As they built their case in one of China’s highest-profile corruption trials, the two defense lawyers for former Communist Party star Bo Xilai used laptops without Internet connections and kept documents in a safe requiring both their keys to open.

The need for caution was imperative. Charged with abuse of power and graft, the former party chief of southwestern megacity Chongqing had been mooted as a future leader. When his trial began in August 2013, Bo stunned observers by recanting his confession and attacking prosecution witnesses in a hearing that was partially public via a near real-time court microblog.

Bo is back in the spotlight as the case against his confidante and former security chief Zhou Yongkang for bribery, abuse of power and leaking state secrets is readied for trial. Zhou is the highest-ranking official caught in President Xi Jinping’s anti-graft net, and his hearing will be a test of a legal system Xi has said he wants to make more transparent in a country with a conviction rate of more than 99 percent.

“Security was the major priority when I was handling the case, due to the sensitivity of his identity,” lawyer Wang Zhaofeng said of the trial where his client Bo was convicted and sentenced to life in prison. “We were not allowed to give information to anyone, even the family members.”

Official approval was needed for an assistant to be added to an overloaded defense team, Wang said in an interview in Beijing.

“Bo had doubts that we could defend him seriously,” he said. “When we were discussing a certain problem if we frowned or expressed any kind of facial expression, he would suspect we knew something he didn’t. It was really hard to win his trust.”

Cross examination

Analysts including University of Chicago political science professor Dali Yang said authorities publicized Bo’s trial through court transcripts on the Internet to show he was treated fairly. Zhou’s trial will probably be less open given the state secrets charges he faces and potential embarrassment to the top leadership, they said.

“Leaders, now more overtly repressive than at the time of Bo’s trial, may decide that it will not be desirable to emphasize the availability of self defense and cross examination to others,” said Jerome Cohen, a law professor at New York University who specializes in China’s legal system.

Supreme Court President Zhou Qiang was reported in March by state news agency Xinhua as saying that Zhou’s trial will be open “in accordance with the law,” suggesting areas unrelated to state secrets may be made public. The investigation of Zhou found evidence that he ordered unauthorized spying on top leaders including Xi, two people familiar with the probe have previously said.

Bo’s wife

Parts of Bo’s trial, which occurred almost a year before an investigation into Zhou was announced, weren’t released, including his testimony that he received orders from a law and order committee headed by Zhou in early 2012 on how to cover up the defection of a police chief.

Bo also blamed the Central Commission for Discipline Inspection, the party’s disciplinary watchdog, for pressuring him into confessing to save himself and his wife Gu Kailai from the death penalty, a person present during his trial said, asking not to be identified given the sensitivity of the matter. The CCDI did not reply to a fax seeking comment.

Gu accepted all the facts in her indictment and was ready to accept her punishment, Xinhua reported from her August 2012 trial where she was convicted of murdering British businessman Neil Heywood and given a suspended death sentence.

Cohen said Zhou’s trial would probably be more like Gu’s than the Bo hearing, though “each public portrayal has to be shaped in accordance with the defendant’s specific circumstances.”

Party secrets

Zhou leaked party and national secrets, Xinhua reported in December, citing a party statement announcing his expulsion. Together with Bo he “engaged in political activities” that “sabotaged party unity,” according to a Supreme People’s Court report in March.

The 72-year-old, who faces a possible death penalty or life in jail if convicted, can’t be reached for comment. No defense lawyer or date for his trial has been announced.

“The Chinese courts have made great efforts to boost transparency, especially in making verdicts available nationwide,” said Yang from the University of Chicago. Because of the state secrets charges, “Zhou’s trial will be open only partly,” he said. “If it’s closed, the official agencies will likely offer a summary quickly.”

The corruption charges against Zhou cover almost his entire political career from 1988 to 2012, according to his indictment cited by prosecutors. His intentional disclosure of state secrets “was particularly serious,” they said.

‘Super powers’

State media outlets have warned this year that factions within the party will not be tolerated, and Xi has urged officials to “strictly keep the party’s secrets”.

“Chinese authorities have super powers, and to fight against them as a lawyer, sometimes the courage is more important than the result,” said Bo’s lawyer Wang, who now advises Chinese families on their personal financial affairs.

“Bo was satisfied with my defending despite not being happy with the result,” Wang said. “But he knew it wasn’t me making the decision, and he can’t blame me for the final result as he knew I tried my best.”

Bloomberg

The post China’s 99% Conviction Rate Leaves Zhou With Bo Xilai Odds appeared first on The Jakarta Globe.

Investors look at an electronic board showing stock information an a brokerage house in Shanghai, on Dec. 15, 2014. (Reuters Photo/Aly Song)

China Inc. is turning to the stock market for a cure to its unprecedented debt hangover.

As authorities show a newfound tolerance for defaults and debt levels at Shanghai Composite Index members climb to all- time highs, Chinese companies are increasingly tapping the equity market for funds to pay down liabilities and invest in growth. They’ve announced $82 billion of secondary stock offerings in 2015, a figure UBS Group predicts will increase to a record $161 billion by December. That comes on top of $10 billion already raised through IPOs.

Investor appetite for new shares has rarely been stronger after a world-beating rally in the Shanghai Composite added $4.4 trillion to China’s market capitalization over the past year.

While the gains came too late to stave off the first default on domestic debt by a state-run company last week, officials at both China’s securities regulator and the central bank have endorsed the flow of funds into equities as a way to support an economy growing at the slowest pace since 2009.

