China to Place Consumption Tax on More Luxury Goods, Xinhua Says

China to Place Consumption Tax on More Luxury Goods, Xinhua Says

China will widen the scope of its consumption tax to include more luxury goods, the official Xinhua News Agency reported, a sign that some high-end brands may become more expensive for purchasers on the mainland. The Asian nation is also targeting goods that cause heavy pollution or use excessive levels of energy for consumption tax adjustments, Xinhua said on its official microblog today. The news agency cited a report by China’s finance minister Lou Jiwei to the Standing Committee of the National People’s Congress. Read more of this post

China Urban Migrants’ Cost Seen at Least $6.8 Trillion

China Urban Migrants’ Cost Seen at Least $6.8 Trillion: Economy

China must spend at least 41.6 trillion yuan ($6.8 trillion) over two decades to integrate rural workers living in cities and towns so the country realizes benefits of urbanization, a United Nations report said. Spending may exceed 75 trillion yuan in a scenario with a higher rate of investment to improve living conditions and housing quality, according to the report released yesterday in Beijing. The study’s baseline assumptions are for the urban population to rise to 976 million in 2030 from 666 million in 2010 and integrate about 210 million migrant workers. The report quantifies the urbanization challenges faced by Communist Party leaders as they prepare for a November meeting to discuss deepening policy reforms amid an economic slowdown. Officials are considering changes to the hukou residence-registration system that excludes migrant workers from taking advantage of schools and pension benefits in cities. Read more of this post

After mega-LBO boom, a massive private equity cleanup

After mega-LBO boom, a massive private equity cleanup

3:31am EDT

By Greg Roumeliotis

NEW YORK (Reuters) – According to Blackstone Group LP’s (BX.N: Quote, Profile, Research, Stock Buzz) books, the private equity firm’s investment in Hilton Worldwide Inc was worth 50 percent more this year than when it took the international hotel chain private in 2007. While that might not seem like much compared to private equity’s historical record of doubling or tripling its investments, it is a remarkable turnaround for a $26.7 billion deal that has come to epitomize the leveraged buyout boom and bust of the past decade. Hilton is one of many cleanup acts that have been quietly going on in the world of private equity, as the industry atones for a debt binge in the years before the financial crisis. Many of the largest buyouts from 2005 to 2008 were based on revenue and profit expectations that proved too optimistic when the recession hit. Companies such as casino operator Caesars Entertainment Corp (CZR.O: Quote, Profile, Research, Stock Buzz) and Texas utility Energy Future Holdings were saddled with huge piles of debt and had difficulty meeting interest payments when business declined. Read more of this post

Suntech Directors Quit Saying Solar Maker Has No Business Plan

Suntech Directors Quit Saying Solar Maker Has No Business Plan

Suntech Power Holdings Co. (STP), the Chinese solar manufacturer whose main unit was pulled into bankruptcy earlier this year, said three directors including the former chairwoman quit saying the company had no business plan. Susan Wang, Julian Worley and Zhizhong Qiu resigned on Aug. 21, saying they weren’t provided with information they needed to fulfill their responsibilities, the Wuxi, China-based company said today in a statement. Michael Nacson replaced Wang as chair, who took the post in March, Suntech said. The resignations highlight the divisions that have plagued the company’s management and come less than six months after Suntech founder Shi Zhengrong was ousted as chairman. Nacson was appointed to the board last month by Suntech’s bondholders. Read more of this post

China companies feel the investment hangover

Last updated: August 27, 2013 5:10 pm

China companies feel the investment hangover

By Simon Rabinovitch in Qujing

Wooden carvings of two elephants and an eagle, meant to symbolise wisdom and prosperity, flank the entrance to the Chinese chemical producer Yunwei. Today, they suggest a very different interpretation: a lumbering debt load and scavengers picking over the company’s scraps. “Lots of Chinese companies rushed to expand, to be the biggest in the world. This was a source of great pride. Now we see it as a headache,” says a soft-spoken Yunwei executive, back from a business trip where he was trying to sell more of the hard black coking coal piled high in the company’s storage facility in Qujing in the southwestern province of Yunnan. Read more of this post

