Korean charbols are often family led. Samsung moves away from this by appointing Geesung Choi Chief Executive.
Choi, one of the most successful managers in Samsung, currently heads the consumer electronics division that contributes 2/3 of Samsung’s USD 110 Bn annual revenue. His success stories include leading the TV division to overshoot Sony’s world premier sales position, and steering Samsung phones to overtake Motorola to assume the world’s no. 2 position after Nokia.
Samsung has firmly established itself as one of the world’s largest technology companies and analyst forecasts that it might pass Hewlett-Packard’s revenue crown for this year or next. The Samsung empire currently consists of over 60 companies that are in ship-building, trading, construction, entertainment, hotels, & even baseball. In a re-structuring announced together with the appointment of a new CEO, Samsung will be re-organized into 7 operating units that will behave like standalone companies with their own presidents & finance chiefs. Objective is to render the transparency that international investors demand, despite the founding family still owns around 20% stake.
Together with the CEO appointment, grandson of the founder, Jay Lee, is appointed COO.
Thursday, December 17, 2009
Tuesday, December 8, 2009
World's no. 1
Hong Kong tops the world in terms of money raised through IPOs in 2009.
As of Dec 7, USD26.81Bn has been raised through initial public offerings via the Hong Kong Stock Exchange. This is substantially above the USD17.11 Bn raised through the New York Stock Exchange, the world’s no.2. However, the 2009 year-end figure in Hong Kong is still fall short from the record USD43.9Bn raised in 2006 when it also topped the global list for IPO issuance.
Key success of Hong Kong is its liberal in and out flow of funds, attracting institution & individual investors from both the mainland & overseas. The financial sector and speculators certainly benefit, but whether this success is truly beneficial to the Hong Kong community at large is questionable.
Share price of HKEx is up 90% this year and 150% from its lows in March.
Sunday, December 6, 2009
Where to put your money?
To my amazement, when being asked the question, which one of these countries ( Mexico, India, the US & China) would you invest in, given the current situation, answers of 3 corporate titans are as follows:
Rupert Murdoch – Chairman & Chief Executive of News Corp
No. 1 would be India. As against China, it has a rule of law, it’s an infinitely complicated country, but it has a huge advantage over other developing countries, in that there is a rule of law, and it does work.
China, which is remarkable, the wealth there – the disparities of wealth are incredible. But you never know. You know, if someone doesn’t like you somewhere, your partner is in jail on Monday morning or something and you have no business. For safety, every time India, and for opportunity, India.
Ratan N. Tata – Chairman of Tata Motors Ltd. & Tata Group, India’s largest conglomerate
You know, as an Indian, obviously, I would feel very comfortable about putting the money into India, but if you asked me where I would, in a totally free situation, want to invest, I would still invest in the US. I think the US is a country that has repeatedly shown its ability to be entrepreneurial. It has faced several crisis from which it has emerged. And I have enormous faith in what the US would do for the investor and for a person looming for opportunities.
Carlos Slim Helu – majority stake owner of Telefonos de Mexico
Latin America. Because we have everything to do. We have to grow the market, most of the people are in poverty, or are not incorporated in the market. You have there the potential market, the potential for growth.
The amazement for me is that China is not even one of the three’s choices. Indeed in a past business I managed, out of various geographic markets, I have witnessed phenomenal business growth in India & Latin America, at least on par, or better than China.
(source of interview excerpts: WSJA)
Rupert Murdoch – Chairman & Chief Executive of News Corp
No. 1 would be India. As against China, it has a rule of law, it’s an infinitely complicated country, but it has a huge advantage over other developing countries, in that there is a rule of law, and it does work.
China, which is remarkable, the wealth there – the disparities of wealth are incredible. But you never know. You know, if someone doesn’t like you somewhere, your partner is in jail on Monday morning or something and you have no business. For safety, every time India, and for opportunity, India.