“Valuations are very high now thanks to the stock rally and capital is very cheap,” said Xu Gao, the chief economist at China Everbright Securities in Beijing. “Companies that have access to the stock market will be able to tap the cheap funds.”

Financing shift

The Shanghai Composite rose 3 percent on Monday to close at the highest level since February 2008.

Equity fundraising in China surpassed net sales of corporate debt last month for just the third time in the past three years, according to data compiled by Bloomberg.

In one of the latest examples of the shift, China Eastern Airlines Corp. said on April 23 that it plans to sell as much as 15 billion yuan ($2.4 billion) of stock to fund the purchase of 23 planes and pay off debt. Shares rose 10 percent in Shanghai after the news as they resumed trading following a two-week halt.

Shanghai Fosun Pharmaceutical Group, a drugmaker backed by billionaire Guo Guangchang, said April 16 it will raise as much as 5.8 billion yuan from a stock sale and apply more than 60 percent of the proceeds toward repaying debt. Lingyuan Iron & Steel, whose share price has more than doubled in the past 12 months, said in February it will sell as much as 2 billion yuan of shares in a private placement to repay bank loans.

The aggregate debt-to-equity ratio for companies in the Shanghai Composite reached 165 percent in January, the highest level since Bloomberg began compiling the data in 2005.

Supply concern

“This will help some companies improve their debt indicators,” said Liao Qiang, a Beijing-based senior director at Standard & Poor’s.

The risk is that a jump in new share sales overwhelms investor demand after the Shanghai Composite’s valuation increased to the highest level in five years.

Supply surges have triggered the collapse of four of seven Chinese stock-market booms since 1992, UBS analyst Lu Wenjie wrote in a March 27 research report. The Shanghai gauge dropped as much as 2.2 percent on Friday after regulators said they will speed up the pace of IPO approvals.

“We still see a significant downside risk in China’s stock market,” said Mole Hau, an economist at BNP Paribas SA in Hong Kong. “The very high price-to-earnings ratios that we are seeing are not supported by fundamentals.”

The money raised through some stock sales will help boost the world’s second-largest economy as companies invest the proceeds to grow their businesses.

IPO reform

Hainan Airlines, the carrier based on a tropical island in southern China, is seeking 24 billion yuan to buy planes, while China Railway Group is raising as much as 12 billion yuan to fund expressway construction. Chongqing Changan Automobile plans to sell 6 billion yuan of stock to boost production capacity for passenger cars and engines.

Equity financing will play an even bigger role in China after regulators reform the nation’s IPO rules, according to Li Miaoxian, a Beijing-based economist at Bocom International Holdings Co.

Authorities have pledged to move toward a so-called “registration system” where markets, rather than regulators, determine most aspects of an offering, including pricing and timing.

Policy makers have been putting pressure on companies to cap the valuations of IPO shares, leading to smaller cash infusions than investors were willing to commit.

Equity markets can channel funds to companies more efficiently than China’s state-run banks, according to Zhao Yang, the Hong Kong-based chief China economist at Nomura Holdings.

“The market can do a better job than the government in deciding which industries offer better returns,” Zhao said. “Capital will reward the best companies in the market with the highest valuation.”

Bloomberg

The post China Inc. Finds Cure to Debt Hangover in Stock-Market Boom appeared first on The Jakarta Globe.

A centuries-old template for China’s economic influence may be the best idea the nation’s current-day leaders have for addressing a shortfall in growth.

China reported on Wednesday that the economy expanded the least since the 2009 global recession last quarter, at a 7 percent pace. Last time round, policy makers unleashed a record credit expansion that’s left a legacy of unused properties and rising bad debts.

Now, President Xi Jinping and his colleagues are focused instead on restructuring initiatives, including steps to bolster the role of private enterprise. With overseas demand for Chinese products waning, Xi’s grand plan is to deepen ties with Asian countries along the Silk Road commerce and migration routes of the Middle Ages.

Through initiatives including a $40 billion Silk Road Fund, and the $100 billion Asian Infrastructure Investment Bank now taking shape, Xi aims to fund projects that will aid development in what’s already some of the world’s fastest-growing areas. The vision could produce benefits that match China’s integration with the global economy when it joined the World Trade Organization in 2001, according to Australia & New Zealand Banking Group.

“China’s scale means the country has the capacity to change the economic fortunes of the Silk Road region,” said Ben Simpfendorfer, founder of research firm Silk Road Associates in Hong Kong, which advises multinational companies on expansion strategies in Asia and the Middle East. “We are watching the rebirth of the world’s center of economic gravity.”

Belt, road

China calls the plan “One Belt, One Road,” the “road” actually referring to the Maritime Silk Road linking China’s east coast to Europe via the South China Sea and Indian Ocean. The “belt” refers to the land mass of China, Central Asia, Russia and Europe.

For Chinese manufacturers, fresh opportunities in countries from Indonesia to Kazakhstan would help counter the impact of a domestic property-market slump and sluggish demand for exports in Europe. Government data Wednesday showed that industrial output rose 5.6 percent in March from a year before — weaker than all 40 forecasts in a Bloomberg News survey.

Boosting infrastructure investment overseas will also help China’s industries with excess capacity including in steel, cement and construction to sell abroad, said Alicia Garcia- Herrero, chief economist for emerging markets at Banco Bilbao Vizcaya Argentaria in Hong Kong.

