HSBC, StanChart to keep up China expansion in 2009

SHANGHAI, March 11- HSBC Holdings Plc and Standard Chartered Plc , the two biggest foreign banks in China, said on Wednesday they would continue to expand in the country despite global cost-cutting by banks struggling to survive the financial crisis.

HSBC China, whose pretax profit surged 85.2 percent last year to 2.19 billion yuan ($320 million), plans to boost its number of outlets in 2009 to 100 from 82 and will hire 1,000 employees to support the expansion, it said in a statement.

Rival Standard Chartered aims to add 11 to 15 sub-branches in China in 2009, its China consumer banking head Wilson Chia said in an interview.

He added that the bank would continue investing in people but gave no projections for staffing levels in China, which have risen five-fold to 2,000 over the past three years.

The China expansion plans at HSBC, Europe's largest bank, contrast with its plans to shut its U.S. consumer lending business, cutting 6,100 jobs.

"Our growth was driven by China's stimulus efforts, which enabled continued economic growth and market confidence amid the global financial crisis," HSBC said.

(Reuters)

Coke will pump a further $2 billion into China

The Coca-Cola Company opened a $90 million innovation and technology centre in Shanghai on Friday. The company also announced that it will pump a further $2 billion into China over the next three years. The news comes just weeks before the deadline for the completion of Coke's proposed takeover of domestic drinks company Huiyuan Juice.

The new research centre, Coke's largest in Asia, will look at developing new products suitable for Chinese tastes—where drinks like juices and teas are preferred over Coke's traditional mainstay, carbonated beverages.

The $2 billion of further investment will be spent on new plants and distribution infrastructure, sales and marketing, and research and development. The investment announced is greater than all the money the US drinks giant has put into China since it returned to the country in 1979, estimated at $1.6 billion.

The timing of the announcement is likely to be linked to the imminent deadline for Coke's takeover of Huiyuan Juice, which is due for completion on March 23. In September, Coke revealed a $2.4 billion offer for control of Huiyuan and has since been waiting for regulatory approval under China's new anti-monopoly law. The regulator's decision is critical because it will signal China's attitude towards inbound M&A deals.

Coke is advised on the Huiyuan deal by the Royal Bank of Scotland, while Huiyuan Juice is advised by Goldman Sachs. The controlling shareholder of Huiyuan, Huiyuan Holdings. is advised by UBS.

The regulator's decision is likely to be watched from all corners of the world as China is also aggressively pursing outbound targets. China is awaiting approval from Australia's Foreign Investment Review Board (FIRB) for the acquisition of stakes in two mining assets and China may not want to send a message that it plays by different rules on its home ground.

As for Coke, the US soft drinks compnay will be hoping that by injecting large chunks of cash into China, its third largest market, it will be corroborating its long-term commitment to the country. The acquisition has proved controversial, with accusations that Zhu Xinli, the man behind Huiyuan, has sold out to a foreign multinational.

In terms of multiples, $2.4 billion is six times Huiyuan's 2007 revenues and 26 times its trading profits. At HK$12.20 a share, it represents a premium of 195% to the price of the target's shares before the deal was out. Although shares in the company rocketed after the deal was announced, reaching HK$10.94, six months of market turmoil have pulled the price down again to HK$9.1, suggesting that perhaps Coke could have got away with paying less. Indeed, some sources suggest that if the deal were to unravel it would be a blessing for Coke. Market conditions have worsened in the time since the deal was announced and a couple of billion dollars on Coke's balance sheet could be welcome in these uncertain times.

But Coke president and CEO, Muhtar Kent, presented a picture of confidence in February when he spoke to analysts about the company's fourth quarter 2008 and full-year financials. In a transcript posted on seekingalpha.com, Kent highlighted that the company had delivered another quarter of strong performance, marking its ninth consecutive quarter of double-digit earnings per share growth and the third straight year of meeting or exceeding targets. "Simply said, we were built for times like these," said Kent referring to Coke's ability to weather the recession which has adversely impacted results at a number of companies.

China's importance was apparent on the call which mentioned the world's most populous country time and again. Sprite sales reached two billion units in annual volume, driven by China; the Olympic sponsorship allowed Coke to connect with half a billion consumers; Coke's product Minute Maid Pulpy was deemed a "huge success in China" reaching a volume of a couple of hundred million cases; and China's volume growth of 19% in 2008 was highlighted.

