This Week in China - Ecology Projects, Australian Wineries, H&M, GAP, E-Commerce and More

China Tops Europe as the Most Attractive FDI Market

China (39%) was ranked the most attractive foreign direct investment (FDI) destination for 2010, edging ahead of Western Europe (38%), in an Ernst and Young (E&Y) latest survey of 814 companies.

Going forward, E&Y sees a clear shift in the World’s economic weight eastwards, as they rank China (66%), India (61%) and Central & Eastern Europe (59%) as the most attractive regions for FDI projects in the next three years.

Western Europe, which currently ranks as the second-most popular destination for FDI, is expected to fall to fifth place behind Brazil in E&Y’s future attractiveness rating.

The report stated that in the improved economic scenario, investors have resumed their hunt for higher returns, leading to global FDI competition. This has resulted in a leveling of the playing field.

Both East and West Europe have been hit badly by the economic crisis, which has raised doubts about the region continuing to play a leading role in a multi-polar world if it is unable to attract new investments, the report added.

“In 2010, investors look at a forecast global growth of 4%, see that only 1% is likely in Europe and turn their eyes to high-growth markets,” said the authors of the report.

China is a key growth area for European firms such as Siemens AG and Peugeot.

The global financial meltdown has pushed the world economy into recession. In 2009, foreign investment around the world dipped 40%. Europe saw a 11% decline in new FDI projects in 2009 with just 3,303 deals registered. But in China, it dropped only 2.6%, to $90 billion.

In the first quarter of 2010, FDI in China grew 7.7% year over year to $23.44 billion. A total of 5,459 overseas-funded ventures were established, up 19.9 % from the corresponding period last year.

A report from the American Chamber of Commerce in China shows that nearly 80% of US firms in China plan to increase their investment in the country. And nearly half are expecting their investment growth, to reach more than 10%.

At the same time, a report named “2010 Global Manufacturing Competitive Index” issued by Deloitte and US Council on June 23rd shows that China scored ranked first in both current competitiveness and competitiveness in the next five years, followed by India. The epicenter for manufacturing continues to shift to emerging markets and especially China.

Investment by American companies can be found in all 29 categories of China’s industry and 100 service sectors that China promised to open. According to AmCham-China, 74% of its members reported positive profits in 2008.

In 2009, foreign-funded companies participated in 71% of China’s 12,000 public international purchase bids for machinery and electric products, and won 6,887, or 77.8% the bids.

China will make institutional arrangements to turn the country into a “fair playing ground” for foreign investors, and improve the quality of foreign capital usage, further strengthening the country’s economic efficiency.

Adam Roseman,
Founder & CEO
ARC China

Consumption In China May Top Japan By 2015

China may see its final consumption reach $5 trillion in value by 2015, surpassing Japan as the world’s second largest consumer, a senior government official has projected.

Wang Xuanqing, deputy director of the Department of Commercial Services Administration with the Ministry of Commerce, made the forecast based on an average annual 11.6 percent growth in consumption in China since 2000.

However, Wang said China’s domestic consumption was still weaker per capita than that in many developing nations. He made the remarks at a retailer’s conference held in Chengdu, capital of southwest China’s Sichuan Province.

“If consumption remains too weak for too long, economic growth will depend more and more on investment and exports,” Wang said.

“But investment and exports are increasingly meeting restrictions from resources, environment, and international market changes,” Wang said, adding “an economy with weak consumption is not sustainable.”

Data from the country’s National Bureau of Statistics showed China’s retail sales rose 18.7 percent year on year to RMB 1.25 trillion ($183 billion) in May, with total retail sales up 18.2 percent to RMB 6.03 trillion in the first five months.

As part of the county’s stimulus package, the Chinese government has introduced a host of subsidies for home appliances, old-for-new programs, and tax cuts for auto purchases to boost domestic consumption.

Final consumption consists of goods and services used up by individual households or the community to satisfy their individual or collective needs or wants, according to the definition of the Organization for Economic Cooperation and Development.

