LI, Tao @ Hong Kong

A man rides past a Gome Electrical Appliances Holdings Ltd store in Shanghai. Huang Guangyu, the billionaire founder of the mainland retailer was finally charged by authorities in Beijing last month, after 15 months in police custody. Kevin Lee / Bloomberg News

After 15 months in police custody, mainland appliances tycoon Huang Guangyu was finally charged by authorities in Beijing last month. The founder and former chairman of Gome Electrical Appliances Holding was charged with the expected “illegal business dealings”, “insider trading”, and one unexpected count: “bribery by organization”.

A Shanghai based lawyer, Hua Qi from Shanghai Zhongxiaxubo Law Firm, told China Daily that although the new charge sounds like a rare one to the public, it befits the facts.

Hua said “bribery by organization”, unlike the commonly referred bribery, has linked the fate of the mainland’s former richest man with Gome the company. If the former chairman is found guilty on this charge, Gome will also face a huge fine.

Elaborating, Hua said, “People have doubts, because the maximum penalty on a bribery charge is life imprisonment, but only 5 years for the ‘bribery of organization’ in this case. The test is to see who enjoys the illegal gains. If the manipulator himself does, he should be charged with normal bribery. If the company is the major beneficiary, then it should apply.

“Huang is a typical rags-to-riches case, and Gome to him is more than just a company. Even though Huang made profits from those illegal dealings, (the prosecution of) his case could also consider the benefits of his company as well; therefore I think the new charge is appropriate,” Hua added.

Gome earlier had expressed confidence in its operations and financial condition despite the charge. “The alleged amount involved in the prosecution is 4.56 million yuan. Even if the company is eventually levied a fine, the amount will not exceed a hundredth of the company’s expected profit in 2010, which leaves no reason for Gome to make a fuss,” said Hua.

Hua said Huang’s case reminded him of another Shanghai property tycoon, Zhou Zhengyi, who evaded indictment in Hong Kong years ago.

Zhou was once named the mainland’s 11th richest person by Forbes. He was sentenced to 16 years in prison by the Shanghai People’s Intermediate Court in November 2007, on charges of bribery, embezzlement and tax fraud.

As early as in 2006, Hong Kong’s Independent Commission Against Corruption (ICAC) had already obtained approval from a Hong Kong court to arrest Zhou for manipulating the stock price of the then-Hong Kong-listed Shanghai Land Holdings, dated 2002, a Nongkai subsidiary.

However, only Zhou’s wife Sandy Mo was sentenced – to 3 years’ imprisonment in Hong Kong for manipulating the price of Shanghai Land shares with the aim of defrauding investors in January 2006.

“Without an extradition agreement, we can’t indict him (Zhou) unless he is brought to Hong Kong,” a regulator at ICAC said earlier.

Hong Kong’s High Court ordered an injunction to freeze part of a HK$1.66 billion asset pool controlled by Huang and his wife Du Juan, following allegations by the Securities and Futures Commission (SFC) last August.

The SFC claimed the pair organized a share repurchase scheme illegally in early 2008 and caused Gome to incur a loss of approximately HK$1.6 billion, which hurt the retailer and its shareholders. SFC said at the time that “the SFC is continuing to liaise with mainland authorities with a view to assisting the court to effect service on them.”

But a spokesperson from the watchdog told China Daily that no any further step had been taken in Huang’s case since the issuance of the injunction in August.

Lin Feng, an associate professor of Law from City University of Hong Kong, said extradition was still a hot potato tossed between the mainland and Hong Kong, since the two sides adopt different laws and judicial systems.

Hua, the Shanghai lawyer, said that even if Huang were to be sentenced to imprisonment in the mainland, he could still face indictment from Hong Kong after serving the time.

“The lack of relevant coordination now will only make it difficult to take Huang to the court, even if Hong Kong plans to, as long as Huang decides not to show up in the city any more,” Hua observed.

The mainland’s Securities Regulatory Commission confirmed earlier that Huang was indicted for illegal gains by manipulating the share price of two mainland-listed companies, but refused to elaborate in detail. Reports said Beijing Second Intermediate People’s Court will proceed with Huang’s case this month.

(HK Edition 03/23/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-03/23/content_9625626.htm

With a faster-than-expected export-sector recovery and growing momentum in industrial production in Hong Kong, HSBC has increased both the mainland’s economic growth and inflation forecast, and has predicted a rising risk of a rate hike in the coming weeks.

In an HSBC Global Research commentary released Friday, the bank revised the mainland’s 2010 gross domestic product (GDP) forecast to 10 percent from the previous 9.5 percent. The consumer price index (CPI), the main gauge of inflation, was also adjusted to forecast an increase to 3.1 percent, 0.5 percent higher than previously predicted.

“China’s economic growth has been accelerating so far this year and most of the latest data releases beat expectations. Growth in industrial production surged to 20.7 percent and exports jumped 31.5 percent, while imports grew by 63.6 percent year-on-year in January-February,” said Qu Hongbin, chief economist with HSBC China.