Coke's bullishness on China is not surprising. Per capita consumption of Coke beverages in 2008 was 24 units per person per annum, compared to over 400 in North America. Even accounting for the difference in purchasing power and consumption preferences, the potential for Coke to further penetrate China seems indisputable. If the money spent on Huiyuan takes Coke a little closer to that goal, even the expensive deal it has struck may be worthwhile.

(FinanceAsia.com)

Foreign Direct Investment in China Tumbles on Crisis

Feb. 16 -- Foreign direct investment in China declined for a fourth month in January as companies cut back on spending to weather the global financial crisis.

Investment fell 32.6 percent to $7.54 billion from a year earlier, the commerce ministry said at a briefing in Beijing today. That compared with a 5.7 percent decline in December.

Motorola Inc., the second-biggest U.S. seller of mobile phones, said last week that it had eliminated jobs in China as part of cutting 4,000 workers worldwide. Weaker investment this year by both foreign and Chinese companies may add to falling exports and a sagging property market in hampering government efforts to reverse the nation’s economic slowdown.

“Foreign multinational companies still find China very attractive, but their hands are tied -- they don’t have spare money to invest,” said Sherman Chan, a Sydney-based economist with Moody’s Economy.com. “Once the global economy shows signs of recovery, China will probably see a surge in foreign direct investment again.”

The global crisis, a Chinese Lunar New Year holiday in January, and a high comparative figure a year earlier contributed to the decline, commerce ministry spokesman Yao Jian said.

Thousands of factories have closed in China on a waning world appetite for toys and electronics. The nation’s exports declined by the most in almost 13 years in January and house prices across 70 major cities fell by the most since data began in 2005.

Global Decline

Worldwide, foreign direct investment fell 21 percent last year to $1.4 trillion because of tight credit, the global recession and falling profits, the United Nations Conference on Trade and Development estimated on Jan. 19. It’s likely to decline further this year, the organization said.

In developing economies, investment rose 3.6 percent last year, UNCTAD estimated. While China reported a 23.6 percent increase in investment from abroad in 2008 to a record $92.4 billion, the inflows of cash got smaller each quarter.

A dip in investment from overseas isn’t as big a concern for the Chinese economy as the risk of a slump in spending by local companies, according to Mark Williams, a London-based economist at Capital Economics Ltd.

“In scale, foreign investment pales against investment generated domestically,” Williams said. “Most domestic investment is financed internally by firms from retained profits and with profits now contracting this source of funding is now under threat.”

Economic Slowdown

The world’s third-biggest economy may expand 6.3 percent this quarter, the weakest pace since 1999, according to the median estimate of 14 economists surveyed by Bloomberg News. The government is rolling out a 4 trillion yuan ($585 billion) package of stimulus spending to spur growth.

China’s attractions include low labor costs, an economy that’s still growing when developed nations are in what the International Monetary Fund describes as “a depression,” and a market of 1.3 billion people.

Companies switching manufacturing to China include Groupe SEB SA. The world’s largest maker of countertop kitchen appliances said Feb. 11 that it will eliminate 214 jobs at factories in France and Germany as it shifts production of irons.

In China, Intel Corp., the world’s biggest chipmaker, said Feb. 5 that it plans to close its assembly and test operations in Shanghai, laying off about 2,000 workers, and move the operations to the western city of Chengdu, where costs are cheaper. It also said it will add $110 million of registered capital to its China unit.

Motorola declined last week to say how many jobs it had eliminated in China, where it employs about 10,000 people.

Globally, foreign direct investment will rebound “sooner or later” for reasons including the opportunities created by cheap asset prices and industry restructuring, according to UNCTAD.

(Bloomberg)

Alcoa to partner with China's Henan Province

NEW YORK — US-based Alcoa on Thursday announced a "strategic cooperation agreement" with Henan Province in China on primary and fabricated aluminum products.

The agreement was signed Wednesday at Alcoa?s New York headquarters by company president and chief executive Klaus Kleinfeld and Governor Guo Gengmao of Henan.

"By combining the strengths of Henan Province, an area with abundant energy and natural resources, and Alcoa's technology and market leadership, we are aiming to establish a globally competitive base for aluminum production in China," said Kleinfeld.

Alcoa "will work with Henan as a strategic ally on identifying value-adding projects for alumina, primary aluminum and aluminum fabrication facilities in the province," a company statement said.

The Henan government "will provide the necessary support for resource allocation, energy supply, development plans and policies needed to make Henan a globally competitive base for aluminum production."

Henan is located in central China and is the country's largest producer of nonferrous metals.

