Movable feasts give U.S. government statisticians fits. Because holidays like Easter, Labor Day and Thanksgiving don't arrive on the same date from year to year, adjusting for the twists in the economic data they bring about, like jumps in marshmallow Peeps sales, is a difficult thing to do.
But it is an Asian holiday, not an American one, that has lately been causing the biggest headaches. As China's role in the world economy has grown, so too have the swings in global trade around Lunar New Year Holiday, notes Goldman Sachs economist Andrew Tilton.
Chinese manufacturers ramp up production ahead of Lunar New Year, which can come any time from late January to mid-February. Then once the holiday starts, the country goes idle. This year, New Year came on the early side — Feb. 3 — and the effects on trade appear to be particularly intense. Indeed, the drop in Chinese exports to the U.S. in February was, according to Chinese government data, 'the largest month-on-month decline on record — including the financial crisis — in data that go back to 1993,' Mr. Tilton writes in a research note.
With the drop-off in exports from China and other countries celebrating the holiday not picked up by the government's seasonal adjustment process, Mr. Tilton expects that February's inflation-adjusted trade balance could show an improvement of $5 billion or more.
As a result, when the U.S. trade report gets released Tuesday, it could show a much narrower trade gap than many economists expect. That, in turn, could lead them to bump up their estimates for first quarter GDP growth.
Monday, April 11, 2011
Wednesday, April 6, 2011
Big Deals Roar Back As Spirits Rebound
The deals market is back in a big way.
In just the past 48 hours, new mergers popped up across the globe -- including Texas Instruments' $6.5 billion purchase of venerable National Semiconductor, an unsolicited $6.5 billion offer by a state-owned Chinese mining company for a Canadian-Australian firm, KKR's $2.4 billion deal for a Pfizer unit, and a consortium of Japanese metal companies paying $680 million for Kentucky-based Arco Aluminum.
So far this year, companies around the world have announced $784.1 billion worth of deals, up from $637.9 billion over the same period in 2010, according to Dealogic. That marks the largest year-to-date volume since 2007, when $1.1 trillion worth of transactions were announced in the same stretch.
The deals show a renewed confidence by corporate executives and private-equity firms -- many in the developing nations of Asia -- who are sitting on $2.4 trillion in cash. With rates held low by the U.S. Federal Reserve, financing rates remain at some of the cheapest on record. The deals also reflect the unleashing of years of pent-up demand, as mergers across the globe largely came to a halt at the end of 2007, and worries that inflation might pick up, boosting rates.
All this has happened while evidence mounts that mergers often fail. Nonetheless, a change in psyche has pushed corporations to make deals -- if only for fear that a rival may strike first. Nowhere is that more clear than in the financial-exchanges business, where seven global players -- in the U.S., Germany, Canada, England, Singapore, and Australia -- are fighting for primacy of the world's financial markets. 'There are certain situations if you don't act now, you've lost your chance,' said Bruce Evans, head of Americas M&A at Deutsche Bank.
Deal makers may be further encouraged by stockholders, who are tending to reward companies that make acquisitions, pushing shares higher after deal announcements. Typically, shareholders punish companies that make big deals. Shares of Nasdaq OMX Group, for instance, rose 9% on Friday, after it announced an unsolicited $11.3 billion for NYSE Euronext Group last week.
Chip maker Texas Instruments on Monday announced its all-cash purchase of rival National Semiconductor, bringing together two big makers of devices used in cell phones, industrial equipment and consumer electronics. The price represented a nearly 80% premium over what National shares traded at on Friday.
The scope of this year's deals has been larger than in years past, with three so far valued at more than $15 billion each, compared to four at those heights in all of 2010, said Antonio Weiss, Lazard's global mergers-and-acquisitions chief.
The latest deals are bypassing traditional hot spots in the U.S. and Europe. In nearly a third of all deals last year, at least one party came from an emerging market, Mr. Weiss said. Emerging-markets deals are at their highest ever, says Dealogic, at around $210 billion during 2011.
China is now the third-most active nation for cross-border deals, with volume about one-third that of the U.S. and more than half that of the United Kingdom, according to Dealogic. Chinese firms have targeted oil and gas deals most avidly, followed by mining and chemicals.