Ratan N. Tata – Chairman of Tata Motors Ltd. & Tata Group, India’s largest conglomerate
You know, as an Indian, obviously, I would feel very comfortable about putting the money into India, but if you asked me where I would, in a totally free situation, want to invest, I would still invest in the US. I think the US is a country that has repeatedly shown its ability to be entrepreneurial. It has faced several crisis from which it has emerged. And I have enormous faith in what the US would do for the investor and for a person looming for opportunities.
Carlos Slim Helu – majority stake owner of Telefonos de Mexico
Latin America. Because we have everything to do. We have to grow the market, most of the people are in poverty, or are not incorporated in the market. You have there the potential market, the potential for growth.
The amazement for me is that China is not even one of the three’s choices. Indeed in a past business I managed, out of various geographic markets, I have witnessed phenomenal business growth in India & Latin America, at least on par, or better than China.
(source of interview excerpts: WSJA)
Thursday, December 3, 2009
Sharp Reversal
Wang Shi, founder & chairman of Vanke, China’s largest developer, gave a lucid account of the current property scene in China on the WSJA today.
China’s property market was in doldrums in 2008. After years of soaring sales & rising prices, the government began imposing restrictions on sales & lending in 2007. Prices peaked in July 2008 and by Oct 2008, residential property sales were down by 17%. Debt-ridden developers are stripped of cash. The global financial crisis actually saved at least 1/3 of Chinese developers from bankruptcy with the Chinese government announcing a ￥4 Trillion (USD585Bn) economic stimulus package, essentially asking the banks to lend more. Much of the soaring loans went to properties. The sharp turn in sentiments & reaction is amazing. Since March 2009, both property sales and prices have risen month by month. Total floor space sold in the first 10 months of 2009 rose 50% compared to the same period in 2008. Prices increased overall by 4%. Shenzhen marked the highest increase of 13.8%, followed by Hangzhou at 6.6%
Vanke, founded by Wang Shi 25 years ago, has operations in more than 30 cities. I had the opportunity to work with the Vanke team & met with Wang at one occasion. A well managed and highly disciplined team. At 58, Wang should be cloning more of himself as corporate leaders to improve overall corporate governance in China.
Wang detailed to WSJA that Vanke’s original sales target for 2009 was ￥55Bn, but it is likely to surpass ￥60Bn. Next year’s forecast is￥80Bn. In the first 9 months of this year, sales grew 32% to ￥27.99Bn while net profit rose 30% to ￥2.96Bn
China’s property market was in doldrums in 2008. After years of soaring sales & rising prices, the government began imposing restrictions on sales & lending in 2007. Prices peaked in July 2008 and by Oct 2008, residential property sales were down by 17%. Debt-ridden developers are stripped of cash. The global financial crisis actually saved at least 1/3 of Chinese developers from bankruptcy with the Chinese government announcing a ￥4 Trillion (USD585Bn) economic stimulus package, essentially asking the banks to lend more. Much of the soaring loans went to properties. The sharp turn in sentiments & reaction is amazing. Since March 2009, both property sales and prices have risen month by month. Total floor space sold in the first 10 months of 2009 rose 50% compared to the same period in 2008. Prices increased overall by 4%. Shenzhen marked the highest increase of 13.8%, followed by Hangzhou at 6.6%
Vanke, founded by Wang Shi 25 years ago, has operations in more than 30 cities. I had the opportunity to work with the Vanke team & met with Wang at one occasion. A well managed and highly disciplined team. At 58, Wang should be cloning more of himself as corporate leaders to improve overall corporate governance in China.
Wang detailed to WSJA that Vanke’s original sales target for 2009 was ￥55Bn, but it is likely to surpass ￥60Bn. Next year’s forecast is￥80Bn. In the first 9 months of this year, sales grew 32% to ￥27.99Bn while net profit rose 30% to ￥2.96Bn
Parasite Singles
The west has coined a rather unpleasant term “parasite singles” to delineate the group of Japanese unmarried women or men in the 20’s & 30’s, who are living with their parent and hence, able to blow large portions of their paychecks on themselves. In fact, this segment of consumers are what European fashion brands have counted on in the 90’s for their year-on-year sales growth. Currently, nearly half of Japan’s single men & women, age between 20 and 34, live at home.