Past hiccups

China’s previous overseas investment forays have hit obstacles. Sri Lanka’s Prime Minister Maithripala Sirisena has suspended a $1.4 billion Chinese-funded plan to build a city on reclaimed land near Colombo’s port, pending a review into whether the project was being implemented with relevant approvals.

In Kazakhstan, through which Xi envisages pipelines, roads and railways, China has struggled to gain influence. It has failed to reach a free-trade agreement mooted more than 20 years ago and in 2009, the Kazakh president rejected a plan to lease farmland to China after protests from a public wary of their neighbor’s growing power.

China’s direct investments overseas have thus far left “a catalog of mis-allocation, waste, poor administration and weak commercial standards and returns,” said George Magnus, a senior independent economic adviser to UBS Group in London.

Using multilateral institutions such as the AIIB could soothe concerns over China’s political influence. The number of countries with the intention to join AIIB as founding members has climbed to 57, the Finance Ministry said in a statement.

Silk Road

The expertise gained at the AIIB may also help develop standards that could apply to loans and other assistance for infrastructure development from the Silk Road Fund. The US and Japan have declined so far to sign on to the AIIB because of question marks over governance.

The undertaking has the potential to boost a region that will contribute 80 percent of global economic growth and vault 3 billion more people into the middle class by 2050, according to advisory firm McKinsey & Company.

Deepening economic cooperation with dozens of countries along the routes may help China leap to the next level of globalization, wrote ANZ Bank analysts led by Chief China economist Liu Li-Gang in Hong Kong in a March 30 note.

“The initiative will boost infrastructure investment especially railway, highway, shipping, port development and the resources sector,” they wrote.

Maritime road

The plan will drive domestic demand for construction machinery used for infrastructure by an annual average of 11.9 percent and boost providers of railway and nuclear power equipment, China International Capital Corporation’s analysts Wu Huimin and Kong Lingxin wrote in a March 31 note.

The maritime “road” will be more successful than the land route across Central Asia “simply because there is vastly more economic activity” there, said David Dollar, a senior fellow at the Brookings Institution in Washington, who previously worked for the US Treasury in Beijing.

“Think of coastal China, the Philippines, Vietnam, Indonesia, continuing on to Bangladesh and India — there is a huge amount of economic activity already and an insufficient degree of integration,” said Dollar, a former head of the World Bank in China.  “Plus sea transport is less expensive than land transport.”

Bloomberg

The post China Follows Silk Road in Search for Land of Fast Growth appeared first on The Jakarta Globe.

A centuries-old template for China’s economic influence may be the best idea the nation’s current-day leaders have for addressing a shortfall in growth.

China reported on Wednesday that the economy expanded the least since the 2009 global recession last quarter, at a 7 percent pace. Last time round, policy makers unleashed a record credit expansion that’s left a legacy of unused properties and rising bad debts.

Now, President Xi Jinping and his colleagues are focused instead on restructuring initiatives, including steps to bolster the role of private enterprise. With overseas demand for Chinese products waning, Xi’s grand plan is to deepen ties with Asian countries along the Silk Road commerce and migration routes of the Middle Ages.

Through initiatives including a $40 billion Silk Road Fund, and the $100 billion Asian Infrastructure Investment Bank now taking shape, Xi aims to fund projects that will aid development in what’s already some of the world’s fastest-growing areas. The vision could produce benefits that match China’s integration with the global economy when it joined the World Trade Organization in 2001, according to Australia & New Zealand Banking Group.

“China’s scale means the country has the capacity to change the economic fortunes of the Silk Road region,” said Ben Simpfendorfer, founder of research firm Silk Road Associates in Hong Kong, which advises multinational companies on expansion strategies in Asia and the Middle East. “We are watching the rebirth of the world’s center of economic gravity.”

Belt, road

China calls the plan “One Belt, One Road,” the “road” actually referring to the Maritime Silk Road linking China’s east coast to Europe via the South China Sea and Indian Ocean. The “belt” refers to the land mass of China, Central Asia, Russia and Europe.

For Chinese manufacturers, fresh opportunities in countries from Indonesia to Kazakhstan would help counter the impact of a domestic property-market slump and sluggish demand for exports in Europe. Government data Wednesday showed that industrial output rose 5.6 percent in March from a year before — weaker than all 40 forecasts in a Bloomberg News survey.

Boosting infrastructure investment overseas will also help China’s industries with excess capacity including in steel, cement and construction to sell abroad, said Alicia Garcia- Herrero, chief economist for emerging markets at Banco Bilbao Vizcaya Argentaria in Hong Kong.

Past hiccups

China’s previous overseas investment forays have hit obstacles. Sri Lanka’s Prime Minister Maithripala Sirisena has suspended a $1.4 billion Chinese-funded plan to build a city on reclaimed land near Colombo’s port, pending a review into whether the project was being implemented with relevant approvals.

In Kazakhstan, through which Xi envisages pipelines, roads and railways, China has struggled to gain influence. It has failed to reach a free-trade agreement mooted more than 20 years ago and in 2009, the Kazakh president rejected a plan to lease farmland to China after protests from a public wary of their neighbor’s growing power.

China’s direct investments overseas have thus far left “a catalog of mis-allocation, waste, poor administration and weak commercial standards and returns,” said George Magnus, a senior independent economic adviser to UBS Group in London.

Using multilateral institutions such as the AIIB could soothe concerns over China’s political influence. The number of countries with the intention to join AIIB as founding members has climbed to 57, the Finance Ministry said in a statement.

