Archive for March, 2009

New Rules for China’s NASDAQ

Tuesday, March 31st, 2009

With the private equity and venture capital markets cratering, there are a ton of startups here that are in need of capital. Hopefully by the time the exchange actually gets up and running, the economy will be in better shape, allowing it a chance of success.

Details from AFP:

China’s securities regulator on Tuesday issued rules for initial public offerings on a long-waited Nasdaq-style second board aimed at helping the country’s cash-hungry start-up companies.

Firms seeking to list on the second board, the growth enterprise market (GEM), should have a net profit of at least 10 million yuan (1.46 million dollars) over the two-year period before listing, the China Securities Regulatory Commission said on its website.

The watchdog said it could not say when it would start accepting applications, only that it would be at an “appropriate time”.

It said there was still work to be done including the establishment of trading rules, setting up a review committee for the board and training traders, lawyers and accountants on how the board would operate.

China’s Shampoo Shenanigans

Tuesday, March 31st, 2009

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Paul Midler’s been on top of this baby shampoo case for a while. Looks like it’s heading into freaky territory:

It seems that a number of Chinese families are looking to launch a class action lawsuit related to shampoo. From ConsumerAffairs.com:

Eighty families have already organized in anticipation of the suit, and lawyers don’t plan to stop there. Cui Baoyu, one of the attorneys involved, said that the group was pursuing a class action “because of the huge number of victims involved.” More than 50 attorneys are already involved in the case, and Cui says that “the group continues expanding as more lawyers from all over the country ask to join every day.”

A few days ago, I reported on a recall in China of U.S.-made shampoo products, followed by a “never mind.” Now, it looks as though China is moving forward. Again, for those who might be interested, my book which was just published deals in part with China’s soap and shampoo market.

As I’ve been saying to my foreign clients for ten years now: don’t believe anyone who tells you that China is not a litigious nation at heart.

Without knowing any details at this early stage, I will say that if I was the plaintiffs’ attorney, I would much rather bring this suit in the U.S. as opposed to China (if possible). Lots of reasons for this, but I wanted to emphasize that you’ve got a bunch of babies with allergic reactions and possible exposure to carcinogens — that’s the worst-case scenario. I haven’t heard about any babies dying, being disfigured, etc.

China’s judicial system is really not equipped to assess damages for exposure to carcinogens. Additionally, what kind of damages are you going to get for allergic reactions which, I assume, are basically skin rashes? Remember, China does not have a jury system, so no chance to parade babies/baby photos in front of a bunch of concerned citizens.

Loser case. I’ll pass on the opportunity to comment on the nationalism aspects of all this, which will just raise my blood pressure.

ADB’s Growth Forecast — Bleak, But No Surprises

Tuesday, March 31st, 2009

The FT reports:

The Asian Development Bank on Tuesday halved its 2009 growth forecast for developing countries in Asia, warning that an anticipated rebound in 2010 was heavily dependent on a broader recovery of the world economy.

The Asian lender said that Asia excluding Japan was likely to grow 3.4 per cent this year, compared with a forecast of 7.2 per cent in September. The region is however expected to rebound in 2010 to growth of 6 per cent.

The forecast revision follows a plunge in exports starting in the fourth quarter. While some Asian countries have recently slowed down the decline in exports, the ADB’s acting chief economist, Lee Jong-Wha, suggested that it was too early to say whether Asia’s slowdown had bottomed out.

The forecast adjustment is not shocking as every other organization has done the same. What is slightly depressing is that the rebound numbers they are talking about are export dependent. This is what got us into this mess in the first place (i.e. in Asia), so if we need strong overseas markets to pull us out, well, that really does depend on a lot of stuff going on outside of Asia. I certainly do not see the EU doing much to boost demand, and attempts by the U.S. seem rather anemic.

Nice to see that the ADB is keeping their eye out for the number one policy issue here over the short to medium term:

Mr Lee also encouraged Asian governments to target more carefully their fiscal stimulus packages to ensure that their economies become more dependent on domestic demand rather than external demand. “This is a crisis but this may also be the opportunity to rebalance our growth and strengthen our domestic demand,” he said.

Couldn’t agree more.