Also today: Prudential buys AIG asian operations; Buffett talks up US housing market; Toyota getting mileage from Japanese vehicle market, despite worldwide woes; Rights groups snap at Apple after suppliers employ child labour; Digg Ads mimic social networking sites for success.
After gruelling duel with US lawmakers, Akio Toyoda visits China
Toyota President Akio Toyoda, fresh from his gruelling appearance before US lawmakers, is now doing the rounds in China to underscore the importance of a car market that’s become the world’s largest. Toyota sales across the board haven’t done as well in China as many would like, and now with worldwide concerns over the safety of Toyota’s acceleration, braking and steering mechanisms, it could fall further behind General Motors, Volkswagen and Ford in China’s market. China’s overall vehicle sales soared a massive 53% last year to 13.6 million units. That’s big money, but Toyota saw sales rise only by 21%, leaving it with about 5% of the car market. Surprisingly, observers say Toyota and Japanese manufacturers such as Honda have relatively few small-engined models that are eligible for Chinese tax breaks and are within reach of most Chinese families. It used to be that the US made fuel-guzzlers and the Japanese manufactured compact cars. It seems things have changed on that score in China.
Photo: Toyota Motor Corporation President and CEO Akio Toyoda attends a news conference in Beijing March 1, 2010. Toyoda on Monday offered a sincere apology to Chinese consumers over its massive global recall, which has had limited impact in the Chinese market. REUTERS/Jason Lee
Prudential buys AIG asian operations
Britain’s Prudential will buy American International Group’s life insurance business in Hong Kong in a deal valued at $35.5 billion. The buyout of American International Assurance (AIA) will give the US government its biggest return yet on AIG’s $180 billion public bailout after markets crashed in October 2008. The Federal Reserve Bank of New York, which holds AIA preference shares, gets the first $16 billion from the sale. Prudential will now be the leading life insurer in Asia, and the biggest foreign life insurance business in China and India. The Prudentil already has 11 million policyholders in 13 countries in Asia, so the AIA acquisition will give it much more reach in one of the world’s fastest-growing markets for life insurance.
Buffett talks up US housing market
Warren Buffett predicts the US residential housing slump will end by about 2011, saying for now prices will remain far below the levels achieved during the nation’s property boom. The Sage of Omaha reckons for each of the 20% of US mortgage holders owing more than their houses are worth, there’ll be a buyer who benefits. But that’s small comfort for the nation’s real estate market after a record number of foreclosures last year. Supply outstrips demand by a long way, leaving a flood of unsold properties on agent’s books. New construction is at its lowest in 50 years, as the worst overall housing decline since the Great Depression in the 1930s saw housing starts drop from some 2 million annually to about 1.2 million. Buffet’s firm Berkshire Hathaway owns businesses that range from constructing pre-fab houses, to carpeting them, so he stands to gain massively during a housing recovery. But for the moment he’s also hurting from this sector.
Toyota getting mileage from Japanese vehicle market, despite worldwide woes
Despite its world-wide woes, Toyota’s benefiting from the seventh straight increase in Japan’s monthly car sales, on the back of government incentives that significantly boosted demand. Overall sales of cars, trucks and buses rose 35% in February from a year earlier, according to the Japan Automobile Dealers Association, with Toyota selling 48% more vehicles. Honda, Japan’s second biggest car maker, also saw sales recovering in August after government tax-cuts for fuel-efficient vehicles helped raise sales by about 600,000 units last year, and a possible 900,000 units this year. Honda’s February sales jumped 36%, while Nissan sold 18% more vehicles. Toyota’s still recalling nearly 225,000 hybrid cars in Japan to repair software in their anti-lock brake systems. Consumers in Japan can apply for generous subsidies until September if they scrap a car more than 13 years old and buy a new one.
Rights groups snap at Apple after suppliers employ child labour
Apple’s been rapped over the knuckles by rights groups, after some of its contractors hired 15-year olds in countries that only allow youngsters to start work at 16. Apple mentioned this in its 2010 “Supplier Responsibility” report that surveyed employee practices in countries including China, Taiwan and Thailand. It said some suppliers overworked their employees, while others were paid less than the local minimum wage. Electronics companies in Asia typically trail clothing manufacturers in efforts to fulfil workers’ rights. Apple doesn’t disclose its suppliers as a matter of policy, but rights groups Students and Scholars Against Corporate Misbehavior and the Asia Monitor Resource Centre, both of which are based in Hong Hong, now want the California-based firm to allow non-government organisations to better monitor its hiring practices. Apple has supplier sites in countries as diverse as Taiwan, Malaysia, Singapore, South Korea, and the Philippines. Plants owned by Apple suppliers in China face a shortfall of about two million workers at present, which the rights groups say encourages the use of child labour.
Digg Ads mimic social networking sites for success
Attempts to bring search or brand advertisements onto social networking sites such as MySpace and Facebook didn’t nearly match the sites’ general popularity. But Digg, a company through which advertisers submit or sponsor content with the same look and feel of its social news site, is now getting up to 30% of its revenue from such ads. It also customises ads in its standard Interactive Advertising Bureau spots, bringing in about another 10% of revenue, which helping the company double income in 2009. Advertising is starting to blend in seamlessly with copy, through point and click devices that which will make it difficult in future to tell what’s news and what’s advertorial. Welcome to advertising paradise.