Bulging bad debts give China a new banking dilemma; If China is to rebalance, savers cannot foot the bill

August 27, 2013 5:15 pm

Bulging bad debts give China a new banking dilemma

By Paul J Davies

If China is to rebalance, savers cannot foot the bill

There are two pieces of received wisdom that open and close almost any conversation about China’s banks. Firstly, they face a looming bad debt problem that will make the 2008 US banking bust seem like a bugle before a foghorn. Secondly, this doesn’t matter because the Chinese do things differently – any bad debts can be simply magicked away. China has form on this front. In the late 1990s a piece of apparently costless circular financing took a big chunk of bad debts from the four largest banks and parked them at their original value in four specially created bad banks, or “asset management companies”. These were funded in full mostly by the banks themselves via the Ministry of Finance. Read more of this post

If the Billabong brand is worth nothing, which brand will be next?

Michael Bleby Reporter

If the Billabong brand is worth nothing, which brand will be next?

Published 28 August 2013 12:17, Updated 28 August 2013 13:25

Not quite washed up – but Billabong has some recovery work to do on its iconic brand. Photo: Glenn Hunt

Billabong is not the only Australian retail brand at risk of going under in an era when online and global competitors are circling the country’s traditional consumer businesses, as even iconic names need to support a business and make it profitable. The surfwear company’s much-reported $636 million writedown this week on the value of brands including Billabong and Element shows how far the business has fallen, even from as recently as May, when Billabong ranked at number #43 in a list of Australia’s 100 most valuable brands by consultancy Brand Finance. Read more of this post

BMW Owners Vent Anger at Months-Long Wait for Spare Parts

BMW Owners Vent Anger at Months-Long Wait for Spare Parts

South African Neels Kilian was as proud as any BMW owner could be when he got his new 3-Series in May. After getting into an accident a few weeks later and still waiting today for repairs, he’s reconsidering that sentiment. The resident of Gauteng, South Africa, needs a rear fender replaced before the car is driveable again. In the meantime, he’s still making a monthly payment of 8,000 rand ($770) and has to bear additional costs for work travel because he hasn’t been offered a loaner. Read more of this post

China SUV Maker Has Great Wall to Climb

August 27, 2013, 11:00 a.m. ET

China SUV Maker Has Great Wall to Climb

ABHEEK BHATTACHARYA

China can boast that it is home to the world’s most profitable car maker. But the company may soon run out of open road. Hong Kong-listed Great Wall Motor GWLLY +8.01% has the fattest margins in the auto world, says Sanford C. Bernstein’s Max Warburton. It posted an operating profit margin of 18.4% in the first half of 2013. That tops even Ferrari, which was at 14.9% in the same period. Great Wall’s secret sauce is that sport utility vehicles, which typically yield higher profits, account for half of the autos it sells. In contrast, SUVs on average make about a third of an auto maker’s volumes in North America, according to research firm LMC Automotive. That sector is about a fifth in China. Read more of this post

China’s Top Telecom Operators to Cut Fees with Upcoming Anti-Trust Probe

China’s Top Telecom Operators to Cut Fees with Upcoming Anti-Trust Probe

08-27 11:43 Caijing

The NDRC has delivered a combined fine of roughly 1.5 billion yuan so far this year in a string of anti-trust probes. China’s top telecom operators may further cut mobile and Internet service fees after the lucrative industry became one of the latest targets by the county’s economic planner in its antitrust campaigns. The National Development and Reform Commission (NDRC) will work together with the Ministry of Industry and Information Technology to push downward the country’s telecom charges in the rest months of the year, the Economic Information Daily reported. Read more of this post