Source: Xinhua Net

China Again Retailers’ Favorite

China returned to the top of this year’s Global Retail Development Index (GRDI) for the first time since 2002, compared with last year’s third place, according to global management consulting firm A.T. Kearney.

The GRDI ranks 30 emerging countries based on a set of 25 variables including economic and political risk, retail market attractiveness, retail saturation levels, and the difference between GDP growth and retail growth.

Chinese consumers are becoming increasingly comfortable with Western-style retail forms and the country’s size continues to provide retailers with opportunities, according to A.T. Kearney.

China’s retail sales rose 17.9 percent in the first quarter of 2010, while the country’s GDP grew 11.9 percent during the same time period, according to data from the National Bureau of Statistics.

The top 10 countries in the 2010 GRDI are the most diverse mix of large and small markets in the Index’s nine-year history: China, Kuwait, India, Saudi Arabia, Brazil, Chile, United Arab Emirates, Uruguay, Peru and Russia.

China, India, Brazil and Russia remain the highest-priority markets for retail expansion, according to 60 retail executives from around the world surveyed by A.T. Kearney, with nearly 80 percent of respondents citing one of these markets as part of their firms’ plans for short-term international growth.

Expansion is also on the agenda for many emerging market retailers. Ninety-two percent of respondents from emerging markets are looking to expand beyond their home markets, with close to 30 percent of those saying a developed country is among their top three expansion targets.

Source: China Daily

Emerging Markets Set The Pace In IPOs

Emerging markets are outpacing advanced economies in bringing companies to market. Initial public offerings in China, India, Poland, and other developing nations raised $29.3 billion in the April-to-June period, almost three times the amount raised in industrialized markets. Emerging markets have won the IPO contest in each of the past five quarters, the longest run since at least 1999, according to Bloomberg data.

The streak could continue next quarter, when Agricultural Bank of China sells up to $28 billion of stock in Hong Kong and Shanghai. “The investor appetite is just not there right now” for IPOs in industrialized nations, says Robert Froehlich, senior managing director at Hartford Financial Services Group.

Stock markets around the world declined over the past three months. Investors worried that the global economic recovery will slow, as countries including Greece, Portugal, and Spain struggle to fund their debts. At least 47 initial offerings worldwide have been shelved since March.

While emerging markets were not immune from the decline—the MSCI Emerging Markets Index sank as much as 18 percent this quarter—companies, many of which were government-owned, pushed ahead with their share sales. State-controlled PZU, Poland’s biggest insurer, raised $2.7 billion in April in Europe’s largest initial offering since 2007. The IPO was part of Poland’s efforts to raise as much as $10 billion from asset sales to help finance a widening budget deficit and curb borrowing. SJVN, the state-owned operator of India’s largest hydropower plant, raised $236 million in an initial offering in May.

Ken Fisher, chief executive of Fisher Investments in Woodside, Calif, believes investors seeking big payoffs will continue to snap up developing-market IPOs. Emerging economies tracked by the International Monetary Fund are forecast to expand 6.3 percent this year, almost three times the 2.3 percent projected for advanced economies.

Source: Business Week

China’s Zhou Eyes Bigger Role For Emerging Economies

Chinese central bank Governor Zhou Xiaochuan said emerging nations must play a bigger role in world financial reforms.

Problems such as financial crises “can no longer be solved properly under the old traditional framework,” Zhou wrote in a commentary published on Caijing magazine’s website to coincide with a financial forum in China. At the Shanghai event, Deputy Governor Yi Gang said the nation could benefit from moving swiftly.

Leaders of the Group of 20 nations meeting in Toronto will discuss altering financial rules to prevent a repeat of the 2008 crisis that triggered a global recession. The US will argue for tougher regulation of the derivatives market, stronger capital requirements for banks and safeguards against market manipulation, according to President Barack Obama.

The G20 includes the US, the European Union, Japan, Germany and emerging economies such as China, India and Brazil. Zhou is attending the summit as part of a Chinese delegation led by President Hu Jintao.

