The Star Online: Business
The Star Online: Business |
- China seeks profit, shuns politics, in Afghanistan
- Sony near buying Ericsson out of phone venture
- CEOs say U.S. unlikely to slip back into recession
| China seeks profit, shuns politics, in Afghanistan Posted: 06 Oct 2011 06:13 PM PDT KABUL, Oct 4 (Reuters) - The Chinese passengers boarding the weekly Ariana Flight 332 from the remote western city of Urumqi to Kabul speak volumes about ties between a rising China, the world's number two economy, and its desperately poor and unstable neighbour, Afghanistan. Of at least nine Chinese, six were heading for a China-funded copper mine, two were working for a Chinese telecom equipment maker and one was the boss of a Chinese restaurant, struggling to check in several boxes of illicit supplies, from alcohol to frozen pork. "The situation is not as bad as news reports suggest, and I am hoping to make money," said Li Xiaofeng, the restaurant owner, who is from the eastern Chinese province of Zhejiang and opened his restaurant in Kabul last year. He is contributing to a tiny but growing trade flow between China and Afghanistan, which many in Kabul hope could be the country's financial salvation as Western troops head home. Bilateral trade between China and Afghanistan is currently just a fraction of trade with other "stans" - the turnover of $114.9 million in the year through July was 2 percent of Sino-Pakistan trade. But the rich mineral reserves lying untapped in Afghanistan after decades of war are a tempting and potentially lucrative lure for resource-hungry China, whose companies have already shown an ability to operate profitably in hostile environments. A Chinese consortium in 2008 won Afghanistan's first major mining contract, a deal to develop the Aynak copper deposits. The state-owned parent company of Metallurgical Corp of China Ltd (MCC) and China's largest copper producer, Jiangxi Copper , are developing the mine, estimated to hold up to nine million tonnes. The project is the biggest component of plans to wean Afghanistan off foreign aid that currently makes up most of the government budget. But progress has been slower than expected. "Officials in Kabul always said yes, but on the site, there are always a lot of problems to handle," one MCC official, who asked for anonymity, told Reuters. MCC said in a statement that construction workers were currently idle as archaeological preservation works on a Buddhist monastery were under way. NO POLITICAL, MILITARY COMMITMENT The slow development may actually suit some officials back in Beijing, who are anxious to avoid a military or security role in the central Asian country. China wants to stay out of the diplomatic spotlight in Afghanistan, said He Ming, deputy dean at East China Normal University's international studies college, who recently held an academic conference on Afghanistan. "It's quite dangerous for China to play an active role in Afghanistan," he said, referring to the expense and controversy that followed most foreign intervention in Afghanistan in recent decades - whether Soviet or Western-led. "It's okay for Chinese companies to start up projects there, but if you are talking about political influence ... I don't think China has the necessary conditions and abilities." Beijing's ambiguous attitude to Kabul shows in official hesitance to open the border with Afghanistan. The frontier lies on a remote 76-km (47-mile) stretch of land at the end of the narrow valleys of the Wakhan Corridor. But a dirt road leading up near China's side of a high pass - reputedly used by Marco Polo - is not matched on the Afghan side, where farmers and herders still live much as they did centuries ago. China fears the spread of Islamic militancy from Afghanistan into its restive Western Xinjiang region, home to millions of Uighur Muslims, and instability in Afghanistan. So it has an interest in Afghanistan's future, but has also watched the Soviet Union and the United States flounder there. As a result, Beijing plans to steer well clear of serious political or military engagement. "China hopes there will be peace in Afghanistan, but as for what conditions there should be for peace, China has no seat on the negotiating table," said Ye Hailin, a researcher with the Chinese Academy of Social Sciences in Beijing. He added that Pakistan, rather than Afghanistan, was always Beijing's top choice for exerting influence in the region. "In China, the phrase 'Af-Pak' does not exist," he said, referring to a term often used by Western diplomats and policy-makers, who consider the neighbours and their problems so closely linked they should be tackled together. "Pakistan is a big Muslim sovereign nation; Afghanistan is