Chinese auto parts maker Huayu Automotive to buy Visteon’s stake in their car-interiors JV and interests in other car-parts businesses for $1.25 billion in cash

August 13, 2013, 10:18 a.m. ET

Auto-Parts Maker Visteon to Receive $1.2 Billion as It Refocuses Its China Strategy

PRUDENCE HO And JEFF BENNETT

HONG KONG—Chinese auto parts maker Huayu Automotive Systems Co.600741.SH +10.05% agreed to buy Visteon Corp.’s VC +6.65% 50% stake in their car-interiors joint venture and interests in other car-parts businesses for $1.25 billion in cash. The sale highlights the continuing global expansion of Chinese auto parts makers. Wanxiang Group won U.S. government approval on Monday to complete its acquisition of advanced automotive battery maker A123 Systems Inc. The company paid $256.6 million for the business trumping a lower offer made by Milwaukee auto-parts manufacturer Johnson Controls Inc. JCI +0.07% Huayu, 60% owned by SAIC Motor Corp., 600104.SH +4.17% China’s largest domestic auto maker, is acquiring Visteon’s share of Yanfeng Visteon Automotive Trim Systems Co. The unit makes car-interior components such as dashboards and door panels, as well as low-end electronics./  Visteon said it would use most of the proceeds to buy back stock until the end of 2015 and its board of directors raised the authorization of Visteon’s remaining share repurchase program by $875 million to $1 billion. Read more of this post

Closer Look: How Best to Manage the Rise of Bad Loans

08.12.2013 16:44

Closer Look: How Best to Manage the Rise of Bad Loans

Creating a market-driven method for dealing with certain debts will mean building the necessary infrastructure and letting investors judge risk

By staff reporter Li Tao

The top three regions where banks’ bad loans increased the fastest in the first half of the year are all in the Yangtze River Delta. This is primarily because of the economic slowdown and excess output capacity in the steel trading, solar energy and shipbuilding industries. To a certain extent, it is good that the risks have been exposed because it implies that we did not choose to continue covering them up by exacerbating oversupply and taking on new debts to repay old ones. The three regions, Shanghai and the provinces of Jiangsu and Zhejiang, are among the most market-oriented areas in the country. Their disposal of non-performing loans should thus be handled in a more market-driven manner. Read more of this post

Trust Company Forced to Repay Investors Out of Own Pockets

08.13.2013 16:57

Trust Company Forced to Repay Investors Out of Own Pockets

Shaanxi International forks over nearly 600 million yuan of its own money, then asks court to seize collateral behind failed offering

By intern reporter Liu Zhuozhe

(Beijing) – A trust company says it used its own money to buy a trust product back from investors after the issuing firm fell behind on repayments.  Shaanxi International Trust Co. Ltd. (SIT) said on August 12 it spent 597.9 million yuan acquiring outstanding units of a trust product sold in two phases by Henan Yufeng Compound Fertilizer Co. Ltd. in 2012.  Yufeng started falling behind on payments in December. The final payment of the first phase, which had an interest rate of 18 percent, was due in April. The second phase (16.2 percent) came due in July. SIT said it asked Xian Intermediate People’s Court to seize Yufeng’s assets, including land and office buildings it used as collateral to issue the trust product. It is unclear how SIT will dispose of the assets. Read more of this post

Electronics retail giant Suning aims to enter the e-finance arena after the wild success of Alibaba’s Yu E Bao service

08.08.2013 16:31

Suning Plans to Offer Money Market Funds to Online Shoppers

Retail giant aims to enter the e-finance arena after the wild success of Alibaba’s Yu E Bao service

By intern reporter Li Huiling

(Beijing) – The e-commerce platform of retail giant Suning Commerce Group Co. Ltd. said it will soon add a service to its payment system that allows shoppers to buy money market funds online. This follows Alibaba launching Yu E Bao, which lets users invest in money market funds offered by Tian Hong Asset Management Co. through their payment accounts with Alibaba. Suning’s Yi Fu Bao payment system could offer users more choice because it will provide access to more funds from different companies, said Min Juanqing, executive deputy director of Suning’s marketing department. More importantly, she said, the service will be available to both individuals and companies. Suning may also promote the online investment service in its brick-and-mortar stores. Read more of this post

The Other Chinese Interest Rate Nobody Is Talking About: China 5Y Bond Yield Surges

