5 Habits Of The Most Creative People




What do a startup king, a social network innovator, a hip hop prince, perhaps the best actor on television, and two absolutely hilarious dudes have in common? They’re all among the Most Creative People–and we can learn quite a bit from the way they work.

Max Levchin: Always be asking questions

We talked to PayPal founder Max Levchin about how he keeps snagging startup ideas. Turns out it’s a lot about controlling chaos in ways we’ve discussed about why ideas come at random and why you need to document everything.

Levchin’s method is like this: He talks to tons of random creative people, asks them questions about their craft, takes extensive notes of their quandaries, and then compiles–and reviews–all of his research. What comes out of it? Companies–like his new mobile payment solution Affirm–and loads of paper. Dude has a crate of 200 legal pads sitting in his garage.

Kirthiga Reddy: Go flat

The director of online operations for Facebook India, Kirthiga Reddy has helped growthe social network’s user base from 8 to 71 million users over two years. What did it? A little California import: the flat culture of Silicon Valley, so different than the hierarchical norm in India.

“You’re not here to do just what you’re told,” she says. “You’re here to see gaps and to act upon them.” Read more of this post

Harvard-for-Free Meets Resistance as U.S. Professors See Threat

Harvard-for-Free Meets Resistance as U.S. Professors See Threat

Professors across the U.S. are criticizing a rush to offer free online college courses, challenging a movement designed to spread knowledge and reduce higher-education costs.

Amherst College faculty voted last month against joining an initiative led by Harvard University and Massachusetts Institute of Technology. The provost at American University issued a moratorium this month on such massive open online courses, or MOOCs. At San Jose State University, the philosophy department refused to use a free Web course from a Harvard professor.

As college costs soar, professors are concerned that MOOCs may primarily become a way for universities to reduce expenses. Even at Harvard, some faculty members said at a meeting last week that the movement could damage higher education by leading institutions to cut face-to-face instruction. Read more of this post

Massive fund outflow challenges China’s forex management

Massive fund outflow challenges China’s forex management

Staff Reporter


The influx of hot money and outflow of funds via various channels in China underscores the increasing challenge to the country’s foreign exchange management system, reports the Beijing-based China Economic Weekly. According to Jones Lang LaSalle, a multinational real estate service firm, overseas commercial property investments by Chinese investors have jumped by 33% last year to US$4 billion and may reach US$5 billion by the end of this year. The investments coincide with an increase of Chinese nationals choosing to emigrate, a group which totaled more than 150,000 people in 2011. The huge amount of funds flowing out of the nation via various channels are reportedly due to the official restriction on outward forex remittance, which is capped at US$50,000 per person a year. The People’s Bank of China, aware of the futility of efforts to stem the outflow of money, recently summoned representatives from a number of foreign banks, including HSBC, Citibank, Standard Chartered, and DBS, to discuss the establishment of a system governing offshore investments by Chinese nationals, the China Economic Weekly said. The government also discussed the issue during a meeting of the National People’s Congress Standing Committee on May 6, and will now aim to monitor cross-border fund movements, which currently evades government inspection. Liu Jinchuan, a financial expert, said that underground channels for fund outflows include underground financiers, assets transferred via trade and investment, money laundering via offshore casinos and offshore bank cards. There are many brokers for overseas investments in Shenzhen, on the border with Hong Kong, with many of them operating as local underground financiers, the paper said. Adi (pseudonym), a money broker, said that the State Foreign Exchange Administration, while capable of controlling the cross-border movement of large amounts of funds, is powerless to regulate the movement of smaller amounts of money, equivalent to several millions or tens of millions of renminbi. Adi said he can remit funds out of the country within half an hour of receiving notice from his clients, for which he charges a fee of 0.8%-1.5%, adding that the transfer of large-scale funds can be carried out in installments. Chinese investors have also been funneling funds abroad via foreign trade, such as bloating import prices or underreporting export prices, especially in the case of hi-tech products. The underground outflow of funds via foreign-trade channels explains in part the increase of Hong Kong’s export value, which shot up by 74.2% year-on-year to US$105.6 billion in the first quarter of this year, much higher than its import figures.

That sighing sound you hear from China… is strategists everywhere cutting their GDP forecasts

