according to Dr. Jay Piccirillo. “People want a pill to make it go away, but there isn’t anything like that,” Piccirillo, an otolaryngologist from the Washington University School of Medicine in St. Louis, told Reuters Health. “There’s no cure for tinnitus.”

Read more of this post

Sirgoo Lee, CEO of Kakao Corporation, shared what made KakaoTalk a hit messaging platform in Korea and its rapid expansion

The Kakao story: Rising from the ashes of failure and being lean

BY JOASH WEE | APR 22, 2013 | ASIA

Sirgoo Lee, CEO of Kakao Corporation, shared what made KakaoTalk a hit messaging platform in Korea and its rapid expansion. Born from two failures, KakaoTalk was created by Brian Kim and his founding team as their “killer application.” Having built two web applications that have failed, (social bookmarking serice, 2009) and (social ranking service, 2008), the appearance of the smartphone came at the right time for the company, then named iWILAB, to revive its efforts in the application space. According to CEO Sirgoo Lee, the team threw away all the code for the web service and decided to do something called “application service.” With just four people, KakaoTalk was created in two months. Sirgoo shared that they have since tried to keep to the “4 by 2” spirit where they aim to create something with the least amount of resources in the shortest amount of time. The reason was, when they were building web services, the team focused on creating products that had no flaws, and that is why they failed. KakaoTalk taught them to release products as quickly as possible and to continuously improve the product. KakaoTalk currently has 86 million registered users, with 70 percent of them in Korea, 29 million daily users and send 4.8 billion messages daily. In 2012, the company reported revenues of US$42 million and had its first profitable year in six years, pulling in US$6.5 million in profits.


Kakao-RevenuKakao-Profit Read more of this post

South Koreans, who lunch religiously between midday and 1 p.m., can now get an extra treat through a smartphone app that promises to help singles find their one true love; The app now has 800,000 subscribers

“Catch of the day” for Korea’s hungry singles with popular app

2:05am EDT

By Narae Kim

SEOUL (Reuters) – South Koreans, who lunch religiously between midday and 1 p.m., can now get an extra treat through a smartphone app that promises to help singles find their one true love. In a country with the longest working hours among rich industrialised nations, and where 8 million of its 50 million people are thought to be single, the i-um app, which means “to connect”, offers detailed profiles and photographs to help match up busy singles. Subscribers register and submit photographs and personal information. Then at exactly 12:30 p.m. each day they receive a message through a stylised “lunchbox” showing the match of the day – and if both parties click “okay”, they receive the other’s name and phone number. “At 12:30 p.m., the hour and the minute hand make a straight line. That means that both the man and the woman we connect can become one,” said Park Hee-eun, who founded the company that developed the app in 2011. The app now has 800,000 subscribers and Park says that so far, 56 people have successfully found mates. “App dating was my last-ditch effort, (I was) grabbing at straws,” said Lee Ji-sun, a 33-year-old businesswoman who last month married the man she met through the app.

China says aims to banish superstition, promote knowledge

China says aims to banish superstition, promote knowledge

Sun, Apr 21 2013

By Ben Blanchard

BEIJING (Reuters) – China is struggling to get its estimated 100 million religious believers to banish superstitious beliefs about things like sickness and death, the country’s top religious affairs official told a state-run newspaper.

Wang Zuoan, head of the State Administration of Religious Affairs, said there had been an explosion of religious belief in China along with the nation’s economic boom, which he attributed to a desire for reassurance in an increasingly complex world.

While religion could be a force for good in officially atheist China, it was important to ensure people were not mislead, he told the Study Times, a newspaper published by the Central Party School which trains rising officials.

“For a ruling party which follows Marxism, we need to help people establish a correct world view and to scientifically deal with birth, ageing, sickness and death, as well as fortune and misfortune, via popularizing scientific knowledge,” he said, in rare public comments on the government’s religious policy. Read more of this post

Europe’s struggling emissions trading scheme holds valuable lessons for China

Carbon copies?