Silk Road

The expertise gained at the AIIB may also help develop standards that could apply to loans and other assistance for infrastructure development from the Silk Road Fund. The US and Japan have declined so far to sign on to the AIIB because of question marks over governance.

The undertaking has the potential to boost a region that will contribute 80 percent of global economic growth and vault 3 billion more people into the middle class by 2050, according to advisory firm McKinsey & Company.

Deepening economic cooperation with dozens of countries along the routes may help China leap to the next level of globalization, wrote ANZ Bank analysts led by Chief China economist Liu Li-Gang in Hong Kong in a March 30 note.

“The initiative will boost infrastructure investment especially railway, highway, shipping, port development and the resources sector,” they wrote.

Maritime road

The plan will drive domestic demand for construction machinery used for infrastructure by an annual average of 11.9 percent and boost providers of railway and nuclear power equipment, China International Capital Corporation’s analysts Wu Huimin and Kong Lingxin wrote in a March 31 note.

The maritime “road” will be more successful than the land route across Central Asia “simply because there is vastly more economic activity” there, said David Dollar, a senior fellow at the Brookings Institution in Washington, who previously worked for the US Treasury in Beijing.

“Think of coastal China, the Philippines, Vietnam, Indonesia, continuing on to Bangladesh and India — there is a huge amount of economic activity already and an insufficient degree of integration,” said Dollar, a former head of the World Bank in China.  “Plus sea transport is less expensive than land transport.”

Bloomberg

The post China Follows Silk Road in Search for Land of Fast Growth appeared first on The Jakarta Globe.

OnePlus, a China-based smartphone maker, is in talks to obtain Silicon Valley venture capital funding to help double its workforce as it boosts output.

OnePlus, which offers phones at less than half the price of flagship models by Samsung Electronics and Apple, plans to boost staff to 1,500 employees this year, said co-founder Carl Pei, who started the company in 2013 with six people.

The smartphone maker is betting on demand for full-featured phones at mid-range prices while bidding for talent amid intensifying competition among companies including Xiaomi, Lenovo Group and Huawei Technologies. OnePlus plans two new models for this year and aims to increase unit shipments 10- fold by next year, said Pei, 25.

“We lack the experience to help us grow one step further, so we are actually in talks with VCs in the Valley,” Pei said in an interview at company headquarters in Shenzhen, China. “The most important part is access to experience and senior- level talent that will help us scale further.”

He declined to give an estimate of the amount of funds to be raised or the company’s valuation.

OnePlus sold more than a million One smartphones in 2014, offering the device to buyers by invitation only. It plans to ship between 3 million and five million units this year, and then double that to 10 million units next year, using a combination of online and invitation sales, chief executive Pete Lau said.

Loyal fans

The One sells for $299 and two-thirds of last year’s sales were in overseas markets including the US, the UK and India.

“It’s a very high-end product at a very affordable price,” said Bryan Ma, a Singapore-based analyst at research firm International Data Corp. “They have been able to build up a very, very loyal fan base and that’s really where a lot of the value of the company is today. They’ve got people who are just, you know, waiting for that next thing they’re going to announce.”

Samsung, which is virtually tied with Apple in smartphone shipments, introduced its S6 last week, offering models from 858,000 won ($780). Apple’s newest model, the iPhone 6, sells for $649 at T Mobile US.

China-based Coolpad Group and ZTE are also expanding their business globally, adding to competition at the low-priced end of the market.

The One’s successor, the OnePlus Two, is anticipated in the third quarter, Lau said. Another phone, a cheaper model, is planned for release by the end of the year, he said, without supplying details.

Invitation marketing

Initially, OnePlus sold devices only to people who had received an invitation by participating in contests or promotions. In February, the company also began holding weekly open sales online. The invite system has allowed OnePlus to run lean, keeping “almost no inventory,” Pei said.

The invite system plus weekly online sales will be continued with the release of the Two device, while the original One smartphone will become available through unrestricted online sales.

Production of OnePlus devices is outsourced to Guangdong Oppo Electronics, the Dongguan, China-based maker of smartphones and Blu-ray players where Lau and Pei worked before going on their own.

OnePlus also plans to increasingly focus on selling software and services to users of its phones, Lau said.

“We’re hoping to develop a platform,” Lau said. “What I’m thinking is, for example in five years, we will become a platform host and allow many software developers to use our platform to give end users more choice.”

Bloomberg

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More than 90 new health-care companies employing as many as 6,200 people have been created in the United States since Obamacare became law, a level of entrepreneurial activity that participants say may be unprecedented for the industry.

Zenefits, which provides human-resources software and acts as a health-insurance broker for small employers, wouldn’t exist without the law, said Parker Conrad, the firm’s chief executive.

Since the Affordable Care Act’s inception in April 2013, the San Francisco-based company has grown to more than 900 employees.

That makes it the largest firm among dozens that have sprouted in the law’s wake, according to PricewaterhouseCoopers, which issued a report on the trend this week.

The health law, which took full effect in 2014, represents the most dramatic change to the US health system in 50 years.

Entrepreneurs, including some from within President Barack Obama’s administration, have founded companies that target employers, health insurers, hospitals, doctors and consumers looking to navigate new requirements and possibilities.

“There’s a lot of opportunity for new market entrants,” Zenefits’ Conrad said.

“The ground is literally shifting under the feet of the incumbents.”