The news came as Alcoa said it was pulling out of a joint venture with China's state-owned Chinalco that had been established to buy a stake in Anglo-Australian mining giant Rio Tinto.

Alcoa will receive 1.02 billion dollars for the stake plus dividends from the venture called Shining Prospect.

(AFP)

Siemens to invest additional 150 mln eur in China

FRANKFURT, Jan 28 - Siemens AG: To invest additional EUR 150 million in China.
Article Controls Says the 150 million EUR investment is earmarked among other things for the
expansion of production capacities for alternative energies over the next three years

(Reuters)

IBM buys $16 mln stake in China Changhong

SHANGHAI, Jan 17 - International Business Machines Corp has bought a strategic stake in Sichuan Changhong Electric Co for 108 million yuan ($15.8 million), the major Chinese television and consumer electronics maker said on Saturday.

A Chinese unit of IBM bought the 1.56 percent stake through the Shanghai Stock Exchange on Friday from the Changhong group, Sichuan Changhong's biggest shareholder, which saw its shareholding reduced to 29.08 percent from 30.64 percent.

Sichuan Changhong did not elaborate on any future expansion of ties with IBM, which did not previously own a stake in the Chinese company.

In December 2007, China's securities regulator blocked a deal under which Microsoft Corp. was to have bought a nearly 1 percent stake in Sichuan Changhong for $12.9 million, apparently because it felt the purchase price was too far below the market price of the Chinese firm's shares.

Sichuan Changhong's shares closed at 3.59 yuan on Friday, near the price of 3.64 yuan per share at which IBM bought its stake. They have plunged from a peak of 13.00 yuan in mid-2007 as the firm's earnings have been slashed by the global economic slowdown and an earthquake which damaged its facilities last May.

(Reuters)

Premiere Global Services enters China

Atlanta business communications and data services company Premiere Global Services Inc. is now doing business in China.

Premiere Global Services (NYSE: PGI) said Thursday it inked a deal with one of China’s leading communications services providers allowing companies doing business in China to meet and collaborate virtually through Premiere Global’s audio and Web conferencing services.

Premiere Global’s entry into China follows its expansion into India last year and the Nordic region in 2007, and it increases its global presence to 24 countries.

“By continuing to expand our presence in high-growth, developing markets, we get closer to our ultimate goal of enabling Premiere Global to facilitate any meeting, anytime, anywhere,” said Boland T. Jones, chairman and CEO, of Premiere Global, in a statement.

(NYT)

Deutsche Bank Fets China OK for Share Deals

HONG KONG -- Deutsche Bank AG has become the latest foreign bank to receive approval for its Chinese joint venture to underwrite and sponsor deals in China's securities market.

Under the terms of the agreement approved by the China Securities Regulatory Commission, Shanxi Securities Co. will hold 66.7% of the venture and Deutsche Bank will hold the rest. The venture, named Zhong De Securities Co., will underwrite and sponsor the listing of yuan-denominated A shares, foreign currency-denominated B shares, and bonds, Deutsche Bank said Tuesday.

In late December, Credit Suisse Group said its brokerage joint venture with Founder Securities Co., which was set up in early 2008, had received a similar approval.

Until Credit Suisse and Deutsche Bank got their go-ahead, Goldman Sachs Group Inc., UBS AG, CLSA Asia-Pacific Markets and Morgan Stanley were the only global investment banks with securities platforms in mainland China.

(WSJ)

GSR Ventures raises $383 mln for new China fund

HONG KONG, Jan 6 GSR Ventures, a China partner of U.S. venture capital specialist Mayfield Fund, said on Tuesday that it had raised $383 million for a new fund to focus on investing in Chinese technology companies.

GSR Ventures has about $700 million under management, including the new fund, which is called GSR Ventures III.

GSR Ventures III will invest in China's technology-related sectors including the Internet, wireless, green technology and semiconductors, it said in an e-mailed statement.

On Tuesday, GSR Ventures also announced its first investment by the newly formed third fund. It is buying a stake in iLemon Group Inc, a Shanghai-based online gaming company specialising in technology related to the 3D virtual world, according to GSR's statement, which did not provide details.

GSR Ventures and Mayfield established their partnership in 2003.

Mayfield, one of the oldest U.S. venture capital funds, was established in 1969 and has more than $2.8 billion under management and is invested in more than 470 companies.

More than 100 of its investee companies have gone public and nearly 100 were merged or sold.

GSR Ventures had 26 portfolio companies in China as of the end of 2008.