One of the boldest moves this week came from China's Minmetals Resources Ltd., which said Monday it was making a $6.5 billion bid for Canadian-Australian Equinox Minerals Ltd. Minmetals is part of a Chinese state-owned mining conglomerate, whose previous interest in Canadian companies in 2004 received widespread derision among Canadian politicians at the time. Sentiment in Canada has changed since then, as politicians view Chinese deals as a necessary part of raising capital for new natural-resources investment.
The proposed deal represents China's largest acquisition bid since China Petrochemical offered $7.1 billion for a 40% stake in Repsol Brasil last October, according to Dealogic.
Despite turmoil in the Japanese economy, companies there haven't shied away from transactions. On Monday, Japan's Sumitomo Light Metal Industries announced it was leading a group of Japanese firms to buy Kentucky-based Arco Aluminum from BP PLC for $680 million.
Companies and private equity firms see the next several months as a window of opportunity, especially if inflation picks up. Private equity firms also need to put money to work as funds wind down and they embark on new fundraising rounds.
On Monday, Pfizer Inc. announced it was selling its Capsugel unit, which makes hard capsules, to Kohlberg, Kravis & Roberts in a $2.4 billion deal. Also, private equity firm Apax Partners announced it was acquiring Epicor Software Corp. and Activant Solutions Inc., both software providers, in deals totaling about $2 billion.
In just the past 48 hours, new mergers popped up across the globe -- including Texas Instruments' $6.5 billion purchase of venerable National Semiconductor, an unsolicited $6.5 billion offer by a state-owned Chinese mining company for a Canadian-Australian firm, KKR's $2.4 billion deal for a Pfizer unit, and a consortium of Japanese metal companies paying $680 million for Kentucky-based Arco Aluminum.
So far this year, companies around the world have announced $784.1 billion worth of deals, up from $637.9 billion over the same period in 2010, according to Dealogic. That marks the largest year-to-date volume since 2007, when $1.1 trillion worth of transactions were announced in the same stretch.
The deals show a renewed confidence by corporate executives and private-equity firms -- many in the developing nations of Asia -- who are sitting on $2.4 trillion in cash. With rates held low by the U.S. Federal Reserve, financing rates remain at some of the cheapest on record. The deals also reflect the unleashing of years of pent-up demand, as mergers across the globe largely came to a halt at the end of 2007, and worries that inflation might pick up, boosting rates.
All this has happened while evidence mounts that mergers often fail. Nonetheless, a change in psyche has pushed corporations to make deals -- if only for fear that a rival may strike first. Nowhere is that more clear than in the financial-exchanges business, where seven global players -- in the U.S., Germany, Canada, England, Singapore, and Australia -- are fighting for primacy of the world's financial markets. 'There are certain situations if you don't act now, you've lost your chance,' said Bruce Evans, head of Americas M&A at Deutsche Bank.
Deal makers may be further encouraged by stockholders, who are tending to reward companies that make acquisitions, pushing shares higher after deal announcements. Typically, shareholders punish companies that make big deals. Shares of Nasdaq OMX Group, for instance, rose 9% on Friday, after it announced an unsolicited $11.3 billion for NYSE Euronext Group last week.
Chip maker Texas Instruments on Monday announced its all-cash purchase of rival National Semiconductor, bringing together two big makers of devices used in cell phones, industrial equipment and consumer electronics. The price represented a nearly 80% premium over what National shares traded at on Friday.
The scope of this year's deals has been larger than in years past, with three so far valued at more than $15 billion each, compared to four at those heights in all of 2010, said Antonio Weiss, Lazard's global mergers-and-acquisitions chief.
The latest deals are bypassing traditional hot spots in the U.S. and Europe. In nearly a third of all deals last year, at least one party came from an emerging market, Mr. Weiss said. Emerging-markets deals are at their highest ever, says Dealogic, at around $210 billion during 2011.
China is now the third-most active nation for cross-border deals, with volume about one-third that of the U.S. and more than half that of the United Kingdom, according to Dealogic. Chinese firms have targeted oil and gas deals most avidly, followed by mining and chemicals.
One of the boldest moves this week came from China's Minmetals Resources Ltd., which said Monday it was making a $6.5 billion bid for Canadian-Australian Equinox Minerals Ltd. Minmetals is part of a Chinese state-owned mining conglomerate, whose previous interest in Canadian companies in 2004 received widespread derision among Canadian politicians at the time. Sentiment in Canada has changed since then, as politicians view Chinese deals as a necessary part of raising capital for new natural-resources investment.