Conrad, a cancer survivor, said that after reading the Affordable Care Act cover-to-cover and talking to insurance experts, he realized it offered an opportunity to ease the process of pricing, selling and managing health insurance for small businesses.

Zenefits, which has 10,000 clients, can “spit out pricing” for every health insurance plan in a state “in milliseconds,” using only the ages and addresses of employees, he said.

Opponents of the Affordable Care Act have continually warned of the law’s potential effect on US jobs, with Republican John Boehner of Ohio, the House speaker, frequently calling it  “the president’s job-killing health-care law.”

The American Action Forum, a nonprofit advocacy group that opposes the law, has blamed it for reducing pay at businesses with 20 to 99 employees by about $22.6 billion annually.

Still, the act became law just as the nation’s employment figures began to improve. On March 6, the Bureau of Labor Statistics reported that the United States added 295,000 jobs in February and the unemployment rate fell to 5.5 percent, the lowest level in about seven years.

The economy has added at least 200,000 jobs for 12 straight months, the best run since a 19-month stretch that ended in March 1995.

“The claim that the Affordable Care Act is a job-killer is just factually untrue,” said Bob Kocher, a doctor and former Obama adviser who is now a partner at New York-based venture capital firm Venrock Associates.

The law has “created the most enormous opportunity to build health-care companies ever,” Kocher said.

His firm has invested in eight such startups, including a Bethesda, Maryland-based company started last year by another former Obama administration official, Farzad Mostashari.

His company, Aledade assists doctors looking to take advantage of a program in the health-care law that offers higher payments under Medicare, the insurance plan for the elderly and disabled, if they can reduce the cost of caring for those patients without harming their health.

Mostashari didn’t return a phone message left at his office.

The US health secretary, Sylvia Mathews Burwell, made an appearance on Sunday at Rock Health, a venture capital fund in San Francisco that backs health-care companies, to promote the health law’s benefits for entrepreneurs.

Since 2012, the Health and Human Services Department has hosted an annual event it calls “Health Datapalooza” to encourage entrepreneurs to use its resources.

The Affordable Care Act has “provided funding for us to make more investments in data and make that data available to the private sector to help find solutions to some of our biggest challenges through innovation,” Burwell said in San Francisco, according to a transcript distributed by her department.

In the five years prior to the law “you don’t get anywhere close” to as many startups in the health-care industry, said Ceci Connolly, managing director of PricewaterhouseCoopers’s Health Research Institute, which published the report.

“There really is a stark difference,” she said. “We thought it was striking how many entrepreneurs said to us, ‘This has sparked innovation and entrepreneurship.’ ”

Omada Health, a San Francisco-based company that helps employers and insurers prevent diabetes and cardiovascular disease in high-risk individuals “is a direct result of the ACA,” chief executive Sean Duffy said.

The company’s online service uses prevention techniques that were developed by the Centers for Disease Control and Prevention under a little-known program funded by the health-care law, Duffy said.

Some companies give only partial credit to the Affordable Care Act.

They also were formed because of a related law passed a year earlier that provided federal money for hospitals and doctors’ offices to buy electronic record systems.

Bloomberg

The post Obamacare Helps Heal Health of US Employment Rate appeared first on The Jakarta Globe.

An attendee tries out an Apple Watch following an Apple event in San Francisco, California March 9, 2015. (Reuters Photo/Robert Galbraith)

Apple jumped to the top of the Chinese market by adapting the iPhone to local tastes. It’s using the same recipe with the Apple Watch.

The new timepiece is available in gold — appealing to China’s appetite for luxury. Apple also is showcasing the WeChat messaging service from China’s Tencent Holdings, an app used by half a billion people.

The smartwatch starts at 2,588 yuan ($413) in China, putting Apple in position to boost sales beyond the $182 billion in revenue from iPhones, iPads and Macs last year.

Apple’s China sales rose 70 percent in the past quarter, helped by the introduction of the iPhone 6 and 6 Plus. By moving to a screen that’s bigger than a traditional smartphone’s but smaller than a tablet’s, the iPhones were popular in a market where consumers prefer to carry one device.

The Apple Watch is “going to be a massive hit in China,” said Shaun Rein, managing director of China Market Research in Shanghai. “It’s a brand that’s aspirational, but it’s not so over the top in price.”

Greater China contributed more than $16 billion to Apple’s sales in the past quarter, about 21 percent of the company’s total. The country still ranks behind the Americas and Europe in total revenue. Yet Chief Executive Officer Tim Cook has said China eventually could become the company’s biggest market.

China has been a key component of Apple’s marketing of the watch since it was first announced in September, with the device gracing the cover of China Vogue before any other magazine.

Volkswagen polo

China prices for the watch were released Tuesday after Cook showed off the device in San Francisco. The Apple Watch Sport is the least expensive model at 2,588 yuan. The 18-karat gold Apple Watch Edition will cost about 126,800 yuan, more than the price of a Volkswagen AG Polo.

“For an international brand, plus add gold into the equation, and I think that combination is going to appeal in China,” said Chris Jones, an analyst for Canalys, noting the popularity of gold-colored iPhones.

The most expensive watches could be a tough sell in some quarters, though. Conspicuous consumption has become a hot issue as President Xi Jinping tackles the waste and corruption that he said threatens the Communist Party’s rule.

Graft crackdown

China’s sales of luxury goods have been damped by the government’s antigraft campaign, which has curbed gift-giving. Luxury spending in mainland China fell for the first time in 2014, slipping 1 percent to 115 billion yuan, according to consultancy Bain & Co.