The Other Chinese Interest Rate Nobody Is Talking About

Tyler Durden on 08/13/2013 18:54 -0400

While all the attention of the world’s investing public – focused on the short-term repo markets in China – has been ameliorated by the PBOC’s ‘fold’ thanks to ~CNY600bn in liquidity provision (or an equivalent 65bp RRR cut), liquidity concerns remain high (and not so hidden if one knows where to look). Not only has there been a surge in copper imports – based on the cash-for-copper deals replacing short-term funding but concerns raised by investors and the PBOC over duration mismatches (exposed by the recent crisis) has forced Chinese banks to seek longer-term funding. Banks are now raising longer-term deposit rates in order to attract stickier term-deposits and this is causing medium-term Chinese bond yields to surge. While inflation remains ‘under control’ (if one looks at the official data – as opposed to reality), growth hopes and inflation fears may also be impacting Chinese bonds though the timing suggests this remains evidence of a Chinese banking system in distress. And so, in a vicious circular manner, the cost of funding for Chinese firms is rising rapidly; implying (all things being equal) that end-users’ pocket books will be pressured as firms are forced to raise prices (raising inflationary expectations) and driving interest-rates up still further. The margin compression that banks alone will suffer will also mean more PBOC liquidity will be needed as capital floods out on risk-aversion.

Luxury-Car Market Shifts Gear in China Ultra-High-End Has Ruled, but Now More-Affordable Is in Fashion

August 13, 2013, 7:20 a.m. ET

Luxury-Car Market Shifts Gear in China

Ultra-High-End Has Ruled, but Now More-Affordable Is in Fashion

ABHEEK BHATTACHARYA

In recent years, luxury-car makers have been all fired up over China. The likes of Ferrari, Rolls-Royce and Aston Martin rolled out models carrying images of dragons or other auspicious symbols. Lately, though, their fortunes have taken a turn for the worse. China’s economic slowdown and Beijing’s drive against conspicuous consumption are taking a toll. Ferrari’s China sales volume in the first six months of 2013 was down 12.5% from a year earlier. Bentley’s China sales were down 23%. At Lamborghini, sales growth has ground to a stop. While the top end of the luxury-auto market is stalling, though, less pricey cars are faring much better. BMW‘s BMW.XE +1.11% China sales volume for January-June was up 15% from a year earlier. At Jaguar-Land Rover, the increase was 16%; atAudi, NSU.XE -0.26% 17.7%. Read more of this post

China Plans Faster Capacity Cuts Even as Growth Slows

China Plans Faster Capacity Cuts Even as Growth Slows

China will push ahead with efforts to cull excess industrial capacity a year earlier than planned even as economic expansion slows, and will promote spending on information products to stabilize growth, an official said.

The government will complete by the end of 2014 its overcapacity reduction plan for the five years through 2015, and will seek to cut further outdated capacity, China National Radio said yesterday, citing Industry Minister Miao Wei. Read more of this post

China Investigates Foreign-Car Pricing; Regulator Asks Dealers Association for Data; on the Lookout for Anticompetitive Practices

August 14, 2013, 12:19 a.m. ET

China Investigates Foreign-Car Pricing

Regulator Asks Dealers Association for Data; on the Lookout for Anticompetitive Practices

SHANGHAI—The China Automobile Dealers Association has been asked to compile prices for foreign cars sold locally so any overcharging can be exposed, the organization said Wednesday. The National Development and Reform Commission wants to see whether foreign car makers are manipulating prices or setting minimum retail prices for dealers, said Luo Lei, the association’s deputy secretary-general, noting that those practices are illegal. Read more of this post

A handful of foreign entrepreneurs have gone into rural China to operate boutique hotels in restored properties with historic or vintage appeal

August 13, 2013

From Outsiders to Innkeepers in China’s Sleepy Countryside

By MIKE IVES

Brian Linden and his wife, Jeanee, converted a courtyard residential complex in Yunnan Province, built before the Communist revolution, into the Linden Centre hotel.

XIZHOU, China — Brian Linden welcomed the guests to his boutique hotel in one of its courtyards at the end of a cobblestone alley here, surrounded by old stone walls and polished wood balconies. He invited the group, from Greenwich, Conn., to peruse the hotel’s book collection, which he created years ago as a doctoral candidate in Sinology at Stanford University. “And if any of you are light sleepers, what I recommend is, turn on the fan for some white noise,” Mr. Linden said. “Because there’s no white noise here at all.”

The hotel is far from the noise of any major city, which Mr. Linden, an American who first arrived in China in 1984 as a student, thinks is one of its draws. He and his wife, Jeanee, are among a small number of foreign entrepreneurs in rural China who operate boutique hotels in restored properties that have historic charm. They converted a courtyard residential complex in Yunnan Province, built before the Communist revolution, into the Linden Centre. Read more of this post

The pressure on big auto makers to squeeze more miles out of a gallon of gas is powering a surge in profit at U.S. auto-parts makers.