(Reuters)

Rogers Says He’s Buying China Shares in Hong Kong

Dec. 31 -- Jim Rogers, chairman of Rogers Holdings, said he’s been buying shares of Chinese companies even as growth in the world’s fourth-largest economy slows.

Rogers started buying Chinese shares in 1988 and is now favoring equities traded in Hong Kong and Singapore that are cheaper than yuan-denominated stocks in Shanghai.

China is slowing but “some parts of the Chinese economy will be totally unaffected by what happens in the West,” Rogers said in an interview today in Hong Kong. “I started buying in October again. I never sold any Chinese shares.”

The nation’s economic growth is slowing as recessions in the U.S. and Europe stem demand. China’s exports fell for the first time in seven years in November, imports plunged and output contracted by a record. Hong Kong’s Hang Seng China Enterprises Index, which tracks Chinese companies’ so-called H shares, has plunged 51 percent this year, its worst annual performance since at least 1994. The CSI 300 Index, which tracks yuan-denominated A shares listed on China’s two exchanges, tumbled 66 percent in 2008.

Rogers said he has been buying Chinese agricultural stocks because of the government’s support measures. Other industries he favors are infrastructure in China, water and tourism in Asia. He didn’t name any specific stocks.

Premier Wen Jiabao unveiled a 4 trillion yuan ($583 billion) stimulus package that included spending on roads and bridges last month. The Chinese government will increase spending by a “relatively big margin” and cut taxes next year, China National Radio, a state radio service, reported Dec. 10, citing the annual Central Economic Work Conference.

(Bloomberg)

Blue Point to help China firms expand in U.S.

SHANGHAI- U.S. private equity fund Blue Point Capital Partners, which helps mid-sized firms in the United States invest in China, is eyeing new opportunities to help Chinese companies invest abroad, its Asia managing director said.

With U.S. companies cash-strapped by frozen credit markets, private equity firms such as Blue Point are changing strategy.

Blue Point aims to spend a quarter of its newly-raised, $400 million fund in China, helping local manufactures acquire U.S. companies, Chip Chaikin said in an interview in Shanghai.

"A couple of years ago, private companies in China weren't ready to do it. Now, they recognize they need to grow somewhere else too, and they are more sophisticated and bigger," he said.

"Entrepreneurs in China have a once-in-a-life-time chance to buy overseas technology, brand, market channels at a bargain."

Blue Point, 3i Group Plc and other private equity firms are suffering from the impact of a deepening global credit and economic crisis that has hurt the value of their investments and made exiting more difficult.

Blue Point has previously funded China expansion by five U.S. companies, including auto parts maker QSR and architectural & design firm Callison Architecture, but now, many U.S. companies are too cash-strapped to expand overseas.

"If they have cash, they want to do it. China is the only place they can grow," Chaikin said. "But most of them don't have cash."

Meanwhile, Chinese companies are more eager to buy assets abroad, as an appreciating yuan makes overseas acquisitions cheaper, and the government calls for a change in China's growth model, which relies too much on low-cost manufacturing.

"Many Chinese manufactures are at the bottom of the global industry value chain, struggling with thin margins," said Chen Xiaoming, director of Blue Point Asia.

"We could help them climb up the value chain, by acquiring overseas brands and sales channels."

Blue Point seeks to invest $15 million to $50 million of equity capital in mid-sized companies which generate revenue of between $25 million and $250 million, according to its website.

The 18-year-old firm set up an office in Shanghai in 2004, to help its U.S. portfolio companies tap growth opportunities in China, the world's fastest-growing major economy.

(Reuters)

China Stocks Lure international investors

Dec. 24 -- The biggest investors in emerging markets say China is the best choice for 2009, betting plans to stimulate growth will lead a stock market recovery in the fastest growing major economy.

Investors with $63 billion of developing-nation stocks put 15 percent of their funds into China, more than Brazil, Taiwan or South Korea and the most in 13 years, according to data compiled by EPFR Global last month. Templeton Asset Management Ltd., Schroder Investment Management and BlackRock Inc. say they're adding to holdings in China.

While the MSCI China Index lost a record 53 percent in 2008, Merrill Lynch & Co. says China's plans to spend 4 trillion yuan ($584 billion) on bridges, housing and tax breaks will help make it the best-performing market next year, boosting shares of China Mobile Ltd., the world's largest phone company by value, and coal producer China Shenhua Energy Co. Investors are becoming more optimistic even as China faces its steepest slowdown in two decades, because the government has $1.9 trillion set aside in the world's largest reserves.