Tuesday, April 23, 2013

Europe’s struggling emissions trading scheme holds valuable lessons for China

In Europe, the privilege of emitting a ton of carbon dioxide now costs about the same as a hamburger. That was one painful takeaway from a recent New York Times article on the crisis in Europe’s market for carbon allowances, which has now gone into a noisy free fall. Already-cheap carbon prices sank to record lows last week, after the European Parliament voted on April 16 against a proposal to shore up prices by reducing the number of allowances in the Emissions Trading Scheme (ETS). It was just the latest plunge in a volatile market that has seen the price of a ton of carbon dioxide fluctuate from $0 to $40 in the last few years. Europe launched its emissions trading scheme in 2005 in an effort to raise the cost of emitting greenhouse gases and incentivize industrial polluters to switch to cleaner alternatives, such as wind, solar and natural gas. European governments convinced their companies to spend billions on investing in renewable energy projects to gain credits to offset pollution elsewhere, and many people hailed the market as a success.

But then an oversupply of carbon allowances and Europe’s terrible economic fortunes combined to drag on the market. Analysts say the price of carbon is currently too low to influence corporate behaviors, and Europe is actually seeing increasing investment in coal-fired power plants. As prices have fallen and liquidity dried up, financiers have lost interest in what once seemed to be a promising market. Analysts are debating what effect Europe’s recent failures will have on nascent cap-and-trade schemes around the world. More than a dozen governments are developing their own programs, including Australia, South Korea, California and China. Read more of this post

Paris Hit by Property Freeze as Taxes Deter Buyers

Paris Hit by Property Freeze as Taxes Deter Buyers

At least one in four Paris apartments listed by realtor Agence Etoile can’t be sold, even with mortgage rates at record lows, as buyers and sellers fail to agree on price, the company’s director said.

“I have some inventory that’s too expensive and sellers don’t want to lower prices,” Christine Perrissel said in an interview. “Buyers are just much more selective.”

Across France, an economy that’s stalled for two years, joblessness at a 15-year high, property prices near record highs and new taxes have made households reluctant to borrow to buy homes. While Europe’s debt crisis prompted banks to tighten credit, since the start of this year they’ve offered more attractive terms to lure customers and meet lending targets, after borrowing plunged in 2012.

The average home-loan rate fell 0.8 percentage point from a year ago to a record low 3.34 percent in the first two months of the year. Still, new mortgages granted in the 12 months through February slid 27 percent from a year earlier to 98.4 billion euros ($129 billion), according to the Bank of France.

New home sales plunged 18 percent in 2012 to 77,900. Existing home sales declined 12 percent to 709,000, with the drop worsening to 22 percent in the year to February. The average housing investment funded with loans represented 3.73 years of the buyer’s income in March, the lowest since January 2010, a study by lender Credit Logement SA and polling firm CSA shows. Read more of this post

Look to Japan’s ageing industrial sprawl for roadblock to Abenomics; S&P says more than one-third chance of Japan downgrade, cites risks to Abenomics

S&P says more than one-third chance of Japan downgrade, cites risks to Abenomics

Mon, Apr 22 2013

TOKYO (Reuters) – Rating agency Standard & Poor’s said on Tuesday it saw more than a one-third chance that it would downgrade Japan’s sovereign ratings because of uncertainty about whether the government’s push to revive growth and end deflation will succeed. “The continuing prospect of a downgrade arises from risks associated with recent government initiatives and uncertainty of their success,” S&P said in a report. “Japanese Prime Minister Shinzo Abe’s plan to lift Japan out of deflation and spur economic expansion–known as “Abenomics”–has three pillars: bold monetary easing, fiscal efforts to spur growth, and a strategy to induce private sector investment,” it said. “Of the three engines that Mr. Abe foresees reinvigorating the nation’s economy, so far only one, monetary easing, has kicked into full gear. The others remain idle.” S&P has an AA- long-term rating on Japan’s sovereign debt.

Look to Japan’s ageing industrial sprawl for roadblock to Abenomics

Mon, Apr 22 2013

By Yoko Kubota

TOKYO (Reuters) – For a close-up view of where Japanese Prime Minister Shinzo Abe’s economic policies could falter, skip across Tokyo Bay to the sprawling Kimitsu steelworks, once a must-see icon of Japan’s export boom. By the early 1970s, Kimitsu in Chiba had become the hub of the world’s largest steel operation. It provided the sheet metal for the first wave of Japanese cars sold overseas and the beams to build the first skyscrapers in Tokyo’s Shinjuku district, inspiring Chinese leader Deng Xiaoping on a 1978 visit to build a copycat mill in China. But last month Nippon Steel & Sumitomo Metal Corp, (5401.T: QuoteProfileResearchStock Buzz) fresh off a merger that created the world’s second-biggest steelmaker, announced it would shut down Kimitsu’s No. 3 blast furnace, part of a sweeping restructuring meant to shed overcapacity at home in the face of unrelenting competition from China and South Korea. “It makes no sense to revive it,” the Kimitsu plant manager, Ichiro Sato, told reporters on a tour last week. “We want to operate without bringing it back.” That same caution is echoed by Japanese manufacturers in industries from autos to electronics.