Although uncertainty about the strength of the global demand recovery remains, especially in the second half of this year, Qu said given the strong exports recovery momentum in the last three months, HSBC has raised the full-year exports growth forecasts to 25 percent for 2010 and 20 percent for 2011, versus the 9 percent and 10 percent previously predicted.

The imports growth projection has also been revised upward, to 32 percent for this year and 22 percent for next year. China’s strong domestic demand, underpinned by continued investment in ongoing infrastructure projects and improving labor markets and consumer sentiment, is also expected to support growth of imports of finished products.

Qu said stronger exports should directly lift industrial output and create more new jobs, supporting a quicker recovery of wages and indirectly boosting consumer spending. There are even some factories faced with the difficulty of hiring workers to meet rising export orders in the coastal exports bases, which has prompted offers of higher wages to attract qualified workers.

“These new developments point to improving labor market conditions and, hence, to robust consumer spending in the coming quarters. All this implies that industrial production should also expand faster than we initially expected,” Qu said.

“We expect growth to peak at 11.5 percent year-on-year in the first quarter before gradually softening in the second half in 2010 amid the fading lower base effect and the impact of policy tightening,” Qu added.

Qu said strong growth has also been lifting inflation, with the headline CPI hitting 2.7 percent year-on-year in February, its highest pace in 16 months. He said the rising risk of overheating growth is likely to spur some immediate steps toward policy tightening.

“We continue to expect further acceleration in the headline CPI until around mid-year, with year-on-year spikes of around 4 percent likely. Stronger exports imply larger aggregate demand and better capacity utilization, translating into tighter demand and higher inflation pressure.”

Qu said given that inflation is Premier Wen Jiabao’s top concern, the central government is likely to further tighten policy to cool inflation, and continue to unwind its stimulus measures, to contain overheating and inflation risk.

“On the monetary policy front, we believe that the stronger-than-expected growth and still excessive loan growth implies a rising risk of an earlier rate hike, though our main scenario of a 54 basis points total rate hike starting in the second quarter this year remains unchanged. We stick to our view that quantitative tightening this year will be primarily conducted through another 150-200 basis points of reserve ratio hikes and lending curbs,” said Qu.

China Daily

(HK Edition 03/20/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-03/20/content_9616530.htm

It is easy to find healthy food, like salad, on the menu at the international fast food chains these days. Its introduction, however, was neither early nor easy. There was a long debate between the health

group and fast-food suppliers in terms of responsibility for reducing obesity, and they would not reach an agreement without the continuous mediation and good offices of a business group.Opening up a brand-new office in Hong Kong last year, the international Business Leaders Forum (IBLF), an independent, business-led and not-for-profit organization, is dedicated to help companies carry on responsible business across various sectors in the past 20 years.

Director in Asia Pacific of the group, Peter Brew, told China Daily how IBLF helped to resolve the disparities of healthy diet between the World Health Organization (WHO) and the fast-food restaurants.

“The two sides were not making any progress on the issue for years, so we brought them together to the same table. At the beginning, the fast-food suppliers insisted that ‘customers would make the choice’ as they had laid out nutrition information on the menu. However, with the discussion underway, they realized there were things they could do or should prepare to do to accept their responsibility to society, which was to diversify the menus and give the customers more choices for a healthy diet,” said Brew.

Brew said IBLF has also worked with business and government to improve working conditions in footwear and garment factories in several developing countries, to introduce better health and safety standards for workers. Anti-corruption, employability and environmental stability are among the common subjects IBLF normally deals with.

Sometimes IBLF initiates the ideas, but it also promotes some successful concepts drawn from the wider community.

IBLF’s chief executive Adam Leach said one international hotel started a training program for youths years ago. One year after the program start-up, these young people not only had enhanced knowledge and technological skills, but also greatly improved presentation skills, which brings in more opportunities to work in other walks of life.

Learning of this, Leach said IBLF then actively participated in popularizing this program among other hotels, to encourage workforce neophytes, to get them involved and to help them receive better exposure in the fierce and competitive job market.

“We might not help the companies make a perfect world directly, but we are definitely helping them to take more responsibility toward the whole society,” said Leach.

Leach said the group has a 20-year track record in providing the impetus, the platform, the global reach and the methodology for companies to pursue responsible business management and to contribute to sustainable development.

Its Beijing office, which partners with the People’s University of China, has, for the past five years, brought together Chinese and foreign business leaders every quarter in Beijing to discuss the improvement of business standards and practices.

The increasing focus on responsible investment in developing countries in recent years eventually motivated IBLF to launch a new representative office in 2009 in Asia’s economic hub – Hong Kong.

Leach said they do not intend to run a business in Hong Kong, but expect the city could set a role model for the rest of world, particularly the emerging markets they are currently working with.

“Hong Kong is renowned for transparency and integrity in doing business, where trust is highly respected and moral values have been firmly strengthened. There is no better place than Hong Kong to educate the world about how to conduct business responsibly,” he said.

(HK Edition 03/17/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-03/17/content_9599919.htm

Planned collaboration spans advertising, technical support and capital operations

In a move that attests Asia Television’s strong mainland ties as much as its improving commercial prospects, ATV signed agreements with five large mainland enterprises for future strategic cooperation yesterday in Beijing.