Since a G20 summit in London, developing nations and emerging economies have had a “louder voice,” Zhou wrote in the article. “There has been consensus that their participation is needed in coordinated actions in global economic and financial policies, as well as in the drafting of rules for global financial regulation.”

China’s rising influence poses “challenges” for the nation, said Zhou, citing the need for policy makers to assess key issues and reach a consensus.

Source: China Daily

Norway, China In Ecology Projects

Cooperation between China and Norway on environmental protection has moved forward with the drawing up of lists of projects around the country at the Shanghai Expo 2010 Garden.

A two-day seminar on Sino-Norwegian Environmental Collaboration at the expo, held in the Norway Pavilion earlier this month, was jointly organized by the Ministry of Environmental Protection of China and Norway’s Environment Ministry. Issues under discussion at the seminar included biological diversity, climate change and pollution control.

Since the mid-1990s, Chinese and Norwegian governments have carried out a series of active cooperation projects that focus on international environmental issues and China’s needs for environmental protection. They have effectively promoted the capability for environmental protection in China.

Reducing the emissions of industrial pollution is another area in which China and Norway entered into agreements. A project called Capacity Building in Environmental Protection Bureau in Guizhou province (Zunyi Project) came about in reaction to the official agreement on cooperation in environmental protection between China and Norway. The project was aimed at reducing industrial pollution including the amount of industrial wastewater and damage to forests and cultural monuments in Zunyi city.

From a more ecological position, China and Norway environmental departments also reached consensus on the discussion and analysis of the protection of natural reserve areas in China.

Source: China Daily

United Plans To Spread Its Wings In China

Operating the most direct flights in terms of passenger capacity between the US and China, United Airlines Inc is eager to tap deeper into China’s aviation market. Strengthening ties with Shanghai, the nation’s financial center and a future international aviation hub, is high on the agenda of Star Alliance partners, said a senior executive from the Chicago-based carrier.

Being one of the five Star Alliance founders, “United has worked closely with aviation alliance partner Air China to identify opportunities to serve the Shanghai market that Shanghai Airlines used to serve,” said James P. Mueller, vice president of United Airlines Pacific region. Former Star Alliance member Shanghai Airlines will change to SkyTeam after the merger with China Eastern Airlines.

China’s plan to build 97 new airports by investing up to RMB 450 billion will make it the world’s fastest growing aviation market. Shanghai as the future financial center is extremely important for the future development of aviation in China.

By the end of May, as many as 278 multinational firms had set up their regional head-quarters in Shanghai, and more companies are trying to establish their branches in the coastal metropolis. The soaring demand from business travelers can be met by additional trans-Pacific flights.

United would be very interested in being part of that process, said Mueller. In addition to expanding United’s own service in China, the carrier also plans to use Air China’s existing network to serve areas that they cannot easily reach. “We are always looking where the next business opportunity is, and try to serve the emerging market most efficiently, including cooperation with Star Alliance members,” he said.

Under the umbrella of Star Alliance, United and Air China have had a strong relationship for many years, giving United a tremendous edge to grow not only in the major cities, but also in the secondary cities.

Source: China Daily

World Bank To Support Energy Efficiency Lending By Minsheng Bank

The Board of Executive Directors of the World Bank have approved a loan of $100 million to China’s Minsheng Bank for energy efficiency projects to help China to achieve its target of a 20 percent reduction in energy intensity by 2010.

Minsheng Bank will lend the funds to industrial enterprises or energy service companies for eligible energy efficiency projects. “The project will continue assisting the Government of China in scaling up energy efficiency commercial lending in China,” said Wang Leiping, a World Bank energy specialist.

The China Energy Efficiency Financing II Project of World Bank is designed to aid commercial investments in industrial energy efficiency rehabilitation projects, and demonstrate mechanisms for financing industrial energy efficiency investments that can be replicated by other commercial banks in China.

The major types of energy efficiency projects supported by the program include: replacement of inefficient industrial technologies with more efficient industrial boilers, kilns, and heat exchange systems; recovery and use of by-product gas, waste heat and pressure; installation of highly efficient mechanical and electrical equipment, including motors, pumps, heating and ventilation equipments; and industrial system optimization to reduce energy use.