“We've got the mother of all stimulus plans,” said Plamen Monovski, an emerging-markets fund manager in London for BlackRock, which oversees about $1.3 trillion. “Savings rates are high, prices of commodities have come down and employment is unlikely to collapse.”

Fund Favorite

The MSCI China Index advanced 12 percent since the end of October and China's CSI 300 Index of shares traded on the mainland, where the government limits foreign investment, gained 15 percent. The MSCI Emerging Markets Index fell 2.6 percent in the same period, extending this year's decline to 55 percent, the worst in its 20-year history, according to data compiled by Bloomberg.

The CSI 300 Index dropped 1.9 percent to 1883.14 at 2:24 p.m. local time, a third straight retreat, while the MSCI China Index lost 0.5 percent to 39.62.

Mutual funds focused on China received a net $1.2 billion from investors in the past two months, compared with $25 million for Brazil, according to EPFR, a research firm in Cambridge, Massachusetts, that specializes in investment flows. India and Russia funds suffered a combined $778 million in withdrawals, the EPFR data shows.

Increased Holdings

Funds investing in emerging-market stocks worldwide raised their holdings of Chinese equities last month to the highest level since EPFR began collecting the data in 1995, increasing the weighting from an average of 10.7 percent in January.

Shares of Chinese companies accounted for 16 of the 30 best performers in the MSCI emerging markets index as it rebounded from a four-year low in October, including 13 stocks that more than doubled.

China Mobile, China Shenhua and Ping An Insurance (Group) Co. are among 20 emerging-market stocks worldwide that are the “best of breed” because of “solid” balance sheets and increasing profitability, according to Michael Hartnett, the New York-based emerging-market strategist at Merrill.

Beijing's State Council announced a spending package last month for low-rent housing, roads, railways and airports, along with tax deductions on industrial purchases. The package is equivalent to about 18 percent of China's gross domestic product, compared with the $1.4 trillion of stimulus plans under consideration in the U.S. that amount to 10 percent of GDP.

Slower Growth

China aims for 8 percent economic growth to create jobs and maintain social stability in the nation of 1.3 billion, according to Banking Regulatory Commission Chairman Liu Mingkang. Goldman Sachs Group Inc. forecasts expansion will slow to 6 percent next year because of weaker exports and investment, half the 11.9 percent pace in 2007.

“Even at 6 percent growth, that's very high when you compare it with the growth, or lack thereof, in Europe, the U.S. and Japan,” Mark Mobius, who oversees about $26 billion in emerging-market shares as executive chairman of Templeton, said in a Bloomberg Television interview from Hong Kong last week. “We are buying Chinese stocks pretty aggressively.”

Reserves

China has more money to spend on stimulating growth than other developing countries because its debt is equivalent to less than a third of reserves, lower than any of the 20 nations tracked by Morgan Stanley. The economy is cushioned from a global slowdown in retail spending by a savings rate equivalent to 50 percent of GDP, five times more than in the U.S., according to Credit Suisse Group AG data.

Even the 40 percent slide in the Reuters/Jefferies CRB Index of 19 raw materials that drove investors from emerging markets has benefited China as it imports a net 3.3 million barrels of oil a day, based BP Plc data for 2007.

The People's Bank of China has sought to boost spending by reducing its key lending rate by 2.16 percentage points to 5.31 percent since September.

“There's value starting to reappear in China,” said Allan Conway, the London-based head of emerging-market equities at Schroder, which oversees about $170 billion. China is his biggest “overweight” holding. “What we highlight in China is their ability to stimulate domestic demand,” he said.

Not Enough

Lower borrowing costs and government spending may not be enough to keep China from contracting as the first simultaneous recessions in the U.S., Japan and Europe since World War Two reduce exports, said Marc Faber, publisher of the Gloom, Boom & Doom Report.

“The Chinese economy, in my opinion, is also in recession” even though the government won't report “recessionary figures,” Faber said in a Bloomberg Television interview from Zurich this week. Chinese stocks may rally as much as 30 percent in a “trading opportunity” before resuming their decline, he said.

The MSCI China index slid 4.3 percent yesterday after the central bank cut interest rates by 27 basis points, half the reduction forecast by Citigroup Inc. and HSBC Holdings Plc.

Shrinking Reserves

Foreign-exchange reserves are shrinking for the first time in five years, Market News International reported this week, citing Cai Qiusheng, head of the investment management bureau under the State Administration of Foreign Exchange. Reserves dropped in October by at least $16 billion, Reuters reported, citing a person familiar with the situation.