a war-torn country eagerly awaiting reconstruction." RESOURCE HUNT MUST GO ON But the wait-and-see stance of Beijing when it comes to politics and security has not deterred Chinese firms' hunt for precious resources and profit. In September, the China National Petroleum Corp (CNPC), China's state-owned oil giant, was chosen as a preferred bidder for an oil field in northern Afghanistan. "China has no choice, it has to go out to find resources to ensure energy security," said Lin Boqiang, director of think-tank the Center for Chinese Energy Economics Research. "For China's state oil giants, they know clearly that they must take the risks, including risks in Afghanistan." Chinese firms already have a stake in nearly 40 projects in Afghanistan, with contracts worth nearly $500 million at the end of June, according to Wu Gangchen, the commercial counselor at the Chinese Embassy. "Reconstruction means markets, reconstruction means opportunity," Wu was quoted as saying in a recent interview with Beijing-based newspaper the International Business Daily. He urged Chinese investors to keep their eyes open for possible deals in Afghanistan, particularly in the sectors of "energy, infrastructure, trade, service and processing." CNPC appears to agree, and if it can finalise its intended oil deal with Kabul as expected in mid-October, it would be a good news for national airline Ariana as well. On the sunny Thursday flight, only about a third of the seats were taken. |
| Sony near buying Ericsson out of phone venture Posted: 06 Oct 2011 06:08 PM PDT TOKYO (Reuters) - Sony Corp is nearing a deal to buy Telefon AB LM Ericsson's half of their smartphone venture, The Wall Street Journal reported Thursday, signaling a possible fresh push by Japan's No. 1 electronics brand to regain ground lost to rivals Apple Inc and Samsung Electronics. Sony and Ericsson have been talking for weeks about the future of the venture because the companies must decide this month whether to renew their 10-year-old pact, two industry sources told Reuters. The Wall Street Journal said the talks were ongoing and could break apart at any time, citing people familiar with the matter. Ericsson and Sony declined to comment on the reported talks. "We have a long-term commitment to our joint ventures," said an Ericsson spokesman. "The talks are not something that have been announced by Sony. We are declining to comment," said Mami Imada, a Sony spokeswoman in Tokyo. Many analysts say Japan's Sony needs to assert control over Sony Ericsson if the venture is to recoup market share in the cut-throat world of smartphones. Sony's shareholders, however, appeared wary of any deal that would burden the company's finances. Its stock dipped as much as 1.8 percent to 1,444 yen in early trading compared with a 1.2 percent gain in the benchmark Nikkei 225. The joint venture, formed in 2001, thrived after its breakthrough with Walkman music phones and Cybershot cameraphones, both of which leveraged Sony's brands. But it lost out to bigger rivals Nokia and Samsung Electronics at the cheaper end of the market, and was late to react to Apple's entrance into the high-end of the market. It has refocused its business to make smartphones using Google's Android platform, but it has dropped to No. 9 in global cellphone rankings from No. 4 just a few years ago. It is making some progress and turned a net profit of 90 million euros last year after booking a loss of 836 million euros in 2009. But it reported another loss for the April-June quarter. The venture is due to report its September quarter results on Oct 14. DIVORCE GOOD FOR BOTH PARTNERS? "A buyout would make a lot of sense for Ericsson as I believe their share in the joint venture is worth to them between zero and minus 1 billion euros," said Bernstein analyst Pierre Ferragu. "Whatever price they agree on, it would be a positive for Ericsson." Shares in Sweden's Ericsson gained on the report and closed 6 percent higher at 69.20 crowns on Thursday. A full takeover of the venture would boost Sony's overall offering, which includes content, gaming devices, consumer electronics and even tablet computers. But the company still lacks its own smartphones. "The buyout allows Sony to move development in-house and better integrate other products like gaming into newer phones," said Steven Nathasingh from U.S. technology research firm Vaxa Inc. Last month at the IFA trade fair in Berlin, Sony Ericsson's phones were presented inside the Sony hall, mixed with Sony's TV sets and new tablets. |