The proposed deal represents China's largest acquisition bid since China Petrochemical offered $7.1 billion for a 40% stake in Repsol Brasil last October, according to Dealogic.
Despite turmoil in the Japanese economy, companies there haven't shied away from transactions. On Monday, Japan's Sumitomo Light Metal Industries announced it was leading a group of Japanese firms to buy Kentucky-based Arco Aluminum from BP PLC for $680 million.
Companies and private equity firms see the next several months as a window of opportunity, especially if inflation picks up. Private equity firms also need to put money to work as funds wind down and they embark on new fundraising rounds.
On Monday, Pfizer Inc. announced it was selling its Capsugel unit, which makes hard capsules, to Kohlberg, Kravis & Roberts in a $2.4 billion deal. Also, private equity firm Apax Partners announced it was acquiring Epicor Software Corp. and Activant Solutions Inc., both software providers, in deals totaling about $2 billion.
Thursday, November 25, 2010
Domenica De Pasquale's grandmother, matriarch of the Australian family that founded Nanda Pasta
'My sister was 'rosebud' and I was 'frangipani,'' said Ms. De Pasquale.
So when Ms. De Pasquale decided to build a set of luxury apartments on the site of the old family beach house, she named it the Gold Coast Frangipani in memory of her grandmother. The project was completed in 2009.
The property is near both the serenity of Burleigh Head National Park, a coastal rain forest, and the hustle-bustle of Surfers Paradise-as the name suggests, Australia's best surfing beach.
The two-story penthouse apartment with soaring glass windows has three bedrooms, two bathrooms and a parents' retreat; a rear deck features a spa and a barbecue. The oceanfront terrace, eight meters by four, has a glass balustrade and bifold doors. Ms. De Pasquale lives in a similar-size apartment on the building's ground floor.
An open living room includes a designer kitchen with marble walls, Gaggenau appliances and a wine refrigerator. There's an island counter (or, as the Australians call it, 'bench top'), made of Corian, for food preparation or in-kitchen eating.
The open plan makes it easy to entertain for big parties, says Ms. De Pasquale. 'I had a sit-down lunch for 30 people on Easter Sunday this year. The table extended from the balcony all the way to the middle of the living room.'
The property includes a 20-meter-wide stretch of beach and an infinity-edge pool shared by all apartments. The exterior facade of aluminium screens depicting frangipani leaves provides a breezeway and shade at the rear of the building. A basement car park offers each apartment three parking spaces as well as private storage space.
Natural materials in the living areas and bathrooms include travertine stone, marble and timber. Louvered windows in each bathroom offer sea views.
So when Ms. De Pasquale decided to build a set of luxury apartments on the site of the old family beach house, she named it the Gold Coast Frangipani in memory of her grandmother. The project was completed in 2009.
The property is near both the serenity of Burleigh Head National Park, a coastal rain forest, and the hustle-bustle of Surfers Paradise-as the name suggests, Australia's best surfing beach.
The two-story penthouse apartment with soaring glass windows has three bedrooms, two bathrooms and a parents' retreat; a rear deck features a spa and a barbecue. The oceanfront terrace, eight meters by four, has a glass balustrade and bifold doors. Ms. De Pasquale lives in a similar-size apartment on the building's ground floor.
An open living room includes a designer kitchen with marble walls, Gaggenau appliances and a wine refrigerator. There's an island counter (or, as the Australians call it, 'bench top'), made of Corian, for food preparation or in-kitchen eating.
The open plan makes it easy to entertain for big parties, says Ms. De Pasquale. 'I had a sit-down lunch for 30 people on Easter Sunday this year. The table extended from the balcony all the way to the middle of the living room.'
The property includes a 20-meter-wide stretch of beach and an infinity-edge pool shared by all apartments. The exterior facade of aluminium screens depicting frangipani leaves provides a breezeway and shade at the rear of the building. A basement car park offers each apartment three parking spaces as well as private storage space.
Natural materials in the living areas and bathrooms include travertine stone, marble and timber. Louvered windows in each bathroom offer sea views.
