Posts tagged with "news"
Tuesday, 26. December 2006, 02:39:56
domestic news, news
Avon recruits 300,000 licensed sales promoters in China
(Xinhua)
Updated: 2006-12-05 13:38
Cosmetics firm Avon said that the company has recruited a team of some 300,000 licensed door-to-door salespeople in China this year and has complied with 95 percent of China's new direct sales rules.
Gao Shoukang, president of Avon China, said that the company has trained and certificated its direct sales agents.
According to Gao, the number of the company's licensed sales staff reached 299,568 nationwide by the end of October. Its network of some 6,000 boutiques in China shrank to 5,400, as it shifts to its more traditional business of door-to-door sales.
Gao said that Avon will use China Post to deliver its products.
In 1998 door-to-door sales of 10 foreign-backed direct selling companies were suspended in China while new regulations were developed. The deadline for application for approval under the new regulations passed on December 1 with two companies being granted licenses.
Only Avon, the world's biggest direct seller of beauty products, and For You, a manufacturer of health products have obtained licenses.
Gao said the company expect a 9 percent increase in revenue this year.
Direct selling giants such as Amway, Mary Kay, and Perfect are waiting for final approval of their direct selling businesses in China.
The major difficulty for the unlicensed firms is that their sales plans resemble pyramid schemes in which one sales person relies mainly on recruiting other sales people, who have to recruit other salespeople.
Tuesday, 26. December 2006, 02:24:03
domestic news, news
Anxiety starts haunting Chinese
(chinanews.cn)
Updated: 2006-12-05 14:35
According to a survey of 2,134 people launched by the China Youth Daily Social Research Center, more than 96 percent of respondents say they suffer from anxiety.
Asked the reason of anxiety, 52.1 percent of respondents say they are anxious about certain things, 49.5 percent about certain living conditions, and 35.2 percent about their own psychological feelings.
Things that make people anxious include: careers (65.4 percent), pressures from the outside world (38.3 percent), interpersonal relationships (37.1 percent), pressures in life (35.8 percent), and private affairs (29.2 percent).
The survey also shows that 47.8 percent of respondents think they are more anxious than five years ago, while only 12.2 percent believe they feel relaxed, as the living conditions have improved dramatically in recent years.
The most anxious social groups tend to be well-educated white collars, poor people, senior officials and company managers, and citizens living in cities.
Tuesday, 26. December 2006, 02:21:24
domestic news, news, news
[I]Rules tightened on brokerages
(Shanghai Daily)
Updated: 2006-12-05 14:43
China's stock regulator issued rules to tighten oversight of senior employees at brokerages, part of which states at least 70 percent of managers must be Chinese at a domestic securities firm.
Foreigners also can't exceed 50 percent of total manager-level executives at a Sino-foreign joint-venture stock company, the China Securities Regulatory Commission said in a statement on its Website over the weekend without elaborating.
Individuals that own one percent of a publicly traded brokerage or five percent of a non-listed securities firm can't serve as independent directors on the company, the statement said.
The general manager, deputy general manager and board secretary at a brokerage must have worked in the securities industry for at least three years and pass specific tests organized by the regulator, it said.
The move "is aimed at ensuring operations comply with regulatory rules and tracking the quality of senior executives, board members and supervisors," the CSRC said.
China has been striving to develop its capital industry - previously pummeled by scandals and capital misuse - with tighter rules to restore investor confidence and lure massive household savings.
The stock regulator has unveiled a slew of regulations in the past three years to curb brokerages' investment irregularities, prevent them from stealing client funds and prompt weaker players to merge.
"Apparently, the regulator hopes to keep control of the industry on the domestic side," said a senior analyst in Shanghai. "Foreigners might play an important role in a Chinese firm but not a decisive one yet."
Only a small number of financial giants such as Goldman Sachs and CLSA have set up joint-stock operations on in China, with businesses restricted to investment banking.
UBS AG last year agreed to purchase part of Beijing Securities Co to become the first foreign firm to have management control of a China venture with brokerage licenses. But the deal has yet to gain final approval from the government.
