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Goldman Sachs and Others Joining Shares in ICBC in an Unprecedented
3.78l-Billion-USD Deal
The Industrial and Commercial Bank of China (ICBC) and a Goldman Sachs-led
investment consortium (comprising Goldman Sachs, Allianz and American Express)
signed in Beijing a strategic investment and partnership agreement. According to
the agreement, the consortium will spend 3.78 billion USD joining shares in
ICBC. The strategic investment will be effected by buying new ICBC shares. The
consortium will set one director on the ICBC board of directors. Meanwhile, the
two sides also signed a comprehensive partnership agreement. Now these two
agreements are waiting on an official stamp from the China Banking Regulatory
Commission (CBRC).
According to the agreements, the various strategic investors commit to
wide-ranging collaborations with ICBC in related service and managerial areas.
In particular, Goldman Sachs will assist ICBC in building a standardized
corporate governance structure and improve its risk management capabilities and
internal controls besides helping the latter innovate and develop products in
other areas such as capital transactions, assets management, corporate and
investment banking, and NPL disposal. Allianz will mainly devote its
collaborative efforts with ICBC to banking and insurance. American Express will
continue to deepen its service networking with ICBC inn issuing joint credit
cards.
Sources: fdi.gov.cn
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Foreign Investors Select China as Research and Development Base
Foreign investors are setting up an increasing number of research and
development facilities in China, according to the Chinese Ministry of Commerce.
There are about 750 of these centers in China, mainly distributed in Shanghai,
Beijing and Shenzhen where foreign investment is concentrated.
In response to China's hunger for advanced overseas technologies, many
multinationals have re-deployed their global strategy and have made China one of
their priority locations for R &D centers.
The ministry said the centers mainly focus on high-tech industries such as
electronic and telecommunications equipment, manufacturing of transport
equipment, pharmaceuticals and chemical materials.
Multinationals such as Microsoft, IBM, Motorola, Nokia and Toyota have all
established R&D centers in China.
With the expansion of the China market, many multinationals have kept increasing
investment in their China R&D centers. Statistics show that the investment of
companies like General Motors, Philips, Motorola and Siemens to their Chinese
R&Ds have all exceeded 10 million U.S. dollars.
These foreign R&Ds also employ a large proportion of Chinese talent. The
ministry said high-school graduates and students, who have returned from
overseas, have been the main target for recruitment.
The R&Ds also have close ties with Chinese universities and scientific research
institutions, said the ministry.
Many centers have combined with Chinese scientific institutions to work on new
products and technologies, with both sides reaping the rewards.
Economic observers said by attracting more and more localized foreign R&D
centers, China can climb the hierarchy within the global economy and the
technological innovation of Chinese companies can be improved.
Sources: Xinhua
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American Airlines Signs Tech Agreement with Lenovo
American Airlines announced February 8 it has signed a strategic technology
agreement with Lenovo, China's largest personal computer manufacturer, to
provide Admirals Club members with access to Lenovo PCs.
Since Lenovo acquired the PC operations of IBM, it becomes the world's third
largest PC giant.
Under the agreement, new Lenovo ThinkCentre desktops equipped with ThinkVision
flat panel displays will be installed in all 43 Admirals Club lounges.
In addition, Lenovo ThinkPad Z60 notebooks and Thinkpad X41 Tablet PCs will be
available in Admirals Club lounges worldwide.
IBM will provide deployment services, including the loading of software,
testing, staging and installation of the PCs and IBM printers.
Sources: People's Daily
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Coca Cola Reports 22% Growth in China Business
The yearly financial statement of Coca Cola has shown that the company saw its
China business grow 22 percent last year. Li Xiaojun, vice president of Coca
Cola (China) Co. Ltd., ascribed the robust growth to the company's readjusted
strategy of diversifying its product lines, especially with the focus on
non-carbonated beverages.
Coca Cola, the world's biggest soda supplier, now owns a wide variety of soft
drinks in China, ranging from mineral water and fruit juice, to tea and coffee.