Yang Dacai, a former official in Shaanxi province, was vilified on social media after images showed him wearing luxury timepieces while smiling at the scene of a deadly bus crash. He was sentenced to 14 years in prison for graft in September 2013.

“The anti-corruption campaign has definitely made people, especially in government, reluctant and even scared to buy expensive products,” said Shi Jie, a partner at the Grandall Law Firm and a member of the China People’s Political Consultative Conference. “They buy fewer for themselves and fewer to give others.”

Usually the bling factor of a new, high-end device would make China one of the strongest markets for the Apple Watch Edition, but this year could prove different because of the anti-graft campaign, said Bryan Ma, an analyst at International Data Corp. in Singapore.

Juggling act

“Recent anti-corruption crackdowns have cooled some of the momentum around some of these shiny flashy objects,” said Ma. “It remains to be seen what kind of social statement an Apple Watch will convey in China compared to a more traditional luxury watch brand like A. Lange & Soehne.”

Zhou Fen, a 28-year-old guide who takes Chinese tour groups to Southeast Asia, has been won over, at least for a less expensive model. He plans to buy the Apple Watch when it’s released April 24, the same day as in the US.

“On a tour my hands are full. I’ve got tickets, clipboards with itineraries, a megaphone so the group can hear me,” Zhou said at Apple’s store on Beijing’s Wangfujing shopping street.

“Trying to get a phone out of my pocket with all those things in my hands is a juggling act. With all these functions right on my wrist, I can stop the juggling.”

Apple’s presentation on Monday included a video showing the new store in Hangzhou, emphasizing China’s value to the company, said Andrew Uerkwitz, a New York-based analyst with Oppenheimer & Co.

“China is arguably the most important market outside the U.S. and, without this key market, I don’t see how Apple can have success with the watch or any future product,” Uerkwitz said.

Luxury watches

Uerkwitz projects the watch will do well in China, helping push global sales this year to 15 million units.

Neil Shah, an analyst at Counterpoint Technology Market Research, predicts Apple Watch sales will surpass 5 million units this year.

Zhang Xiaohong, a 21-year-old college student in Beijing, was shopping in watch stores along Wangfujing street, looking for something between 3,000 yuan and 5,000 yuan.

“I’d be very interested in the Apple Watch because I love Apple products,” Zhang said. “I’ve got an iPhone 5 and a MacBook computer. The design and quality is so good.”

While Apple has grabbed headlines for the success of its devices, its move into wristwear hasn’t caught everyone’s attention just yet.

Chen Zhiting, shopping for watches in Beijing wearing a New York Yankees baseball cap, was looking for something sporty at a price as much as 50,000 yuan.

Would he consider the Apple Watch? “Does Apple make watches?,” he responded. “I thought they were the iPad people.”

Bloomberg

The post Apple Watch Targets China Aspirations in $16 Billion Market appeared first on The Jakarta Globe.

Samsung Electronics won early praise for its new high-end Galaxy S6 smartphones, with reviewers saying the devices featured premium materials and innovative design.

The Galaxy S6 and S6 Edge, with a screen stretching from the front across both sides, were unveiled on Sunday in Barcelona, with Forbes saying the use of glass and metal represents “great gains in terms of style.” The BGR website called the S6 and the S6 Edge “truly fantastic smartphones.”

Samsung’s Galaxy S range has been criticized for using plastic instead of the metal frames featured in Apple’s iPhone and high-end devices by rivals running Google’s Android software. The new phones use an aluminum casing, the South Korean company’s own processors, as well as payment software and a fingerprint reader for added security.

“The Galaxy S6 accomplishes something important for Samsung: It’s a flagship phone that finally feels like a flagship,” the New York Times said. “Samsung is moving in a beautiful and powerful new direction, and has indeed created something that looks and feels new and different.”

Both phones will be available in gold, white and black. The S6 also comes in blue, while the S6 Edge has a green version. The phones, which go on sale from April 10, have high-speed and wireless charging capabilities. Samsung has not disclosed the prices.

While TechRadar praised the phones for their design and upgraded camera, it said the smaller battery, which cannot be removed, may be a drawback.

Re/Code said the new devices featured high-quality design and materials with a high-end feel that should have been part of the S range from the start.

Samsung has unveiled its “most beautiful phone,” said the Wall Street Journal, while Chosun Ilbo, a daily newspaper in South Korea, said that dropping the removable battery and memory slot put the new Galaxy devices into more direct competition with Apple.

Still, the changes have resulted in a more sophisticated phone, it said.

Bloomberg

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“Where is Patrick?”

Jacquita Gonzales could hear the urgency in the caller’s voice when asked about her husband of 29 years. Patrick Gomes was an in-flight supervisor for Malaysia Airlines and one of its planes had disappeared. It was Saturday, March 8, 2014.

Almost a year later, it’s a question with no solid answers for the 52-year-old or anyone else. Nothing from Flight 370 has been recovered for 352 days, threatening to make it the first commercial jet ever to be lost without a trace. With no debris and no knowledge of what happened, distraught families are struggling for closure.

“There are huge holes, huge gaps in our lives,” said Gonzales, a daycare center teacher in Kuala Lumpur.

Angry at the whole search process and the lack of information coming through, families have formed self-help groups on social networks and also meet in Subang Jaya, outside Kuala Lumpur to talk in person. They yell and cry and debate the many conspiracy theories around MH370 — it flew to Afghanistan; it was shot down by China; it caught fire. Mostly, they console each other.