China's 107 brokerages had a cumulative profit of 18 billion yuan (US$2.3 billion) in the first 10 months after four years of losses, the China Securities Journal reported yesterday.
Tuesday, 26. December 2006, 02:21:24
domestic news, news, news
[I]Rules tightened on brokerages
(Shanghai Daily)
Updated: 2006-12-05 14:43
China's stock regulator issued rules to tighten oversight of senior employees at brokerages, part of which states at least 70 percent of managers must be Chinese at a domestic securities firm.
Foreigners also can't exceed 50 percent of total manager-level executives at a Sino-foreign joint-venture stock company, the China Securities Regulatory Commission said in a statement on its Website over the weekend without elaborating.
Individuals that own one percent of a publicly traded brokerage or five percent of a non-listed securities firm can't serve as independent directors on the company, the statement said.
The general manager, deputy general manager and board secretary at a brokerage must have worked in the securities industry for at least three years and pass specific tests organized by the regulator, it said.
The move "is aimed at ensuring operations comply with regulatory rules and tracking the quality of senior executives, board members and supervisors," the CSRC said.
China has been striving to develop its capital industry - previously pummeled by scandals and capital misuse - with tighter rules to restore investor confidence and lure massive household savings.
The stock regulator has unveiled a slew of regulations in the past three years to curb brokerages' investment irregularities, prevent them from stealing client funds and prompt weaker players to merge.
"Apparently, the regulator hopes to keep control of the industry on the domestic side," said a senior analyst in Shanghai. "Foreigners might play an important role in a Chinese firm but not a decisive one yet."
Only a small number of financial giants such as Goldman Sachs and CLSA have set up joint-stock operations on in China, with businesses restricted to investment banking.
UBS AG last year agreed to purchase part of Beijing Securities Co to become the first foreign firm to have management control of a China venture with brokerage licenses. But the deal has yet to gain final approval from the government.
China's 107 brokerages had a cumulative profit of 18 billion yuan (US$2.3 billion) in the first 10 months after four years of losses, the China Securities Journal reported yesterday.
Friday, 10. November 2006, 08:36:51
news
Taiwan
Trouble in Taiwan
Nov 7th 2006
From the Economist Intelligence Unit ViewsWire
Corruption allegations put President Chen Shui-bian under pressure to step down
On November 3rd prosecutors announced the indictment of Wu Shu-chen, the wife of Taiwan's president, Chen Shui-bian, on corruption charges relating to the alleged misuse of a presidential fund. The prosecutors also claimed to have evidence implicating Mr Chen, although the president cannot be prosecuted so long as he remains in office. All this has added to the pressure on Mr Chen to step down, and the Economist Intelligence Unit believes there is now a much stronger chance that he will do so. However, this is still not our central forecast.
The first lady's indictment and the prosecutors' naming of Mr Chen as a suspect are among the most important twists so far in the saga of opposition-led efforts to force Mr Chen from office. Corruption allegations aimed at Mr Chen, his family and others in his inner circle have dogged the presidency for many months, all but paralysing policymaking. The latest charges are especially damaging and will undermine further the moral authority of the ruling Democratic Progressive Party (DPP), which has lost the political advantage it once held over the Kuomintang (KMT) through having a relatively corruption-free image.
Will he quit or won't he?
Whether the latest charges will prove decisive in bringing about Mr Chen's resignation is uncertain, however. For one thing, Mr Chen's presidential immunity provides an obvious incentive for him to remain in office for as long as possible. (His current term—his second as president—will expire in May 2008, and he cannot be re-elected for a third term.)
For another, removing him through formal parliamentary processes—that is, through a vote on a recall motion—will be difficult. The KMT and its allies do not have sufficient numbers on their own in the 225-seat legislature to secure the two-thirds majority necessary to pass a recall motion. Two previous attempts this year to recall Mr Chen have failed. A third recall motion, which the KMT is expected to table this week, is expected to receive greater support. The DPP's long-time ally, the Taiwan Solidarity Union (TSU), for the first time has said it may call on its 12 legislators to vote for such a motion. However, even these 12 extra votes would not be enough—a number of DPP lawmakers would also be required to support the motion in order for it to succeed. Although there have been increasing signs that DPP politicians want to distance themselves from Mr Chen, whom they increasingly regard as an electoral liability, the DPP's antipathy towards the KMT and the shortage of attractive alternatives to Mr Chen may discourage its members from breaking ranks.