August 13, 2013, 6:34 p.m. ET

Mileage Boosters Give Second Wind to Car-Parts Makers

Engine TurboCharger, Start-Stop Battery Makers Gain New Sales, Profit as Auto Industry Seeks Improved Fuel-Economy

JEFF BENNETT

TRAVERSE CITY, Mich.—The pressure on big auto makers to squeeze more miles out of a gallon of gas is powering a surge in profit at U.S. auto-parts makers. Once dismissed by Wall Street, companies including BorgWarner Inc., BWA +2.32%Delphi Automotive PLC, DLPH +2.01% Federal-Mogul Corp. FDML -0.75% and TRW Automotive Holdings Corp. TRW -0.18% are today beating Wall Street’s profit forecasts, hiring workers and making acquisitions. At an industry conference here earlier this month, industry executives said the appetite for fuel-saving technology such as turbochargers, easy-rolling tires and advanced fuel injectors is providing a second wind for companies already benefiting from booming car sales. Read more of this post

YTL’s Francis Yeoh: Key public services have to be opened up to private competition

August 13, 2013 4:32 pm

Why Asia needs a few doses of Thatcherite rigour

By Francis Yeoh

Key public services have to be opened up to private competition, writes Francis Yeoh

Everyone is talking about the incredible economic miracle taking place in Asia. It is true that the continent has made huge strides. But while millions more people move up into the middle classes, huge swaths of its population are being left behind. To realise their full economic potential, Asian nations must free public utilities from the clutches of the governments that control them – often simply for political or ideological reasons. Read more of this post

In Asia, Locals Rise Only So Far at Western Firms; Multinationals Still Rely on Expatriates to Fill Top Jobs Decades After Expanding Into Region

August 13, 2013, 7:52 p.m. ET

In Asia, Locals Rise Only So Far at Western Firms

Multinationals Still Rely on Expatriates to Fill Top Jobs Decades After Expanding Into Region

MARIKO SANCHANTA and RIVA GOLD

HONG KONG—As Western multinationals ratchet up their operations in Asia, there is one glaring omission from the upper ranks of management: Asians. Asians are employed by multinationals in greater numbers than ever before at lower levels, but when it comes to the top roles, companies from food to finance tend to pick Westerners. When Western companies first started expanding to Asia, headquarters sent an executive to Asia to show employees how the business should run. Decades later, not much has changed. In part, that’s because leaders tend to promote people in their own image and culture, perpetuating a cycle of white, male bosses, according to consulting and executive-search firms. Many executive-search firms say their clients would leap at the chance to hire locally, but few firms are taking steps to develop and groom talent. Read more of this post

Foreign beer brands growing fast; Rising popularity poses threat to OB-Hite duopoly who account for over 90 percent of the market

2013-08-13 16:40

Foreign beer brands growing fast

Rising popularity poses threat to OB-Hite duopoly
By Yi Whan-woo
Two local powerhouses ― Oriental Brewery (OB) and Hite-Jinro ― are facing a growing challenge from foreign makers. The two Korean breweries account for over 90 percent of the market, but market observers anticipate the share of foreign alcoholic beverage firms will consistently rise as more consumers become willing to spend money on premium beers.
The market share of foreign firms reached 5.7 percent in the first quarter of this year, up from 4 percent in 2010, according to Korea Alcohol & Liquor Industry Association (KALIA).
Japan’s Asahi tops the list of international beer brands in terms of sales. Its average annual sales in Korea increased by 47 percent from 2005 to 2012. Read more of this post

South Korea’s $15-billion wedding industry is wooing an image-conscious slice of the Chinese jet set seeking a wedding with a South Korean touch

Image industry weds Korean cool to China’s nouveaux riches

BY ELIZABETH SHIM

AP, AUG 13, 2013

Gangnam-style: A Chinese couple pose during their wedding shoot at a studio in Seoul. South Korea’s $15-billion wedding industry is wooing an image-conscious slice of the Chinese jet set seeking a wedding with a South Korean touch. | AP

SEOUL – Standing by a French château’s window, the bride-to-be glows in the afternoon sun as she gazes into her fiancé’s eyes. This Chinese couple’s fairytale moment, however, isn’t unfolding at a Bordeaux estate. The 20-something Beijing lawyers and fans of South Korean pop idol Rain are part of a small but growing number of affluent Chinese for whom the craze for all things South Korean means flying to Seoul for the weekend to have wedding pictures taken. Read more of this post

Cleanup Attempt At Japan’s Fukushima Plant Could Release 14,000 Times As Much Radiation As Atomic Bomb

After disaster, the deadliest part of Japan’s nuclear clean-up

10:16pm EDT

By Aaron Sheldrick and Antoni Slodkowski

An aerial view shows workers wearing protective suits and masks work at a construction site (C) of the shore barrier to stop radioactive water from leaking into the sea, at the tsunami-crippled Fukushima Daiichi nuclear power plant in Fukushima, in this photo taken by Kyodo August 9, 2013. Highly radioactive water from Japan’s crippled Fukushima nuclear plant is pouring out at a rate of 300 tons a day, officials said on Wednesday, as Prime Minister Shinzo Abe ordered the government to step in and help in the clean-up. The revelation amounted to an acknowledgement that plant operator Tokyo Electric Power Co (Tepco) has yet to come to grips with the scale of the catastrophe, 2 1/2 years after the plant was hit by a huge earthquake and tsunami. Tepco only recently admitted water had leaked at all.