Sarah Bajc, a 49 year-old American teacher, uses her knowledge of Mandarin to bring together Malaysian and Chinese relatives of those who died. She also set up a crowd-funded third-party investigation into the disappearance.

She’s still living in the Kuala Lumpur apartment she picked out with Philip Wood, a 51-year-old International Business Machines executive from Texas. He was on MH370 to pack up his home in Beijing before moving to Malaysia.

Presumed dead

“I’ve never been to formal counseling, but I’ve stayed grounded through a strong family and dear trusted friends,” Bajc said. “I get through each day by focusing on what I can control. They have treated the investigation like a joke, and have been callous and malicious in their treatment of the families. The world should not accept their incompetent, irresponsible and selfish behavior.”

After 327 days of hunting for the plane, Malaysia’s civil aviation department on Jan. 29 finally declared Flight 370 an accident and all on board presumed dead. It was to help the families obtain assistance, including compensation. Malaysia’s government has taken the airline private, plans to cut jobs and has appointed a new chief executive to restructure the company.

“We have endeavored and pursued every credible lead and reviewed all available data,” Azharuddin Abdul Rahman, director general of the department, said in a statement on Jan. 29. The information “supports the conclusion that MH370 ended its flight in the southern Indian Ocean.”

Vanish without trace

Even after a multinational search of 4.6 million square kilometers of the Indian Ocean, or about one percent of the Earth’s surface area, the world is little closer to finding out what really happened to Flight 370 with 239 people on board. Investigators are still trying to figure out how one of the most sophisticated aircraft of modern aviation simply vanished without any trace.

“It’s really on an unprecedented scale. I can’t recall a search that’s been as difficult as this,” Ken Mathews, a former air accident investigator who’s worked with the U.S. National Transportation Safety Board as well as its U.K and New Zealand peers, said by phone from Cairns, Australia. “Without anything specific to go on, it’s very difficult.”

Malaysian Airline System’s Flight 370, with 227 passengers and 12 crew on board, vanished while on a routine commercial flight to Beijing from Kuala Lumpur. The plane was deliberately steered off its course, Malaysia’s Prime Minister Najib Razak has said.

Not one body

Boats, armed with sonars capable of spotting objects no bigger than a shoebox, haven’t found a single man-made item across 22,000 square kilometers of silt-covered seafloor – no seat cushion, life jacket, or any object that usually floats if a plane crashes on sea. The current phase of the investigation is likely to be completed in May, when sonar scanners will have examined an area of about 60,000 square kilometers that’s almost as large as West Virginia.

The searches not finding a single body only adds to the pain of those grieving.

Wanting to see the remains is important to convince the minds and achieve closure, according to Wallace Chan Chi-ho, who specializes in bereavement as an assistant professor at the Chinese University of Hong Kong. Such behavior is common among people who’ve lost loved ones in disasters, such as the Sept. 11, 2001, attacks in the US, he said.

“It is difficult to make sense of the loss, especially when the dead bodies cannot be found. Seeing the dead bodies is part of the grieving process,” he said by e-mail. “Bereaved persons may often join together, as they can find mutual understanding. It is somehow difficult for others to understand them.”

Families’ anger

Malaysia’s government pronouncing those on board as dead has only angered the families.

Relatives of Chinese passengers, who made up 153 of those on board, traveled to Kuala Lumpur to seek meetings with Malaysian authorities, according to the Facebook page of MH370 Families, a non-profit organization. Don’t give them a “death sentence” without hard evidence, says a Feb. 13 posting.

“So far, I cannot accept such a result, with little evidence provided to us,” Bai Jie, 23, whose mother was on board the missing flight, said by phone from Beijing Jan. 29. “They just quickly announced the result without enough communication with family members,” she said.

Wen Wancheng, 63, from Shandong province, arrived in Kuala Lumpur Feb. 12. He said about 40 relatives will be there in the city by Lunar New Year, traditionally a time when families get together for reunion. Feb. 19 was the first day of the Lunar New Year this year.

Holiday ruined

The timing of the announcement, just before the New Year, also hasn’t gone down well, he said.

“After the announcement, we family members cannot spend a good holiday as it made the sad sentiment even worse,” Wen said in a phone interview from Kuala Lumpur. They intend to stay in the city to continue their protest, Wen said.

Others are taking to social media. Gonzales and families of the nine other cabin crew members share a chatroom on messaging service Whatsapp Inc., where she’s nicknamed “boss” in reference to her late husband’s job.

“Sometimes we are up till 2 a.m. or 3 a.m., talking about our families,” she said. Chatting and meeting up with other relatives is a “form of therapy,” she said.

“In the early days, some of the MH370 families would meet when there were issues to settle, decisions to make about the government, about Malaysia Airlines,” she said. “But you know, everyone has to slowly get back to their lives, look after children. If anything, you need to do it for the children.”

Dating again

Bajc, who also hasn’t resorted to any formal counseling, and has relied on family and close friends to go through the crisis, echoed the same sentiment.

“If I went back to the States I would have my family, but in Malaysia, I have the friendship and the support of the people who are in the same situation that I am in,” she said. “They say it’s socially acceptable to start dating again after a year of being a widow. But I don’t know where Philip has gone to. I can’t just move on like this. Philip needs to return, even if it is just his remains.”

In the 62 years since a De Havilland Comet flight from London to Johannesburg kicked off the modern passenger aviation industry, no scheduled commercial jet has ever disappeared without a trace.