Read more of this post

Indonesia warns multinationals not to be greedy over resources

Indonesia warns multinationals not to be greedy over resources

5:24am EDT

By Dayan Candappa and Jonathan Thatcher

SINGAPORE (Reuters) – Indonesia’s president told major investors in his country’s natural resources not to be greedy, comments that suggest he is in no mood to row back on policies that foreign mining and energy firms have called a deterrent.

But Susilo Bambang Yudhoyono sounded more accommodative in remarks over a long-delayed $7.2 billion bank takeover by Singapore’s DBS Group and on the thorny issue of reducing state fuel subsidies, which are eating up a growing chunk of the government’s budget.

“My criticism to the world is that many multinational corporations take too much and do not leave behind enough for the people of those countries,” Yudhoyono told a Thomson Reuters Newsmaker event in Singapore on Tuesday. Read more of this post

Malaysia Needs to Get Off the Road to Mediocrity

Malaysia Needs to Get Off the Road to Mediocrity

In his bid for re-election, Malaysian Prime Minister Najib Razak has dispensed with all shame. Vote for me, he has essentially declared, or Malaysia will suffer “catastrophic ruin” and an “Arab Winter” of the kind that has undone economies from Egypt to Libya.

Both warnings are ludicrous — signs of how worried Najib’s National Front coalition is of losing power for the first time since 1957. They speak to the desperation of a government that has come to serve itself, not Malaysia’s 29 million people. And they are emblematic of a leader whose talk of bold change hasn’t been matched by action.

Najib’s claim is this: Giving the opposition, led by former Finance Minister Anwar Ibrahim, a chance to lead on May 5 would reverse all the gains Malaysia has made since the 2008 financial crisis. The economy would crater, stocks and the currency would plunge, and chaos would reign.

Change through the ballot box in a democracy should never be disruptive or chaotic, and rhetoric suggesting otherwise is disingenuous. Najib likes to say: “The time has come for Malaysians to make a decision.” Actually, the time has come for Malaysia’s government to grow up.

Najib’s scaremongering, some of which came out of an April 17 Bloomberg News interview, smacks of the re-election campaign run almost a decade ago by then U.S. President George W. Bush. Instead of this vote-for-me-or-you’re-in-danger appeal, Najib should scare up some headline-grabbing reforms that leave Malaysia better off in the future. Read more of this post

Why People Stay Scared After Tragedies Like Boston Attack

Why People Stay Scared After Tragedies Like Boston Attack

The great psychologist William James was Gertrude Stein’s teacher and mentor. As legend tells it, James once posed a single question on a final examination: “What is risk?” Stein wrote, “This is,” walked out of the examination room, and went about her business. Supposedly James gave Stein an A.

After a tragedy such as the one last week in Boston, people have a heightened sense of risk. If a flood, an earthquake, a violent crime or a terrorist attack has occurred in the recent past, people tend to have a feeling of vulnerability, captured in the alarming idea that “you can’t be safe anywhere.” Often that feeling is far greater than reality warrants. This is so because of two facts about how human beings respond to risk.

The first is that we often assess probabilities not by looking at statistics, but by asking what events come readily to mind. If you are unable to think of a case in which a crime occurred in your neighborhood, or of a situation in which an accident resulted from talking on a mobile phone while driving, you might not much worry about crime or distracted driving. But if your neighbor was recently robbed, or if a friend was badly injured in a crash caused by distracted driving, you might think that the risk is pretty high.