The financing will be available for both private and State-owned enterprises and small and medium-sized enterprises will be particularly encouraged, the Bank said.

Besides the $100 million provided by World Bank, Minsheng Bank will also provide at least $500 million equivalent of its own resources to finance energy efficiency and renewable energy projects. World Bank will also provide technical assistance to Minsheng Bank, in order to strengthen its capacity for developing low-carbon lending businesses, carbon finance and managing environmental and social risks.

In order to meet the energy efficiency target, investment requirements for energy efficiency improvements in the next few years are estimated at more than $20 billion per year. Contributions from the commercial banks are strongly needed in order to meet the requirements.

Source: China Daily

Chinese Firm To Produce Low Carbon Subway Trains For India

A Chinese manufacturer has won a deal to produce five environment-friendly subway trains for India, the company’s spokesman said.

Zhuzhou Electric Locomotive Co Ltd of China South Locomotive and Rolling Stock Corporation Limited (CSR), China’s main rail vehicles manufacturer, signed the contract with representatives of Siemens, the contractor of a subway project in New Delhi, in Zhuzhou city, Hunan province, said Han Jun, publicity director of the Chinese company.

Under the deal, the Chinese supplier would hand over the first train in November 2011, and the other four trains were expected to be finished before March 2012, said Han.

The trains would go into service on the route linking New Delhi and satellite city Gurgaon.

The trains, each with three carriages, were exclusively developed by China and designed to be energy-saving with less noise and electromagnetic emissions, he said.

Han said each train, which could transport up to 1,010 people at the speed of 80 km/h, could save up to 20,000 kwh a year based on advanced electric and material techniques compared with traditional trains.

Source: China Daily

China To Tap More Unconventional Gas To Ease Energy Shortage

China is set to exploit more unconventional gas reserves to meet rising demand and to power its rapid economic growth as part of the country’s efforts to grapple with energy shortages and climate change.

Natural gas consumption accounts for only four percent of China’s total energy needs, well below the world’s average of 24 percent, and even below Asian countries’ average of 11 percent, Wu Yin, deputy head of the National Energy Administration, said at an energy forum.

The country has booming demand for natural gas, but its supplies always fall short of demand, forcing the government to raise onshore natural gas prices by 25 percent in early June to adjust for the market demand.

China aimed to double the weighting of natural gas in its total energy consumption basket to eight percent over the next five years, which would also be a test of the country’s gas production capacity, Wu said.

“China has to accelerate the exploitation of unconventional gas to meet the target,” said Hu Wenrui, academician from the Chinese Academy of Sciences, who is also the head of the China Petroleum Enterprise Association.

China has huge unconventional gas resources, five times greater than its conventional gas deposits.

Increasing unconventional gas production could also ease restrained oil supplies and rising costs of oil production and cut carbon emissions, he said.

Actually, the country has strengthened cooperation with countries boasting advanced technologies to accelerate the exploitation of its unconventional gas reserves.

In the just-concluded Sino-U.S. Strategic and Economic Dialogue, the two sides agreed to further promote cooperation in assessment, exploration and production of shale gas.

Source: China Daily

Shanghai Strives To Win Key Role

Shanghai will go all out to be the front-runner on financial reform and innovation, Shanghai Party Secretary Yu Zhengsheng told the Lujiazui Forum.

Shanghai embraces advice and suggestions on how to grow better as a global financial center, Yu said.

“Shanghai will keep making initiatives to break through the bottleneck that limits the city’s rise in the financial area,” he told the Lujiazui Forum, touted as the “Financial Davos.”

A better coalition between the financial and high-tech industries, better regulation and a better environment for attracting financial professionals are all on the agenda, he said.

The State Council announced guidelines in early 2009 to make Shanghai a global financial and shipping hub by 2020 and the city is striving to meet the target.

Shanghai boasts 200,000 financial professionals in its population of 20 million.

