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Geely aims to clinch Volvo deal in early 2010

Zhejiang Geely Holding Group aims to conclude the acquisition of Ford Motor\’s Volvo Car Corp in early 2010 and has hired consultants for restructuring and integration, sources with direct knowledge of the deal said.
German-based Roland Berger Strategy Consultants has been hired to launch a 100-day internal review and restructuring to improve Geely operations with a focus on sales of Geely\’s self-branded cars in China, according to a source.
"The Volvo deal sees no more hurdles," said another source.
"It is expected to be done before Chinese New Year, and then Geely will quickly launch integration," said the source, who declined to be named due to the sensitive nature of the deal.
The Chinese New Year will start on Feb 14.
A Geely spokesman was not available for comment.
Geely Chairman Li Shufu, who is also the chairman of the Hong Kong-listed Geely Automobile Holdings, has hired Deloitte Touche Tohmatsu, to work on post-acquisition integration for Volvo.
The focus will be on the integration of marketing and sales in China, network distribution, logistics and joint global operations, the source said.
"Li Shufu wants to do something like Lenovo-IBM — have a foreign headquarters and a China headquarters," he added.
Ford has selected Geely as the preferred bidder for its loss-making Swedish unit Volvo in a deal estimated to be worth about $1.8 billion. Geely, China\’s largest private carmaker and the producer of such mass market models as the Geely Kingkong, is seeking at least $1 billion in loans from Chinese banks to finance the deal.
Wolfgang Bernhart, a partner at Roland Berger, told mainland media earlier this year that markets and technology were the two main drivers for Chinese automakers chasing overseas brands such as Volvo, Saab and Hummer.
"Personally, I think there is the likelihood of success of such mergers and acquisitions," he said.

Huang asset freeze is extended
A Hong Kong court yesterday extended an order freezing US$214 million of assets owned by one of China\’s richest men amid an ongoing corruption probe in China\’s mainland.

The assets owned by Huang Guangyu and his wife have been frozen since early August after an application by Hong Kong\’s Securities and Futures Commission.

Huang is founder and ex-chairman of China\’s leading home appliance chain, Gome Electrical Appliances. He is being investigated by Chinese mainland authorities in connection with a corruption probe that has already ensnared government officials. He is accused of stock price manipulation and other crimes.

His wife, Du Juan, also under investigation, is reportedly being detained on the mainland.

The court order in Hong Kong serves to prevent Huang, Du and the two companies through which Huang holds his stake in Gome from removing and dealing with the assets while SFC is investigating a share repurchase allegedly planned by Huang.

The regulator alleged that Huang had used the proceeds of the buy-back of Gome shares worth HK$2.2 billion (US$284 million) between January and February 2008 to repay a personal loan of HK$2.4 billion to a financial institution.

The dealings caused Gome and its shareholders to lose HK$1.6 billion, the SFC has said. The commission is also seeking a ruling that the couple pay unspecified damages to Gome and restore the financial positions of any parties involved.

The order will remain in force until Huang\’s trial for organized securities fraud, Judge Susan Kwan said yesterday. A trial date hasn\’t been set yet as the SFC is still investigating.

Gome said its assets are not subject to the court order and that its businesses have not been affected by it. But analysts said the case could affect investor confidence in the company\’s management.

"It may raise concerns from lenders and suppliers. As a result, the company may face cash pressure if lenders reduce loans to it or suppliers stop providing products," said Liang Ying, an analyst at China Merchants Securities.

Gome shares fell 1.8 percent to HK$2.19 yesterday, compared with a gain of 2.14 percent in the Hang Seng Index.

Shell opens lubricants plant in Guangdong

Shell today started up a lubricants blending plant in Guangdong province to meet domestic growing demand.
With a production capacity of 200 million liters a year, and the potential for a phased development to 400 million liters a year, the complex could become one of Shell?ˉs top three lubricants blending plants worldwide in terms of volume.
Located in Zhuhai, Guangdong, the plant is set to become Shell?ˉs sixth in China and will produce consumer, transport, industrial and marine lubricants targeted at the Chinese market.
Shell also announced new investment in a technical facility at the complex. It will offer a range of technical services including a quality control laboratory to provide key customers and original equipment manufacturers (OEMs) in the automotive industry with technical research, marketing and training services related to their lubricants applications, according to the company.