That sighing sound you hear from China

Kate Mackenzie

| May 15 09:45 | 1 comment Share

… is strategists everywhere cutting their GDP forecasts. Last week Standard Chartered’s China economist Stephen Green and his team slashed their 2013 forecast to 7.7 per cent from 8.3 per cent. Their 2014 forecast was cut to 7.5 per cent from 8.2 per cent. Today, BAML’s Ting Lu cut to 7.6 for both 2013 and 2014, from 8 per cent and 7.7 per cent, respectively. It seems that April data has dampened any hopes that the Q1 surprise of just 7.7 per cent growth was due to simple base effects such as a missed leap year day or variations in the Chinese New Year holiday. Here are charts of Green et al’s favoured indicators suggesting that this economy won’t be powering back to 8 per cent levels of growth: What went wrong? Green cites a slow and patchy real estate recovery and pressure on local government investment vehicle cash flows, plus slow land sales outside big cities. BAML’s Lu says that, unusually, the quarter-on-quarter rate will keep rising: To be sure, we continue to expect a recovery of sequential growth; however, we have decided to revise down quarterly year-over-year GDP growth as well as annual growth in 2013E. More specifically, we maintain the view that sequential growth (QoQ, seasonally adjusted but not annualized) could bounce from 1.6% in 1Q to around 1.9%-2.0% in 2Q-4Q this year, but we cut quarterly YoY growth to 7.7%, 7.6% and 7.5% in 2Q, 3Q and 4Q (vs 7.7% at 1Q13) from the previous 8.1%, 8.0% and 8.0% respectively. Interesting, but we’re not sure of the significance of the non-annualised quarter-on-quarter figures; it’s true the non-annualised figures have moved around a lot since they were first published a couple of years ago, but most countries give annualised figures so figures like 1.9 per cent growth probably aren’t going to float many people’s boats. Lu however argues that the focus on the year-on-year figures might leave investors overly spooked and, in turn, lead to a more bullish tone if/when the focus shifts. We’re a little more sceptical that the favoured data points change any time soon, considering China’s main quarterly GDP growth number is already quite unusual. Another bullish theory was that the surge in credit growth, particularly in March, might just take some time to generate more growth. Credit data for April however showed that even if that’s the case, it’s not a sustained surge anyway:  Finally, the chance of a renewed stimulus push looks ever less likely (not that many pundits have been openly expecting this anyway). From Bloomberg News: “To achieve this year’s targets, the room to rely on stimulus policies or government direct investment is not big — we must rely on market mechanisms,” Li said in a May 13 speech broadcast to officials around the country, according to a transcript published last night on the central government’s website. Relying on government-led investment for growth “is not only difficult to sustain but also creates new problems and risks,” he said. Incidentally, Green says big stimulus is unlikely unless unemployment begins to look like a problem. Makes sense.


Trade between Hong Kong and Guangdong artificially skewed; Firms inflate trade data to cash in on currency exchange gains

Firms inflate trade data to cash in on currency exchange gains

Staff Reporter


Many Chinese trading firms have been inflating their performance without the knowledge of the local banking system, Shanghai’s First Financial Daily has reported. The news comes in the wake of unusually high import and export data which was recorded during both March and April and prompted China’s State Administration of Foreign Exchange to issue a notice that it will enhance inspections of firms’ transactions and adjust policies for goods which leave the country. China’s bilateral trade with Hong Kong jumped 66% year over year for the first four months ending April 30. The mainland’s exports to Hong Kong grew 92.9% in March from the same period a year ago, which is the highest growth reported since March 1995. Many companies are found to have made up or adjusted their import data in order to receive foreign currency loans and increase their credit limit from local banks, the report said. Many banks in China offer currency clearing services for international firms as part of the central government’s policies to help domestic firms expand globally and to internationalize the renminbi. The special clearing service is a win-win for both the companies and the banks. The services generate certain revenue for trading firms, which helps them cut down on overall expenses, and also helps the banking sector earn service fees. Companies have to make a full down payment, which translates into sizable and virtually risk-free deposits for banks, said a risk manager at a bank in Shenzhen, who wished to remain anonymous due to the sensitive nature of the issue. The practice may result in the banks’ loose regulations on trading firms’ applications for the clearing service, he said. There is mounting speculation that the growing trading figures might be inflated by companies that routinely moved goods in and out of special trade zones to claim tax rebates. For the first four months ending April 30, exports from Guangdong province rose 35.6% from a year ago. Of that increase, Shenzhen’s share accounted for more than 90% of the growth due to the city’s special trade zones which allow for smoother processing for exports.

Trade between Hong Kong and Guangdong artificially skewed

Staff Reporter


China’s total trade reached 6.12 trillion yuan (US$995 billion) in the first quarter of the year, marking year-on-year growth of 13.4%, after excluding the effects of foreign exchange. The country recorded an 8.4% increase in exports for the quarterly period ending March 31, the Guangzhou-based Southern Weekly reports. Read more of this post

Sham shampoo: China’s market for impersonal care products; A 400ml bottle passing itself off as Procter & Gamble’s Pert shampoo sells for 10 yuan (US$1.60) per bottle while the genuine article sells for US$5.30

Sham shampoo: China’s market for impersonal care products

Staff Reporter


The market for personal care products is a breeding ground for knockoffs in China, with manufacturers cashing in on the low costs and high returns involved, reports Shanghai’s First Financial Daily.

Rural areas in Henan, Guizhou and Anhui provinces have become the epicenter for cheap imitations of personal care products. Mo Lei (pseudonym), an Anhui-based entrepreneur who primarily trades in counterfeit goods, said that there are knockoff factories everywhere in China and there are also wholesale markets that primarily deal with fakes.

A 400ml bottle passing itself off as Procter & Gamble’s Pert shampoo sells for 10 yuan (US$1.60) per bottle at local retailers, while the genuine article sells for 32.80 yuan (US$5.30) for the same amount. Read more of this post

Legend Holdings, which owns Lenovo Group, the world’s second-largest PC maker, is planting itself deeper into the agricultural sector with Joyvio Group

Legend puts down deeper roots in agribusiness

Staff Reporter


Legend Holdings, which owns Lenovo Group, the world’s second-largest PC maker, is planting itself deeper into the agricultural sector with Joyvio Group, which specializes in investment in and operation of related businesses in the area of modern agribusiness, the Beijing-based The Economic Observer reports. By using satellite technology to manage its farms, Joyvio can immediately see the condition of its crops. It has installed GPS on its drug-injecting carts to monitor pesticide sprays. Read more of this post

Intel and ARM: New leaders, same battle

Intel and ARM: New leaders, same battle

By Michal Lev-Ram, writer May 14, 2013: 5:54 AM ET

Intel’s new CEO starts Thursday. Chipmaker ARM’s begins later this year. The only thing not changing? What they’re fighting for.