| CEOs say U.S. unlikely to slip back into recession Posted: 06 Oct 2011 05:52 PM PDT COLUMBUS, Ohio (Reuters) - Corporate America's chiefs do not expect the nation to slip back into recession, but say political gridlock in the United States and Europe could make for a long, slow recovery. Top chief executives including General Electric Co's Jeff Immelt and ExxonMobil Corp's Rex Tillerson said on Thursday that the U.S. economy could remain sluggish but will likely avoid an outright double-dip downturn. "Recovery is underway, but it's a long, slow recovery. Slower than we'd like," the head of GE told a group of about 500 executives from mid-sized U.S. companies. While conditions are making executives nervous, the situation does not seem nearly as dire as it did during the credit crunch during the last recession. "This is a lot different than 2008," said Immelt, chief executive of the largest U.S. conglomerate. "There's liquidity; there's pockets of growth." The head of FedEx Corp , the world's second-largest package delivery company also offered a cautious view. "We don't see a contraction; we don't see a recession," said FedEx founder Smith. "It's steady as you go, slow growth." Tillerson, who heads the world's largest publicly traded oil company, sounded a similar note. "I am not as optimistic as I was six months ago. It will continue, I am afraid, to be a sluggish (U.S.) economy, and globally the economy will not perform as well as we expected," Tillerson told the Washington Ideas Forum. "We will have positive growth (but) it is not going to be as positive as we hoped. DATA SHOWS SIGNS OF IMPROVEMENT Data released on Thursday backed up their guarded confidence, showing a pick-up in consumer spending and modest improvement in employment -- critical given that stubbornly high joblessness has been the main roadblock to the nation's economic recovery. New unemployment claims rose slightly to 401,000 last week, near a level that is associated with modest improvement in the jobs market. And major U.S. retailers including Kohl's Corp and Nordstrom Inc reported stronger-than-expected sales in September, on average up 5.1 percent at stores open at least a year. A 4.6 percent gain had been expected. Those reports and news that the European Central Bank was taking new measures to help the continent's banks weather the euro zone debt crisis boosted U.S. shares, with the broad Standard & Poor's 500 index <.spx> up 1.1 percent, for a third straight day of gains. But even with that rise, the index is down about 8 percent for the year, reflecting deep unease among over the direction of the U.S. and European economies. Immelt and Smith spoke at an event where GE Capital and Ohio State University's Fisher College of Business unveiled research on the "middle market" sector of U.S. business, companies with $10 million to $1 billion in annual revenue. The study found that tier of business is an underappreciated jobs engine for the U.S. economy that accounts for about one-third of employment and continued to add workers through the recession, while big U.S. companies were shedding people. POLITICAL UNCERTAINTY HURTS INVESTMENT Executives said political logjams in Washington and Brussels have made businesses more reluctant to invest and hire. "The world has problems and classic institutions have not been able to solve these problems -- that creates volatility," Immelt said. "I'd like to think that a fully functioning integrated financial system in Europe could have stopped the Greece crisis quickly. That hasn't taken place." Concerns that Greece could default on its debt have rattled European and U.S. banks over the past couple of weeks. The logjams are not limited to Europe. Immelt cited this summer's standoff in Washington over whether to raise the debt ceiling or allow the United States to slip into default. "Congress just doing one bipartisan thing, however small, would be conducive to the market. It would be a positive to investors," Immelt said. Immelt, a lifelong Republican, currently serves as a top adviser to the Obama administration on jobs and the economy. However, not all the blame lies with politicians, Smith said. He suggested that CEOs, who command considerable public attention in their own right, could do more to tamp down the partisan bickering that has flared in the United States. In part, he said, CEOs can afford to be more candid in commenting on when they agree or disagree with policymakers than can officials who face election. "If one person on the right said, 'You know President Obama did a hell of a job on that bin Laden thing,' the next time he ran for anything it would be on the TV and his opponent would say, 'Obama supporter, I'm a better Republican,'" Smith said. "Those of us in the business community who don't need to run for anything probably need to be a bit more candid." |
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