Social scientists emphasize that people use the “availability heuristic,” which means that we assess risks by asking whether a bad (or good) event is cognitively “available.” It is hardly unreasonable to use the availability heuristic, yet we can be misled by it, and far more frightened than we need to be. Read more of this post

31 Business Lessons You Usually Learn The Hard Way

31 Business Lessons You Usually Learn The Hard Way

Dan WaldschmidtEdgy Conversations | Apr. 22, 2013, 3:49 PM | 4,331 | 1

Sometimes your best effort isn’t good enough to land you the deal.

You can’t learn if you aren’t willing to listen.

The only way to get other people to care about you is to care about them first.

You can’t find opportunities for success if you aren’t looking for them.

Just because social media is free doesn’t mean it gets you results.

You have to change the conversation before you can close the deal.

The difference between success and failure is just a decision to keep trying.

If you market like a “person” you have a better chance of getting people to buy.

Just because all your competitors are doing it doesn’t mean you should too.

You don’t have to build rapport to build trust.  Chit-chat is overrated.

Pretending like you never make mistakes doesn’t make it so.

Working smarter is a result of hard work; not a replacement for it.

Your big moment usually comes before you’re ready for it.

“Apologies” and “Thank You’s” are the best way to create a conversation on your terms.

You have to give a lot to get a lot.

Spend less time networking and handing out business cards. Be amazing.  People will find you.

Once you provide the answer people stop listening. Leave clues instead.

There is no easy way out for big problems; but there is always a way out.

Negativity isn’t reality.  Not for you.  Not for your critics.

You don’t need permission to start marketing to a prospect.

Being “professional” is key to getting prospects to want to do business with you.

Working smart will get you more applause.  Working hard will get more done in the long run.

Sometimes bad things happen to good people with great strategies.

Just because it hasn’t worked out already doesn’t mean that it won’t ever.

Anything that is easy to do isn’t going to lead to success.

Ironically, the quickest way to become an experts is to defy industry experts.

The number of people who believe in you doesn’t correlate to your chances of success.

Being the smartest person in the room doesn’t necessarily make you rich or wise.

You don’t have to be “up for the job” to finish the job.

If you haven’t failed a lot, you probably aren’t going to win a lot.

Experience is what you get just after you need it.

Borrowers in Asia dangle rebates as bait to get wealthy individual investors to buy their dollar-denominated bonds as returns dwindle to an 18-month low

Asia Banks Offer Bond Perks as Returns Dwindle: Credit Markets

Borrowers in Asia have stepped up the use of rebates to get wealthy individual investors to buy their dollar-denominated bonds, underscoring weakness in the market as returns dwindle to an 18-month low.

At least 24 percent of the deals in the region last quarter provided a monetary incentive for private banks whose clients bought the offerings, more than double the same period of 2011, according to FIL Ltd., a global fund manager known as Fidelity Worldwide Investment that oversees $248.2 billion. While the practice is legal, it’s only common in Asia, lawyers say. Read more of this post

Chinese Investors Are Reportedly Having Big Money Trouble In North Korea; As many as 100 Chinese businessmen have reportedly holed up in hotels in downtown Pyongyang waiting to recover money invested in the country

Chinese Investors Are Reportedly Having Big Money Trouble In North Korea

Geoffrey Ingersoll | Apr. 22, 2013, 5:11 PM | 2,408 | 3

As many as 100 Chinese businessmen have reportedly holed up in hotels in downtown Pyongyang, North Korea, waiting to recover money invested in the country.

Some of these businessmen may have even been deported, the Chosun Ilbo reports citing the Chongqing Daily.

This is just the most recent case of long running risky-business in the Hermit Kingdom. A Chinese beer business in the country went belly up just last week, and just last year mineral producer Xiyang Group reportedly lost 240 million yuan ($3.8 million) in a North Korean iron mine.

“The biggest mistake Xiyang Group made was to ignore the dangers of investing in North Korea,” Jiao Qiming, head of a Chinese trading company in Dandong, told the Chosun Ilbo, “Once a dispute occurs, it is impossible to beat the North Korean government.” Read more of this post

Deloitte Loses Bid to Delay SEC Suit Over China Documents of its fraudulent client Longtop Financial Technologies

Deloitte Loses Bid to Delay SEC Suit Over China Documents

Deloitte Touche Tohmatsu CPA Ltd. lost a bid to delay a lawsuit brought by the U.S. Securities and Exchange Commission seeking documents in an investigation of the auditor’s former client Longtop Financial Technologies Ltd.