Investigators tracked the aircraft to a remote stretch of the southern Indian Ocean based on a series of failed connections between the aircraft and an Inmarsat satellite as it flew south before its fuel ran out about 2,500 kilometers southwest of Perth, Australia.

“People say it gets better, but nothing has changed for me when there are no answers,” said Grace Subathirai Nathan, 27, whose mother Anne Catherine Daisy, an executive with Axa Affin General Insurance, disappeared on the Malaysian flight.

“What I feel on March 8, I still feel it today,” she said. “I try to carry on with life but I have not moved on in life. Sometimes I find myself crying on the way to work and on the way back.”

Bloomberg

The post Broken Hearts Won’t Mend as Malaysia Airline Hunt Nears One Year appeared first on The Jakarta Globe.

Jakarta. Indonesia’s debt sales are poised to decline through 2015, giving investors another reason to buy bonds that produced the best returns in Asia last year after India.

President Joko Widodo’s administration will reduce domestic issuance by as much as 18 percent this year as a cut in fuel subsidies to the nation of 254 million bolsters state coffers, according to HSBC.

PineBridge Investments said bond sales will drop as the nation’s fiscal deficit shrinks, even as the government provides for higher borrowings in a budget yet to be approved by the legislature.

The declining cost of oil imports, waning legislative opposition to Joko three months after he took office and the prospect of faster economic growth are combining to boost demand for Indonesian bonds, the best-performing local-currency debt in Asia this year.

Schroder Investment Management and AllianceBernstein expect returns to beat India’s.

“The supply dynamics will be favorable,” Rajeev De Mello, who manages about $10 billion as head of Asian fixed-income at Schroder in Singapore and has more Indonesian and Indian bonds than the benchmarks he uses to gauge performance, saidon Wednesday. “In the short term, perhaps Indonesia benefits more.”

Indonesia’s local bonds have handed investors a 7.6 percent return this year, compared with 2.9 percent on Philippine notes and 1.9 percent for Indian debt, Bloomberg indexes show.

India was the best performer in 2014 with a return of 17 percent, followed by Indonesia at 13 percent. A gauge of Asia’s developing economies advanced 7.8 percent.

Subsidies, deficits
Joko scrapped gasoline subsidies and capped aid for diesel from Jan. 1 to free funds for development. India ended controls on diesel and raised natural gas prices in October. Central banks in both countries expect inflation to ease after oil prices declined to the lowest since 2009.

Indonesia aims to cut its budget deficit to 1.9 percent of gross domestic product this year from 2.3 percent in 2014.

India is targeting a 4.1 percent shortfall in the year ending March 2015 and 3.6 percent the following year.

Indonesia’s 10-year yield has dropped 102 basis points, or 1.02 percentage points, from this year’s high on Jan. 7 to 7.10 percent on Thursday.

That’s more than seven times the 15 basis point decline for similar Indian notes. The benchmark Indian yield slid 97 basis points in 2014 compared with a 66 basis point decline in Indonesia.

‘Most dramatic’
The impact has been “most dramatic” in Indonesia, where yields are reflecting the prospect of lower bond supply and inflation, Anthony Chan, a Hong Kong-based Asian sovereign strategist at AllianceBernstein said by phone on Monday.

Indonesia’s net issuance, which excludes sales to replace maturing debt, will drop to Rp 217 trillion ($17.2 billion) in 2015 from 265 trillion last year, HSBC analysts led by Andre de Silva in Hong Kong, estimated in a Jan. 19 report.

Joko’s administration said the same day it may borrow a net Rp 308.3 trillion this year, or 16 percent more than in 2014.

Targets proposed in the 2015 budget are yet to be finalized by legislature, and the Finance Ministry will decide on actual issuance, Robert Pakpahan, director general of the ministry’s debt management office, said on Wednesday.

Mandiri Sekuritas expects debt sales to increase as the government aims to inject funds into state enterprises tasked with improving infrastructure, Handy Yunianto, Jakarta-based head of fixed-income research at the unit of Indonesia’s biggest lender by assets.

However, it may take more time to get projects for building roads, ports and power plants going, De Mello said.

Bond inflows
In 2013, Indonesia and India paid a price when global funds shunned assets of nations with large fiscal and trade imbalances. The rupiah slumped 21 percent and the rupee fell 11 percent. Both declined about 2 percent in 2014.

While the rupee has rebounded this year, the rupiah has extended its slide. Global investors increased their holdings of Indonesian bonds by $2.9 billion in 2015, and added a net $4.4 billion of Indian notes.

The differences may be explained by how subsidies and oil prices affect deficits in both countries.

Moody’s Investors Service estimates savings from fuel reforms amount to 2 percent of Indonesia’s GDP and 0.5 percent of India’s.

While both benefit from cheaper oil, the wider slump in global commodities reduces Indonesia’s earnings from exports such as coal and palm oil, senior vice president Atsi Sheth said in a Jan. 29 briefing.

Imports meet about 80 percent of India’s petroleum needs compared with 40 percent for Indonesia, which lost its net oil-exporter status as production dwindled.

“India and Indonesia rank very highly in our local currency framework,” said Anders Faergemann, a senior portfolio manager at PineBridge.

“Indonesia’s authorities have been quick to take advantage of the oil price adjustment and have shown a desire to eliminate a big chunk of the distortions in the budget from fuel subsidies.”
Bloomberg

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