Wednesday, November 24, 2010
Over the past 10 years, Stuart Craig has designed a sprawling gothic boarding-school campus
For the seventh Potter film, 'Harry Potter and the Deathly Hallows: Part 1,' released Friday, Mr. Craig, 68, faced a new challenge: None of the action takes place at Hogwarts School of Witchcraft and Wizardry, the primary setting of the first six Harry Potter movies. Mr. Craig needed to create nearly 2 1/2 hours' worth of new settings, and give the franchise a darker look. The film unfolds like a road movie, with the characters traveling through bleak, barren countryside and facing mortal dangers in burning houses and cobwebbed castles.
At the movie's London premiere last week, Mr. Craig noted with satisfaction that the audience visibly shuddered when Harry jumped into an icy pond in a lifeless, moonlit forest. 'It was giving an extreme sense of discomfort,' he said.
In reality, the scene was shot entirely at Leavesden Studios in Watford, near London, where all the Harry Potter movies were made. Leavesden is also home to the fictional Ministry of Magic, which is supposed to sit beneath a real street in the London government district of Whitehall. To create the ministry, which first appeared in 'Harry Potter and the Order of the Phoenix' in 2007, Mr. Craig studied underground structures such as the London and Moscow subway stations.
For the new film, Mr. Craig added a towering monument to the ministry's atrium. The Soviet-style sculpture shows wizards crushing cowering muggles -- people without magic powers -- and bears an engraving that says 'Magic Is Might.' The totalitarian aesthetic, Mr. Craig says, highlights the theme of a world dominated by evil. He used seemingly long, winding corridors to give the ministry a Kafkaesque feel. As the characters explore the building, including an upstairs office and a basement courtroom, viewers soon feel as if they know their way around the place.
Mr. Craig designed his first set as a teenager in England, when he painted the Tower of London as a background for a school production of Gilbert and Sullivan's 'The Yeomen of the Guard.' Years later, in 1983, Mr. Craig won his first Academy Award for his work on 'Gandhi.' He won two subsequent Oscars for 'Dangerous Liaisons' and 'The English Patient.'
One afternoon in 1999, Mr. Craig was decorating the bedroom of his soon-to-be-born grandson when director Chris Columbus called and invited him to Los Angeles to discuss a film version of the first Potter novel. Mr. Craig rushed out to buy the book and got on the plane. Reading it, he felt 'a slight sense of panic.' He had to invent a complex world, based in reality but with magical elements. Many readers had firm images of that world already in their heads.
For the Hogwarts Castle, he studied Norman and Gothic cathedrals. The school's Great Hall was based on Christ Church College at Oxford. In the first six movies, the Hogwarts exterior that audiences see is a scale model built at 1/24th of the size shown on screen, that sat inside the studio, a former aircraft hangar. For the final film, 'Harry Potter and the Deathly Hallows: Part 2,' scheduled for release next year, Hogwarts was made digitally. Visual effects experts scanned the model and then scanned surfaces of real buildings, including cracks and crumbling masonry. Those images were then laid over those of the model, creating a more weathered texture and more architectural detail. The improved castle walls allowed for more action close to the building -- essential for the final film, which revolves around Hogwarts.
At the movie's London premiere last week, Mr. Craig noted with satisfaction that the audience visibly shuddered when Harry jumped into an icy pond in a lifeless, moonlit forest. 'It was giving an extreme sense of discomfort,' he said.
In reality, the scene was shot entirely at Leavesden Studios in Watford, near London, where all the Harry Potter movies were made. Leavesden is also home to the fictional Ministry of Magic, which is supposed to sit beneath a real street in the London government district of Whitehall. To create the ministry, which first appeared in 'Harry Potter and the Order of the Phoenix' in 2007, Mr. Craig studied underground structures such as the London and Moscow subway stations.
For the new film, Mr. Craig added a towering monument to the ministry's atrium. The Soviet-style sculpture shows wizards crushing cowering muggles -- people without magic powers -- and bears an engraving that says 'Magic Is Might.' The totalitarian aesthetic, Mr. Craig says, highlights the theme of a world dominated by evil. He used seemingly long, winding corridors to give the ministry a Kafkaesque feel. As the characters explore the building, including an upstairs office and a basement courtroom, viewers soon feel as if they know their way around the place.
Mr. Craig designed his first set as a teenager in England, when he painted the Tower of London as a background for a school production of Gilbert and Sullivan's 'The Yeomen of the Guard.' Years later, in 1983, Mr. Craig won his first Academy Award for his work on 'Gandhi.' He won two subsequent Oscars for 'Dangerous Liaisons' and 'The English Patient.'