David Pirret, executive vice-president for Shell Lubricants, said: "The investment in a lubricants blending plant in Zhuhai is part of Shell?ˉs strategy of selective downstream growth and allows us to support demand from local and international customers based in China, which is the world?ˉs fastest growing lubricants market. Once the technical facility at Zhuhai is completed, our customers in China will have the opportunity to experience at first hand our leading lubricants technology capability."
Executive chairman of Shell companies in China, Lim Haw-Kuang, said the new plant marks another milestone in Shell?ˉs business development in China and is part of the company?ˉs commitment to China and Guangdong. "We will continue to look for key growth opportunities to contribute to China?ˉs fast growing economy by providing high quality energy products and solutions."

Sanlu sued by tainted-milk victim family
A lawsuit filed by a family that was a victim of the melamine-tainted milk scandal saw its day in court on Friday – the first trial for the families suing the milk company since the incident broke out more than one year ago.
Several courts nationwide have previously accepted compensation cases from parents of sickened children who were not satisfied with the government-led compensation, but no court has ever held a public hearing against the company until Friday.
Ma Xuexin, father of a 20-month-old boy from Henan province, requested compensation totaling 55,184 yuan ($8,080) from collapsed dairy maker Sanlu Group in Hebei province and a Beijing-based supermarket, where he bought the Sanlu-brand infant formula milk powder before the scandal went public last year.
The 30-year-old also requested that the medical costs for his son, until he reaches adulthood, be covered by the 1.1 billion yuan State-run compensation fund, of which 900 million was paid by Sanlu Group last December.
"Since my son was born last March, he has suffered from a stone in his left kidney after consuming hundreds of packages of Sanlu-brand infant formula milk powder," Ma said in the hearing.
The two defendants, the bankrupted Sanlu Group and the Longhua supermarket in the Shunyi district, both said they should not be held responsible for the plaintiff\’s requests because the central government has already set up the fund for victim families.
"There is no official document from the hospitals showing the direct link between melamine-tainted milk powder and the child\’s kidney problem," said Zhou Xiaolong, a lawyer with the Jimin Law Firm from Hebei province, where Sanlu Group was formerly located.
The hearing came just three days after two criminals were executed by injection in Hebei for their roles in producing and selling toxic milk, which killed six children and made more than 300,000 sick nationwide.
There was not a flurry of media attention at the hearing on Friday. Only representatives from the plaintiff and the defendants were sitting in the small No 9 courtroom at the Shunyi district court, about 30 km northeast of downtown Beijing.
"Being the first case held by a Chinese court, more such cases may have a chance to be heard in the near future," said Xu Zhiyong, a Beijing-based law scholar.
The hearing lasted just two hours without a verdict. The judge, Zhang Nan, said that both sides need to bring more evidence when the trial continues on Dec 9.

