Category: Business

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Business Stocks

Consumer series IV: China Youth Travel

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I am resuming this series as I am in Shanghai, and I got first hand look at the consumer spending here. Travel industry grew very fast in recent years due to several factors:

1) The golden week, where people got one week break in Chinese New Year, May 1, and Oct 1;

2) People have more money to spend in general, especially young people want to more DIY travel (freedom tour instead of the good old group tour);

3) More sites have been developed, e.g., Sanya, Lijiang (Yunan), etc.

But the travel industry is highly fragmented in China. The main players include: the scenic sites (Huangshan, e’Mei Shan etc.); the travel agency; the airlines; and the hotels. The profit margin of travel agency business is not high, especially the domestic travel.

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Business China

Who is benifit from China real estate market?

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The first, Chinese banks. They are making money from two sides: the developer, and the home buyer. The developers borrow from the banks; they will pay interest and principle (hopefully) later on. The home buyers borrow from the bank, and pay mortgage (interest and principle).

The second, developers. It’s not hard to understand, as the market booming, the developer can charge more for the same apartment or villa.

Last but not least, the local goverment. The land in China are owned by the goverment, the developer will pay more for the new land as the housing price go up. The goverment wants its fair share of the profit too. In addition to the land, the goverment will collect more tax and fees as the housing price go up. So, as much as the (central) goverment wanted to control the housing price (we all want a harminious society, right?), the local goverment don’t think so, at least from economy side.

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Business China

WuXi Pharma Tech looking good

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WuXi Pharma Tech (NYSE: WX) is a pharmaceutical R&D service company based in Shanghai, and they do work for the pharma giants like Pfizer, Merck, etc. They are the No. 1 player in China and growing fast.

Wuxi Pharma Tech pic

To give some background, here is a discussion thread from trader168.com; and a valuation analysis article from Yahoo (ChinaBio Today).

I’m not in the pharma business but from my observation, pharma R&D outsourcing is a sweet area because of the following trend.

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Business

Ineresting article about Mindray

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I found this one from China Business Feature. Some of the interesting paragraphs:

How they started the R&D of medical devices?
“But unlike other distributors, Xu Hang, who holds a degree in medical engineering, started independent innovation of some products in 1992. Mindray’s first products included China’s first single-parameter blood oxygen saturation monitor. “At the time, as China’s hospitals had never used Chinese-made devices, they preferred the imported multi-parameter monitors. So our products did not sell well,” says Xu. Customers didn’t try Mindray’s equipment until 1995 because of problems in technology, quality and sales service. In the early stages of its development, Mindary was basically an opportunist. It hadn’t gone deep in researching the industry. It would generally sell anything that appealed to the market. It even sold products that had nothing to do with medicine.”

Market acceptance:
“Despite its success, Mindray still faces “discrimination” on international markets. In the Middle East, for example, American products are always chosen in the first place, and then those from Japan and Korea. Chinese products are given a very low priority. But the situation has been slowly changing since Mindray was listed. “Agents that we couldn’t contract with before are now coming to us,” claims Xu. The listing made Mindray more popular and trustworthy in overseas markets. Xu hopes to build on that trust with an international brand image for Mindray – that’s why he chose the NYSE instead of the NASDAQ.”

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Business Fun

YouTube and CNN

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made history today. I am talking about the YouTube CNN Democrats Presidential Canidates debates.

While people are talking about who won the debates, I think both Google (GOOG) which owns YouTube, and CNN (owned by Time Warner, TWX) won this thing.

Finally YouTube starts to get serious? And CNN is fun to watch (especially for Gen Y)?

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Business China

China E-House IPO

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I read from PacificEpoch about the filing. From its SEC filing, here is an summary:

“We are a leading real estate services company in China based on scope of services, brand recognition and geographic presence. We provide primary real estate agency services, secondary real estate brokerage services as well as real estate consulting and information services. We were ranked as the largest real estate agency and consulting services company in China for three consecutive years from 2004 to 2006 by the China Real Estate Top 10 Committee, as measured by the number of transactions facilitated, transaction value and gross floor area, or GFA, of properties sold, and geographic coverage…

We have experienced substantial growth since our inception in 2000 and became a leader in the real estate services market in Shanghai within two years of our inception. We have expanded our operations from Shanghai to 19 other cities throughout China. Our revenues grew from $31.2 million in 2004 to $56.0 million in 2006, representing a compound annual growth rate, or CAGR, of 34.0%, and our net income increased from $5.6 million in 2004 to $18.1 million in 2006, representing a CAGR of 80.0%…”

I noticed its CEO Zhou Xin has 67% of the shares. Neil Shen, the co-founder of Ctrip and Home Inns, has 12% of the stake. Will the “3rd baby” of Neil Shen as good as its siblings? My gut feeling is no. Actually we should count this is Zhou Xin’s “first baby”.

I will post my analysis later on…the following is a picture taken outside E-house office near Zhongshan park in Shanghai

IMG_4660

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Business Stocks

McCafe tries to eat starbucks’s lunch

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in Japan. I read this news from MSN that McDonald is going to open McCafe stores in Japan. Quote the news:

“The Japan unit of U.S.-based McDonald’s Corp. will launch 15 pilot “McCafe” stores in the Tokyo area on August 29, according to a company release. The stores, the burger chain’s first foray into the coffee shop business, will offer low-priced beverages to lure more families, the release said. McDonald’s said it will consider opening McCafes across Japan in the next fiscal year.

The cafe business in Japan has been shrinking and stood at 1.052 trillion yen ($8.61 billion) in 2006, down 5 percent from the previous year. Still, sales at specialty coffee shops like Starbucks have soared. The Seattle-based coffee chain, which first opened a store in Japan in 1997, has almost 700 stores across the country and saw sales jump 16 percent last year to 78.9 billion yen ($646 million).”

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Business Life

Whole Food, Wild Oats and Trader Joe’s

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John Mackey, the founder and CEO of Whole Food Markets (WFMI), allegedly used pen name “RahoDeb” (his wife name is Deborah) publishing his opinion on the stock at Yahoo Message Board. Here is the link to the mesages.

Of course, the thing really hits news is his comments about competitors, such as Wild Oats and Trader Joe’s. These are now being used by FTC (Federal Trade Commission) to block the attempt take over of Wild Oats. One reason FTC given is this take over will reduce the competition and increase grocery prices for consumers.

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Business

The Growth of Crocs

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1) International: no secret here, as you can count the stores (more stores in India than China), from their web site www.crocs.com (international). The trick here is they expanded internationally at much early stage compared to Nike, etc., considering they are just a few years old. We can attribute partly to the globalization of economy and branding.

CROX_intl

Keep in mind both CEO Ron Snyder and CFO Peter Case have significant international experience before joining Crocs. I think this is more relevant than just paying attention to their stock sales. As long as they can make me (shareholder) money, do I care how much money they make?

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Business

What is partner exactly?

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We all know Wal-mart calls its employee “associates”, today I noticed Starbucks calls its employee “partner”, from its annual report. We all know this is more a sloagn, or public relation, nonetheless it’s good public relation.

Seriously, what is partner or partnership exactly. It’s almost like spouse. According to wikipedia, “A partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which all have invested…The most basic form of partnership is a general partnership, in which all partners manage the business and are personally liable for its debts…”

Robert Kiyosaki, the author of “Rich Dad, Poor Dad”, has an article of “finding right business partner“. Interesting read. Some key points include: common goal, complementary expertise, good chemistry, etc.