U.S. District Judge Gladys Kessler in Washington today rejected Shanghai-based Deloitte’s argument that the case should be put on hold while an administrative judge considers a separate case the regulator brought against the China-based affiliates of the Big Four accounting firms.

“There is no significant burden placed on Deloitte by requiring it to litigate these two very different proceedings simultaneously,” Kessler said.

The decision may quicken the pace of litigation over the Chinese documents sought by the regulator more than 22 months ago.

The Deloitte case has been on hold since August when the U.S. sought a resolution from Chinese regulators. Chinese law bans the removal offshore of audit papers, and foreign regulators aren’t allowed to work inside the country. Read more of this post

Chinese in Earthquake Zone Flock to Tencent’s WeChat as Calls Fail

Chinese in Earthquake Zone Flock to WeChat as Calls Fail

Chinese in the earthquake-hit province of Sichuan resorted to instant-messaging apps including WeChat to communicate with family and friends, as overloaded voice networks prevented calls from connecting.

Yu Yuli posted a note telling friends she was safe on Tencent Holdings Ltd. (700)’s WeChat, China’s most popular instant- messaging app, after futile attempts to make calls. The quake, measured at magnitude 6.6 by the U.S. Geological Survey, killed at least 193 people and injured more than 12,000, according to the official Xinhua News Agency.

“I was really surprised to see that I was still getting messages on WeChat,” said Yu, 49, a manager at a logistics company in Chengdu, the provincial capital of Sichuan. “I was able to get in touch with friends in a very short time, so I panicked less.”

Apps from Internet companies including Tencent and Sina Corp. (SINA) have become an important tool for Chinese to locate relatives and help rescue efforts in natural disasters. Government agencies have also recognized their merit. After the April 20 quake, the Chengdu government posted a message on Sina’s Weibo, a Twitter-like service, urging people to cut down on phone calls and use WeChat, Weibo or text messages to save resources for rescue operations.

One of the first Weibo comments from the China International Search and Rescue Team, asking for first-hand accounts of damage, was reposted nearly 480,000 times as of yesterday afternoon. Read more of this post

Germany Joins Low-Speed Europe; When even Germany stops motoring, you know you have a problem

April 22, 2013, 1:24 p.m. ET

Germany Joins Low-Speed Europe


When even Germany stops motoring, you know you have a problem.

The woes of Europe’s auto industry show no sign of abating: European Union auto sales were down 9.8% year on year in the first quarter. But within the data, there is an anomaly. In Germany, Europe’s supposed economic strongman, car sales fell 12.9% over the first quarter compared with 2012; in the moribund U.K., sales rose 7.4%. Unfortunately, Germany’s slowdown, not the U.K.’s acceleration, is the truer guide to the health of the European market.

The U.K.’s outperformance should be put in perspective. Car sales in 2012 were still 20% below their 2003 peak, despite rising 5% from 2011. The post-2007 sales slump is still affecting the market now, because it has restricted the supply of cars currently available in the second-hand market. Auction prices for cars sold in “part exchange”—when the old car is sold as part of the deal—for another rose 23% last year, according to Sanford C. Bernstein. Consumers might as well buy a new car instead of an increasingly pricey old one. With interest rates seemingly stuck at 0.5%, car sellers have been able to offer generous financing terms. Read more of this post

You can see why PwC might feel nervous about Bumi, the Indonesian coal miner and FTSE 250 constituent. The accountant signed off the June 2011 prospectus subsequently blighted by investor infighting and allegations of fraud.