Tingyi gets nod for Taiwan share sale
Tingyi (Caymen Islands) Holding Corp plans to raise as much as NT$17.1 billion ($532 million) in Taiwan depository receipts, the biggest offering by an overseas Taiwanese company returning to the island\’s stock market.
Tingyi, the largest noodle maker in China, plans to sell 380 million Taiwan depositary receipts at between NT$43 and NT$45 each, said Sinopac Securities Corp, its underwriter. The shares will be priced on Dec 8 and start trading Dec 16.
The Tianjin-based company, which is controlled by Taiwanese investors, joins companies including Want Want China Holdings Ltd in raising funds on the Taiwan exchange after the island eased restrictions on its capital markets last year as relations with the mainland improved.
"It\’s worth buying Tingyi for long-term investment," said Sam Hsieh, a Taipei-based fund manager at Fuh Hwa Investment Trust Co, who helps oversee the equivalent of $4.8 billion. "In the next three years, we can expect Tingyi\’s profit to continue growing and its share price to rise with the popularity of Chinese consumer shares."
Net income for the Hong Kong-listed company surged 41 percent to $179.4 million in the first half from a year ago, while sales rose 22 percent to $2.5 billion. The 17-year-old company, which runs 24 noodle factories and has bottling plants in almost every province in the mainland, is also benefiting from rising incomes.
Tingyi rose 1.64 percent to HK$19.82 ($2.55) in Hong Kong trading yesterday. The shares have more than doubled this year, compared with the 56 percent advance in Hong Kong\’s Hang Seng Index and 68 percent surge in the Taiwan Taiex Index. Each Tingyi stock in Hong Kong will be equivalent to two Taiwan shares, the underwriter said.
Its Master Kong-brand instant noodles continue to lead in the mainland with a market share of 50.8 percent by sales value according to a survey by ACNielsen, a global marketing research firm, at the end of 2008.
Its competitors Hualong Group and Baixiang Food Group hold a market share of 12.6 percent and 8.2 percent respectively, the survey said.
Want Want shares in Taiwan have risen 60 percent since they started trading on the exchange in April, the first Taiwan depositary receipt to list after the rules were eased. The gain outperformed the 48 percent advance in its Hong Kong-listed stock.

EDF plans more green investments
French power company EDF said it is looking into China\’s hydro, nuclear and wind power sectors for investment opportunities, in line with the rapid growth of these industries in the country.
The company is also looking at opportunities in clean technologies in the power industry like carbon capture and storage (CCS), Herve Machenaud, president of EDF Asia Pacific Branch, told China Daily in an exclusive interview.
EDF will form a joint venture with China Guangdong Nuclear Power Group to operate the Taishan nuclear power project in southern Guangdong province, said Machenaud, who is also executive vice-president of EDF.

A view of the turbines being produced for a nuclear project in China. EDF is planning to form a joint venture with China Guangdong Nuclear Power Group. [China Daily]
The Paris-based EDF is also talking with several major power producers in China on possible wind power and nuclear power projects, he said.
China and France in 2007 signed an 8-billion-euro agreement for the supply of the two reactors of the Taishan project. The reactors will use the European pressurized reactor technology from France and have a capacity of 1,700 mW each.
Industry sources said that the first reactor of the project is scheduled to be completed by the end of 2013, while the second one is likely to be finished in mid-2014.
"Over 80 percent of electricity generated by EDF in France is from nuclear power plants. We want to share our long-time expertise in the industry with Chinese partners," said Machenaud.
EDF now has stakes in three coal-fired power projects in China. To make the business more diversified is beneficial for the company\’s future growth in the country, said analysts.
"The use of more green technology in the power industry fits extremely well with China\’s efforts to build an environmentally friendly economy. I do believe these technologies will flourish in the next few years," said Han Xiaoping, chief information officer of leading energy website China5e.com.
The three thermal power projects EDF has stakes in are located in the Guangxi Zhuang autonomous region, and Shandong and Henan provinces. The latest round of power tariff increases has made little impact on the profit of these projects, said Machenaud.
After the price hike last month, the on-grid price of the Guangxi and Shandong projects remain unchanged, while the price of the Henan project has been reduced by 0.003 yuan per kWh.
"After suffering a difficult year in 2008 due to coal and economic crises, we expect our projects in China will restore the profitability back to a reasonable market level this year," said Machenaud.
Generally speaking, the profitability of the Guangxi project will remain stable, and the Shandong project will be better than last year, but the Henan project will still suffer, he said.
Facing surging coal prices in China, Machenaud said EDF had to increase the efficiency of its power plants to reduce costs.
Rising coal prices have long been a headache for China\’s power producers. Government controls on power prices prevented power generators from passing on the rising costs to power users.
Although EDF is also facing the problem of rising fuel costs in China, the company wants to be a "long-term industry partner in the country", said Machenaud.