FORTUNE — Much has been made of the upcoming leadership transitions at chip rivals ARM (ARMH) and Intel (INTC). But it’s unlikely that the battle plan will change for either side. Both companies chose long-time insiders to take the helm—Intel COO Brian Krzanich will become CEO later this week, and ARM’s Simon Segars, currently the company’s president, takes over in July. So it’s hard to imagine sweeping changes in either camp. Besides, it’s not clear that ARM, which licenses its chip architecture to the likes of Qualcomm (QCOM) and Nvidia (NVDA), is in need of massive transformation. Though much smaller than Intel, the British chip designer isn’t dependent on the lackluster PC market. ARM-based chips power 95% of mobile phones, and the company is now trying to venture into new markets like lower-power serversFortunerecently caught up with Segars, ARM’s incoming CEO, to find out about his plans for the company, the rivalry with Intel and the state of Moore’s Law.

FORTUNE: You’re often viewed as head-to-head competitors with Intel, yet you have such a different model. Is it fair to constantly compare you to them?

Segars: Intel is a semiconductor company; we are not. Qualcomm, Samsung, Nvidia, Marvell, etc. are semiconductor companies. In the mobile device, the competition is between Intel and all those other guys. All those other guys use the ARM architecture and are dependent on us to keep that relevant. But at the business level it’s Intel competing against ARM’s customers. For our part we take that very seriously. It’s a competition for sockets among Intel and our licensees, and we can’t just sait there and say, “Sorry you lost that one.” Because if those sockets are lost, then it impacts our volumes and our royalties. So we need to be sure that we keep developing great microprocessor technology to help support our customers in creating products which deliver the best user experience.

Intel’s greatest asset is its fabs and manufacturing power. What’s yours?

I think it’s the partnership base. You can have great technology, but the best technology doesn’t always win out. For us it’s been the combination of great technology deployed through the business model that has made ARM successful, and it’s helped people build innovative devices at lower cost. I think the benefit of that has been greater diversity in the silicon that’s enabled greater diversity in the end product. It’s about enabling choice so that as a consumer you can go into a store and go, “I’ll have that one.” You’ve got a lot of choice there because there is money available through the supply chain for innovation to happen at different points, unlike PCs where two people have controlled it and the person that makes PCs runs on 2% profit margin and can’t afford to innovate in anything other than which shade of grey the plastic is. Read more of this post

Did some traders have advance knowledge of huge Sony revamp and make big money?

Published: Wednesday May 15, 2013 MYT 9:02:00 AM

Did some traders have advance knowledge of huge Sony revamp and make big money?

NEW YORK: A surge in option market bets on Sony Corp just before a large hedge fund investor announced a big stake and called for a major restructuring of the company has raised concerns that some traders may have had advance word of the news.

U.S.-listed shares of Sony Corp <6758.T> jumped 9.9 percent to close at $20.76 after Daniel Loeb’s Third Point hedge fund said on Tuesday it accumulated more than 6 percent of Sony’s shares – a stake worth $1.1 billion – making it the largest shareholder in Japan’s biggest electronics company.

But on Monday, the day before that announcement, trading volume in Sony options soared by more than seven times the average daily activity in the last three months. Volume in its stock rose to 6.1 million shares, more than doubling the average 2.7 million shares over the past 25 days. Read more of this post

Baba Is 35-Year-Old Billionaire With Zombie and Bear Apps

Baba Is 35-Year-Old Billionaire With Zombie and Bear Apps

Naruatsu Baba, the 35-year-old founder of Japanese smartphone game maker Colopl Inc. (3668), has become one of the youngest billionaires in the world as Colopl stock leaped sevenfold since its December initial share sale.

The Tokyo-based app maker produces games such as “Catastrophic Zombies” and “Kuma’s Digging Adventure.” Baba holds a 69 percent stake in the company valued at $2.2 billion, according to the Bloomberg Billionaires Index. He has never appeared on an international wealth ranking.

Game app makers with hits in Japan have soared, contributing to an 86 percent advance in the JASDAQ Stock Index (JSDA) this year and minting billionaires in the world’s third-largest economy. Baba joins the ranks of GungHo Online Entertainment Inc. (3765) Chairman Taizo Son, whose bestseller “Puzzle & Dragons” generated first-quarter sales of $3.4 million a day. Son, the youngest brother of SoftBank Corp. (9984) President Masayoshi Son, is now worth $5.1 billion, up from $3.3 billion last week, according to the daily billionaires index.

“It’s a bubble market for mobile-game makers,” said Takashi Oka, an analyst at TIW Inc. in Tokyo, who rates Colopl stock “neutral plus.” “As a developer, president (Baba) probably developed games in the beginning, so with more developers it’s possible for the company to grow exponentially.” Read more of this post

How Can We Tell If ‘Abenomics’ Is Working?

How Can We Tell If ‘Abenomics’ Is Working?

