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GM China to recall 7,942 Cadillac CTS cars

GM China Investment Co., Ltd. is to recall 7,942 imported Cadillac CTS cars in the Chinese mainland from April 28 due to possible brake fluid leakages, China\’s quality watchdog said Thursday.
The rubber part of the brake lining could trap water with impure chemical materials, which could lead to erosion of the brake lining\’s connection point with the brake cylinder, a statement posted on the official website of the General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ) said.
The erosion could lead to possible leakages of brake fluid, affecting braking.
From April 28, the Cadillac after-sales service center would contact customers and help replace the old brake linings for free, the statement said.

China confirms faults with HP laptops

China\’s top quality watchdog announced Thursday that Hewlett-Packard had violated China\’s consumer rights regulations and that its laptops did have faulty graphic chips and display screens.
The findings came out six days after the government agency launched the probe into HP laptops, a statement posted on the official website of the General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ) said.
The findings showed problematic graphic chips, which resulted in black screens, overheating and computer crashes, were found among HP Pavilion DV2000 and Compaq Presario v3000 laptops.
Defective display screens were also found with six HP laptop models, including the HP 541, the findings showed.
The U.S. company had not \”strictly\” obeyed the Chinese \”Three Guarantees\” regulations concerning after sales service, according to the findings.
The \”Three Guarantees\” are guarantees of a refund, replacement, and repair.
The AQSIQ had sent the findings report to the Ministry of Industry and Information Technology and the State Administration for Industry and Commerce, the statement said.
The three government agencies would closely monitor the company in implementing the regulations.
HP on Monday issued an apology to Chinese customers and pledged to extend the warranties for certain laptops.

Geely set for control of London taxi maker

China\’s Geely Group is set to increase its grip on lossmaking London black cab taxi maker Manganese Bronze by taking a controlling stake and moving more of the production of the TX4 cab to China.
Geely, China\’s largest privately owned car maker, is also in talks to buy Ford\’s Swedish unit Volvo — another of Europe\’s venerable motoring names.

A London taxi crosses Waterloo Bridge in London on July 29, 2009.  [Agencies]
Manganese Bronze said on Wednesday it was considering a placing of new shares with 20 percent shareholder Geely at 70 pence per share to give the group a controlling stake, and announced plans to shift production of bodies and chassis for the TX4 from its Coventry plant in central England to Shanghai.
The company said the share placing would give Geely at least a 51 percent stake in the group, which had a market capitalisation on Wednesday of just under 26 million pounds ($40 million).
\”This is a bit of a turning point for us,\” Manganese Bronze\’s chief executive John Russell told Reuters after the group reported a pretax loss in 2009 of 7.3 million pounds.
\”Seeing the immediate benefits of our relationship with Geely coming through in the TX4 we are now at a point where we can think about building a closer relationship with our Chinese partner.\”
Hong Kong-listed Geely Autombile has not made a decision on whether to increase its stake in Manganese Bronze yet, a company executive told Reuters.
Cab wars
The black cabs that Manganese is now making in China are traditionally associated with London, where licensed drivers must pass a test known as \’the knowledge\’ to show they know all the roads, landmarks and places of interest within a six-mile radius of Charing Cross station.
Competition in the market, once controlled by Manganese\’s TX series of vehicles, has heated up over the last 18 months with the entry of the Mercedes Vito model, distributed by Eco City Vehicles.
Eco City has since grabbed a 30 percent slice of the market and in direct contrast to its rival has announced plans to increase production in Coventry and hire more people to meet demand.
Manganese Bronze, which halted dividend payouts in 2008, said on Wednesday that shifting body and chassis production to Shanghai would result in cutting around 60 jobs in Coventry but the TX4 cab would continue to be assembled in England. Manganese said it has already reduced its workforce to around 359 from a peak of around 500 employees before the recession began.