China\’s centrally-administered SOEs shrink to 131
China\’s centrally-administered state-owned enterprises (SOEs) have shrunk to 131 enterprises from 132, China\’s state property regulator State-owned Assets Supervision and Administration Commission (SASAC) said Tuesday.
With approvals from the State Council, China State Farms Agribusiness (Group) Corp. became a subsidiary of China National Agricultural Development Group Corporation (CNADC), China\’s largest state-owned agricultural enterprises.
The SASAC was aiming to reduce the number of centrally-administered SOEs to between 80 and 100 by 2010 through mergers and restructuring. It had 196 centrally-administrated SOEs under its supervision when it was set up in 2003.
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ADB provides $2m loan to build railways in E China
The Asian Development Bank (ADB) Saturday said it has approved a $2-million loan to finance a-billion-dollar project to build railways in an eastern Chinese province to link remote rural villages to the country\’s economic hubs.
The $1.35-billion Anhui Integrated Transport Sector Improvement Project includes building of a new 139-kilometer-long expressway in Anhui province\’s neglected northern region, upgrading 452 kilometers of existing roads, improving village bus services, and strengthened capacity in the province\’s transport departments, the ADB said.
As a result of the improved transport corridor, two poor counties in the northeast of the province will gain direct access to markets and development opportunities in the more affluent neighbouring Jiangsu province, it added.
"An underdeveloped transport system is one of the major barriers to development and poverty reduction in Anhui, particularly in the rural areas," said Xiaohong Yang, principal transport economist in ADB\’s East Asia Department.
"A well-developed transport network will help the central region capitalize on its strategic location and transform it into a major hub linking China east and west, north and south."
ADB\’s loan, from its ordinary capital resources, covers almost 15 percent of the project cost of the $1.35 billion. The loan has a 25-year term, including a grace period of five years, with interest determined in accordance with ADB\’s LIBOR- based lending facility.
Parties to provide the balance include the national and provincial governments, Anhui Communications Investment Group Co Ltd and the Industrial and Commercial Bank of China and Bank of China.

Noodle king eyes food companies
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Wei Ing-chou
Taiwanese billionaire Wei Ing-chou, whose "Master Kong" brand built Tingyi (Cayman Islands) Holding Corp into China\’s largest maker of instant noodles, said he may buy mainland food companies and expand his real estate holdings before retiring in four years.
Tingyi may target companies that produce beverages and baked good on the mainland, and its largest shareholder may buy and manage office property in Taipei and Shanghai, Wei said on Monday during an interview at company headquarters in Tianjin.
"In this world there\’s no brighter place than the Chinese mainland," Wei said. "We won\’t give this place up. The pursuing of other markets will be for my sons to do."
Wei plans to leave the company in four years when he turns 60, aiming to ease investor concerns on management succession at the family-controlled firm. His replacement will be one of the company\’s current executives, he said without identifying the candidates.
Wei Hong-ming, the chairman\’s eldest son, is a manager in the company, while Wei Hong-chen, his third son, is an assistant manager. Wei Ing-chou has three sons.
"It\’s good to have leadership planning and would be good for the company and its shares," said Albert King, who manages $10 million as chief executive officer at Prophet Capital Inc in Taipei. "Still, this is a family business. We have to observe if the chairman still wields influence after stepping down."
Wei Ing-chou started transforming Tingyi from an oil and grease company founded by his parents in 1958 into China\’s biggest maker of packaged foods in the early 1990s, when he says he foresaw growing demand for fast meals as more Chinese moved from the countryside to the cities for factory work. He opened his first noodle factory in Tianjin in 1992.
Sales of "Master Kong" surged 500-fold since production began, helping make Wei Taiwan\’s fifth-richest man with an estimated wealth of $3.2 billion, Forbes Magazine reported in July. Tingyi sold 15 billion yuan of instant noodles last year, compared with 30 million yuan ($4.39 million) in 1992.
The company also makes tea, mineral water and juices and sells bakery products.
"He is the king of instant noodles," said Anita Hwang, an analyst at Mirae Asset Securities Co in Hong Kong.
Ting Hsin International Group, Tingyi\’s biggest shareholder with a 36.6 percent stake at the end of 2008, is controlled by Wei Ing-chou and his three younger brothers.