Shanghai has passed rules to attract experienced professionals to base in the city but “the efforts are far from enough,” Tu said. He said luring professionals to the city is key for Shanghai’s rise as a global financial center.

Tu waved off Shanghai’s competition with Hong Kong as a global financial center, citing China’s large-scale economy as enough to accommodate the rise of both cities.

In the past year, much progress has been made to put Shanghai in the forefront to pilot financial innovation programs, such as the cross-border trade yuan settlement.

The program, launched in Shanghai and four Guangdong Province cities, have been expanded nationwide.

Source: Xinhua Net

Expanding Future For Derivatives Market

China is to expand its financial derivatives market and allow more institutions to participate in margin trading and short selling to boost liquidity and turnover, the country’s top securities regulator said.

Shang Fulin, chairman of the China Securities Regulatory Commission, also told the Lujiazui Forum that dealing with insider trading had become a top priority.

“After we steadily launched index futures, we have to gauge our regulatory abilities in order to push forward new products,” Shang said. “We should gradually form an effective pricing mechanism and risk-control system.”

In April, China unveiled the country’s first stock index futures based on the CSI 300 index, covering the biggest 300 mainland-listed companies, in order to help investors hedge against trading risks.

In March, it introduced margin trading and short selling, limited to projects involving a handful of brokers.

“We will conduct analysis on the current operation of margin trading and short selling,” Shang said.

“If risks are under control, we will expand the trial.”

On supervision, Shang said: “System reforms in the past years have effectively eased previous problems such as market manipulation.

“But,” he added, “some new problems like insider trading among corporate mergers and acquisitions have become prominent.”

Some traders and fund managers had already been expelled from the market after they used inside information to reap profits.

Source: Xinhua Net

 

Financial Industry Fund Starts With Bang

Institutional investors cheer China’s first financial industry fund which attracted a higher amount of money than expected in its first fund-raising exercise.

The fund attracted more than RMB 11 billion ($1.6 billion), higher than its planned RMB 8 billion, participants at the Lujiazui Forum were told over the weekend in Shanghai.

The sole financial industry fund among China’s 10 industry funds approved by the State Council is expected to have a total size of RMB 20 billion in the long run. GP Capital Co Ltd, operator of the fund, started to raise funds in January.

“We hope the fund can set an example for the professional and regulated running of private equity in China,” said Xu Lin, director of the finance department of the National Development and Reform Commission, in Shanghai.

The industry fund is China’s official private equity fund allowed by the State Council.

GP Capital was launched in Shanghai in July 2009 by Shanghai International Group, the investment arm of the city’s government, and China International Capital Corp, one of the country’s most prominent investment banks. The two parties own 50 percent each of GP Capital which has a registered capital of RMB 200 million.

Bei Duoguang, managing director of China International Capital, and also president of GP Capital, said earlier that GP Capital targets nationwide financial institutions, including insurers, banks, fund management companies, brokerages and trust firms, as investment opportunities.

“We also hope it will contribute to the rise of Shanghai as a global financial hub,” Xu said.

Shanghai is pulling out all the stops to attract more private equity or venture capital firms to the city. It is already home to the lion’s share of overseas banks based in China.

Source: Shanghai Daily

CONSUMER / RETAIL

South Australian Wineries Interested In China Wine Market

South Australia’s (SA) world-renowned wineries said they hope to tap into China’s burgeoning wine market with a trade mission and wine tastings.

Twelve wineries, including Belvidere, Chalk Hill and Bethany, spanning every wine growing region in the state are being represented on a mission to China, SA Minister for Industry and Trade Tom Koutsantonis said.

“The rapidly expanding Chinese middle class is creating outstanding opportunities for South Australian wine,” the minister said in a statement.

“There are between 50 and 250 million potential wine drinkers in China.

“Wine is South Australia’s fifth largest export to China, worth A$49 million ($42.7 million) – and the market is still in its infancy.”

The trip will include visits to major wine retailers and distributors and there will be tastings with invited guests, and a Wine Showcase Dinner for influential wine distributors and wholesalers in Shanghai and Qingdao, China.