One afternoon in 1999, Mr. Craig was decorating the bedroom of his soon-to-be-born grandson when director Chris Columbus called and invited him to Los Angeles to discuss a film version of the first Potter novel. Mr. Craig rushed out to buy the book and got on the plane. Reading it, he felt 'a slight sense of panic.' He had to invent a complex world, based in reality but with magical elements. Many readers had firm images of that world already in their heads.
For the Hogwarts Castle, he studied Norman and Gothic cathedrals. The school's Great Hall was based on Christ Church College at Oxford. In the first six movies, the Hogwarts exterior that audiences see is a scale model built at 1/24th of the size shown on screen, that sat inside the studio, a former aircraft hangar. For the final film, 'Harry Potter and the Deathly Hallows: Part 2,' scheduled for release next year, Hogwarts was made digitally. Visual effects experts scanned the model and then scanned surfaces of real buildings, including cracks and crumbling masonry. Those images were then laid over those of the model, creating a more weathered texture and more architectural detail. The improved castle walls allowed for more action close to the building -- essential for the final film, which revolves around Hogwarts.
Tuesday, November 23, 2010
Heavy rain this past weekend in Hong Kong may have damped the mood
The first thing you need to know about the Senz umbrella is that it looks odd. Shorter in the front and wider on the sides than a traditional umbrella, with an extended 'tail' in the back, it looks like a spare part of a bat costume left over from Halloween. From personal experience, we can say that many onlookers will stare when you take it out; a few will even point.
But according to the Dutch team led by an industrial-design student that spent two years developing the Senz umbrella─with some help from the Delft University of Technology in the Netherlands─this is the way an umbrella should look if it's to function properly. Apparently, the asymmetric shape is more aerodynamic and provides better coverage for couples sharing cover. And there's no arguing with the convenience of the sturdy handle, which pushes up to open the umbrella.
Once the Senz is open, there are instructions to follow: A small stamp on the underside of one of the front panels should be kept pointed against the wind; when used correctly, the instructions claim, the umbrella can withstand winds of up to 100 kilometers an hour. But this proved more troublesome than expected, as erratic shifts in winds meant constantly having to turn the umbrella. Still, take it for all in all, it did seem to provide more rain coverage than a standard umbrella.
When it was launched in 25 countries world-wide, all 10,000 Senz umbrellas sold out in just nine days. This year, the Dutch company is hoping Christmas holiday gifts will boost sales of the Senz in Hong Kong, where it is available in Lane Crawford and local retailer Oplus. But in a city full of sky-bridges and taxis that take you door-to-door, is there a need?
But according to the Dutch team led by an industrial-design student that spent two years developing the Senz umbrella─with some help from the Delft University of Technology in the Netherlands─this is the way an umbrella should look if it's to function properly. Apparently, the asymmetric shape is more aerodynamic and provides better coverage for couples sharing cover. And there's no arguing with the convenience of the sturdy handle, which pushes up to open the umbrella.
Once the Senz is open, there are instructions to follow: A small stamp on the underside of one of the front panels should be kept pointed against the wind; when used correctly, the instructions claim, the umbrella can withstand winds of up to 100 kilometers an hour. But this proved more troublesome than expected, as erratic shifts in winds meant constantly having to turn the umbrella. Still, take it for all in all, it did seem to provide more rain coverage than a standard umbrella.
When it was launched in 25 countries world-wide, all 10,000 Senz umbrellas sold out in just nine days. This year, the Dutch company is hoping Christmas holiday gifts will boost sales of the Senz in Hong Kong, where it is available in Lane Crawford and local retailer Oplus. But in a city full of sky-bridges and taxis that take you door-to-door, is there a need?
Monday, November 22, 2010
'Do you know the surest way to go broke?'
At least for the present, the Swiss watch industry may be the exception that proves the rule. While demand in the West may be falling for the kind of workhorse watch prevalent in pre-cell phone days, it is still strong in other parts of the world. And luxury brands are booming, observers say.
From academics to consumers, fashion insiders to manufacturers, most agree that the prospects for the Swiss watch industry are rosy thanks to soaring Asian sales and the enduring social cachet of expensive watches. Demand for the likes of Swatch's Omega, Rolex and Cartier : particularly in China -- is solid and companies are reporting glowing earnings despite a surging franc, sky-high precious metals prices and a limping global economy. Switzerland is the world's largest watch manufacturer, and while it produces timepieces in all different price categories, it accounts for most of the luxury market.