Analysts at Collins Stewart said Geely had come to the rescue of Manganese Bronze, which has struggled with radiator problems, discounting and falling market share.
\”Such a move (a placing) would effectively bring in 14 million pounds ($21.50 million) of cash and reduce the group\’s dependency on stocking loans as a source of capital,\” they said.
London-born driver Brian, who has been a cabbie for 17 years, said greater overseas control could mean lower quality parts and therefore more reliability issues, noting how cabs no longer carry a \”Made in Coventry with pride\” sign.
\”We\’re their bread and butter but they treat us like the dirt on their shoes,\” he said, showing a Reuters reporter a sheaf of repair bills and rust spots on his cab, which is only five years old.
The firm said in response it would never use any parts that didn\’t pass strict UK regulations, or their even more stringent internal standards.
Shares in Manganese Bronze, which have lost almost a quarter of their value so far this year, were down 0.6 percent at 85 pence at 1310 GMT, far below the high of over 950 pence achieved in May 2007.

Mercedes\’ domestic sales to outdo UK

Mercedes-Benz believes its strong market success in China comes from the German carmaker\’s ability to assimilate the trends and demands of the local market.
That strategy has been key to zipping ahead in China\’s fiercely competitive and dynamic automobile market, according to Klaus Maier, president and CEO of Mercedes-Benz (China) Ltd.
Just last month, his company posted record year-on-year growth of 160 percent in China, far outpacing Audi\’s 62 percent growth and BMW\’s 97 percent.
Maier credits the company\’s success in China to a comprehensive understanding of the market.
By all accounts, the strategy has served the Stuttgart-based company well. In the first two months of 2010 alone, for instance, it enjoyed vehicle sales of more than 15,300 units.
This translates, on average, to approximately 7,500 units per month thus far in 2010 – compared with the company\’s typical delivery of 5,500 in 2009.
Mercedes executives see this as a long-term trend on the mainland. \”Our successful efforts in formulating such a localized strategy have provided us with increasing and validated confidence looking forward, as we expect to continue growing at a higher rate than our competitors, as well as the overall and luxury auto market in 2010,\” said Maier.
This is expected to have global implications for product sales. This year, added Maier, \”we expect China to overtake the UK to become our third largest market worldwide\”.
Knowledge of the Chinese marketplace, in terms of economics and demographics, and adapting sales and marketing activities to the fast changing environment has made Mercedes the top brand among China\’s growing numbers of wealthy people.
Mercedes-Benz, for example, has long been straddled with a \”Big Benz\” reputation – an automaker dedicated to bigger, more traditional luxury cars.
Following studies of the Chinese market, however, \”we have made a point to diversify our product portfolio – even introducing China-specific models – to reflect market demand\”, said Maier. \”Supported by enhanced marketing activities the Mercedes brand has broadened its image, and is more identifiable to a much wider customer base.\”
Quick to realize the trend for entry-level models with smaller engine sizes, the German-luxury brand launched a wide range of products with 3.0 liter or less-sized engines last year, including its B-Class and smart car.
\”The reason for this, in part, lies in the recognition of our younger audience with an average age below 40-years-old, which has the majority of purchasing power in the country,\” said Maier.
Mercedes\’ German rival BMW has also realized that its customers in China are younger and more discerning. Introducing smaller and more diversified vehicles appeals to a younger, lifestyle-oriented audience.
BMW launched its 1-series hatchback in China in 2008, and launched its smallest SUV, the X1, this January.
Catering to China\’s growing interest in a greener society, two hybrid models were also included in the luxury carmaker\’s local product launch this year.
Mercedes-Benz has also taken at first-hand look at the environmental damage accompanying China\’s breakneck industrialization.

Not surprisingly, the automaker introduced a wide range of environmentally compatible models, including the S400 HYBRID – a hybrid vehicle with a lithium-ion battery – and the fuel efficient E-Class, with its low carbon emissions, in line with customers\’ increasing desire for eco-friendly mobility.
\”Mercedes Benz has carefully crafted it\’s formula for success in a business environment that can prove challenging to all carmakers,\” said Bjoern Hauber, vice-president of sales and marketing of Mercedes-Benz (China) Ltd. \”Later this year, we will continue to expand our product portfolio, and introduce even more eco-friendly products to lead the market trend.\”
Additionally, Mercedes SLS AMG – an alluring sports car characterized by its dynamic performance, purist design, lightweight construction and outstanding handling – is scheduled to enter China in 2010.  