The country has “nothing to fear” from a slow erosion of reserves given the “enormous size,” Stephen Green, head of China research at Standard Chartered Plc, wrote in a research report yesterday.

Stock gains since October boosted the price of Hong Kong-listed companies to 9.9 times annual earnings, almost triple the valuations on Russia's Micex index, and more than India's Bombay Stock Exchange Sensitive Index at 9.6 times and Brazil's Bovespa at 8.6. Chinese stocks remain 69 percent cheaper than the peak last year and 41 percent below the monthly average this decade.

China Mobile is valued at 12.8 times earnings, 69 percent cheaper than at its peak last year and 25 percent below the six-year weekly average, according to data compiled by Bloomberg. Ping An, China's second-largest insurer, trades for 2.7 times book value, near the lowest on record.

“Some stocks are just fundamentally cheap,” said Jeff Chowdhry, the London-based head of emerging-market equities at F&C Asset Management, which oversees about $150 billion. “People who are sitting on large amounts of cash should be nervous.”

(Bloomberg)

M&S to open first mainland China store

LONDON, Sept 25 - Marks & Spencer will open its first store in mainland China on Oct. 2, the same day as a keenly-awaited trading update, in the latest move by an international retailer into the world's most populous country.

The British clothing, food and homewares group said the 45,000-square-feet store on Nanjing Road West, Shanghai's premier shopping street, would be its biggest so far in Asia.

The opening underscores Chairman Stuart Rose's determination to take Marks and Spencer (M&S) back onto the international stage, despite growing problems at home.

Global retailers like U.S. group Wal-Mart and France's Carrefour have flocked to China in a bid to tap into its surging economic growth and growing middle class.

Expansion has not been without problems. Richemont, the world's second-biggest luxury goods group, and Kingfisher , Europe's biggest home improvements retailer, have both closed stores after rapid growth and stiff competition.

But M&S already has experience of mainland Chinese shoppers, as many travel to its nine stores in Hong Kong.

Formerly occupied by the Wings department store, the Shanghai site has been given a complete makeover and will sell M&S's traditional mix of women's, men's and children's clothes, as well as homewares and food, over four floors.

Like its Hong Kong stores, the Shanghai outlet is wholly-owned by the company. M&S has not said when or where it plans to open more shops in mainland China. However, it is due to open another one in Hong Kong in the near future.

M&S first began expanding outside the UK back in the 1970s. But it retrenched earlier this decade, selling its operations in the United States and closing down company-owned stores in western Europe to focus on boosting sales at home.

(Reuters)

Cascal Trickles Into China

Global water services provider Cascal announced a 51.0% stake in a new joint venture company in China's Henan Province that's expected to expand its Chinese presence to more than 1.5 million residents.

Cascal N.V. said its subsidiary, China Water, will partner with the Zhumadian Bangye Water Group, forming a new joint venture company called Zhumadian China Water Company. Exact details of the long-term contract weren't released but similar contracts made by Cascal typically run for at least 20 years.

Cascal's subsidiary agreed to acquire a 51.0% stake in the company for $18.0 million. Cascal shares rose 28 cents, or 2.7%, to Monday's trading session at $10.79.

"The signing of the Zhumadian joint venture agreement represents another important milestone in the growth of our China Water subsidiary, and our second significant acquisition in China this year. China has been our fastest growing region, and we anticipate this trend to continue in the future," said Cascal's Chief Executive, Stephane Richer.

Water treatment is in high demand in developing markets where increased industrialization, which swallows water supply and creates more pollution, makes uncontaminated water a precious resources for the countries' growing populations (See: Innovation: Water's Life Saver).

Zhumadian China Water Company will provide water services to 400,000 people and is slated to begin operations in the next few weeks. Cascal said Zhumadian Bangye Water Group will transfer its water supply assets to the joint venture once Zhumadian China Water receives its business license.

Cascal plans to fund the majority of its acquisition through its corporate debt facility with HSBC , which was recently increased to $60.0 million from $20.0 million.

The new joint venture company plans to invest $42.0 million to construct a water treatment plant for extra output of 26.0 million gallons a day. The new plant will supply seven major industrial customers, including companies involved in power generation and chemical and steel production.

Cascal expects the acquisition to add an additional $6.0 million to $13.0 million to its sales through the first three years of the long-term contract. The British company provides water and wastewater services to Great Britain, South Africa, Indonesia, China, Chile, Panama and the Philippines for a total population of 3.6 million. Last April, it guided for 2009 sales between $179.0 million and $184.0 million, a 13.0% increase from 2008's expected sales.