They are however, moving away from their brand-conscious habits with the decrease in income & increase in employment. To ride on their changing behaviour, Fast retailing, with its low cost Uniqlo brand, has introduced a line by Jil Sander to cater to this new customer group to capture higher price points amidst other lower price products. H&M is doing the same with the introduction of Jimmy Choo-designed goods. While Louis Vuitton has recently cancelled its plans for a glitzy new megastore in Ginza, Uniqlo sales jumped 14% in October and profit expects a 25% surge to USD 713Mn by year end.
High real estate prices have deprived a lot of youngsters the opportunity to build their own homes in places like Hong Kong & Japan. Take Hong Kong as an example: average monthly income of a fresh graduate is HKD9,000; average per square foot cost of a residential home is HKD4,500. It would take the new graduate round 10 years to save up for the initial 20% deposit. For rentals, the monthly average of HKD15 per sq ft for a 300 sq ft studio could easily eat up half of the fresh grad’s gross income. “Parasite” doesn’t seem to be a fair term as long as the youngster does contribute to the household of which he or she is a part of.
They are however, moving away from their brand-conscious habits with the decrease in income & increase in employment. To ride on their changing behaviour, Fast retailing, with its low cost Uniqlo brand, has introduced a line by Jil Sander to cater to this new customer group to capture higher price points amidst other lower price products. H&M is doing the same with the introduction of Jimmy Choo-designed goods. While Louis Vuitton has recently cancelled its plans for a glitzy new megastore in Ginza, Uniqlo sales jumped 14% in October and profit expects a 25% surge to USD 713Mn by year end.
High real estate prices have deprived a lot of youngsters the opportunity to build their own homes in places like Hong Kong & Japan. Take Hong Kong as an example: average monthly income of a fresh graduate is HKD9,000; average per square foot cost of a residential home is HKD4,500. It would take the new graduate round 10 years to save up for the initial 20% deposit. For rentals, the monthly average of HKD15 per sq ft for a 300 sq ft studio could easily eat up half of the fresh grad’s gross income. “Parasite” doesn’t seem to be a fair term as long as the youngster does contribute to the household of which he or she is a part of.
Wednesday, December 2, 2009
Women to uphold half of the Sky
Latest statistics from the US indicate that women held 49.9% of the nation’s jobs, excluding farm workers and the self-employed, as of September 2009 . This sees a marked increase from 35% recorded in 1970. More importantly, women are either the sole earner or make as much as or more than their male spouse in 4 out of 10 US families with children under 18.
Nevertheless, the median earning of a full-time working woman is USD35,745 compare to USD46,367 for man.
Hong Kong statistics for 2006 indicate that 49.3% of the work force is women. Women earned more than men in the managerial, administrative & professional sector, while median pay is still below their male counterparts in other categories. They also earning less based on comparisons with similar academic background.
Apparently, the famous saying of Chairman Mao that Women can uphold half of the Sky is a close reality ~~ only some 60 years after he made the statement.
Nevertheless, the median earning of a full-time working woman is USD35,745 compare to USD46,367 for man.
Hong Kong statistics for 2006 indicate that 49.3% of the work force is women. Women earned more than men in the managerial, administrative & professional sector, while median pay is still below their male counterparts in other categories. They also earning less based on comparisons with similar academic background.
Apparently, the famous saying of Chairman Mao that Women can uphold half of the Sky is a close reality ~~ only some 60 years after he made the statement.
Tuesday, December 1, 2009
Who will buy?
In a bold move made 2 years back when LCDs were in great demand with the boom of flat panel TVs, Sharp embarked on building a USD11 Bn, 32 baseball stadium size state of the art plant to produce high tech, high quality products. The idea is to vertically integrate suppliers & service providers under one compound to work as one virtual company, facilitate just-in-time supplies, stream-line production, and cut cost. This is seen as a litmus test for the new mode of Japanese high tech manufacturing in contrast to lower cost productions in Korea & China.