Statistics show that the sale of Coca Cola's fruit juice drinks has grown by 64
percent over the previous year, with two local sub-brands, "Meizhiyuan" and
"Qoo", grasping 15 percent of the market share.
In addition, the company has taken over Nestles' coffee drinks business in
China, in an effort to cater to different people's tastes and drinking
preferences.
Currently, Coca Cola has 35 bottled-drink factories, 700 business outlets, and
over 7,000 local agents and partners across China.
Entering the mainland market in 1979, Coca Cola has invested more than 1.2
billion U.S. dollars in China. Li said the company is eyeing a new era of
business boom by partnering with the 2008 Beijing Olympics.
Sources: Xinhuanet
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Morgan Stanley in Talks to Buy CH Broker
Morgan Stanley is in talks to buy up to half of troubled Chinese broker AJ
Securities to bolster its leading position among foreign investment banks in
China, two sources close to the situation said on Tuesday. The bank wants at
least a 20 percent stake in mid-sized AJ, and could take up to half of the
Shanghai-based broker if current restrictions against foreign ownership are
eased, a senior brokerage executive close to AJ told Reuters.
Foreigners are lobbying China to drop ownership caps for overseas firms in its
financial industry, including brokerages.
Set up with China Construction Bank Corp. in 1995, top domestic investment bank
China International Capital Corp. (CICC) is dominant in helping Chinese firms
get access to markets.
Morgan Stanley's minority stake in CICC gives it access to a swathe of potential
Chinese client companies, and allows the U.S. bank to help those firms access
international capital markets.
A controlling stake in a Chinese broker would allow Morgan Stanley to also
underwrite potential fundraisings in mainland China for local firms.
A second senior industry executive said Morgan Stanley had been conducting due
diligence for the potential AJ deal since last week, and had not submitted a
formal bid yet.
"Talks with Morgan Stanley are in the preliminary stages. The final result will
mostly depend on their due diligence and regulatory approval," said the first
executive.
A Morgan Stanley spokesman in Hong Kong declined to comment.
AJ Securities, a unit of Shanghai-backed industrial conglomerate AJ Corp. , is
considered by market players to be one of the most beleaguered securities firms
in China and carries a heavy debt burden.
It operates 16 branches in China, mostly in the financial hub Shanghai, and its
registered capital stood at 650 million yuan ($80.8 million), according to its
Web site (www.ajzq.com).
Industry clean-up
Beijing is trying to clean up China's loss-making brokerage industry, crowded
with more than 100 securities houses, with the aid of foreign capital and
expertise as it pursues efforts to foster viable capital markets.
And several top global investment banks are vying to invest.
Late last year, Switzerland's UBS A.G. became the first foreign firm to announce
plans to win de facto management control of a Chinese brokerage by investing 1.7
billion yuan for 20 percent of Beijing Securities.
HSBC Holdings Plc. , Credit Suisse and Citigroup Inc. are also exploring
investments in Chinese securities houses, sources have said.
State media reported late last year that Morgan Stanley had tried,
unsuccessfully, to buy into China's Shanxi Securities. At the time, Morgan
Stanley Asia chief Alasdair Morrison said the company was on the hunt for
potential opportunities in China.
The two industry sources said that Morgan Stanley's efforts with AJ would be
similar to the UBS deal with Beijing Securities.
"Morgan Stanley is also seeking management control of troubled AJ, trying to
revamp the Chinese firm as a completely new broker venture," said the second
source.
It was unclear if a Morgan Stanley bid for AJ Securities would be cleared by
regulators, which state media said in December had suspended all new foreign
investment in brokerages after receiving a flurry of criticism from local
players who were worried that such stakes were being sold too cheaply.
AJ Securities' parent, the property-to-textiles giant AJ Corp., has had its
share of troubles. Its ex-chairman Liu Shunxin was arrested and sentenced to
five years in jail in June 2005 after he illegally siphoned off 500 million yuan
of deposits.
AJ Securities was then forced to recover the losses.
"Now AJ really needs a strong outside investor to recover its image and
business," the Shanghai-based second brokerage source said.
Sources: China Daily
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