Category: Business

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Business China

What is second home?

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Week in review 12-09 to 12-15

1) China central bank, along with China Banking Regulatory Commission, defined “what is second home” for the lending purpose: it will be measured against a family (husband and wife), not individual. See this NetEase news.

12月11日，央行、银监会联合发布《关于加强商业性房地产信贷管理的补充通知》明确规定，以借款人家庭为单位认定房贷次数。另外，如果首套住房人均面积低于当地平均水平，再贷款购房还是按照首套标准执行。业内人士解释，以家庭为单位来界定，就相当于夫妻双方无论任何一方有向银行申请房贷的记录，另外一方再贷款买房，都要按照房贷新政执行，即提高首付比例的同时，贷款利率按照现行贷款基准利率的1.1倍来计算。

For more info, check out Baidu.

A smart move to contain the housing speculation. But will it really work as desired?

2) US Fed cut interest rate by 0.25, not as much as Wall Street liked. Stock tanked after the announcement. Obvious the baby (Wall Street) is not happy with this Xmas gift from Ben.

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Business China

CompUSA, Dell, TV-Guide and NetEase

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Week in review Dec 2 to Dec 8

1) All remaining CompUSA stores to be closed (bloomberg). I think it’s understandable from business point of view, because selling computer is a tough business these days. It is a commodity business, and unlike other commodity such as gas or coffee, a customer only buy a new PC/laptop once every a few years.

Similarly, I can understand Dell computer lackluster financial performance lately, and its decision to sell PCs at BestBuy (reuter news). People used to buy Dell because it offers most bang (more disk and memory, faster CPU, etc) for the buck, but nowadays people buy computer and electronics not solely for the “bangs”, they look for the brand, design, fashion (think Apple iBook, MacBook).

2) MacroVision (MVSN), the licensing software company, announced to buy GemStar-TV Guide (San Jose Mercury News). Normally when company A buys company B, the company A stock will drop, and company B stock will rise. In this case, interestingly, both companies’ stock drop big. I, for one, can not understand why a software company will buy a traditional magazine company.

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Business Master Series

Durable competitive edge

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Buffett talks about “durable competitive edge” a lot.

Here is a video (scroll down the article) he used Berkshire mill, the first major company he bought in 19060s, as an example to explain this concept.

Also I watched the “Buffett goes global” show on CNBC in the weekend, I am sure CNBC will run it again just like the other two shows about Walmart and eBay.

This is a much better show than Jim Cramer’s Mad Money, in terms of education value. I watched the Mad Money mostly for entertainment, along with Fast Money, etc.

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Business

Smart buyback, iPhone China delayed

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Week in progress 11/25 to 12/01/07

1) Panera to buy back up to USD 75 millions (worth) of shares from a broker (see the news here). The is in contrast to Crocs panic buy back announced on Nov. 1, amid the sharp fall of its stock price after it announced Q3 result. Last I looked at its 10Q at SEC: “On November 7, 2007, the Company repurchased approximately 524,000 shares for a total of approximately $25.0 million”. That is $47.70 per share (currently CROX traded just under $40). Good shoes maker, not so good stock traders?

2) iPhone delayed in China. The main problem is Apple and China Mobile can not agree on the how big a pie each will get, according to NanFangdaily (Chinese). American expatriate entrepreneur (in Beijing) Billsdue predicted the outcome before hand.

3) J. Crew reported a good quarter. Here is a link to its conference call (webcast). I found its CEO Millard Drexler had good insights about fashion and fashion business.

4) China Ping An Insurance (sh601318) paid 1.3 b Euro for 4% stake in Fortis, a Belgo-Dutch financial group.

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Business China

Introducing Vanke

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Vanke is No. 1 home builder in China. Today. Vanke A share (000002) went up 10% in Shenzhen, after it moved sideways for about two months. Note today is the first trading day after China national holiday break.

