Bankruptcy in China - Silent busts

For you Doc...


http
://www.economist.com/business/displays...9&fsrc=rss

More Chinese businesses are collapsing—though you would never know it

OFFICIALLY, only a few thousand companies will declare bankruptcy this year in China. Unofficially, local manufacturing groups believe many more than that will go out of business in the southern province of Guangdong alone. And the underlying causes—falling demand for exports, higher material costs, stricter labour laws—are hardly unique to that province. But in contrast to Europe and America, where business failures are meticulously tracked, the only trace left by most of these firms will be rusting locks on their old front gates.

This is because Chinese business owners who wish to shut down their companies have three options: to reach informal agreements with employees, trading partners and the government; to file under the auspices of a court; or to walk away. Each has its drawbacks.

A Shenzhen manufacturer who recently tried to close by informal agreement describes the process as almost impossible. He had to negotiate separately with over a dozen government agencies, including tax, labour and even the fire department; each had demands that changed by the day. Then there were skittish suppliers, one of whom blockaded his firm’s entrance. “Everyone just wanted more money,” he says. “That is why most people just shut down overnight.” The only thing everyone agreed on was the need to avoid the local courts.

Last year a new bankruptcy law came into effect, but it is incomplete and poorly understood. Even firms that might recover by restructuring under court protection are reluctant to use it, says Helena Huang of Kirkland & Ellis, a law firm. In the past, bosses often preferred to run a business down to its last yuan before acknowledging problems, at which point there was little to reorganise. Even under the new law, it is unclear whether lenders who step in after a bankruptcy have priority over old claims, undermining any incentive for a would-be backer to give a firm a second chance.

As a result, any reorganisations that do take place often happen informally. One local municipal government, Ms Huang says, recently bailed out a big local firm because it feared that a collapse would harm local jobs and its own reputation—and this is hardly uncommon. There are quiet bail-outs, she adds, even among publicly listed companies.

More than 30 companies on the national stockmarkets have recently failed, says Alan Tang of Grant Thornton, a consultancy. But in many cases control has been acquired by other firms to engineer a “backdoor listing”, without the lobbying and delays common in China. Evidently some Chinese entrepreneurs continue to believe that a listed firm’s ability to raise public capital is worth having—if not now, then one day.

FACTBOX-Piracy on the high seas

FACTBOX-Piracy on the high seas
18 Nov 2008

Nov 18 (Reuters) - A Saudi supertanker hijacked by pirates with a $100 million oil cargo in the largest ever such seizure has reached the coast of north Somalia, a regional maritime group said on Tuesday.

Here are some details on piracy off the Horn of Africa:

* SCALE OF PIRACY:

-- Piracy has been growing for several years off the Horn of Africa, and near-daily attacks are now forcing many shippers to seek alternative routes.

-- Intelligence sources say three suspicious trawlers now in the Gulf of Aden are believed to be pirate mother vessels.

-- The International Maritime Bureau said there have been a total of 92 attacks off Somalia this year, 36 of those -- more than one in three -- have been hijacked. Fourteen ships are still controlled by pirates. 682 crew members have been kidnapped and 243 are still being held.

-- Recent attacks have brought the anti-terrorist Combined Task Force 150 into action. The multinational unit, part of Washington's Operation Enduring Freedom, is based in Djibouti and has come to the aid of many ships attacked.

* INCIDENTS IN THE LAST WEEK:

-- The Sirius Star, with 25 crew from Croatia, Britain, the Philippines, Poland and Saudi Arabia, was attacked 450 nautical miles southeast of Mombasa, Kenya, the U.S. Navy said on Monday. It is the first tanker to have been seized in the area. The Sirius held as much as 2 million barrels of oil, more than a quarter of Saudi Arabia's daily exports.

-- A Russian navy patrol boat scared off pirates who tried to capture the Saudi Arabian merchant ship Rabih in the Gulf of Aden on Sunday, the Russian navy told Interfax.