Schneider Electric names Chinese exec

A production line employee checks electric contactors at the Schneider Electric factory in Le Vaudreuil, France. Zhu Hai, newly appointed Schneider Electric\’s first native president in China, does not believe that he will face a series of big challenges at his new job. [Agencies]
Zhu Hai is Schneider Electric\’s first native-born president of its China operations, but he believes it will be business as usual.
"Schneider Electric SA has been well on track since it entered China in 1987. And especially in recent years, our company has been maintaining double-digit organic growth in the market," Zhu said.
After taking the reigns from his French predecessor in September, Zhu became responsible for the Paris-based company\’s 15,000 employees, 77 offices, 22 factories, six distribution centers, one learning institute, two research and development centers, one laboratory, 500 distributors and a nationwide sales network.
From 2005 through 2008, Schneider Electric grew its business in China by about 10 percent each year – well ahead of the business growth of most companies in the sector.
China is the company\’s second-largest market behind the United States. "We expect China to be the top one in the near future," Zhu said.
Growing market
Realizing the China market\’s significance, the company has announced plans to move its Asia-Pacific headquarters to Beijing next year.
"I, a native-born president, have the responsibility of being a bridge between Schneider Electric and the Chinese government, as well as our local customers," Zhu said.
Zhu was directly involved in Schneider Electric\’s strategic partnership with China\’s Delixi Group to form a low-voltage product joint venture in Wenzhou, Zhejiang province, in late 2006. At the time, it was the biggest by scale and investment in China\’s power industry.
When the joint venture was inaugurated in 2007, Zhu became chair of Delixi Electric Ltd and helped it become successful.
"I achieved my target of \’Six Satisfactions\’, making our staff, providers, distributors, shareholders, local governments and customers satisfied with the Delixi venture\’s business here," Zhu said.
"Now I am making efforts to bring my Six Satisfactions concept into Schneider Electric\’s company culture," he added.
Long-term strategy

Schneider Electric during the past few years began to transfer itself from a products provider to a worldwide products and solutions provider. China is not an exception.
"So my strategy is to help my company implement and accomplish the transition, especially during the financial crisis," he said.
Zhu told China Business Weekly that Schneider Electric sees a huge potential for providing power control and management services in emerging markets like China.
According to the company\’s financial report for the third quarter, its revenues declined 17 percent worldwide over the last year. The company cited the global financial crisis for shrinking revenues.
However, Schneider Electric\’s revenues in the Asia-Pacific region, led by its China operations, fell by only 5 percent – a much better showing than the 20 percent drop in revenues in Europe and North America.
"From a long-term perspective, to further develop in China\’s market, we will focus our business on three segments," Zhu said.
First, Schneider Electric will actively "participate in the Chinese government\’s initiative of energy conservation and emission reduction through cooperation with related government offices and also enterprise partners", he said.
"Schneider Electric helped Beijing Yanshan Petrochemical Co Ltd, under Sinopec, one of China\’s larger chemical product producers, to save electricity costs of 450,000 yuan ($65,908) per year with our tailored energy use and management solution," he said.
Schneider Electric also helped reduce carbon dioxide emissions by 700 tons.
"On average, our customers can get back their investment through saving energy costs within three years," Zhu said.
"It\’s more than a win-win situation for us and our customers. The cooperation also benefits society by reducing emissions," he said.
Second, he said, Schneider Electric provides low- and medium-voltage power distribution solutions and network monitoring systems to China\’s energy Smart Grid.
"We are very dedicated to this field of power distribution and usage, since we neither generate electricity nor produce power consumption equipment," Zhu said.
The third focus is to improve the safety of power resources and the living standard of the Chinese people.
In the 1980s, Schneider brought safer circuit breaker technology to China, replacing traditional fuses.
"Although China\’s-big and medium-sized cities have said goodbye to the application of fuses, we still see huge potential for the safer use of power in China\’s vast rural regions," Zhu said.
"There are few companies like us that can provide such comprehensive power management solutions in more than 20 industries," Zhu said.