However, a rebellion against Mr Chen remains a possibility. It is uncertain whether Mr Chen's promise, made on November 5th, to step down if Ms Wu is found guilty will appease those in the DPP who would be happy to see his departure. In particular, the shift in the TSU's position has increased the risk that members of his own party could vote against him. The spiritual leader of the TSU, the former president Lee Teng-hui, appears to be increasingly frustrated with Mr Chen. Mr Lee has influence over many pro-Taiwan independence members of the ruling party.
Tactical morality
If attempts to force Mr Chen from office using the legislative process fail, the opposition's only alternative is to exert so much moral pressure on the president that he feels compelled to step down voluntarily. However, Mr Chen thus far has stubbornly refused to give in to such pressure during the months that corruption scandals have overshadowed his presidency, and doing so now would only undermine his protestations of innocence. There is perhaps a chance that Mr Chen might step down in the national interest if the large protests calling for his resignation were seen to endanger public safety. Indeed this may be part of the motivation behind such protests—to put Mr Chen in a position where he has little alternative but to step down, or risk seeing citizens hurt. But this scenario seems highly unlikely.
It does highlight, however, the important fact that the opposition-led campaign to discredit Mr Chen is as much an exercise in manipulating public opinion as it is an attempt actually to remove him from office. Indeed, given the difficulty of getting rid of Mr Chen, it can be argued that the primary purpose of his opponents' campaign has been as a tactical ploy to damage the DPP's reputation. In this it has succeeded to some degree. Important mayoral elections are coming up in the cities of Taipei and Kaohsiung in December, and next year will see a parliamentary election and an increase in political manoeuvring ahead of the 2008 presidential poll. As the policymaking paralysis that has accompanied the corruption scandals has already, in effect, made Mr Chen a lame duck, whether or not he remains in office matters less in some respects than how the underlying party-political skirmishes play out over the next 16 months.
KMT vulnerabilities
However, while Mr Chen's difficulties have undermined the DPP's moral authority, the KMT is hardly on solid ground itself. Mr Chen's defence rests, in part, on the implicit argument that whatever he has done with state funds is relatively normal practice in Taiwan and no worse that anything the KMT did during its five decades in power. This is potentially a convincing argument, especially as Mr Chen also has some right to protest that his use of the state-affairs fund was not for personal gain—he claims, for example, to have cut his salary by much more than he would have gained from embezzling from the fund—and that such funds, of necessity, have never been transparently managed in Taiwan.
Moreover, part of the case centres on the first lady having failed to provide legitimate receipts when obtaining reimbursements from the presidential fund. This became an issue for the first time during the annual audit of the president's accounts. However, the president's supporters have pointed to the fact that the same procedure for reimbursements has been followed since Mr Chen came into office—it therefore seems odd that the audit office has only now decided to allege wrongdoing, given that Mr Chen has been in office since 2000.
The KMT's attempts to take the moral high ground are also complicated by its greater sympathy for cross-Strait co-operation with China, which many Taiwanese distrust. Although many voters are equally uncomfortable with strident support of Taiwan independence or any moves to change the political status quo, the broadly pro-independence DPP nonetheless has a subtle inherent advantage in being able to promote itself as standing up for Taiwan's interests.
Perhaps most potentially damaging of all for the KMT is the likelihood that voters will regard its anti-Chen campaign as one of cynical opportunism, a perception reinforced by the fact that the overt aim of ousting Mr Chen has seemed a long shot until now. This, of course, could be just why Mr Chen is refusing to back down. Either way, and whether or not Mr Chen is removed, Taiwan's political scene will remain confrontational and unstable for the time being.
Saturday, 28. October 2006, 02:30:43
news
Shares of ICBC rise on debut
By Zhang Ran and Lillian Liu (China Daily)
Updated: 2006-10-28 09:05
The Industrial and Commercial Bank of China (ICBC), the country's largest lender by assets, made a successful debut on its first day of trading in Shanghai and Hong Kong on Friday.
Its shares closed at 3.28 yuan (41.5 US cents) in Shanghai, up 5.13 per cent from its IPO (initial public offering) price of 3.12 yuan (39.5 US cents). Investors oversubscribed the stock 26 times in the world's biggest IPO that raised US$19.1 billion.
In Hong Kong, the bank's H shares closed at HK$3.52, up 14.66 per cent from its IPO price of HK$3.07.
Share prices fluctuated between HK$3.63 and HK$3.50, with the peak price 18 per cent higher than the IPO price. Bullish sentiment lifted the benchmark Hang Seng Index to a six-year high in the morning session.
It was the first-ever simultaneous listing in both Hong Kong and Shanghai by a giant mainland lender. The IPO represents about 15 per cent of the bank's enlarged share capital.
"It is the day of the ICBC... It surely will attract many other companies to follow suit and launch dual listings, because the A-share market policy and regulations are getting sound and mature and the economic gap between Hong Kong and the mainland is narrowing," said Andrew To, director of Hong Kong-based Taifook Securities.
However, market watchers were a little disappointed, as they had expected the shares to rise as much as 12 per cent on the Shanghai market.
"The closing price was lower than expected," said She Minhua, a banking analyst with CITIC China Securities. He had expected the shares to close at up to 3.5 yuan (44.3 US cents) on their debut.
Bank of China (BOC), the country's second biggest lender, made a strong debut by rising as high as 23 per cent from its IPO price of 3.08 yuan (39 US cents) on July 5.
BOC shares closed at 3.30 yuan (41.8 US cents) on Friday in Shanghai.
"ICBC shares should be higher than those of the BOC, given the former's largest operating network across the country. And the ICBC is also expected to increase its revenue on bank commission fees faster than the BOC," She said.
The benchmark Shanghai composite index closed at 1,807.18, down 0.19 per cent.
The Hang Seng Index closed at 18,297.55, 0.31 per cent lower, after rising 92.72 points to 18,446.46 by midday.
Analysts attributed the fluctuation to the speculative activities of investors who want to buy once the stock opens and sell before the market closes.
ICBC Chairman Jiang Jianqing said at the stock opening ceremony that he was "very, very satisfied" with the listing and the stock's debut performance.
"The listing was very successful. It will help improve our management. The strong demand reflects the acceptance by the international investment community of the ICBC," Jiang told reporters.
Friday, 27. October 2006, 02:54:05
news
War again in Sri Lanka
Oct 19th 2006 | COLOMBO
From The Economist print edition
The conflict intensifies
NO ONE talks peace while waging war better than Sri Lanka’s government and Tamil rebels. The two sides are due to meet in Geneva on October 28th and 29th, in the latest bid to end their 28-year conflict. They are meanwhile engaged in some of their fiercest fighting in years. More than 1,000 people have been killed since April. Some 220,000 have been displaced, mostly Tamils and Muslims in the north and east of the country, where the rebel Liberation Tigers of Tamil Eelam are fighting for an independent homeland. This week, among other horrors, the Tigers conducted suicide bombings on navy targets, including one on a naval convoy near Habarana that killed nearly 100 sailors, and two on a base beside the southern tourist resort of Galle (see map). In response, government jets intensified a bombing campaign in the east of the country that has cost hundreds of civilian lives.
It is fruitless to ask which side started the latest violence, which erupted in April in a dispute over control of water in the eastern district of Trincomalee. But it has conclusively ended a much-transgressed 2002 ceasefire. At present, neither side looks inclined to stop fighting. Both are rearming, with the government reported to be planning to double defence spending to 139.6 billion Sri Lankan rupees ($1.3 billion) next year. At best, the talks in Geneva may lower the temperature and lead to a more constructive round of dialogue. But there is a good chance that the two parties will merely use them to trade insults before an international audience and justify their military action.
The conflict intensified in July, after the Tigers closed a dam in Trincomalee, thereby denying water to 30,000 farmers, mostly of the Sinhalese majority. In a subsequent ground assault, the government recaptured a number of eastern towns, including Mutur and Sampur. In an apparent bid to chase away nosy foreign aid groups, government troops allegedly executed 17 employees of a French agency, Action Against Hunger. The army easily repulsed the Tigers’ counter-attack.
On October 11th the government launched a three-pronged offensive from the northern coastal towns of Muhamalai, Kilaly and Nagarkovil. Its aim was to clear the rebels from the northern Jaffna Peninsula and capture their headquarters at Kilinochchi, near the peninsula’s neck. But the government had miscalculated. The peninsula was heavily mined and easily defended by determined rebels. Government air strikes were limited by a fear of friendly fire. The assault crumbled, with an estimated 130 solders killed and more than 400 injured. Tanks and armoured personnel carriers were also lost in a serious defeat.
Frail hopes that this might coax the government to negotiate with its enemy were swiftly disappointed. Instead, it intensified its bombing in the east. On October 16th President Mahinda Rajapakse told a special envoy from Japan, Yasushi Akashi, that he would escalate the war again if his troops were attacked. Mr Rajapakse’s lack of enthusiasm for foreign peacemakers and their suggested compromises is well known. He won power last year after taking a hard line against a more conciliatory candidate, Ranil Wickremesinghe, formerly the country’s prime minister.
Mr Rajapakse exploited a Sinhalese fear that the federalism Mr Wickremesinghe championed was a prelude to splitting the country. The rebel leader, Velupillai Prabhakaran, approved of Mr Rajapakse’s bellicosity; he had also had enough of foreign peace efforts. Thus he prevented pro-Wickremesinghe Tamils from voting, ensuring Mr Rajapakse’s election. Given that the recent fighting is what both government and rebels want, the chances of ending it are thin.
Friday, 27. October 2006, 02:52:38
news
Saying no to torture
Oct 20th 2006
From Economist.com
Why some are willing to see it used
IT PAYS to be sceptical about the significance of opinion polls. Depending on what questions the pollsters ask, and how, the most ridiculous or startling results may be generated. But some polls throw up genuinely disturbing information. According to one conducted for the BBC and released on Thursday October 19th, nearly a third of respondents (some 27,000 people were questioned in 25 countries) consider the use of torture acceptable under certain circumstances. Another published last November by the Pew Research Centre found that nearly half of all Americans think torturing terrorist suspects could, at times, be justified. Those results tallied with other Pew polls of the past few years.
Divining the significance of such data is not easy. The various pollsters, for example, apparently left it to respondents to define what they meant by torture. But the results are morbidly fascinating and give clues as to why some people are more willing to contemplate torture than others. Although a clear majority, worldwide, opposes even the occasional use of torture, there are significant groups willing to say they favour it.
Those with an especial fear of terrorism seem most inclined to support its use. Thus 53% of Israeli Jews, according to the BBC poll, would allow terrorist suspects to be tortured for the sake of trying to get information that could save innocent lives. (Only 16% of Israeli Muslims would agree.) Large minorities in the Philippines, Indonesia, Kenya and Russia—where terror attacks have also repeatedly claimed lives—would also tolerate its use.
But fear of terrorists is not the only factor. General attitudes to human rights count, too. Thus in many places where the death penalty is outlawed, as in the European Union, few would consider the use of torture even in extreme circumstances. In Britain and Spain, each the site of a large terrorist attack in the past couple of years, only a small proportion would contemplate it. In contrast in terrorism-free China, where authorities use the death penalty with enthusiasm, more than a third of those questioned say torture might also be ok.
Ignorance apparently matters too. Last year’s Pew survey showed that the general public in America is far more enthusiastic about the occasional use of torture than are security experts, academics or military leaders. It is tempting to conclude that experts who may have a better idea whether torture is likely to prove useful are less inclined to support its use.
But evidently some do believe that it, or something close to it, could be useful for states fighting terrorists. Israeli security officials say they have prevented terrorist attacks with information gleaned from “coercive interrogation” of suspects. On October 17th George Bush signed into law the Military Commissions Act which (though he denies it would sanction torture) allows CIA investigators to use tough, physical, interrogation methods against terrorist suspects. According to Amnesty International, the torture and ill-treatment of prisoners continue to be recorded in many countries.
Those who think it could be useful may not, therefore, be swayed by moral or legal arguments. All big human-rights agreements concluded since the end of the second world war contain absolute bans on torture, with no exceptions. No domestic system officially allows it. Nor can anyone be sure they are only torturing the guilty. Argentina’s junta, for example, justified the use of torture against leftist groups that led to the execution of thousands of innocent people between 1976 and 1983.
A more telling argument, instead, may be that torture is often counterproductive. A desperate prisoner may say anything to bring his pain to an end, leaving interrogators with useless or distracting information. In addition, governments using torture are likely to provoke popular resentment and more embittered opponents. France’s brutal methods against those fighting for independence in Algeria ended up dividing French domestic opinion and strengthening its enemies. Routine abuse of Palestinian prisoners by Israel’s security service, Shin Bet, did nothing to dissuade Palestinian fighters and suicide bombers. Even America's closest allies say they are appalled by treatment of terrorist suspects that amounts, too often, to something near to torture. In too many cases, it seems, terrorist suspects are subjected to cruel treatment not for the sake of obtaining information, but for the purposes of punishment or humiliation.
Friday, 27. October 2006, 02:13:46
news
Georgia's prospects
Oct 19th 2006
From Economist.com
Russia's mixture of economic, political and covert-action pressure on Georgia recalls of another stormy and scary period, in the Baltic states in the 1990s, that changed history completely
WHEN your correspondent lived in the Baltics in the early 1990s, it was common to pooh-pooh the prospect of NATO membership. The obstacles seemed insurmountable: Soviet occupation soldiers who wouldn’t go home; disputed borders with Russia; the expense; the gulf between NATO standards and those of the flimsy and ill-run Baltic home guards—and most of all the deafening lack of enthusiasm from the West.
But just as Russia’s economic sanctions shunted Baltic foreign trade westwards, its insistence that letting the Balts join NATO was “impermissible” (a favourite Kremlin word) was the strongest proof that membership of the alliance was not just desirable, but necessary. Russia neatly backed that up with footdragging on the withdrawal of the Russian military, refusal to recognise the Baltic states’ legal continuity from the pre-war period and endless huffing and puffing about the language and citizenship laws. It all made local support for NATO soar: when you scare people, they buy more insurance.
After a bit, the West came round, too. The Baltic states are still effectively indefensible; two of them (Estonia and Latvia) still lack border treaties with Russia. Yet, rather like the even less defensible West Berlin during the cold war, they have gained a symbolic importance that means they cannot be abandoned. (Or so they hope).
As an illustration, just imagine how different history would have been if the Kremlin line in the 1990s had been: “Sure, go ahead and join NATO if you want. We wouldn’t dream of interfering and we want excellent relations with NATO ourselves anyway. Of course we will pull our troops out as soon as we can…and we will be delighted to sign border agreements as soon as possible, recognising your historical continuity.”
That message would have destroyed the case for NATO expansion overnight. It is unlikely that any of the ex-communist countries would have wanted to join or that NATO would have wanted to have them.
Now Russia is making the same mistake with Georgia. NATO’s appetite for expanding to the eastern shores of the Black Sea is mostly minimal. The alliance is dreadfully overstretched anyway and the last thing it needs militarily is another small poor country which needs a lot and (pipelines apart) offers little.
But Russia’s determination to see Georgia as part of a ‘near abroad’ over which it wields a geopolitical veto is creating the mood—already in Georgia and soon, with luck, in the West—in which the opposite will happen.
It is not just because bullying goes down badly. Russia has signally failed to show the benefits of being an ally. Every country that teams up with Russia ends up regretting it. Nobody in the Kremlin seems to have bothered to think about loyal little Armenia, savagely hit by the sanctions against Georgia. In Belarus, President Alyaksandr Lukashenka calls Vladimir Putin, Russia's president, “worse than Stalin” and is putting out feelers to the West. Cheap gas sounds nice initially—but it always comes at a high price.
The stubborn attractiveness of the ‘Euro-Atlantic orientation’ is striking given that it survives both the hideously botched occupation of Iraq and extraordinarily selfish agricultural protectionism. It must surely give the Kremlin foreign policy thinkers pause for thought that for all its faults NATO has a queue of real countries eager to join it, whereas only a handful of puppet states such as Transdniestria want to go in the other direction.
Friday, 27. October 2006, 02:03:25
news
A growing Indian empire
Oct 20th 2006
From Economist.com
Tata Steel’s $8 billion purchase of Corus, an Anglo-Dutch rival, says much about consolidation in the steel industry and about India’s acquisitiveness
WHAT a difference a year makes. In 2005 Tata Steel, India's largest private-sector steelmaker, was an industry minnow ranked as only the 56th largest steelmaker in the world, by production. It was a likely meal for bigger fish to swallow. Now, after striking an $8 billion agreement to take over Corus, a much larger Anglo-Dutch rival, it is poised to become the sixth largest such firm on the planet, with a likely annual output (judging by last year’s performances) of some 22.6m tonnes.
The deal was announced on Friday October 20th, with the two firms pledging to complete by January, leaving time for a possible—though some say unlikely—rival bid for Corus to emerge. For Tata it represents a significant triumph in a fragmented industry that is fast consolidating. Analysts who monitor the big metals and mining firms, where there has been a frenzy of activity in recent months, increasingly classify companies as either “hunter or hunted”. Mittal Steel (a Europe-based firm run by an Indian tycoon, Lakshmi Mittal) has devoured Arcelor, a Luxembourg-based steelmaker, for $32.2 billion, and is easily the world's biggest steelmaker. Consolidation in the steel industry seems to be the result of firms seeking more leverage over the few global suppliers of the raw materials (iron ore and coking coal) for making the metal.
The expansion of Tata is also a reflection of a rapid growth in confidence among Indian firms. This deal is by far the largest foreign purchase ever made by an Indian company. Corporate India has matured dramatically since 1991, when reforms cut away bureaucratic controls and encouraged the creation of a more competitive marketplace. Tata Steel is emblematic of the successful parts of Indian manufacturing and is known as the lowest-cost producer in the world.
Indian companies are in an expansive, acquisitive mood. So far this year Indian firms have announced 131 foreign acquisitions, with a total value of $18.7 billion, a huge increase on previous years, and much more than foreign firms have invested in Indian purchases.
The shopping spree spans industries from information technology (IT) and outsourcing to liquor. Wipro, for example, one of the country's big three IT firms, has this year acquired technology companies in Portugal, Finland and California. In pharmaceuticals Ranbaxy, an Indian maker of generic drugs, bought Ethimed of Belgium and Mundogen, the Spanish generics arm of GlaxoSmithKline.
Bharat Forge, the world's second-biggest maker of forgings for engine and chassis components, based in the Indian city of Pune, has since 2004 bought six companies in four countries—Britain, Germany, Sweden and China. Suzlon, another Pune firm, which makes wind turbines, this year bought Hansen, a Belgian gearbox-maker. And United Breweries, a booze conglomerate from Bangalore, has made an unsolicited bid for Whyte & Mackay, a Scottish whisky distiller.
Behind this push overseas lies a combination of forces: a domestic boom; the availability of credit; a rush to achieve global scale; and a new self-confidence about Indian business's ability to add managerial value. India's economy is in its fourth successive year of growth at around 8%. In the first two quarters of this year GDP grew at rates of 9.3% and 8.9% respectively over the same periods in 2005.
What is noteworthy about many of the firms is that the root of their success is not India's obvious competitive advantage: its vast, low-cost labour force. In the IT and outsourcing industries, lower salaries for college graduates are an important reason behind Indian firms' rapid growth. But in manufacturing the stars tend to be experts in automated, capital-intensive production. Bosses who have flourished in such businesses in India, with its poor infrastructure and still-daunting regulatory environment, understandably feel confident that they have lessons to teach their new purchases in other countries.
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