TOKYO (Reuters) – The operator of Japan’s crippled Fukushima nuclear plant is preparing to remove 400 tons of highly irradiated spent fuel from a damaged reactor building, a dangerous operation that has never been attempted before on this scale.

Containing radiation equivalent to 14,000 times the amount released in the atomic bomb attack on Hiroshima 68 years ago, more than 1,300 used fuel rod assemblies packed tightly together need to be removed from a building that is vulnerable to collapse, should another large earthquake hit the area. Read more of this post

Korea’s National Pension Service (NPS) is under fire for poor management of taxpayers’ money after it was found to have provided pensions worth $51.3 million to unqualified people between 2009 and June this year

2013-08-13 16:42

NPS hit for mismanaging pensions

By Yi Whan-woo
The National Pension Service (NPS) is under fire for poor management of taxpayers’ money after it was found to have provided pensions worth 57.2 billion won ($51.3 million) to unqualified people between 2009 and June this year. According to data released by Shin Yee-jin of the ruling Saenuri Party, the country’s pension fund operator supplied that amount of pension to people not entitled to that money, including missing persons and the dead. Read more of this post

Energy Firm Makes Costly Fracking Bet—on Water

August 13, 2013, 8:09 p.m. ET

Energy Firm Makes Costly Fracking Bet—on Water

For Antero’s Planned Ohio River Pipeline, Payoff Hinges on Rainfall Patterns

RUSSELL GOLD

Antero Resources Inc., an energy company backed by New York private-equity firms, plans to spend more than half a billion dollars on a pipeline. But the 80 miles of pipe won’t transport oil or gas: They will carry water from the Ohio River to fracking sites in West Virginia and Ohio. The project is a costly wager that the hydraulic-fracturing industry’s thirst for reliable sources of water will grow over the next few years. Fracking, an oil-field technique driving the nation’s current energy boom, involves injecting vast quantities of water into the earth, along with other materials, to break up rock formations and unlock trapped oil and gas. Read more of this post

Whither China Seen in Australia as RBA Notes Slowdown

Whither China Seen in Australia as RBA Notes Slowdown: Economy

From his Manhattan office, Steven Englander looks to commentary from policy makers and executives in Sydney, not Beijing, for the best take on China’s economy.

“They get a direct, immediate view of China demand for highly cyclical products and have an incentive to give it a close read, so if they are sensing an extended slowdown I would take their views seriously,” said Englander, 58, head of Group of 10 currency strategy at Citigroup Inc. “It may be better to have an accurate view of a limited but important segment of Chinese demand, than an uncertain view of aggregate demand.” Read more of this post

Mall Owners Woo Hispanic Shoppers

August 13, 2013, 8:26 p.m. ET

Mall Owners Woo Hispanic Shoppers

MIRIAM JORDAN

PANORAMA CITY, Calif.—On a recent Sunday, Spanish-speaking families swarmed the Panorama Mall here in the outskirts of Los Angeles for an afternoon of Latino entertainment. “We come for the mariachi, then we eat something and go shopping,” said Gloria Mesina, visiting the mall with her daughter, Viviana, and her granddaughter, Brisa. That is music to the ears of José Legaspi, a real-estate broker who joined forces with the mall’s owner, MacerichCo., MAC -2.20% to revitalize the shopping center by targeting Hispanics. The partners are among an emerging crop of commercial-property investors responding to the same demographic reality that has rocked the political landscape: the rise of Hispanics.

Hispanics accounted for more than half the population growth between 2000 and 2011; Latinas have more children than non-Hispanics; Hispanic households that earn $50,000 or more are rising at a faster clip than total U.S. households. Their households outspend other groups on beauty products, food and apparel, according to Nielsen Co. Read more of this post

JCPenney’s 100-year bonds swoon amid retailer’s turmoil

JCPenney’s 100-year bonds swoon amid retailer’s turmoil

1:02am EDT

By Dan Burns

(Reuters) – It was a “century” deal, but in hindsight it was hardly the deal of the century. More than 17 years and a dozen credit downgrades ago, JCPenney Co Inc. (JCP.N: Quote, Profile, Research, Stock Buzz) joined an elite club in capital markets circles by issuing a rare 100-year bond. The deal from Penney, then sporting a mid-range investment-grade rating of “A” from Standard & Poor’s and coming off record holiday-season sales, matched the year’s largest “century bond” deals at $500 million, but the company stood out as the only retailer in the mix. Read more of this post