Blackstone in $600m China agricultural deal

A consortium led by Blackstone Group has agreed to invest about $600 million in a Chinese agricultural company ahead of its planned Hong Kong listing, sources with knowledge of the deal said on Wednesday.
China Shouguang Agricultural Product Logistic Park, one of the country\’s largest agricultural market operators, will sell a roughly 30 percent stake of the company to the group led by the US buyout giant for about $600 million, said the sources.
The investment marks Blackstone\’s first pre-IPO type deal in China as Shouguang plans to raise about $700 million in a Hong Kong initial public offering (IPO) in the middle of this year after receiving investments from the Blackstone-led consortium, the sources said.
It also became the second major investment in China for Blackstone, which agreed in September 2007 to buy a 20 percent stake in the major chemical maker China National BlueStar (Group) Corp for up to $600 million. The BlueStar deal was approved by Beijing in early 2008.
The consortium includes Capital, Atlantis Investment and Warburg Pincus, said the sources, adding Blackstone is the lead investor with the biggest portion.
\”This will be the last round of private capital-raising before the company goes public,\” said one of the sources. \”Blackstone is apparently interested in this type of Pre-IPO deal with private company as well as investment in state enterprise like BlueStar,\” he added.
The sources spoke to Reuters on condition of anonymity because the deal was not yet public. Blackstone declined to comment, while Shouguang, based in Shandong province, could not be immediately reached for comment.
Home of vegetables
Shouguang is a family-owned business and it has hired investment banks including UBS and BOC International, the investment banking arm of Bank of China, to advise on its Hong Kong listing, said the sources.

The company is named after Shouguang, the Chinese city known as the \”Home of Vegetables\” — a center of trade in vegetables and other agricultural products, not only for major domestic customers but also for international agricultural markets.
Shouguang won approval in 2009 to expand its logistic park project, after which trading volumes of vegetables, fruits and agricultural by-products are expected to reach 10 million tons annually, according to a company statement at that time.
Blackstone became aggressive in China business after it hired Anthony Leung, a former Hong Kong financial secretary as its Greater China chairman.
Leung has said the US buyout would not slow its investments in China despite the global financial crisis, as high economic growth and low valuations promised good returns.
Blackstone currently is raising a local currency yuan-denominated fund with a target size of about $750 million, purely for China deals.

Sprite not to blame for poisoning: Police

A man who suffered mercury poisoning that he claimed was caused by a can of Sprite, lied about the real origin, the Beijing Police Bureau said.
Ma Sai, 21, and the person allegedly responsible for the poisoning, a 28-year-old woman surnamed Liu, have both been put under criminal detention, police said.
Ma was hospitalized with mercury poisoning after eating at a restaurant on Nov 7 last year. Police said Ma was dining with Liu and Liu\’s cousin when he was poisoned.
A police brief, released on March 15, said Ma knew Liu was responsible for the act, but agreed to conceal the truth.
The bureau told METRO the case is currently under investigation. Police refused to reveal details about the motive or method of Liu\’s actions and the relationship between Liu and Ma.
Reportedly, Ma and Liu are both workers at the Xuanwu environment and sanitation bureau. Liu visited Ma when he was hospitalized, according to Beijing News.
A similar case of mercury poisoning, involving a can of Sprite in Tongzhou district, is still under investigation.
Wang Haoyong, a 13-year-old student, was hospitalized with mercury poisoning after drinking a can of Sprite on Jan 17.

Police later found a broken thermometer at Wang\’s home. Wang told police he had cleaned up the spilt mercury after breaking the thermometer on the night of Jan 16. Police said details on the case could not be released yet.
Chen Yi, a spokesman with Coca-Cola China, said the company was happy to hear the result of the investigation on the case involving Ma and Liu. He said the result proved Sprite drinks were not contaminated during the manufacturing process and consumers could trust the brand.
Reportedly, Coca-Cola paid 20,000 yuan for Ma\’s treatment and another 20,000 yuan for Wang\’s. Chen declined to comment on this claim.