'The environment for the Swiss watch industry is still good, especially in Asia ex-Japan,' said Patrik Schwendimann, head of consumer goods equity research at ZKB in Geneva. 'These days, they are the most important market and the positive news is that they really like Swiss-made products.'
From January to September, manufacturers exported about 754 million Swiss francs ($765.4 million) worth of products to China, up 59% year on year and about CHF2.16 billion to Hong Kong, up 43% during the same period, according to the Federation of the Swiss Watch Industry. This accounts for about one-quarter of the total value of CHF11.2 billion in watch exports recorded so far this year.
Major players such as Swatch, the world's largest watch maker, and Richemont, produced glowing first-half results. Swatch said sales rose by 33% while Richemont, owner of the Cartier brand, said sales rose 37% in the five months ended August 31. Rolex as well as many other privately-owned brands do not release figures. 'I am optimistic for the rest of the year and 2010 will be definitively a positive year,' said Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry.
It appears that reports of the watches' demise : trumpeted along with the proliferation of cell phones and other time-telling devices -- were premature. But while the covet factor for luxury watches is high, it is unclear what would happen to this market if demand for the lower end falls off a cliff. In other words, would expensive watches be so in demand if there is no popular product to compare it to? Watches in the exclusive luxury sector are roughly defined as costing above $3,000 while the accessible luxury sector is priced from about $500. The mid- and lower range sit below $500 and $200.
The China factor
At the moment, there is little danger that luxury watch sector will follow the same trajectory as the hat industry, another item that was formerly a must-have by all classes. While worries over rising Chinese interest rates and the possibility of speculative bubbles in emerging markets will constantly stalk the whole luxury sector, the longer-term fundamentals are strong, observers say. Analysts expect Chinese growth in demand of luxury goods in excess of 20% a year.
The country has become the world's second-largest consumer luxury goods market after Japan, thanks to double digit economic growth during the last decade and the ascendancy of the 'little emperors,' products of the one-child policy enacted in the late 1970s. This generation has both economic confidence and a willingness to spend money on themselves. According to the Merrill Lynch Cap Gemini World Wealth Report, there are 477,000 Chinese millionaires, a third more than in 2008.
'China's affluent population is growing at a very fast pace and so is their demand for status symbols,' said Ronald Jean Degen, a professor at Fundação Getúlio Vargas in Rio de Janeiro. Degen has written extensively on the luxury market in Asia and believes that part of the success of the Swiss watch industry is that it has stayed away from the trend to democratize luxury .
Analysts also say Asian demand for lower-priced watches remains 'positive.' Elsewhere, however, it is a different picture. Companies like Swatch, with a stable of 19 brands in various price categories, do not break down sales figures for each segment and for each region. However, anecdotal evidence points to the fact that many people in developed economies aren't buying purely functional timepieces as much as they used to. 'I wouldn't expect much growth in the coming years from this segment,' said Schwendimann.
From academics to consumers, fashion insiders to manufacturers, most agree that the prospects for the Swiss watch industry are rosy thanks to soaring Asian sales and the enduring social cachet of expensive watches. Demand for the likes of Swatch's Omega, Rolex and Cartier : particularly in China -- is solid and companies are reporting glowing earnings despite a surging franc, sky-high precious metals prices and a limping global economy. Switzerland is the world's largest watch manufacturer, and while it produces timepieces in all different price categories, it accounts for most of the luxury market.
'The environment for the Swiss watch industry is still good, especially in Asia ex-Japan,' said Patrik Schwendimann, head of consumer goods equity research at ZKB in Geneva. 'These days, they are the most important market and the positive news is that they really like Swiss-made products.'
From January to September, manufacturers exported about 754 million Swiss francs ($765.4 million) worth of products to China, up 59% year on year and about CHF2.16 billion to Hong Kong, up 43% during the same period, according to the Federation of the Swiss Watch Industry. This accounts for about one-quarter of the total value of CHF11.2 billion in watch exports recorded so far this year.