Japan is in the midst of a grand experiment to revivify its economy through a three-pronged campaign of monetary easing, fiscal stimulus and structural reforms. The markets have noticed: The Nikkei stock index has gained more than 70 percent while the yen has become more than 22 percent cheaper relative to the dollar and the euro since mid-November. At the same time, the difference in yields between 5-year Japanese government bonds and their inflation-indexed equivalents has widened by more than a percentage point.

All of this has led some observers to declare that Japanese expectations about inflation and growth have been transformed, thereby leading to a resurgence of domestic spending, hiring and investment. It’s unclear, however, that this has actually happened.

Let’s start with the obvious: Wages, prices, retail sales and industrial production are all flat or falling. On the bright side, the earnings outlook for Japanese firms is much better than it was six months ago, both in absolute terms and relative to firms in other rich countries. Those forecasts, however, are predicated on the belief that the Japanese economy will live up to the hype. Read more of this post

Hipsters Flocking to Silicon Roundabout as Bankers Fade

Hipsters Flocking to Silicon Roundabout as Bankers Fade

Coffee houses hold a special place in London’s history. During the late 17th century, they were the birthplace of Lloyd’s of London and the London Stock Exchange — two institutions that helped make the square-mile City of London a global financial capital. Today, just north of where one of the City’s ancient gates once stood, the latest chapter in London’s economic history is being written in a new generation of coffeehouses, Bloomberg Markets will report in its June issue. At Shoreditch Grind on the Old Street roundabout, a gritty traffic circle, and at Ozone Coffee Roasters, a few blocks away, bearded young men and nose-ringed women huddle around laptops and discuss ideas for startup companies.

The surrounding offices, many of them in converted warehouses, are so crammed with technology startups — at least 300 — that the area has been dubbed, in mock seriousness, Silicon Roundabout. Increasingly, that nickname is losing its irony: Established technology players are moving in. Google Inc. (GOOG) recently opened Campus London, a kind of clubhouse for digital entrepreneurs, not far from the roundabout. Inside, techies hobnob in the bustling cafe and attend lectures and other free events; they can gain access to hot desks, printers and conference rooms operated by another company, TechHub, for a 375 pound ($560) annual fee. Springboard and Seedcamp Ltd., European tech incubators, rent space on two of Campus’s floors. Read more of this post

BMWs Cheaper Than Hyundais on Tariffs Imperil Korean Maker; “Customers who were loyal to the brand for over 20 years are breaking away. It shows that imported brands are now perceived as something accessible.”

BMWs Cheaper Than Hyundais on Tariffs Imperil Korean Maker: Cars

Lee Tack Young says Hyundai Motor Co. (005380)’s luxury vehicles are oversized, overpriced gas guzzlers. So he opted for a more modest alternative: a BMW 528i.

Foreign brands have seen their share of South Korea’s market for premium vehicles surge to 41 percent from 28 percent in the past two years, according to Korean industry groups, as lower tariffs make their cars cheaper and local buyers abandon a decades-long preference for domestic brands.

“I was looking for a quality car that wasn’t too big,” said Lee, president of Cosmetic Engineering, a packaging-machinery maker near Seoul. The 65-year-old’s last seven cars were all Korean, starting with a Hyundai Excel in the 1980s.

This time, he chose his 71 million won ($64,000) BMW over an 85 million won K9 from Hyundai affiliate Kia Motors Corp. (000270) “Unless Hyundai and Kia change and offer me more variety and better quality, I don’t see any reason to go back,” Lee said.

The shift has made South Korea a growth market for Bayerische Motoren Werke AG, Daimler AG (DAI)’s Mercedes-Benz, and Volkswagen AG (VOW)’s Audi. Their gains are coming at the expense of Seoul-based Hyundai and Kia, which count on sales of luxury vehicles in their home market for much of their earnings. Read more of this post

Chinese Suggestions for Improving Internet Disappear

Chinese Suggestions for Improving Internet Disappear

Chinese president Xi Jinping may claim to be interested in hearing the voice of his people, but it’s increasingly clear that this openness doesn’t always extend to people on the Internet.

On Sunday night, billionaire real-estate developer Pan Shiyi tweeted to his 15.3 million followers on Sina Weibo, China’s leading social-media platform: “Soon I might meet a top government Internet regulator,” he announced. “Anything you’d like me to pass along?” By 7:48 a.m. the next morning the tweet had been re-posted 3,455 times and generated 3,891 comments.

Few things irritate Chinese netizens as much as how their government acts on the Internet: blocking access to many foreign websites, censoring content and comments on Chinese websites and directing paid commentators to promote the government’s viewpoint. Over the past few days, the accounts of at least three prominent microbloggers were deleted, and one suspended, including accounts that belonged to Murong Xuecun, the pen name of Hao Qun, a novelist with 1.85 million followers on his Sina Weibo account when it was yanked. Read more of this post

China Corporate Debt to Overtake U.S. Within Two Years, S&P Says; China will need more than $8 trillion for refinancing during the five years, accounting for half of such needs in the Asia-Pacific region

China Corporate Debt to Overtake U.S. Within Two Years, S&P Says

Chinese corporate borrowing will probably exceed that of U.S. companies within the next two years, according to Standard & Poor’s.

Non-financial institutions from the world’s second-largest economy will need $18 trillion of debt during the five years ending 2017, the ratings company said in a report yesterday. That’s 34 percent of the $53 trillion in bonds and loans S&P estimates will be sought globally and compares with $13 trillion forecast for U.S. companies.