Cascal reports fourth-quarter and 2008 year-end results late Tuesday.

(Forbes)

BBVA eyes expansion in China,India,Brazil

MADRID, June 15 - BBVA is looking for medium- to long-term opportunities to expand its foothold in markets in China, India and Brazil, the Spanish bank's chairman said in a newspaper interview.

Spain's second-largest lender has expanded aggressively in recent years to reduce its dependence on Spain, where economic growth is slowing sharply.

Earlier this month, BBVA doubled its stake in mainland China's seventh largest bank CITIC to 10 percent and took an option to buy another 5 percent in the next two years.

"In India or China, you have to think long-term, not in getting there and making money tomorrow," Francisco Gonzalez told El Pais.

"If China develops properly, and I think it will, we will have an excellent opportunity to do good business in China, but that will be in the next 10 to 15 years," he added.

Gonzalez said he was keen to expand BBVA's presence in India, where it currently has one branch.

"Today it is not easy to enter (India) due to restrictions on foreign investment, but there will be a new government in 2009 and perhaps new opportunities," he said.

BBVA expected to return sooner or later to the Brazilian market, where it sold its 5 percent stake in Bradesco last year.

"Of course Brazil is a big country and we have an excellent global banking operation there, so if an opportunity arises, we will take advantage of it," he said.

(Reuters)

Bank of America raising stake in China

Bank of America plans to raise its stake in China Construction Bank to nearly 11 percent, by exercising an option it has to buy more common shares of the Beijing-based bank.

Bank of America first invested in the China bank in June 2005, when it bought a 9 percent stake in a $3 billion deal. Bank of America said it intends to purchase 6 billion more shares for nearly $1.9 billion, or 2.42 Hong Kong dollars a share, on or about June 5, which would raise its total stake to 25.1 billion shares, or 10.75 percent of China Construction Bank’s issued common shares.

The 6 billion new shares may not be sold until Aug. 29, 2011. Since 2005, the two banks have started nearly two dozen partnership projects.

(AP)

GE to invest $2bn in China in 5 years

General Electric plans to invest up to $2bn in acquisitions and other deals in China over the next three years as part of a strategy to double its revenues in the country.

The world’s biggest industrial company, which stunned investors last week when it announced its worst quarter of financial results in five years, is looking to hire a team of 20 “in-house investment bankers” to conduct the deals in China.

“If we do not invest $2bn over the next three years, I would be disappointed,” said Steve Bertamini, chairman of GE’s greater China operations, in an interview with the Financial Times.

The aggressive investment plans, which will include acquisitions and joint ventures, underline GE’s intention to expand its China business rapidly at a time when its domestic operations face a slowing US economy.

Mr Bertamini said the team of deal specialists had already been expanded from two to eight and the recent sharp drop in the mainland stock market, which is down nearly a half from its peak, would make it easier to negotiate investments.

“One of the reasons we have not done much so far is because the prices have been so high,” Mr Bertamini said. “The risk...is that share prices take off again.”

GE said it would continue to enter into joint ventures with leading Chinese companies, in part because in several of the sectors where the group is active – such as infrastructure and power generation – there are foreign investment restrictions.

GE plans to increase its 2007 revenues in China of $4.4bn to $10bn by 2010, which would require the company to expand more than twice as fast as the economy’s double-digit rate of growth.

“The wider problems in the credit market and the signs of a slowing in the overall global economy have not entered the picture [in China],” said Mr Bertamini.

The comments come just days after GE slashed its full-year earnings forecast because of the effect of the credit crunch.

As part of its plans to expand manufacturing in China, the group intends to import fewer components to its plants and will increase both sourcing and design in China.

GE also plans to expand its presence in some of China’s rapidly expanding second-tier cities.

Mr Bertamini said GE was closely watching opportunities to expand in financial services. However, the regulatory and legal framework were not yet in place in many areas. “It will be five to 10 years before the financial services sector really begins to open up,” he said.

(Financial Times)

Intel Forms $500 Million Fund for China

Beijing, April 8 -- Intel Corp., the world's largest computer-chip maker, formed a $500 million China fund to more than triple investments in companies in the world's biggest semiconductor market.

Holdfast Online Technology Co. and Newauto Video Technology Inc. will be among the businesses targeted by Intel Capital's China Technology Fund II, the chipmaker said in a statement in Beijing today. The previous China fund spent $200 million in more than 28 companies, the Santa Clara, California-based company said.