Chinese entrepreneurs, unsettled, speak out for reform; Many business owners say they are forced to bribe local party officials to gain patronage and political protection

Chinese entrepreneurs, unsettled, speak out for reform

By Simon Denyer, Published: August 26

BEIJING — When Chinese property magnate Zeng Chengjie was executed for fraud in July, it sent a chill through the business community here. Zeng’s real misstep, according to associates and supporters, was not the crime he was charged with — defaulting on loans from ordinary citizens — but backing the wrong political horse: When his patron, a provincial governor, was jailed for corruption, Zeng found himself stranded, they say, a victim of China’s shifting political sands. Read more of this post

Everbright Accused of Insider Trading

Everbright Accused of Insider Trading

08-27 15:51 Caijing

The Everbright fat finger incident that occurred Aug. 16, which is a first since the inception of China’s capital market, will likely hinder business innovation by domestic dealers.

By staff reporters Qu Yanli and Liu Wenju

The Shanghai Composite Index jumped 5.96 percent in a matter of seconds at around 11 a.m. on Aug. 16, 2013. The unprecedented flash rally drove a number of blue-chip stocks from the banking and oil industries, which have been sluggish for a long time, up by their daily limit. Investors, hoping to get a piece of the action, rushed into the market, amid a series of rumors and speculation over the cause of the spike. Supervisory authorities were soon alerted to the incident. Read more of this post

rand Vision for a New Beijing Financial District

August 27, 2013, 2:09 p.m. ET

Grand Vision for a New Beijing Financial District

Lize Project Defies Doubters With Plan to Build 80 Skyscrapers Over 20 Years

RICHARD SILK

Lize would be transformed from one of Beijing’s least-developed districts.

BEIJING—A new financial center planned for Beijing, whose size would top London’s Square Mile and Manhattan’s financial district combined, aims to defy doubters on the sustainability of China’s real-estate boom and the stability of its overstretched banks. If completed as planned, the Lize Financial District on the southern outskirts of Beijing would provide between 8 million and 9.5 million square meters of new floor space, almost doubling the Chinese capital’s current stock of high-grade offices. Read more of this post

Lighting companies say they are struggling with fewer individual customers and shrinking sales because of recent government limits on the construction of new properties and restrictions on extravagant official galas

New policies dim lighting firms’ sales

Updated: 2013-08-28 07:58 Read more of this post

Real estate top wealth creator in S China

Real estate top wealth creator in S China

Updated: 2013-08-28 07:58

By Shi Jing in Shanghai ( China Daily)

Despite the central government’s tightening policies in the property market, the real estate sector still generates the largest number of billionaires in southern China, according to the Hurun 2013 Pearl River Delta Region Rich List. Read more of this post

Son of Chinese general faces rape trial; raises anger over top families and elites

Son of Chinese general faces rape trial; raises anger over top families

6:13pm EDT

By Sui-Lee Wee

BEIJING (Reuters) – The teenage son of a prominent Chinese general goes on trial on Wednesday suspected of involvement in a gang rape in a case that has inflamed public anger at the offspring of the political elite who are widely seen as spoilt and reckless. Li Tianyi, 17, is among five men accused of sexually assaulting a woman in a Beijing hotel in February, according to state media. His father is General Li Shuangjiang of the People’s Liberation Army (PLA), who is a singer known for performing patriotic songs on television shows and at official events. Li’s mother, Meng Ge, is a famous singer in the PLA. Read more of this post

Taobao offers moon insurance for Mid-Autumn Festival; Residents of cities of Shanghai, Guangzhou and Shenzhen can pay a premium of 20 yuan (US$3.24) and receive 50 yuan (US$8) from the insurer if they cannot see the moon