Chinese and Hong Kong borrowers sold $41.2 billion of U.S. dollar-denominated bonds since December, the busiest start to a year on record, according to data compiled by Bloomberg. Cnooc Ltd. (883), the nation’s biggest offshore energy explorer, raised $4 billion this month with the largest offering out of Asia in a decade, as it looks to replace part of a loan used to acquire Canada’s Nexen Inc.

“High levels of investment, primarily in manufacturing, real estate, and infrastructure, have supported the country’s strong economic growth rate, particularly over the past five years – and credit is fueling this investment,” S&P said in the report. “While China is now on a lower growth trajectory than in the prior decade, the trajectory is still very high by global standards.”

China’s economic expansion unexpectedly slowed to 7.7 percent last quarter from a year earlier, losing momentum from the 7.9 percent expansion in the previous three months, according to the statistics bureau. Read more of this post

What You’re Really Meant to Do: A Road Map for Reaching Your Unique Potential

What You’re Really Meant to Do: A Road Map for Reaching Your Unique Potential [Hardcover]

Robert Steven Kaplan (Author)


Publication Date: May 7, 2013

How do you create your own definition of success—and reach your unique potential?

Building a fulfilling life and career can be a daunting challenge. It takes courage and hard work. Too often, we charge down a path leading to “success” as defined by those around us—and ultimately, are left feeling dissatisfied.

Each of us is unique and brings distinctive skills and qualities to any situation. So why is it that most of us fail to spend sufficient time learning to understand ourselves and creating our own definition of success? The truth is, it can seem so natural and so much easier to just do what everyone else is doing—for now—leaving it for later to develop our best selves and figure out our own unique path. Is there a road map that will enable you to defy conventional wisdom, resist peer pressure, and carve out a path that fits your unique skills and passions?

Harvard Business School’s Robert Steven Kaplan, leadership expert and author of the highly successful book What to Ask the Person in the Mirror, regularly advises executives and students on how to tackle these questions. In this indispensable new book, Kaplan shares a specific and actionable approach to defining your own success and reaching your potential. Drawing on his years of experience, Kaplan proposes an integrated plan for identifying and achieving your goals. He outlines specific steps and exercises to help you understand yourself more deeply, take control of your career, and build your capabilities in a way that fits your passions and aspirations.

Are you doing what you’re really meant to do? If you’re ready to face this question, this book can help you change your life. Read more of this post

Designing the Corporate Center: How to Turn Strategy into Structure

Designing the Corporate Center: How to Turn Strategy into Structure

by Fabrice Roghé, Ulrich Pidun, Sebastian Stange, and Matthias Krühler

MAY 13, 2013


If there is one overriding imperative for CEOs, it is to add value to the portfolio of businesses so that the whole is worth more than the sum of its parts. Such value creation requires steering by the corporate center—whether across businesses, across regions, or across functions. But whatever form that steering takes, the corporate center must not only choose its optimal parenting strategy but also design an organization that translates that strategy’s value-creation logic into practice. Many CEOs, however, struggle to translate strategic logic into action, and as a result, many corporate centers still fall short of their full value-creation potential. The pressure to improve the center’s value creation is unrelenting and comes from all quarters. The capital market demands constant value creation and is quick to penalize corporate shares—and CEOs—if they fail to deliver. Analysts and shareholders pay close attention to valuation discounts. They are also quick to sound the alarm when overhead cost controls appear to be weakening. They compare the corporation against competitors that demonstrate excellence and ask why the corporation can’t keep up. Just as intense are the internal demands for constant value creation. Boards look for quick results from mergers and acquisitions (M&A) and press for corporate strategies that add value to the combined enterprise. Business units complain that the center insists that they engage in activities that impose costs and operating constraints without seeming to provide offsetting benefits. In the worst cases, these conflicts can paralyze the whole organization. In their own ways, the markets, boards, and business units are all asking the same urgent question: What is the corporate parent doing to add value to the business units? It is no longer sufficient to assemble a corporate portfolio of good businesses. Corporate stakeholders have shifted their focus from the specific competitive advantages of individual units—such as market share, technology, or brands—to the competitive advantage at the corporate level; that is, to the parenting advantage. Effective parenting strategies add value in many different ways. Some promote excellence in key business functions through clear guidelines; some share competencies among business units. Others improve decision quality, attract game-changing talent, or build a high-performance culture in each unit. Read more of this post

In Asia, private-equity firms are cashing out of the Asian companies they own by adding debt to those businesses

May 14, 2013

In Asia, Private-Equity Buyers Borrow to Cash Out

By Fiona Law


Some private-equity firms are cashing out of the Asian companies they own by adding debt to those businesses. The fact that borrowers can raise cheap funds and use the cash to pay dividends to shareholders is more proof that debt markets in Asia are booming. But by leaving the companies with more borrowings and less cash, the tactic also makes the debt riskier for investors who buy it. In a recent example, school operator Nord Anglia Education raised $475 million through two bonds sold this year and last year. One-third of the first $325 million issue was used to repay a loan to Baring Private Equity Asia, which owns the company. The second $150 million issue was used to finance Baring’s and Nord Anglia’s purchase of WCL Group Ltd., which runs international schools in the U.S., Spain and Qatar. In such deals, known as dividend recapitalizations, private-equity-owned companies raise cash by issuing debt. Part, or all, of the proceeds are distributed in the form of dividends to buyout groups. Bond buyers usually prefer that companies use funds raised by borrowing for projects that will generate cash, or to pay down existing debt.