Real estate companies in China don’t get much respect these days. No matter how many new homes they built, how much tax they pay and how many jobs they create. This is similar to the US big oil companies. In this case it’s because the housing prices in China cities spiked again. The hot topic in China these days are “why the new home prices increase so fast”, “why those guys bid the land at such a high price (down the road, they will sell the homes at price even higher”. The “conclusion” is the developers must make good money off home buyers. This is certainly not accurate. I’m not saying the banks are making all the money, while the real estate companies are getting nothing. They certainly get a fair piece of the pie so that they can feed their families.

Front sign of Vanke Baima garden in SH:
Vanke_BaiMa_3

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Business China

Price war leaves bad taste to loyal customers

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Last week one of the biggest news in consumer electronics arena is Apple decided to cut the iPhone price. Consider Apple just started shipping iPhone in late June, this move is a blow to its most loyal customers (early adopters). Apple quickly responded to the angry customers by offering $100 credit (source: Apple.com).

From my own experience, US car makers do those kind of price cut all the time. They carry out price wars mainly in two ways: rebate and/or low interest loan. Sometimes I saw a $8000 rebate on a 20 to 30 k truck or SUV. One side effect of those kind of promotion is the lower residual value of pre-owned cars (trucks), compared to similar model Japanese cars/trucks.

Interestingly, this car price wars are now extended in China, for the good or bad of consumer. On the good side, the new customers can buy the cars on the cheap; on the other hand, the early (loyal) customers paid a premium for the car. This is an Chinese article talking about Hyundai cars. The war is not limited to Korean car makers. It appears to me low end car makers have most to lose; while high end cars such as BMW still have much price power. (Picture below: Hyundai Coupe).

hyundai cars pic

PS, after I wrote the above, I realized there is difference between price cut and price war. But I think there is a strong connection between the two: price cut is the tactics of a price war, e.g., Apple announced a price war against its competitors (Motorola, Palm, RIM etc.) by cutting the iPhone price. Now the competitors will have to respond by cutting their prices if they don’t want to give up market share.

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Business Technology

Week in review 09/02-09/08

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1) Howard Schultz, Chairman of Starbucks, talked about competition from McDonald and Dokin Donuts.

Starbucks is not an advertiser. If other companies are going to advertise and promote specialty coffee, Starbucks is going to benefit in the long term,” he said.

2) iPhone price cut and iPod touch launch: Steve Jobs announced Apple will cut 8GB iPhone from $599 to $399, discountine to offer 4GB iPhone, and offer an iPod touch, which is “an iPhone without phone capability”. In other words: iPod touch will have touch screen, music and video capability, WiFi, Internet, etc. You can check out latest iPod lineup from apple.com

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Business Fun

iTune at Starbucks

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That’s the new services to be offered by two great companies: Apple and Starbucks. According Seattle Post Intelligence:

Apple’s new wireless iPod music player, iPhone or any laptop computer running iTunes will automatically recognize the iTunes store without a connection fee when customers enter a Starbucks shop that has Wi-Fi access.

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Business China

Best buy in Shanghai

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Last Saturday we went to Xu Jia Hui, one of the better known shopping centers in Shanghai. I voguely remember there were not too much when my bro and I visited there in 1991. It was completely developed in last 15 years. There are many stores, including Gang Hui Plaza, Metro City, etc. We found the newest store in Xu Jia Hui, Best Buy, the US electronics and applicance retailer. I heard from Wang Jianshuo the Best Buy opened its first store in Shanghai. But when I stood at the sky bridge leading to Best Buy, I was still a bit surprised. The store has 4 stories and lots of people, both customers and store clerks. Here are some pictures:

IMG_5216

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Business Technology

AT&T and IBM

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I found some interesting articles about AT&T and IBM. They are written by Wu Jun, a research scientist at Google. I like Wu Jun’s writing style (humorous), and his business perspective of the two companies (very good).

Here is the link to AT&T articles; and here is link to IBM series. Both are in Chinese, and there are 6 articles for each company.

One thing I felt amazing about IBM is this (quote the article):

在小华生执掌 IBM 的二十年里，IBM 的平均年增长率高达 30%，这在世界上可能是绝无仅有的，他的父亲也没有做到这一点。

Translated in English: in the 20 years when Watson Jr. was the CEO of IBM, the average anual growth rate is 20%. No other company has done that. His father Waton Sr. did not accomplish that either.