Friday, November 21, 2008

Currency chaos

The Economist today suggests that "Trade slows and gloom mounts. But Asia’s economic downturn will be milder than the one it endured a decade ago". Phew! Read it all. As usual, the good people of The Economist are more level-headed than most.

However, what's on my mind is currencies. The most under-reported feature of the current as far as I can see is the extraordinary revaluation of world currencies. The view that the US' time in the sun has come to an end is clearly not supported by currency traders who have piled into the greenback. I run a multi-currency business and track various currencies over a 5 year period to make sure I know what side of the roller-coaster I'm on. Look at this chart which shows the Aussie dollar, pound and euro against the US$. Who can manage through a swing like that? What does it mean for trade and for our media businesses, particularly in Hong Kong and China where we remain broadly (or very specifically in HK's case) linked to the US dollar?

Click on the chart to see it bigger in all its ugly glory!

Tuesday, November 18, 2008

Circle the wagons

Times are tough and companies are protecting what they've got. UBM's David Levin puts it altogether more smoothly in the Interim Update just released when he says, "We have anticipated challenging economic times and are actively managing our operational costs but we remain on the lookout for opportunities to continue the development of our business. Costs are under continual review and the focus for 2009 is operational excellence."

CMP Asia, the review says, has generated profits "ahead of 2007". It goes on to note that "Whilst the business has performed ahead of plan in China, its performance in Japan was disappointing in 2008; this is an area of continuing management focus". This coincides with the BBC telling us that Japan is now officially back in recession for the first time since 2001.

Meanwhile, the company also tells us that it has bought out Xinhua Finance's share of its Xinhua PR Newswire JV. The $6mn deal includes about 50 people and $4mn in revenues.

Thursday, November 13, 2008

Let's all work together

My colleague Mark Cochrane is in Tokyo while I am in Istanbul and has filed this guest posting for the blog:

BSG is at FIPP's inaugural Asia-Pacific Digital Media Conference in Tokyo this week. There is a strong turnout (500+ delegates) and lively discussions as you would expect. Marcel Fenez, the Global Managing Partner of PwC's Entertainment and Media Practice sees the end of the global M&A frenzy in the media sector. PwC recently surveyed 11,000 CEOs. The key take away: "collaboration, not competition."
Why is M&A out? Firstly, there is no debt to be had. Secondly, messy integration efforts are a distraction which cause management to lose sight of the strategic goals that brought about the deal in the first place. Media CEOs are touting collaboration with competitors and calling it "teaming."
Let's see how that works in Asia's B2B media world. Global Sources and Alibaba, over to you!

Tuesday, November 11, 2008

Crisis, what crisis?

I'm sitting in Bangkok airport en route to the UFI Congress in Istanbul and this post from Fons Tuinstra really caught my eye. He's quoting from a Bloomberg piece which says that October exports from China were up 19.2% in October on 2007, just slightly down from September's rise of 21.5%.

The Bloomberg piece quotes Wang Qian, an economist at JPMorgan Chase & Co. in Hong Kong saying "Demand from Europe and the U.S. will inevitably shrink further, damping China's exports and thus domestic investment''. Fair enough. It would be a miracle if it didn't. But export growth of almost 20%? This doesn't sit comfortable with claims of pending disaster, factory closures and mass unemployment.

As Fons says, with commendable understatement, "it is not yet enough to make me panic". Either things aren't so bad or somebody's taken the optimistic abacus down from the top shelf for adding up the numbers.

So, who's going to pay for Phase III?

Several reports in local papers today (including this one in the Standard) about the HKTDC's initiative to support Hong Kong exporters with a HK$120 million package linked to its exhibitions. $80 million of this will be used to fund over-seas buyers with the remainder going in cash subsidies to exhibitors, according to the Standard.

The report says that the HKTDC will target buyers from Russia, Eastern Europe, the Middle East, North Africa, Southeast Asia and mainland China as traditional sources of business in N. America and western Europe slow down. All very reasonable.

It notes, however, that the Council's capacity to offer more support is constrained by the fact that a sizeable chunk of its HK$860 million in reserves is needed to pay for the Phase 2.5 extension of its Hong Kong Convention & Exhibition Centre now under way. The South China Morning Post (behind subscriber wall, sorry) puts that repayment at $720 million.