Read more of this post

China’s Premier Li Keqiang said the economy is facing downwards pressure but warned that there is little room for stimulus or official investment to take up the slack

TUESDAY, MAY 14, 2013 – 19:26

China’s Li Warns Econ Under Pressure; Little Room For Stimulus

BEIJING (MNI) – China’s Premier Li Keqiang said the economy is facing downwards pressure but warned that there is little room for stimulus or official investment to take up the slack. He said the economic situation remains “complicated” and said market forces will be needed to support growth. Li’s comments were posted in a statement about reforming the structure of the State Council on the government’s main website late Tuesday.

Li Signals Reluctance on Stimulus to Boost China Growth

Chinese Premier Li Keqiang signaled policy makers are reluctant to use stimulus to counter a slowdown in the world’s second-largest economy because the risks outweigh the benefits. “To achieve this year’s targets, the room to rely on stimulus policies or government direct investment is not big — we must rely on market mechanisms,” Li said in a May 13 speech broadcast to officials around the country, according to a transcript published last night on the central government’s website. Relying on government-led investment for growth “is not only difficult to sustain but also creates new problems and risks,” he said.

The comments indicate China may be unlikely to boost government spending or follow central banks across Asia in cutting interest rates as Li tries to pare the state’s role in the economy. Bank of America Corp. and JPMorgan Chase & Co. this week lowered 2013 growth estimates to 7.6 percent after April industrial production and investment trailed forecasts. Read more of this post

Urban rail transit projects across China costing 800 billion yuan are going to weigh heavily on the already high level of local government debt.

More debt trouble is rolling along rails
Wednesday, May 15, 2013
Urban rail transit projects across the mainland costing 800 billion yuan (HK$1.01 trillion) are going to weigh heavily on the already high level of local government debt. The warning about funding challenges presented by subway projects in 24 cities is from the state’s China Economic Weekly. It follows on from US-based Fitch Ratings last month cutting China’s long-term local-currency debt rating, citing rising risks to financial stability given a lack of transparency in the increased borrowing of local governments. It estimated this debt was 12.85 trillion yuan at the end of 2012. On the rail projects, the fear is that 24 cities simply lack the means to pay for the schemes. Guo Tianyong, a professor at the Central University of Finance and Economies in Beijing, pointed to the projects as making the local debt crisis more acute. New projects on the move include Harbin, Changsha, Ningbo and Zhengzhou laying 387 kilometers of track, and eight cities are extending existing networks. Guangzhou Metro Corp executive Ye Zichuan said most subway operators can expect to see greater losses this year. CATHY WU

Tata Steel: Goodwill write-offs are confusing. When they happen, the managers of firms insist they do not matter. The simple, cynical—and largely true—view is that managers are vain and hate to admit mistakes

Tata Steel

Goodwill Hunting

May 14th 2013, 11:38 by P.F. | MUMBAI

GOODWILL write-offs are confusing. When they happen, the managers of firms insist they do not matter. Goodwill is the excess paid for an asset over its book value. Writing it down is a mere accounting adjustment, bosses tend to say. Yet those same bosses go to inordinate lengths to delay recognising such supposedly irrelevant, non-cash losses. On May 13th Tata Steel, an Indian firm, announced a $1.6 billion impairment, mainly of its $13 billion takeover of Corus, a British steelmaker. The deal happened six years ago. It has been clear for at least four years that it has been a financial disaster. Why recognise that now?

The simple, cynical—and largely true—view is that managers are vain and hate to admit mistakes. Investors usually decide an acquisition has gone bad within a year or two. The buyers’ shares drop. It takes longer for the accounts to catch up. Auditors should subject balance sheets to a yearly impairment test, but valuations are subjective and executives can twist their arms. When the auditors do, finally, assert themselves, companies are often blasé. An example is ArcelorMittal, another steel firm, which disclosed a $4.3 billion write-down in December. There has been no post-mortem of the long and value-destructive acquisition spree that helped generate it. Read more of this post

Anxious Wealth: Money and Morality Among China’s New Rich

Anxious Wealth: Money and Morality Among China’s New Rich [Paperback]

John Osburg (Author)

Anxious Wealth

Publication Date: April 3, 2013

Who exactly are China’s new rich? This pioneering investigation introduces readers to the private lives—and the nightlives—of the powerful entrepreneurs and managers redefining success and status in the city of Chengdu. Over the course of more than three years, anthropologist John Osburg accompanied, and in some instances assisted, wealthy Chinese businessmen as they courted clients, partners, and government officials.

Drawing on his immersive experiences, Osburg invites readers to join him as he journeys through the new, highly gendered entertainment sites for Chinese businessmen, including karaoke clubs, saunas, and massage parlors—places specifically designed to cater to the desires and enjoyment of elite men. Within these spaces, a masculinization of business is taking place. Osburg details the complex code of behavior that governs businessmen as they go about banqueting, drinking, gambling, bribing, exchanging gifts, and obtaining sexual services.

