Buffett Has No New Investment Plan in China, Says There’s No Competitive Advantage; The pessimistic remarks about China came as a strong contrast with five years ago when he said China has huge growth potential

Buffett Has No New Investment Plan in China, Says There’s No Competitive Advantage

05-06 13:58 Caijing

The Buffet-backed BYD in March reported a drop of over 94% in net profit for the year 2012 largely due to weakening demands in the world’s second largest economy amid a downturn.

Warren Buffett, the Berkshire Hathaway CEO, said he has no new plans to invest in China, as the Oracle of Omaha remained conservative about competitive edges of the world’s second largest economy, following disappointing performance of his once favored investment in Chinese auto-maker BYD. There’s no competitive advantage in China, said the billionaire in taking up a question from a shareholder from Shanghai as the annual meeting of Berkshire Shareholders was drawing to a close in Omaha on May 4th. The pessimistic remarks about China came as a strong contrast with five years ago when he invested in a new plant of Iscar Metalworking Companies (IMC) in Dalian, a coastal city in northeast China, saying China has huge growth potential.  Buffett purchased 1.3% stake in PetroChina, China’s largest oil and gas producer, with $488million between 2002 and 2003 before selling all the shares in November, 2011, which gained the investor as much as $4billion. Berkshire Hathaway bought 225million shares of BYD, a Chinese auto and battery maker, or just under 10% of the company’s stock at 8 HKD a share before it soared to over 80HKD in 2010. The company, however, had seen slumping businesses since then with its shares dropping as much as over 80% to 12.44HKD in October, 2011. The Buffett-backed BYD in March reported a drop of over 94% in net profit for the year 2012 largely due to weakening demands in the world’s second largest economy amid a downturn. Buffett said he would prefer Chinese companies that export quality goods, especially consumer goods at last year’s annual shareholder’s meeting for Berkshire Hathaway. Berkshire vice chairman Charlie Munger said China has a huge auto market which is BYD’s main focus, and the number of cars he expected BYD to sell in the U.S. would be very small.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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