Last updated: April 22, 2013 8:51 pm

Lombard: PwC’s grounds to feel anxious

By Jonathan Guthrie

Accountant signed off Bumi’s June 2011 prospectus

You can see why PwC might feel nervous about Bumi, the Indonesian coal miner and FTSE 250 constituent. The accountant signed off the June 2011 prospectus for the creation of a business subsequently blighted by investor infighting and allegations of fraud. The recriminations appear to have sensitised the auditor, whose punctiliousness has resulted in Bumi delaying its annual results and suspending its shares. This action is extremely unusual. Most companies report their numbers with clockwork regularity. Bumi’s inability to do so further undermines the credibility of a group whose board narrowly dodged removal by Nat Rothschild and other rebel shareholders in February. Suspension means there is no transparent price in the shares, leaving investors holding an illiquid investment. Trading will not recommence on the London stock market until Bumi has dispelled the doubts that PwC has over Berau, its Indonesian subsidiary. The auditor is worried that ex-executives of Berau signed contracts with suppliers and customers that were never disclosed to the parent group. Quantifying these liabilities, if any, will take too long for Bumi to meet an obligation to report results within four months of the year-end. Nick von Schirnding, Bumi chief executive, hopes to publish 2012 results in May. In June, investors should supposedly have the chance to vote on a proposal for the Bakries, a powerful Indonesian family, to buy out Bumi’s 29 per cent stake in Bumi Resources, another coal miner, in return for cash and the cancellation of their shareholding in Bumi. Will everything happen to schedule? A pessimist would say that if anything can go wrong for Bumi, living embodiment of Sod’s law, it generally does. Pressure is mounting on City advisers who brought foreign miners to list in London. Two of them, Bumi and Eurasian Natural Resources Corp, have become mired in corporate governance rows and allegations of wrongdoing. PwC is auditor to both.

Last updated: April 22, 2013 7:39 pm

Bumi shares halted amid payments concern

By Christopher Thompson

Bumi, the Indonesian coal miner founded by Nat Rothschild, has suspended its shares as it tries to account for tens of millions of dollars in payments to local landowners. Bumi said in a statement on Monday that trading in its shares would be suspended until the publication of its 2012 annual results, which has been delayed indefinitely. Read more of this post

Misuse of collateral creates systemic risk

Last updated: April 22, 2013 1:14 pm

Markets Insight: Misuse of collateral creates systemic risk

By Satyajit Das

Rather than reducing risk, collateral just creates different risks

Five years after the global financial crisis, collateral arrangements remain central to financial markets. They provide security for loans, structured as repurchase agreements or as mortgages or pledges of real estate or financial assets. In derivative transactions, collateral is lodged to secure current mark-to-market exposure.

Rather than reducing risk, as theory would suggest, collateral in practice creates different risks, for a number of reasons.

First, it shifts the emphasis from the borrower or counterparty’s creditworthiness to the collateral. Parties normally ineligible to borrow or transact in the first place are able to enter into transactions. Rapid growth in debt levels, derivative contract volumes and the shadow banking system (hedge funds or structured investment vehicles) are dependent on the use and availability of collateral. Read more of this post

An insider’s warning for the tech industry; Silicon Valley is being warned that it is making the same mistake as bankers

April 22, 2013 4:43 pm

An insider’s warning for the tech industry

By Ravi Mattu

Ten minutes into our conversation, Jaron Lanier has a problem. In the echoey restaurant where we are meeting, the sound of the one other diner is unnerving this pioneer of the internet world. “This space might not work . . . .” he says. “Sometimes I have trouble talking when it’s this loud.”

That Mr Lanier, a bear of a man with long dreadlocks and a scraggly beard, finds it difficult to make his voice heard in an almost empty space is surprising. In recent years the computer scientist has spent a lot of time publicly raising awkward questions of his peers and the internet-connected business world they – and he – created.

In the 1980s, Mr Lanier helped come up with the technology behind virtual reality and is often credited with coining the term. He is a serial entrepreneur and since 2006 has had a role at Microsoft Research (he does not speak on the company’s behalf). Read more of this post

Consumer Meteor Strikes China’s State Dinosaurs

Updated April 22, 2013, 9:52 a.m. ET

Consumer Meteor Strikes China’s State Dinosaurs


A common worry about China’s economy is that vested interests in the state sector will block reforms needed to raise household income and consumption. State-owned enterprises are certainly influential. But new technologies and demanding consumers can make them look less like all-powerful giants, and more like ungainly dinosaurs.

In telecommunications, for instance, popular web-based messaging systems like Tencent’s WeChat are a major challenge to state-owned China Mobile. WeChat has more than 300 million users, sending voice and text messages over the web.

The U.S. experience suggests carriers can be big losers when the likes of WhatsApp takes hold. In the first quarter of 2013, China Mobile’s profits grew just 0.3% year on year; the company said new technologies are eating into the traditional communications business.