These intricate social networks play a key role in generating business, performing social status, and reconfiguring gender roles. But many entrepreneurs feel trapped by their obligations and moral compromises in this evolving environment. Ultimately, Osburg examines their deep ambivalence about China’s future and their own complicity in the major issues of post-Mao Chinese society—corruption, inequality, materialism, and loss of trust. Read more of this post

100 years on, Rockefeller Foundation still busy

100 years on, Rockefeller Foundation still busy

David Crary, The Associated Press, New York | World | Mon, May 13 2013, 8:48 AM

For the richest American family of their era, the goal was fittingly ambitious: “To promote the well-being of mankind throughout the world.”

With that mission, underwritten by the vast wealth of John D. Rockefeller Sr., the Rockefeller Foundation was chartered 100 years ago. For several decades, it was the dominant foundation in the United States, breaking precedent with its global outlook and helping pioneer a diligent, scientific approach to charity that became a model for the field.

“They were in a very small group of foundations that practiced idea-based philanthropy as opposed to just charity. They are willing to invest in ideas,” said Bradford Smith, who as president of the New York-based Foundation Center oversees research on philanthropy worldwide.

The Rockefeller Foundation is celebrating its centennial by touting an array of forward-looking projects, ranging from global disease surveillance to strengthening the resilience of vulnerable cities in the U.S. and Asia to future calamities. It is also looking back, at a 100-year history replete with triumphs and controversy. Read more of this post

Sir Luke Johnson: Whether it’s selling or shutting a business, leaving a job or ending a relationship, deciding when and if to let go makes all the difference

May 14, 2013 4:08 pm

Walking away is often the best option

By Luke Johnson

Deciding when and if to let go makes all the difference

Knowing when to quit separates winners from losers. Those who spend years pursuing lost causes can waste their lives. Others who leave gracefully and move on understand that the world is full of opportunities, and know that sheer stubbornness for its own sake is foolish. A couple of years ago I backed a play called Onassis in London’s West End. As ever, it was launched with great optimism. But the reviews were mediocre and the box office takings poor. Soon the choice came: should we put in more money to fund additional marketing, or accept that the show wasn’t good enough and close? I’m relieved to say that we shut, took the pain – and learnt a few lessons from the experience.

Whether it’s selling or shutting a business, leaving a job or ending a relationship, deciding when and if to let go makes all the difference. As they say, timing is everything. Occasionally massive persistence can pay off: Chester Carlson first patented his technique for a photocopier in 1938 but it wasn’t until 1949 that the Xerox Corporation first launched his product. But for every epic invention like that there are many thousands of doomed ideas that will never achieve lift-off. I regularly receive business plans for schemes that appear entirely uneconomic: in lots of cases the passionate founder has spent years hawking their dream around financiers getting nowhere, ignoring the evidence and allowing emotions to overwhelm their judgment. Read more of this post

Billionaires Juan Roig and Hortensia Herrero, the husband-and-wife team that controls Mercadona SA, Spain’s largest supermarket chain, created thousands of jobs last year as their country’s economy crumbled

Spanish Billionaires Hire 4,000 Amid Country’s Job Slump

Billionaires Juan Roig and Hortensia Herrero, the husband-and-wife team that controls Mercadona SA, Spain’s largest supermarket chain, created thousands of jobs last year as their country’s economy crumbled. Revenue at the closely held operation rose 7 percent to 19.1 billion euros ($24.5 billion) in 2012, according to its annual report, as demand for its low-priced, private-label goods lured cash-strapped Spanish shoppers. Net income also jumped 7 percent to 508 million euros, a performance that helped allow the company to hire 4,000 new workers. Roig, the country’s fourth-richest person and a well-known figure in the Spanish press for his economic commentary and pronouncements, controls 51 percent of Mercadona. He has a $4.5 billion fortune, according to the Bloomberg Billionaires Index.

“Mercadona, under the Roigs’ instruction, has posted extraordinary growth over the last 10 years,” said David Bain, the London-based head of research at Campden Wealth, a networking community for the world’s wealthiest family businesses. “Roig is a big believer in the family business model, and is strict about his family actually contributing rather than providing a nice place to hang out in a high-paying non-job.” Herrero, 62, is vice president of the Valencia, Spain-based company, which commands 14 percent of all food retail space in the country, according to the annual report. She controls a 28 percent stake in the company and has a net worth of at least $2.6 billion. Read more of this post

Game Theory and the Treatment of Cancer; Thinking about cancer as an ecosystem is giving biologists access to a new armoury of mathematical tools for tackling it, such as evolutionary game theory

The Physics arXiv Blog

May 14, 2013

Game Theory and the Treatment of Cancer

Thinking about cancer as an ecosystem is giving biologists access to a new armoury of mathematical tools for tackling it, such as evolutionary game theory

“A small but growing number of people are finding interesting parallels between ecosystems as studied by ecologists (think of a Savanna or the Amazon rain forest or a Coral reef) and tumours.” So begin David Basanta and Alexander Anderson at the Moffitt Cancer Centre in Florida in a fascinating paper describing a new way of thinking about cancer and the way to treat it. They point out that it’s more or less impossible to understand any creature or its behaviour without thinking carefully about the environment in which it lives and evolves.  “As convenient as it would be for cancer biologists to study tumour cells in isolation, that makes as much sense as trying to understand frogs without considering that they tend to live near swamps and feast on insects,” say Basanta and Anderson . What would biologists make of a frog’s sticky tongue without knowing how it is used for catching flies, for example? Similarly, how should cancer biologists think about cancer cells capable of producing vascular endothelial growth factor, a protein that promotes the growth of blood vessels?  Read more of this post