Taobao offers moon insurance for Mid-Autumn Festival

Xinhua

2013-08-27

People in 41 cities in China can insure their enjoyment of the full moon during the Mid-Autumn Festival from Monday. An internet-based insurance product was launched by Taobao Insurance under the Alibaba Group, China’s largest online shopping platform, together with Allianz China General Insurance Company. Internet users can insure themselves against inconveniences during their moon gazing at the Mid-Autumn Festival, and will be paid off if they cannot see the moon because of poor weather on the day. Residents of cities of Shanghai, Guangzhou and Shenzhen can pay a premium of 20 yuan (US$3.24) and receive 50 yuan (US$8) from the insurer if they cannot see the moon. Read more of this post

Tesla’s Chinese Wall

Tesla’s Chinese Wall – Economic Observer Online

By Geng Huili (耿慧丽) and Zhang Xu (张煦)
Issue 633 ,Aug 19, 2013  
The American electric car manufacturer Tesla Motors has plans to enter China by the end of the year, but that might be little more than a fantasy. According to Tesla Vice President George Blankenship, the company plans to open 25 new specialty stores in 2013, one of which will be in China. In fact, the brand has already rented floor space at the Beijing Parkview Green Shopping Center in busy a part of the capital. The 800-square meter location would be its largest in the world. However, Tesla seems to have overestimated the speed with which it could drive through China’s approval process. And even if it gets approval, a trademark dispute and heavy taxes could slow its entry to a crawl. According to the Beijing Administration for Industry and Commerce, Tesla established the wholly foreign-owned Tesla Car Sales (Beijing) Co., Ltd., (拓速乐汽车销售（北京）有限公司) on Nov 7, 2012 with registration capital of two million dollars. Read more of this post

Zhejiang investment projects underline China’s local debt crisis

Zhejiang investment projects underline China’s local debt crisis

Staff Reporter

2013-08-28

As many local governments in China have ramped up investment in urbanization and major construction projects, concerns about future moves bloating local government debt have emerged, reports the Guangzhou-based 21st Century Business Herald. In an attempt to rejuvenate the local economy, the Zhejiang provincial government announced a plan earlier this year to launch more than 1,000 major projects over a five year period, with the aim of attracting more than 10 trillion yuan (US$1.6 trillion) in fixed asset investment. Meanwhile, the country’s National Audit Office announced on July 28 the formation of a new administration to audit all local government debt, which is expected to begin operations in early August. Read more of this post

Europe Haggles Over New Rules Aimed at Saving Fish Stocks; A Ban on Discarding Unwanted Fish Overboard Raises Questions of Cost and Enforceability

August 27, 2013, 9:29 p.m. ET

Europe Haggles Over New Rules Aimed at Saving Fish Stocks

A Ban on Discarding Unwanted Fish Overboard Raises Questions of Cost and Enforceability

ASHLEY DALTON

ZEEBRUGGE, Belgium—Less than five months before a landmark overhaul of Europe’s fishing industry starts to take effect, policy makers and industry groups are haggling over how to replenish depleted fish stocks without crippling the business. A ban on discarding unwanted fish overboard is the most contentious new rule agreed to in late May after years of negotiation. Fishermen currently discard nearly a quarter of Europe’s total catch on average, and as much as 70% of the hauls in some areas, European Commission data show. Scientists and environmental groups blame the practice for speeding the decline of fish stocks. Read more of this post

Lorillard Isn’t Backing Away From Menthol or E-Cigarettes

August 27, 2013, 7:35 p.m. ET

Lorillard Isn’t Backing Away From Menthol or E-Cigarettes

MIKE ESTERL

Murray Kessler, the CEO of Lorillard, America’s third-largest tobacco company, discusses what’s ahead in alternative tobacco products and managing regulatory risk.