Intel, whose processors power three-quarters of the world's personal computers, boosted spending in the country as it seeks to gain a bigger share of the world's fastest-growing major economy. Chip sales in China will surpass $28 billion in 2011, driven by demand for computing and consumer electronics, according to February estimates at research firm IDC.

``We want to foster innovation and entrepreneurship in China,'' Arvind Sodhani, president of Intel Capital, said at a briefing in Beijing today.

Sodhani said the fund, which should be used up in five to seven years, is the chipmaker's single largest in one country.

``That should give you a pretty good idea of the importance and size of commitment to China,'' he said, declining to say what returns the company's investments had made in the country.

Build Factory

Intel is building a $2.5 billion chip factory, its first in Asia, in the Chinese port city of Dalian. The Asia-Pacific region, including China, generated $5.3 billion, or 50 percent, of the company's sales in the fourth quarter.

Holdfast Online is a developer of technology for online gaming, and Newauto Video makes video equipment and network gear for use at the Beijing Olympics, the statement said, without specifying the amount that will be spent on the two companies.

Intel shares fell 67 cents to $21.08 at 4 p.m. New York time in Nasdaq Stock Market trading, leaving them down 21 percent this year.

The company, which has investment managers based in Hong Kong, Shanghai and Beijing, made its first strategic investment in China in 1998.

Last year, Intel Capital invested about $639 million, 37 percent of which was being spent outside the U.S., compared with less than 5 percent in 1998. Since 1991, Intel Capital has invested more than $7.5 billion in about 1,000 companies across more than 45 countries.

Last year, U.S.-based venture capitalists invested a record $1.4 billion in China, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association.

(Bloomberg)

Philips teams up with China hospital

Philips is expected to sign a medical research partnership agreement on Wednesday with one of China’s biggest hospitals, a first for multinational companies in the country.

The Dutch group, which is the world number three in medical imaging equipment, is set to form a partnership with the West China Hospital in Sichuan province, which, with 4,300 beds and 2m outpatients, is the largest single-building hospital in China and one of the largest in the world.

The state-owned West China Hospital, an affiliate of Sichuan University, is also one of the oldest hospitals in China.

The agreement covers eight projects and will last for seven years. Its aim is to help doctors interpret medical imagery and diagnose illnesses earlier by developing an information system and devising faster procedures. Philips hopes to sell the information system to other hospitals around the world.

The projects will focus on diagnosing illnesses such as heart disease and stroke, and finding biological indicators of mental illnesses.

“What is important is the work flow, not the imaging,” Rick Harwig, Philips’ chief technology officer, told the Financial Times. “You need to develop the algorithms to extract the information from the data.”

Philips, which has carried out research in Shanghai since 2000, now conducts 10 per cent of such work in China.

In the medical sciences however, most other multinational companies preferred to donate money towards research in China rather than conduct their own, according to Mr Harwig.

“Money is important, but at the end of the day it is abundant. Scientific expertise is not,” he said.

Some $7.5bn of medical equipment was sold in China in 2006, according to the US commerce department.

Mr Harwig said few other hospitals in the world matched the size of Chinese hospitals. “The basic difference is that they have so many more patients, so you could derive meaningful analyses from the statistics,” he said.

Certain illnesses, such as cardiovascular diseases, are also more prevalent in China, which makes the country an ideal place to conduct research into them.

(Financial Times)

Recruiter Robert Walters goes shopping in China

Robert Walters, the recruitment consultants, will tomorrow announce an expansion into mainland China through an acquisition designed to increase its exposure to one of the world's fastest-growing job markets.

The company, which already has operations in Hong Kong, Malaysia, Singapore and Japan, has bought Talent Spotter, a specialist recruitment business headquartered in Shanghai, for around £1.4m.

Although the deal is relatively small - Talent Spotter has 49 staff and one other office in the prosperous nearby city of Suzhou - it reflects the growing importance that professional services companies are placing on China.

Despite the country's rapid economic growth over the past few decades, the recruitment sector is still in relative infancy. Nevertheless, the demand for such services is expected to rise as the country becomes more integrated into the global economy and Chinese businesses and organisations face calls for increasing professionalism.

Several recruitment companies have set up offices in China or established joint ventures, but Robert Walters' move is believed to be the first foreign takeover of a domestic firm and is the first it has made in more than 10 years.

The acquisition is expected to be a platform for growing the business throughout the country.

The acquisition comes as Robert Walters' full-year results are expected to show a 17 per cent increase in net fee income to around £127m and a 30 per cent increase in pre-tax profits to £24.5m, despite the economic turmoil.

(telegraph)