India’s demographic challenge: India will soon have a fifth of the world’s working-age population. It urgently needs to provide them with better jobs

India’s demographic challenge

Wasting time

India will soon have a fifth of the world’s working-age population. It urgently needs to provide them with better jobs

May 11th 2013 | PATNA, BIHAR |From the print edition


ONE of India’s bigger private-sector employers can be found in Patna, the capital of Bihar, a poor, populous state in the east of the country. Narendra Kumar Singh, the boss, has three gold rings on his right hand and arms big enough to crush rocks. His firm, Frontline, has 86,000 people on its books. They are mostly unskilled men from rural areas in poor states like Bihar; thanks to Mr Singh they have jobs in cities all over India.

There is lots to celebrate about this. Mr Singh’s business has sales of $185m and its employee base has grown by 1,600% since 2000. He is looking for a Western partner and wants to expand to Sri Lanka and Bangladesh. He is providing paid work for part of the large cohort of young people now entering the workforce. And by shifting people from farms to cities he is helping urbanisation of the sort that underpinned startling progress elsewhere in Asia.

Yet Frontline is also a symptom of a colossal failure. For it is not supplying labour for a manufacturing boom of the kind that helped so many in China, South Korea and Taiwan out of poverty, or for the IT services at which India has excelled. Instead it offers relatively unproductive service-sector jobs—in particular, security guards. It has become de rigueur for every ATM, office, shop and apartment building to have guards. Across India millions of young men now sit all day on plastic seats in badly fitting uniforms with braids and epaulettes, unshaven and catatonically bored as the economic miracle passes by. This isn’t how East Asia got rich. Read more of this post

Water With Some Pop to It: New Drinks Go After People Who Don’t Like the Bland Taste; Controlling the Flavor

May 14, 2013, 7:43 p.m. ET

Water With Some Pop to It

New Drinks Go After People Who Don’t Like the Bland Taste; Controlling the Flavor


With soda and diet soda sales in decline, drinks companies are coming up with waters that look more like soda than water. Sarah Nassauer joins Lunch Break with a look.


When is water actually soda? As bottled-water sales boom and traditional soda sales slump in an almost decade-long decline, companies are marketing water that hints it could taste like soda. The consumer targets: People who know they should drink more water but don’t always like the taste. These water-fussy drinkers are a quiet but large group—about 20% of Americans, say drinks companies and consumer research firms. Some complain water tastes metallic or chlorinated. Others say water is too boring. The products becoming popular with these folks aim to mimic water: They have no calories and market themselves as natural, though some have artificial sweeteners and colorings, or other ingredients that help deliver a soda-like fix. The makers of these drinks hope people who like water or soda but want more variety will also buy the products. Read more of this post

European authorities raid Shell, BP and Statoil offices to probe suspected manipulation of oil prices

Published: Wednesday May 15, 2013 MYT 9:27:00 AM

European authorities raid Shell, BP and Statoil offices to probe suspected manipulation of oil prices

LONDON/OSLO: European authorities have raided offices of oil majors Shell, BP and Statoil in an investigation of suspected manipulation of oil prices, one of the biggest cross-border actions since the Libor rigging scandal. Authorities have sharpened scrutiny of financial benchmarks around the world since slapping large fines on some of the world’s biggest banks for rigging interest rate benchmarks. On Tuesday, the European Commission said it was investigating major oil companies over suspected anti-competitive agreements related to submission of prices to leading oil pricing agency Platts, a unit ofMcGraw Hill Group. “Officials carried out unannounced inspections at the premises of several companies active in and providing services to the crude oil, refined oil products and biofuels sectors,” the Commission said. The inspections took place in two EU member states and one non-EU country, it said. “The Commission has concerns that the companies may have colluded in reporting distorted prices to a price reporting agency to manipulate the published prices for a number of oil and biofuel products,” it said.

Read more of this post

Why Foxconn’s Switch to Robots Hasn’t Been Automatic

05.14.2013 17:43

Why Foxconn’s Switch to Robots Hasn’t Been Automatic

With the wages of workers rising, the huge manufacturer has pursued increased automation, but the effort has not gone smoothly

By staff reporter Li Xuena

(Beijing) – In the face of rising labor costs in recent years, manufacturing companies at home and abroad have tried to find new ways to control spending and improve productivity. At the same time, Foxconn International Holdings, the original equipment manufacturer for companies such as Apple Inc. and its iPhones and iPads, has been at the center of controversy over its labor practices since a spate of worker suicides at its facilities in 2010. This prompted the company to give employees a raise. In June 2010, Foxconn said that starting from October 1, 2010 its entry-level workers’ wages would be increased to 2,000 yuan per month from 1,200 yuan after a three-month probation. It also spurred Foxconn to speed up its pursuit of automation. The company’s president, Terry Guo, said in 2010 that it would produce 1 million Foxbots, a mechanical arm researched and developed by Foxconn to perform dull and dangerous jobs. The robots would be implemented from 2012 to 2015 to increase the rate of automation and productivity. However, a poor financial showing in 2012 has become an obstacle realizing the plan. Foxconn’s net loss in 2012 was US$ 316 million, the biggest loss it has suffered since listing in Hong Kong in 2005, the company’s financial report shows. Read more of this post

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