Central SOEs reduced to 127

China New Era Group Corporation and China Energy Conservation Investment Corporation, two centrally-administered State-owned enterprises (SOEs), were approved by the State Council to restructure into one company, China\’s State-assets watchdog said in a statement posted on its website.

The number of SOEs under direct supervision of the State-owned Assets Supervision and Administration Commission (SASAC) has been reduced from 128 to 127, according to the statement.
The SASAC is aiming to reduce the number of centrally-administered SOEs to between 80 and 100 by 2010 through a policy of mergers and restructuring. It had responsibility for 196 when it was first established in 2003.

Geely faces hurdles in quest for Volvo

Financing, technology issues may delay an early deal with US firm
Financing and technology issues could delay Zhejiang Geely Holding Group, the parent of Geely Automobile, in its plan to acquire the Volvo brand from US automaker Ford Motor Co, said sources familiar with the matter on Tuesday.
According to the sources, the chances of a short-term deal now looks bleak, unless the two sides make major concessions.
\”The two parties are yet to reach a definitive agreement due to unsolved obstacles and uncertainties,\” the sources said, without elaborating.

A worker at the Geely assembly line in Ningbo. The Chinese automaker plans to sign a definitive agreement with ford for the Volvo brand later this month. [CFP]
In December, the two companies had said a definitive agreement would be signed by the end of March and the whole deal would be completed by June 30 this year.
Geely was immediately unavailable for comment, but its President Li Shufu had last week told Reuters that the agreement with Ford would be signed as planned. The deal, when completed, would be the largest overseas purchase by a Chinese car company.
A major problem that is compounding the deal is the relatively weak position that Geely is in now compared to last year.
\”Last year Ford had cash flow problems. But the situation has changed now and Ford is on a strong wicket,\” he said.
The US automaker had lost $30 billion in the three years starting from 2006 and put Volvo up for sale in late 2008 to help pay off its debts.
Sales of Ford vehicles, however, increased 43 percent in February and its shares jumped to $13.34 on Monday from $2.1 a year back.
Another bone of contention between the two sides is the technology transfer issue.
\”It is hard to say whether Ford will transfer the platform technologies to Geely along with the deal,\” said John Zeng, an analyst with Shanghai-based Global Insight.
Ford\’s reluctance primarily stems from the fact that its platform technologies are closely aligned with that of Volvo.
For instance, the Volvo S40 compact car and Ford Focus have the same platform. This is also the case with Volvo S80 sedan and the Ford Mondeo, Zeng said.
\”If Geely is unable to get the platform technologies for these key models, the deal will not have much meaning,\” he said.

But the silver lining could be the fact that Ford has decided to focus on its flagship brand alone and shed its luxury brands. \”That is a compelling reason for Ford to sell the Volvo brand,\” Zeng said.
The third stumbling block for the whole deal is whether Geely would be able to secure the funds required to complete the deal.
Geely has so far managed to secure $2.1 billion worth of financing. Most of the funds have been raised from unidentified financial institutions and local governments, said reports.
Analysts say therein lies the problem for Geely. The funds from local governments may take some time to materialize and that could delay the deal.
Even if Geely does manage to get the funds it will have greater challenges in continuing the Volvo brand, said Li Daguang, an analyst with Nomura Research Institute Shanghai Ltd.
After acquiring the brand from Ford, Geely would have to spend at least $1.4 billion to finance car development, marketing, production and distribution next year, said Bloomberg reports, citing Volvo union officials and board members.
Last month, Sichuan Tengzhong Heavy Industrial Machinery Co withdrew its bid for GM\’s Hummer brand after the deal failed to get government approval within the stipulated time.