Source: China Daily

H&M CEO Backs Chinese Manufacturing Despite Yuan Move

Hennes & Mauritz AB will be affected by any appreciation in China’s currency but has no plans to move its manufacturing, the Swedish fashion retailer’s chief executive said.

“Costs there will probably go up,” Karl-Johan Persson said in an interview. Analysts estimate that about a third of H&M’s products are made in China, where the government recently signaled that the yuan’s exchange rate will become more flexible. The move is seen as an effort to appease U.S. politicians, who have complained that the weak yuan unfairly boosts China’s competitiveness.

The Stockholm-based company posted a 24% rise in net profit for its fiscal second quarter to SEK 5.21 billion ($670.4 million) from SEK 4.19 billion a year earlier. Revenue for the three months ended May 31 rose 1.9% to SEK 27.03 billion from SEK 26.54 billion. However, sales in stores that had been open for more than a year dropped 2%.

In the second quarter, the world’s third-largest fashion chain by revenue behind U.S.-based Gap Inc. and Spain’s Inditex SA opened 86 new stores and closed 12 In the third and fourth quarters, H&M expects to open up 180 new stores, mostly in Germany, the U.S., U.K., France, China and Italy.

Source: Wall Street Journal

Gap Reveals China Retail Development Plans

American clothing retailer Gap Inc. has unveiled details of its entry into China with plans to open Gap stores in Beijing and Shanghai in late 2010, and simultaneously bring an online shopping experience to all Chinese consumers.

In Shanghai, a 1,796 square meter Gap flagship will be located on the premier Nanjing West Road, occupying two floors in the Venture Tech building. It will be followed by another 1,140 square meter flagship located on Mid Huaihai Road, one of Shanghai’s top high streets. In Beijing, a 1,165 square meter flagship store will span two floors in the APM building on Wanfujing Street; another 1,800 square meter store will be opened in Chaobei Joy City, a large scale regional shopping center.

As part of its multi-channel entry strategy, Gap Inc. has partnered with Shanghai Yi Shang Network Information Company. The online shopping site will give consumers throughout the country the opportunity to shop for Gap products whenever and wherever they want.

Source: China Retail News

 

ALTERNATIVE ENERGY

China Solar Company ‘Shines’ On World Cup

China did not qualify for the World Cup, but the country is still making an appearance in South Africa. An ambitious Chinese solar company, the country’s first World Cup sponsor, has placed advertising in all the stadiums in a bid to give its brand a worldwide boost.

Yingli Green Energy Co’s sponsorship deal allows it to show its logo of Yingli Solar, in Chinese and English, on electronic perimeter-boards at all 64 games of the World Cup. The Yingli slogan appears for 30 seconds at a time, totaling 8 minutes in each game. Yingli also has right to showcase its solar products near the stadiums.

It is a bold move by the New York Stock Exchange-listed solar panel maker, based in the city of Baoding, southwest of Beijing. The company is not well-known in China. Set up in 1998 with nearly 7,000 employees now, Yingli said its main markets are overseas, with Europe accounting for more than 50 percent.

Liu said Yingli also planned to expand its market to Africa. The appearance of a renewable energy company will differ from the usual Chinese business activities in Africa that are dominated by state-owned oil companies or infrastructure builders.

Source: China Daily

Northeast China To Benefit From Wind Power

Sand-filled winds from Horqin often leaves local farmers’ land barren and the United Nations Educational, Scientific and Cultural Organization has described the county as being one of the areas of the world most unfit for human living.

But the Chinese government’s new strategy to find more renewable energy might provide one of the country’s poorest counties with the opportunity to improve its way of life. The reason for hope is a wind farm with a combined installed capacity of 1.9 million kilowatts that will soon be completed in the county.

More hopeful still, scientists have estimated that the county has a potential wind power of 8 million KW within the 1,600 square kilometers of the wind-rich region for installing giant windmills.

In response to a sometimes limited power supply, the Chinese government has raised its investment in exploring renewable energy resources and issued a series of regulations and policies to encourage green energy use, targeting the expansion of wind, nuclear and solar power.