Something similar is going on in banking. In the past, China’s savers had little choice beyond bank deposit accounts that offered low returns. Now, the rapid growth of high-yield investments known as wealth-management products, or WMPs, means savers have options to move their money around. Read more of this post

What I wish I knew before I started my business; We asked a successful illustrator, two entrepreneur mates and a young franchising go-getter what they’d do differently if they had their time again

What I wish I knew before I started my business

April 19, 2013, Larissa Ham

We asked a successful illustrator, two entrepreneur mates and a young franchising go-getter what they’d do differently if they had their time again.

Elise_Hurst_studio2010--1--copy---article-lead-620x349Elise Hurst

Hindsight is a wonderful thing – both in life and in business. If only you knew the mistakes you were likely to make before you wasted time and money making them. We asked a successful illustrator, two entrepreneur mates and a young franchising go-getter what they’d do differently if they had their time again.

1. Learn to plan for the next job

Illustrator, artist and children’s author Elise Hurst has illustrated more than 50 books, but when she started in 1996, work wasn’t exactly flooding in. “My first few jobs were accompanied by a constant mixture of elation and terror,” says Hurst. “I was so busy finding out if I could actually do what I’d promised, that I wasn’t even thinking of the next job. When the job finally finished, I was in a panic to suddenly find the next source of income. “I had no networks yet, no connections. I learned far too slowly that looking for work is a big part of the job.”

2. Be yourself

Many of us follow a certain career path because we love it and believe we can do something special, says Hurst. But while learning from others can be valuable, she warns against simply replicating your competitors. “There’s a good chance they’re doing it better,” Hurst says. “While you’re earning your crust, set aside time to develop your own ideas and your own style of doing things. That’s where your best chances lie and where the biggest satisfaction will come from.” Read more of this post

Big buyout firms find size isn’t all in China business; High-profile missteps tell a cautionary tale as investors lick their wounds and rethink their approach to a huge and complex market

Big buyout firms find size isn’t all in China business

Tuesday, 23 April, 2013, 12:00am

George Chen

High-profile missteps tell a cautionary tale as investors lick their wounds and rethink their approach to a huge and complex market


Some of the world’s biggest private equity players are learning the hard lesson that size does not guarantee success when it comes to making investments in China.

Industry sources have told the South China Morning Post that US buyout giant TPG Capital recently began to sell its entire holding in a Shanghai-based leasing firm, ending a bad five-year relationship with it.

Many industry watchers described it as a textbook case of how challenging the deal-making environment in China is, despite all the upbeat news headlines.

“Apparently, TPG wants to put the story to an end,” said one source. “Everybody is more cautious than a couple of years ago when making deals in China. We’ve seen many [similar] cases, and lessons should be learned.”

TPG’s plan to exit from its investments in UniTrust Finance & Leasing Corp, formerly known as Nissin Leasing (China), came after some of its rivals ran into difficulty doing deals or managing local firms on the mainland, despite pouring money into China in a bet on business growth. Read more of this post

China’s top general said that a fourth North Korean nuclear weapons test is a possibility that underscores the need for fresh talks between Pyongyang and other regional parties

China says new North Korea nuclear test possible

April 23, 2013


BEIJING–China’s top general said on April 22 that a fourth North Korean nuclear weapons test is a possibility that underscores the need for fresh talks between Pyongyang and other regional parties.

Chief of the General Staff Gen. Fang Fenghui said Beijing firmly opposes the North’s nuclear weapons program and wants to work with others on negotiations to end it. He said Beijing’s preference is for a return to long-stalled disarmament talks involving the two Koreas, China, Russia, Japan and the U.S.

“We ask all sides to work actively to work on the North Koreans to stop nuclear tests and stop producing nuclear weapons,” Fang told reporters. “We believe that dialogue should be the right solution.” Read more of this post

Large Companies ‘Slow to Use Weibo to Respond to Bad News’

04.22.2013 18:24

Large Companies ‘Slow to Use Weibo to Respond to Bad News’

Report says central government-controlled firms are not as good as officials in responding to negative reports

By staff reporter Zhang Fan

(Beijing) – Central government-controlled companies are slow to use social media to respond to negative news, a report by an online public opinion monitoring organization says.

The report by the Peoples’ Daily Online Public Opinion Monitoring Center said ministries, commissions and local governments were more likely to use weibo, China’s version of Twitter, to interact with the public.

The businesses also seldom used spokesmen to address bad news, the report said. Read more of this post

%d bloggers like this: