Cnooc may snag 50% of Argentine oil producer

Cnooc may snag 50% of Argentine oil producer

CNOOC Ltd, China\’s largest offshore oil and gas producer, said on Sunday it will pay $3.1 billion to acquire a 50 percent stake in Argentine oil producer Bridas Corp, a deal analysts said will add to the company\’s reserves and production substantially.
\”It is not only significant as a positive, long-term business strategy, but also will serve to add substantially to CNOOC\’s production and reserves immediately,\” said Frank Gong, vice-chairman of China investment banking at JP Morgan. The company is the sole financial adviser to CNOOC in the deal.
Based on 2009 statistics, the deal would increase CNOOC\’s proven reserves and average daily production by 318 million barrels of oil equivalent (BOE) and 46,000 BOE respectively, said a company statement.
\”Bridas, with a world-class oil and gas asset portfolio, is a very good beachhead for us to enter Latin America. Through this transaction, we\’ll establish a fair presence in this region,\” said Yang Hua, president of CNOOC.
Currently, Bridas, through its affiliates, has oil and gas exploration and production activities in Argentina, Bolivia and Chile.
Latin America is one of the foremost growth areas in the global oil and gas business. Bridas is among the top players in the region on various fronts, including reserve additions, production growth, and low cost operations, said analysts.

Bridas itself has huge upside potential. Energy demand in Argentina is growing rapidly and the regulatory environment is evolving favorably. In addition, there are distinct growth opportunities arising from the exploration portfolio and from increased recovery rates, they said.
It has been some time since CNOOC made its last overseas acquisition, said Liu Gu, an analyst at Guotai Junan Securities.
\”The deal confirms with CNOOC\’s future strategy to focus more on deep-water oil exploration and overseas expansion,\” said Qiu Xiaofeng, an analyst at China Merchants Securities in Shanghai, adding that the company will see accelerated growth in its overseas expansion between 2011-2015.
The deal still needs the approval of the Chinese government, and is expected to take place in the first half of 2010, according to CNOOC.

Wuhan Steel raises April steel prices

Wuhan Steel raises April steel prices

China\’s Wuhan Iron and Steel Co has raised April prices for hot- and cold-rolled steel by 300 yuan a ton, and for galvanised steel by 200 yuan a ton, the China Securities Journal said on Tuesday.
Wuhan Steel was the first to announce April prices among China\’s steel sector, which produced almost half the world\’s steel last year, but the paper gave no further details.
Baosteel, the country\’s top steel firm, has yet to announce prices of its mainstream products for April, after it hiked March prices of hot- and cold-rolled steel coil to their highest since November 2008.
But Baosteel has raised prices of steel wire rod by 150 to 300 yuan per ton for April, the paper said.
China\’s steel mills and global miners are locked in negotiations for 2010\’s iron ore contract, and the country\’s steel sector faces a huge increase in iron ore costs this year.

HP apologizes for its faulty laptops

HP apologizes for its faulty laptops

\”Hewlett-Packard sincerely apologized to its customers for the inconvenience brought by its products and services,\” said Zhang Yongli, global vice president of HP, in a statement posted on its official website on Monday.
HP began offering an extension of warranty periods for some laptop models, such as the HP Pavilion and Compaq Presario, and urged consumers to contact the company\’s after-sales department to report problems, according to the statement.

But HP did not respond to consumers\’ request for a recall for the faulty laptops, 21cbn.com said.
On March 5, a nonprofit website on behalf of more than 170 consumers filed an official complaint against HP to the country\’s quality control watchdog over faulty laptop computers.
The General Administration of Quality Supervision, Inspection and Quarantine launched an investigation into HP laptops following the complaints.

BYD scales back electric-car plans: report

BYD scales back electric-car plans: report

BYD Co, the Chinese carmaker backed by Warren Buffett, has given up a plan to mass produce electric cars in China by the middle of this year, the South China Morning Post said.
The company will make 100 E6 electric cars to be used as taxis in Shenzhen of Guangdong province, where BYD is based, the report said, citing BYD\’s Chairman Wang Chuanfu. Further development of the vehicles will depend on the success of the taxis, the newspaper said.
Paul Lin, a spokesman for the carmaker, didn\’t immediately answer calls to his mobile phone seeking comment. Lin on Feb 24 denied a report that the introduction of BYD\’s first electric car would be delayed.

BYD, 10 percent owned by Buffett\’s Omaha, Nebraska-based Berkshire Hathaway Inc, said March 8 it plans to market electric and hybrid cars in Europe next year including the E6. The company also planned to start selling the model in the US late this year, Henry Li, general manager of BYD\’s auto export division, said at the Detroit auto show in January.
The E6 hatchback will be able to travel 200 miles (322 kilometers) on one charge, according to the company.
BYD introduced its F3DM plug-in hybrid to corporate and government agency customers in December 2008 and supplied 48 of the vehicles in 2009.
The automaker plans to start selling the F3DM to consumers by the end of this year and will set up a sales office in the US, the Morning Post cited Chairman Wang as saying.
Profit surges
BYD said March 14 it more than tripled net income last year to 3.79 billion yuan ($555 million) from 1.02 billion yuan in 2008, as consumers took advantage of government subsidies to buy the automaker\’s gasoline-fueled F3 compact cars. The model was China\’s best-selling vehicle in 2009.
The carmaker\’s sales increased 162 percent to 448,397 vehicles last year as China\’s industrywide auto demand jumped 46 percent to a record.
BYD, a battery maker that entered the automobile market in 2003, teamed up with German luxury-car manufacturer Daimler AG this month to develop and sell electric vehicles in China.
The Chinese carmaker signed a separate electric-vehicle agreement in May with Volkswagen AG, Europe\’s largest automaker. The two companies plan to cooperate in areas including hybrids and lithium battery-powered electric vehicles.

Google to bear consequences

Google to \’bear consequences\’

Google \”will bear the consequences\” if it stops censoring search results on its Chinese website, the Ministry of Industry and Information Technology (MIIT) said on Friday.
The statement by Minister Li Yizhong at a press conference was the strongest one yet by the Chinese government over the issue since Jan 12, when the US-based Internet search giant threatened to pull out of China because of cyber attacks that it claimed originated from the country.
The Chinese government welcomes Google to expand its market share in the country if it abides by Chinese laws and regulations, Li said.
But when reporters asked him what China would do if Google stops censoring search results on its local website, Li, 65, said: \”If you don\’t respect Chinese laws, you are unfriendly and irresponsible, and you will bear the consequences.\”
Google has been in negotiations with Chinese authorities over providing unfiltered online services since its announcement two months ago of the alleged cyber attacks and its unwillingness to continue censoring its search results on domestic website Google.cn.
But talks between the Chinese authorities and Google have made little headway, with MIIT Vice-Minister Miao Wei telling reporters earlier that there has not been any \”direct contact\” with the search engine.
Google was reportedly planning to stop censorship of its search results on its Chinese website within weeks, the Wall Street Journal on Wednesday cited an unnamed source as saying. The report came shortly after Google CEO Eric Schmidt said he expected his company to reach a conclusion soon in its talks with the Chinese government.
Google may end up making individual agreements with different Chinese agencies to allow it to operate some parts of its business in a patchwork arrangement, the newspaper reported.
Li on Friday did not confirm if his ministry was in talks with Google.
Still, he said Google has \”done a good job\” by taking up 30 percent of China\’s search engine market since it entered the country in 2007.
\”If Google chooses to stay, that will be beneficial to China\’s Internet market and we welcome that,\” Li said.
But China respects Google\’s rights if it decides to pull out of the country and the country\’s online market will continue to grow with or without Google, he said.
Google established a joint venture in China in 2007 and launched its domestic website Google.cn. The domestic website accepts the government\’s requirement to censor some of the content such as political issues and pornography.
Such content needs to be regulated by the government, according to current Chinese laws and regulations.
The country\’s Internet market is open and government regulation of it is in line with international practices, Li said.

Chinese firms more cautious on foreign buyouts

Chinese firms more cautious on foreign buyouts

Chinese companies are planning to take a more cautious approach to foreign acquisitions, avoiding outright buyouts and seeking more partnerships and alliances, a report by the Economist Intelligence Unit said on Tuesday.
According to the report, among survey respondents who say they are definitely or likely to make an overseas investment, 47 percent would prefer to strike either joint ventures (29 percent) or alliances (18 percent) while only 27 percent say they will do so through acquisitions.
\”Our analysis of transactions worth more than $50 million between 2004 and 2009 shows that half the deals involved the buyer taking at least 50 percent ownership of the target. But Chinese executives are beginning to sense that this may not be the best approach, not least because it can set off alarm bells among the public and regulators,\” said Xu Sitao, China chief representative of the Economist Group.
Chinese companies made 298 cross-border acquisitions in 2009, with much of those investments welcomed by cash-strapped Western companies that would be hard-pressed to survive without it. But China\’s buying spree has raised a number of concerns, particularly where it has involved State-owned enterprises (SOEs).
And Chinese companies are discovering just how difficult it can be to get mergers and acquisitions (M&A) right, especially when they are cross-border deals. These factors have encouraged companies to lower their ambitions.
\”Multiple investments of minority stakes in different companies in different countries can give a Chinese company many valuable \’windows\’ to learn about management and technology in different markets without triggering foreign investment review or the political pressure associated with \’control\’ issues,\” said Stephen Harder, managing partner of law firm Clifford Chance LLP (China).
Meanwhile, the report showed that outbound M&As remains dominated by SOEs. According to analysis of deals worth more than $50 million between 2004 and 2009, an overwhelming majority of China\’s outbound M&A transactions – 81 percent – were made by State-owned entities.
\”This will remain a cause for concern abroad, not only because many deals involve control of natural resources but also because State ownership seems to confer unfair advantages on the acquired companies,\” said Alison Kennedy, managing partner of strategy with consulting firm Accenture in China.
In the survey conducted for the report, 82 percent of respondents cited a lack of management expertise in handling M&As as the biggest challenge for Chinese companies making purchases abroad. Only 39 percent feel they know what is required to integrate a foreign acquisition. And only 39 percent of survey respondents say they had identified attractive targets within their chosen geographic markets – increasing the risk that Chinese buyers will succumb to the temptation to buy assets that have become available as a result of the global financial crisis, rather than focusing on carefully researched targets.
The report is based on in-depth interviews with large Chinese companies with extensive investment experience abroad, an online survey of 110 Chinese executives and interviews with several foreign participants and advisers to Chinese deals overseas.
In addition, the report analyses available data on Chinese companies\’ cross-border transactions over the past five years, focusing on deals worth more than $50 million.

ICBC remains most profitable

ICBC remains most profitable

The Industrial and Commercial Bank of China (ICBC), the world\’s largest bank by market value, continued to be the country\’s most profitable company last year as it reaped 129.4 billion yuan (18.95 billion U.S. dollars) of after-tax profits.
So far 996 companies listed in China\’s Shanghai and Shenzhen stock exchanges have released their annual business reports as of Thursday. They reported a combined 7.2 trillion yuan of business revenues for 2009, down 1.38 percent year on year, the Beijing-based China Securities Journal reported Thursday.
Total net profits of these companies were 801.9 billion yuan for 2009, up 19.21 percent compared to the previous year, with more than 70 percent of them reporting year on year growths in net profits, the report said.
Public utility companies fared well. Five electric power companies report their net profits grew more than 100 percent in the past year. The Guangxi Guiguan Electric Power Co., Ltd., for instance, boosted its net profit by 959.73 percent to 328 million yuan.
Baosteel Co.,Ltd, the country\’s largest steelmaker, however, said in its annual business report released Thursday that net profit for 2009 was 5.82 billion yuan, a decline of almost 10 percent year on year. Business revenue fell to 148.53 billion yuan, nearly down 26 percent. . Full story

China Shenhua net profit up 16.6% in 2009

China Shenhua net profit up 16.6% in 2009

China Shenhua Energy Company Limited, the largest coal producer in the country, Friday said its net profit rose 16.6 percent to 30.28 billion yuan (4.43 billion U.S. dollars) in 2009 from the previous year.
Business revenue expanded 13.2 percent to 121.31 billion yuan in 2009 year on year, said the company in an annual business report filed to the Shanghai Stock Exchange.
Earnings per share was 1.522 yuan, up 16.6 percent year on year.
Shares of China Shenhua dipped 0.24 percent to 28.77 yuan Friday, before the release of its annual earnings.