That leaves me wondering who is going to pay for the Phase III extension of HKCEC which TDC has been lobbying hard for and which the HK government now appears to be considering seriously (see Let them eat concrete). It's hard to imagine any banks being enthusiastic. So, the Hong Kong taxpayer looks like the likely candidate here doesn't it....

Saturday, November 08, 2008

Events and technology

My friend Joanne Kelleway has recently started a new blog which focuses on her main area of interest and expertise; events and technology. For those of you who don't know Joanne (shame on you; what remote hole do you live in?), she runs from Australia the Info Salons registration business whose reach now extends to China, Dubai and soon, we're all sure, the rest of the world.

She's already written about one of my pet topics; mobile technology and our business. Today she links to an interesting video interview with technology futurist Mark Pesce. Add Joanne's blog to your blog reader. It will make you a better person...

...that will be one Turkish coffee in Istanbul next week, please Joanne.

Thursday, November 06, 2008

Obama B2B Asia media link

OK, well this just goes to prove that Tom Crampton is cleverer than me and you all knew that already didn't you. I said yesterday, "Try as I might, I can't really think of an Asian B2B media link for the Obama victory".

Well old clever clogs Crampton has found out that Obama has a half brother in Shenzhen who "runs an Internet company that helps Chinese companies export to the US". More details in his full blog post here.

Wednesday, November 05, 2008

The Chinese buyer will do it for Alibaba

Try as I might, I can't really think of an Asian B2B media link for the Obama victory. Remembering the scary 1992 pre-election rhetoric of W.J. Clinton, Esq. and what happened after that, I don't think an Obama administration is really going to become a Smoot-Hawley-ite protectionist mob. Having the benefit over his predecessor of intelligence and an apparent willingness to listen, I also don't believe he's going to pursue the manipulation of the renminbi nonsense any further than he already had to in order to guarantee those union cheques kept flowing in.

So, we'll assume business as usual. Which leaves us with international buyers drying up, PRD factories closing down and generally ugly conditions ahead for the exporters of consumer merchandise in China (aka 'cheap tat').

Interesting to see Joe Tsai of Alibaba then predicting to Reuters that he expects 50% of their B2B revenues to be coming from within China in the future. That would be up from 36% today. At the same time, the article reports that Alibaba is cutting prices for many of its manufacturing customers whose businesses are really hurting right now.

Tuesday, November 04, 2008

All change at Reed

We can assume that the insiders are polishing their resumés at Reed Elsevier with the announcement that 'Mr. Generalist' Ian Smith is to succeed Crispin Davies as CEO on 1st January. According to the Grauniad Smith "was most recently the chief executive of British housebuilder Taylor Woodrow Plc. He was before that chief executive of General Healthcare Group and previously held senior positions at management consulting firm Monitor, Royal Dutch Shell and Exel Group". What next? NASA?

Meanwhile, in an altogether more predictable promotion, the diminutive powerhouse Josephine Lee has become General Manager of Reed Huayin, the Shanghai-based joint venture exhibitions business "business in the Corrugated/Converting; Manufacturing/Machinery and Print/ Packaging sectors". Founder Robby He Wenxiong has left the company to "pursue other business interests". I imagine there will be a few of those in London too.

Saturday, November 01, 2008


Chris "Long Tail" Anderson has been pushing the focus on "free" in his blog and his upcoming book. It is not, however, a word closely associated with our friends at Global Sources. In fact, if memory serves me well, a good deal of their early criticism of the business model was that "free is not a business model".

Interesting to see then, that they are embracing the world of "free" in response to the global economic crisis. A press release dated 31st October is headed "To speed world economic recovery, Global Sources offers free website to exporters in search of quality international buyers". The emphasis is ours but it reflects the degree to which the word caught our attention. Nil desperandum, though, the press release's 2nd paragraph focuses onto the good old paying buyers: "Moreover, on behalf of paid clients, Global Sources plans to assist with applications for export development grants from local governments in China, including Hong Kong, thus significantly reducing the overall cost of advertising services".

It quotes Global Sources' Chairman and CEO, Merle Hinrichs saying: "This is a very tough time for buyers and suppliers. Because of the current economic downturn, consumer purchasing behavior is changing rapidly. But over the past 40 years, Global Sources has seen this type of situation before, and we know it represents an opportunity for those suppliers who know how to find the right quality of buyer to do business with. And today, our buyers are more active than ever before, because they must quickly replace canceled orders with products that fit new consumer spending patterns."

Over to you Alibaba. The ball's in your court. Will this be an arm's race towards the free-est of the free?