Major players such as Swatch, the world's largest watch maker, and Richemont, produced glowing first-half results. Swatch said sales rose by 33% while Richemont, owner of the Cartier brand, said sales rose 37% in the five months ended August 31. Rolex as well as many other privately-owned brands do not release figures. 'I am optimistic for the rest of the year and 2010 will be definitively a positive year,' said Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry.
It appears that reports of the watches' demise : trumpeted along with the proliferation of cell phones and other time-telling devices -- were premature. But while the covet factor for luxury watches is high, it is unclear what would happen to this market if demand for the lower end falls off a cliff. In other words, would expensive watches be so in demand if there is no popular product to compare it to? Watches in the exclusive luxury sector are roughly defined as costing above $3,000 while the accessible luxury sector is priced from about $500. The mid- and lower range sit below $500 and $200.
The China factor
At the moment, there is little danger that luxury watch sector will follow the same trajectory as the hat industry, another item that was formerly a must-have by all classes. While worries over rising Chinese interest rates and the possibility of speculative bubbles in emerging markets will constantly stalk the whole luxury sector, the longer-term fundamentals are strong, observers say. Analysts expect Chinese growth in demand of luxury goods in excess of 20% a year.
The country has become the world's second-largest consumer luxury goods market after Japan, thanks to double digit economic growth during the last decade and the ascendancy of the 'little emperors,' products of the one-child policy enacted in the late 1970s. This generation has both economic confidence and a willingness to spend money on themselves. According to the Merrill Lynch Cap Gemini World Wealth Report, there are 477,000 Chinese millionaires, a third more than in 2008.
'China's affluent population is growing at a very fast pace and so is their demand for status symbols,' said Ronald Jean Degen, a professor at Fundação Getúlio Vargas in Rio de Janeiro. Degen has written extensively on the luxury market in Asia and believes that part of the success of the Swiss watch industry is that it has stayed away from the trend to democratize luxury .
Analysts also say Asian demand for lower-priced watches remains 'positive.' Elsewhere, however, it is a different picture. Companies like Swatch, with a stable of 19 brands in various price categories, do not break down sales figures for each segment and for each region. However, anecdotal evidence points to the fact that many people in developed economies aren't buying purely functional timepieces as much as they used to. 'I wouldn't expect much growth in the coming years from this segment,' said Schwendimann.
Saturday, November 20, 2010
Hong Kong health authorities are on alert following the discovery of the city's first human case of bird flu in seven years
Officials, meanwhile, are still struggling to determine if the 59-year-old woman who tested positive for Influenza A (H5), a variant of the avian flu, contracted the disease within the city.
In a press conference Thursday, York Chow, the secretary for food and health, said the risk of avian flu in Hong Kong is 'not significantly higher than before.' Nonetheless, he said all public hospitals are operating at the serious response level under the government's preparedness plan for an influenza pandemic, requiring visitors to wear surgical masks, limiting the number of visitors and shortening visiting hours.
The Center for Health Protection is also testing all severe pneumonia cases for the bird flu. The city's last case of avian flu in humans was in 2003. In 1997, Hong Kong was home to the world's first major outbreak in humans, when six people died from the virus' mutation.
The government will also increase testing of chickens that cross the border with mainland China. In addition, the Agriculture, Fisheries and Conservation Department will inspect 30 Hong Kong farms and obtain samples for further testing.
The victim, currently in serious condition at Princess Margaret Hospital, traveled in mainland China for 10 days before returning to Hong Kong Nov. 1. She developed her first symptom, a runny nose, the next day.
In a press conference Thursday, York Chow, the secretary for food and health, said the risk of avian flu in Hong Kong is 'not significantly higher than before.' Nonetheless, he said all public hospitals are operating at the serious response level under the government's preparedness plan for an influenza pandemic, requiring visitors to wear surgical masks, limiting the number of visitors and shortening visiting hours.
The Center for Health Protection is also testing all severe pneumonia cases for the bird flu. The city's last case of avian flu in humans was in 2003. In 1997, Hong Kong was home to the world's first major outbreak in humans, when six people died from the virus' mutation.
The government will also increase testing of chickens that cross the border with mainland China. In addition, the Agriculture, Fisheries and Conservation Department will inspect 30 Hong Kong farms and obtain samples for further testing.
The victim, currently in serious condition at Princess Margaret Hospital, traveled in mainland China for 10 days before returning to Hong Kong Nov. 1. She developed her first symptom, a runny nose, the next day.
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