Source: China Daily

Akasha Energy Signs EMAX as China Representative

Renewable energy development company Akasha Energy, LLC, announced that it has signed an agreement with EMAX Enterprises Limited of Hong Kong (EMAX). Under the agreement, EMAX will serve as Akasha’s exclusive representative for business development in China and will play a leading role in identifying projects in which Akasha can build and operate renewable energy facilities for local governments and utility companies.

Akasha plans to offer Chinese cities and affected utilities power purchase agreements involving a mix of leading edge technologies in wind, solar, and biomass. Where wholly-owned foreign investment is not an option, EMAX will be assisting Akasha in identifying and recruiting qualified joint venture partners. Robert Vernon, co-founder of EMAX, remarked that “Akasha is offering exactly the right solutions to help China achieve significant reductions in its green house gas emissions. We look forward to leveraging our longstanding government relationships to make sure Akasha is afforded the opportunity to invest in China’s clean energy future.”

Source: Yahoo News

 

RECENT TRANSACTIONS

Alibaba Buys U.S. E-Commerce Software Firm Vendio

Alibaba.com agreed to acquire e-commerce services provider Vendio Services Inc., marking the Chinese company’s first U.S. acquisition.

The acquisition of Vendio, which helps merchants sell their goods on sites such as Amazon.com Inc. and eBay Inc., is part of Alibaba’s larger push to penetrate the U.S. Terms weren’t disclosed.

David Wei, chief executive of Alibaba.com, said he is looking for similar opportunities to expand the company’s “B2B2C,” or business-to-business-to-commerce, model in the U.S.

But he added that while Alibaba runs Taobao, China’s largest Internet retail platform, the company has no plans to expand into the U.S. online retail market.

Alibaba said the deal will give the company access to more than 80,000 small U.S. businesses, most of which have never used online supplier services to source products and materials.

Source: Wall Street Journal

BASF Signs Deal To Buy Out Cognis

Chemical company BASF SE said it has agreed to acquire Cognis, a supplier of raw materials for cosmetics, detergents and cleaners, for €700 million ($858 million) in cash.

Including net financial debt and pension obligations, the enterprise value of the transaction is €3.1 billion, the company said. The closing of the transaction is expected for November 2010.

“With the acquisition of Cognis…we are further expanding our position as the world’s leading chemical company,” said Juergen Hambrecht, the chairman of BASF’s board.

Cognis employs about 5,500 people and operates in 30 countries. Besides chemicals, it also makes coatings and inks, lubricants, and products for mining.

Source: Shanghai Daily

SearchMedia Announces Completion of Continental Acquisition

SearchMedia Holdings Limited (“SearchMedia”), one of China’s leading nationwide multi-platform media companies, announced that it has completed its acquisition of Zhejiang Continental Advertising Co., Ltd. (“Continental”) in a combination cash and stock transaction. The stock component of the transaction is expected to be payable in 2012, based on Continental’s 2011 financial performance and the Company’s stock price prior to issuance.

Based in Hangzhou, Zhejiang province, Continental is a profitable billboard company which has over 10 years of operating history. Continental maintains a leading market position in Hangzhou, operating billboards in key locations including the central business district and at the Hangzhou Xiaoshan International Airport.

Speaking about the acquisition, Paul Conway, Chief Executive Officer of SearchMedia, stated, “We believe the acquisition of Continental enhances the attractiveness of our outdoor media portfolio specifically in Zhejiang province. Hangzhou, the capital city of Zhejiang province, is ranked eighth in terms of city-level GDP nationwide and has a population of approximately 8 million people in addition to being one of the most popular tourist destinations in China.

“In addition to the important strategic market opportunity presented by this acquisition in Hangzhou, SearchMedia will benefit from the managerial experience of Mr. Li Xiaoying, the founder and general manager of Continental. Mr. Li has over 20 years experience in the advertising industry and will remain as the General Manager of our new SearchMedia subsidiary.

Source: Marketwire