-- On Saturday, a Japanese cargo ship was reported seized by pirates off Somalia. It was carrying 23 sailors, including five South Koreans, Yonhap said.

-- A Chinese fishing boat was reported seized off the Kenyan coast late on Thursday. The crew included 15 Chinese, one Taiwanese, one Japanese, three Filipinos and four Vietnamese.

-- The Karagol, a Turkish ship with 14 crew, was hijacked off Yemen. It was transporting chemicals to the port of Bombay.

* IMPACT:

-- Major operators of the world's merchant shipping -- carrying some 90 percent of the world's traded goods by volume -- are considering by-passing the Gulf of Aden and Suez Canal altogether.

-- Industry experts say the alternative trade route, round South Africa's Cape of Good Hope, would add some three weeks or more to a typical journey, pushing up costs for goods.

* TRAFFIC:

-- Exports from the Gulf and Asia to the West cross the region on the way to Suez Canal. Nearly 20,000 ships pass through the Gulf of Aden each year.

-- Seven percent of world oil consumption passed through the Gulf of Aden in 2007, according to Lloyd's Marine Intelligence Unit, including around 30 percent of Europe's consumption.

-- The area is also the main trade route for dry commodities and manufactured goods between Asia, Europe and the Americas.

Sources: Reuters/EIA www.eia.gov/BIMCO, Lloyd's Marine Intelligence Unit, GlobalSecurity/Ministry of Defence/International Maritime Bureau.

California wildfire prompts state of emergency

http://www.cbc.ca/world/story/2008/11/14/c...re.html?ref=rss

California wildfire prompts state of emergency
100 homes destroyed as blaze heads for Santa Barbara
Last Updated: Friday, November 14, 2008

California Gov. Arnold Schwarzenegger declared a state of emergency for Santa Barbara County on Friday, as firefighters and aircraft battled a raging wildfire that has destroyed about 100 multimillion-dollar homes and burned across over 800 hectares of land.

...


Bonfire built by students caused Montecito fire, sheriff says
November 19, 2008
http://www.latimes.com/news/local/la-me-bo...0,4914192.story

Ten men and women, ranging in age from 18 to 22, had gathered at an abandoned property called the Teahouse late Wednesday night and built a bonfire to warm themselves, Brown said.

The D.A.'s office will decide if they will be charged with any crimes.

...

Schwarzenegger seeks federal disaster designation
November 17, 2008
http://latimesblogs.latimes.com/lanow/2008...rnold-schw.html

I request that you declare a major disaster for the State of California as a result of extremely high winds and wildfires beginning November 13, 2008. At this time, impacted counties include Los Angeles, Orange, Riverside, San Bernardino and Santa Barbara. Winds exceeding 70 miles per hour have worsened fire conditions by fanning the flames, causing them to spread with frightening speed. This wind and fire event has already consumed more than 40,000 acres; caused widespread human injury; destroyed and damaged homes, businesses, schools, hospitals and infrastructure throughout the region; and it continues to threaten the lives and safety of many Californians.

Mazda & Suzuki Stocks Up!

Japan Hot Stocks-Mazda gains as Ford to sell stake
11.18.08
http://www.forbes.com/afxnewslimited/feeds...afx5712037.html

Ford, scrambling for cash as the U.S. Big Three automakers struggle to stay alive, will end 12 years of control of Mazda through the sale of a 20 percent stake in the Japanese carmaker for around $540 million.


G.M. Sells Suzuki Stake in Its Effort to Raise Cash
November 17, 2008

http://www.nytimes.com/2008/11/18/business...cwVSO44NmBbGpgw

General Motors will sell its entire stake in Suzuki Motor Corporation, the Japanese automaker, for 22.37 billion yen ($230 million), G.M.’s latest move to stay afloat while awaiting a decision from Washington on aid for the industry.

What's your sign?

What is everyone's zodiac signs?

Mine is Cancer.

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ASC: Libra
MID: Capricorn