The Hong Kong television station was represented by Wang Zheng, who nonetheless admitted he was technically not yet a shareholder of ATV. Wang is also the chairman of Shenzhen-listed property developer Rongfeng Holding and has declared his ambition to make ATV “the CNN of Asia”.

“Thank you heaven and Earth, which finally brought us together,” Wang said at the ceremony.

The five mainland giants, China Life, China Overseas Holdings, GDH group, China Merchants Bank, and Bank of Beijing will undertake collaboration with the troubled broadcaster, in areas that include advertising, technical support and capital operations. But the deal does not involve shareholding.

“If Wang Zheng needs money, we will take care of all his property business in the mainland and Hong Kong, and support him with billions of yuan,” said Sun Wenjie, president of the China Overseas Holdings.

Wang, ATV’s new boss waiting in the wings, said this collaboration will not involve any equity sales, but will promote a platform through the broadcaster for the development of these companies in Hong Kong.

“Since mainland enterprises are not eligible to invest in ATV directly, we decided to work with ATV to exploit opportunities for more publicity for the company in Hong Kong,” said Ma Weihua, President of China Merchants Bank.

Wang said he will lay plans for ATV’s medium to long-term reform, and instead of cutting jobs, ATV will be expanding its staff in the future, to which he added that freedom of the press will be respected.

Wang acknowledged before signing the deal with ATV that he had considered investing in the other free-to-air TV station in the city, Television Broadcasts Limited (TVB), but decided it was too expensive.

Wang stressed his current post at ATV is still a volunteer position, as the whole share acquisition procedure has not yet completed.

Payson Cha, ATV controlling shareholder, also appeared at the ceremony yesterday. Embroiled in an ongoing row for selling ATV shares, Cha said Wang was “the best partner to work with” and one who has been supportive of ATV during a most difficult time.

“I identify with Wang’s thoughts and aspirations, and I admire his determination to elevate ATV to the rank of a global platform,” said Cha.

Chairman of Sing Tao Newspaper, Charles Ho, who had earlier criticized Cha over an earlier deal, said Wang Zheng is sincere in making a success of his investment in ATV, and that therefore the broadcaster’ss staff should feel reassured.

(HK Edition 03/12/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-03/12/content_9577165.htm

Announcing a deal with huge implications for regional broadcasting, Asia Television key shareholder Payson Cha, speaking in Beijing Friday, confirmed that mainland property tycoon Wang Zheng signed a contract on Tuesday that will make him a major ATV shareholder.

Currently Cha’s family owns 51 per cent of the A-shares of Antenna Investment, which, in turn has a sizeable stake in ATV. This gives Cha ATV voting rights.

Cha’s family also possesses 10.75 percent of ATV’s shares through Panfair. The rest of the shares belong to textile businessman Chan Wing-kee, Phoenix TV chairman Liu Changle and the mainland Citic Group.

Cha did not reveal details of the deal with Wang, but it is expected to be completed if or when the city’s Broadcasting Authority gives it the nod.

Wang is the chairman of Shenzhen-listed property developer Rongfeng Holding. Even though characterized by Cha as “knowing nothing about the operation of the broadcaster”, Wang said earlier that he will “spend 20 years in building ATV to become the CNN of Asia.”

As for the size of his anticipated stake, Wang said he will invest HK$2 billion over the next 20 years in the broadcaster, and that his shareholding in ATV will be similar to that of Payson Cha.

Embroiled in a legal dispute with shareholder, Taiwanese businessman Tsai Eng-meng, who holds the rest of ATV’s shares, Cha also rejected his accusation of wrongdoing.

Cha was accused of fiduciary misconduct by the Taiwanese snack tycoon Tsai, chairman of Want Want, who filed a lawsuit in High Court on Thursday, claiming Cha issued convertible notes at less than HK$2.47 apiece, without unanimous agreement, which breached the fiduciary duty as a director on the board.

Cha countered that Tsai was making trouble out of nothing. In denying the accusation he expects the two sides to work rationally to solve the dispute.

Regarding ATV, Cha said he would safeguard the interests of ATV but would not close the door on talks with Tsai.

Cha said earlier he would meet his share-transfer obligations as agreed with Tsai within five years, on condition that the Taiwanese tycoon could meet Hong Kong residency requirements. Tsai disputes the claim, arguing that the existing contract granted him rights to demand Cha to transfer shares to a suitable candidate nominated by himself.

Commenting on this legal wrangling, Wang said it is still possible that a peaceful solution can be found for the Cha-Tsai dispute.

“I think we should look forward. Peace is still possible. Peace will help us make money,” said Wang, adding he has a lot of respect for Cha and Tsai, and hopes he can work with both as partners.

Meanwhile, Payson Cha, addressing the accusation from Tsai, said the recent saga made him feel “sorrowful”, but also that he was “inspired” that the plan to take over the broadcaster with a mainland investor was finalized three days ago.

China Daily

(HK Edition 03/06/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-03/06/content_9546364.htm