Sharp’s impressive massive new plant in Sakai city, close to Osaka.
Sharp decided to build this new facility at a time when it had recorded 5 straight years of unprecedented profits. In 2008, business suffered as consumers damped spending. Not curbing production quick enough, Sharp was saddled with excess inventory and posted its first annual loss in nearly 60 years in the fiscal year ended March 2009.
Only customers can tell if they will buy.
I am a supporter of high tech, high quality, and companies that made bold moves. This is on condition that the premium they charge is not excessive and that there is perceivable product differentiation.
Michelin-stars
While ”Michelin-Star” restaurants have become talk of the town in Hong Kong recently, I’d like to share what is happening to the Michelin tyre business, the origins of the Michelin-star restaurants concept.
Ranked the largest tyre manufacturer in the world in 2008, Michelin is a €16.4 Bn business founded in France by 2 brothers in 1888. Over the years, it invented a number of patented products, made a number of acquisitions & shared the top ranking in the global tyre market with a close number 2, Bridgestone of Japan. Goodyear of USA currently ranks third.
Michelin business has always been headed by a family member until the untimely death of the CEO in 2006 while fishing. The business is now run by 3 Managing Partners.
Business in 2009 has been tough with the sales down-turn of vehicles & the airline industry under pressure. Revenue fell 13% for 1H & the company swung to a loss. It is envisaged that profit could be improved for 2H and a series of re-structuring is underway to increase production in emerging markets while reducing work force in mature ones.
As detailed by Michel Rollier, Michelin’s top executive, the key strategy adopted during the recession is to protect cash-flow. Specifically, the following are implemented:
~ weekly meetings between the 3 Managing Partners & business managers to adjust production
~ inventory management : decrease production by 30% while sales is down by 23%, an improvement on cash flow & debt reduction
~ temporary closure of plants
~ plant specialization, e.g. making of aircraft tyres in Bourges, France
Apart from the core tyre business, Michelin, with its century old Bibendum icon / or the Michelin Man, has been producing a Green Guide on Tourism & a Red Guide on Restaurants for years. Hong Kong readers might not be familiar that the “stars” actually have specific connotations, related to driving :
* = a good restaurant in its category
** = excellent cooking & worth a detour
*** = exceptional cuisine worth a journey
Ranked the largest tyre manufacturer in the world in 2008, Michelin is a €16.4 Bn business founded in France by 2 brothers in 1888. Over the years, it invented a number of patented products, made a number of acquisitions & shared the top ranking in the global tyre market with a close number 2, Bridgestone of Japan. Goodyear of USA currently ranks third.
Michelin business has always been headed by a family member until the untimely death of the CEO in 2006 while fishing. The business is now run by 3 Managing Partners.
Business in 2009 has been tough with the sales down-turn of vehicles & the airline industry under pressure. Revenue fell 13% for 1H & the company swung to a loss. It is envisaged that profit could be improved for 2H and a series of re-structuring is underway to increase production in emerging markets while reducing work force in mature ones.
As detailed by Michel Rollier, Michelin’s top executive, the key strategy adopted during the recession is to protect cash-flow. Specifically, the following are implemented:
~ weekly meetings between the 3 Managing Partners & business managers to adjust production
~ inventory management : decrease production by 30% while sales is down by 23%, an improvement on cash flow & debt reduction
~ temporary closure of plants
~ plant specialization, e.g. making of aircraft tyres in Bourges, France
Apart from the core tyre business, Michelin, with its century old Bibendum icon / or the Michelin Man, has been producing a Green Guide on Tourism & a Red Guide on Restaurants for years. Hong Kong readers might not be familiar that the “stars” actually have specific connotations, related to driving :
* = a good restaurant in its category
** = excellent cooking & worth a detour
*** = exceptional cuisine worth a journey
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