Shanghai GM recalls imported Captiva jeeps

Shanghai GM recalls imported Captiva jeeps

Shanghai General Motors (SGM) is contacting the owners of 2,065 Captive jeeps to recall the vehicles for repair due to risk of steering malfunction, the company said on Friday.
The defected vehicles were manufactured by GM Daewoo Auto in the Republic of Korea between September 18, 2007 and December 31, 2008, said a spokesman with SGM.
China\’s General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ) released a bulletin on Friday, approving SGM\’s application for the recall.
SGM had received no customer reports on the defect, the spokesman said.
GAQSIQ has stopped the importation of GM Daewoo Auto\’s Captive jeeps, according to the bulletin.

Google denies exit China rumor

Google denies \’exit China\’ rumor

Search giant says operations in the country are running as usual
Google on Thursday denied it was planning to shut down its business in China by the end of the month, dispelling rumors that it had informed its Chinese advertising agents to cease their business operations in the country.
Google\’s spokeswoman Marsha Wang told China Daily on Thursday that the company had not ordered its domestic advertising agents to stop doing business.
\”That\’s not possible. Our China operations are still at normal,\” Wang said.
Google\’s China team continued to develop new services, hire people and its businesses were \”as usual\”, Wang said.
In fact, two of Google\’s domestic adv
ertising agencies also confirmed to China Daily on Thursday that their business was \”running well\”.
Rumors about Google\’s possible retreat from China were running high on Thursday ever since its CEO Eric Schmidt said at a media summit in Abu Dhabi a day earlier that he expected \”something will happen soon\” about its high-profile spat with China.
Schmidt had said on Wednesday that Google\’s dispute with China would be solved \”soon\” and that the search giant was still in active negotiations with Chinese officials.
China\’s Ministry of Industry and Information Technology refused to comment on the Google issue on Thursday.
But Qin Gang, the Foreign Ministry spokesman said at a regular press briefing that \”the communication channel between relevant Chinese ministries and foreign Internet operators is running well.\”
Qin also reiterated that foreign Internet operators should respect Chinese law while doing business in the country.
Google sent shockwaves across the business and political world when it declared on Jan 12 that it would stop censoring Chinese search results, and said it was considering pulling out of the country.
The announcement quickly turned into a political spat between Beijing and the US administration, which is weighing the merits of taking the dispute to the World Trade Organization.
Most industry experts believe that Google\’s likely exit from China may be a lose-lose deal for the search leader and China.
Top Chinese officials have, during the past few days, also sounded ambiguous over whether Google was still in talks to resolve the issue or not, signaling the difficulties for the two parties to achieve any sort of meaningful agreement.
Chinese officials attending the Two Sessions over the last few days have repeatedly urged Google to respect related laws of China
But a senior Google official said on Wednesday that the company had not changed its decision to stop censoring its Chinese language search site and that it was prepared to shutter the website if necessary. Tao Wenzhao, an expert on US studies at the Chinese Academy of Social Sciences, said it would be a lose-lose deal if Google retreated from China.
A series of conflicts between the two powers, ranging from the US move to sell arms to Taiwan and US President Barack Obama\’s meeting with the Dalai Lama, have put the ties on ice.
Tensions, however, now appear to be easing after Washington sent two high-level officials earlier this month to mend relations.
Tao said even if Google finally decided to exit from China, the incident would have little impact on the soured relations between Beijing and Washington.
\”It is worth remembering that Google is not the American government. This is just a commercial case,\” Tao said.