Cnooc may snag 50% of Argentine oil producer

CNOOC Ltd, China\’s largest offshore oil and gas producer, said on Sunday it will pay $3.1 billion to acquire a 50 percent stake in Argentine oil producer Bridas Corp, a deal analysts said will add to the company\’s reserves and production substantially.
\”It is not only significant as a positive, long-term business strategy, but also will serve to add substantially to CNOOC\’s production and reserves immediately,\” said Frank Gong, vice-chairman of China investment banking at JP Morgan. The company is the sole financial adviser to CNOOC in the deal.
Based on 2009 statistics, the deal would increase CNOOC\’s proven reserves and average daily production by 318 million barrels of oil equivalent (BOE) and 46,000 BOE respectively, said a company statement.
\”Bridas, with a world-class oil and gas asset portfolio, is a very good beachhead for us to enter Latin America. Through this transaction, we\’ll establish a fair presence in this region,\” said Yang Hua, president of CNOOC.
Currently, Bridas, through its affiliates, has oil and gas exploration and production activities in Argentina, Bolivia and Chile.
Latin America is one of the foremost growth areas in the global oil and gas business. Bridas is among the top players in the region on various fronts, including reserve additions, production growth, and low cost operations, said analysts.

Bridas itself has huge upside potential. Energy demand in Argentina is growing rapidly and the regulatory environment is evolving favorably. In addition, there are distinct growth opportunities arising from the exploration portfolio and from increased recovery rates, they said.
It has been some time since CNOOC made its last overseas acquisition, said Liu Gu, an analyst at Guotai Junan Securities.
\”The deal confirms with CNOOC\’s future strategy to focus more on deep-water oil exploration and overseas expansion,\” said Qiu Xiaofeng, an analyst at China Merchants Securities in Shanghai, adding that the company will see accelerated growth in its overseas expansion between 2011-2015.
The deal still needs the approval of the Chinese government, and is expected to take place in the first half of 2010, according to CNOOC.

Chinalco makes fresh overtures to Rio Tinto

Aluminum Corp of China (Chinalco), the nation\’s largest aluminum producer, is in talks with Anglo-Australian miner Rio Tinto Group on potential projects amid reports that they will jointly develop a $12 billion iron-ore project.

\”We are in talks with Rio Tinto on potential projects, and we are talking with many partners on investment projects. Rio is one of them,\” said Lu Youqing, vice-president of Chinalco, the top shareholder in Rio with a 9.3 percent stake. However, he declined to specify the project.
The Sydney Morning Herald had earlier reported that the two companies are in talks to develop the Simandou iron-ore project in the West African nation of Guinea.
A tie-up with Chinalco could help Rio offset some of the continuing costs of the projected $6 billion Guinea mine project. Rio is spending about $10 million a month to explore the mine in anticipation of selling the ore commercially, the Wall Street Journal (WSJ) said on Tuesday, quoting an unnamed source.
The negotiations are also centered on whether the Chinalco funds could be invested in offsetting the future development costs of the mine, the US newspaper said.
Simandou has 2.25 billion metric tons of resources, with annual production capacity of 70 million tons of iron ore, Rio said.
The Anglo-Australian miner is trying to repair relations with China, its biggest customer, after the soured last year. It ended talks with Chinalco on a proposed $19.5 billion alliance and formed an iron ore joint venture with rival BHP Billiton last year.
Relations with China worsened after four Rio employees in Shanghai were accused of bribery and commercial espionage during the annual iron ore price talks.

Rio CEO Tom Albanese will attend the China Development Forum in Beijing this weekend, alongside chief executives of other foreign companies, Bloomberg News said on Monday.
\”An objective for 2010, and one that I am particularly focused on, is to strengthen our relationship with China,\” Albanese said in the annual report released on Monday, according to Bloomberg.
\”China is our largest source of short-term demand growth,\” he said.
\”We will continue to work towards extending our relationship with Chinalco and to pursue business opportunities that may be to our mutual benefit,\” Rio Chairman Jan du Plessis said.
Chinese companies spent more than $30 billion buying up mines and oil deposits globally last year, taking advantage of the global recession to add resources to feed domestic economic growth.
Rio is also in talks with Chinalco on the Oyu Tolgoi copper and gold project in Mongolia, iron-ore exploration in China, and bauxite and alumina refining in Australia, the Sydney Morning Herald said.
Chinalco President Xiong Weiping told Reuters on Sunday that the company is in talks with many potential partners, including Rio, and hoped to participate in Oyu Tolgoi.
Bloomberg News contributed to this story.