Big Tobacco has always faced strong regulatory scrutiny, but no tobacco maker is more exposed right now than Lorillard Inc. LO -0.71% The Food and Drug Administration said last month that menthol-flavored cigarettes likely pose more public health risk than regular cigarettes, a potential precursor to tighter restrictions on minty smokes. The federal agency also plans to propose regulations for battery-powered electronic cigarettes that turn nicotine-laced liquid into a vapor. That makes things tricky for Lorillard, which brings in about 90% of sales from its Newport menthol cigarettes and which paid $135 million last year to acquire blu, a top-selling e-cigarette brand. Read more of this post

SocGen’s Shocking Oil Forecast: $150 Upside; $125 Base Case Following Syrian Attack “Within A Week”

Brent Crude May Spike to $150 on Syria Spillover, SocGen Says

By Ramsey Al-Rikabi – Aug 27, 2013

Brent crude may “spike briefly” to $150 a barrel if a U.S.-led attack on Syria sparks further conflict in the Middle East and leads to supply disruptions, Societe Generale SA (GLE) said in a report e-mailed today. Military action against the regime of Syrian President Bashar al-Assad is likely within the next week, Michael Wittner, the bank’s New York-based head of oil market research, said in the report. Brent, the price benchmark for more than half the world’s crude, may rise to as much as $125 a barrel “in the coming days” in anticipation or event of a strike, the bank said. A spike to $150 is possible if a widening conflict halts output in Iraq or other Mideast producers.

Read more of this post

Investors Prove More Selective in Latest Emerging-Market Selloff

Updated August 27, 2013, 8:43 p.m. ET

Investors Prove More Selective in Latest Emerging-Market Selloff

ERIC BELLMAN and THOMAS CATAN

Even as currencies in India, Turkey, the Philippines and Malaysia plummet against the U.S. dollar, other developing countries have managed to avoid the selloff, showing that investors are differentiating among them. Mexico and South Korea, which were at the locus of past emerging-market meltdowns, have been relatively unscathed this time around, and a number of Eastern European economies also are holding up well. Investors have been punishing countries with large trade imbalances and foreign borrowings instead. Read more of this post

RICHARD KOO: Emerging Markets Are In For A ‘Tumultuous New Era’

RICHARD KOO: Emerging Markets Are In For A ‘Tumultuous New Era’

JOE WEISENTHAL AUG. 27, 2013, 8:25 PM 4,745 8

Great stuff here from Richard Koo of Nomura, who weighs in on the recent selling in emerging market currencies (and equities and debt). His take: This is the price emerging markets are paying for not being more vigilant about hot money rushing into their economies after the Fed announced QE after the U.S. crisis. The emerging market, he argues, could have prevented the big rush of foreign cash through prudent measures, but that they opted not to take any pain, and now they’re paying the price for going the easy route. He concludes that we’re now in for a “tumultuous new era” for emerging markets as QE gets unwound. Read more of this post

Thai Pension Fund Buying Stocks After Bear Market Plunge; The benchmark SET Index (SET) has fallen for 10 days, the longest losing streak since 1998

Thai Pension Fund Buying Stocks After Bear Market Plunge

Thailand’s Government Pension Fund is boosting holdings of local equities after a bear market in the benchmark index sent valuations to the lowest levels in more than a year. “This is a great buying opportunity,” Yingyong Nilasena, chief investment officer of the fund, which manages about $19 billion of assets, said by phone from Bangkok. “We have increased positions in some stocks recently. We plan to buy some more.” Yingyong declined to name specific companies. Read more of this post

Rule Change Brings IPOs in Thailand

Aug 27, 2013

Rule Change Brings IPOs in Thailand

By P.R. Venkat And Nopparat Chaichalearmmongkol

Investors may be fleeing from emerging markets, but Thailand’s tycoons are gearing up for more than $4 billion in initial public offerings before the year is out, capitalizing on ample domestic liquidity and racing against time in the face of imminent regulatory changes. Some of the country’s richest families, whose businesses range from banks to telecommunications to properties, plan to list a series of property funds before new rules, fees and taxes on real-estate investment trusts kick in as early as next year. Others are counting on strong demand for trust listings to raise cash. Read more of this post