Auto Industry's Castoffs Benefit From New Owners

Just as Ford is finishing up its sale of Jaguar and Land Rover to the Indian firm Tata, the brands are experiencing a renaissance in sales. JLR posted profit of $443 million in the most recent quarter, something it rarely achieved while under Ford ownership.  It is now exploring building cars in China, something Volvo, another former Ford brand, is also exploring.

Auto Industry's Castoffs Benefit From New Owners - WSJ.com

Groupon's Big China Gamble

 
On Monday, Groupon launched its operations in China, the world's largest Internet market.  In doing so, the company faces daunting challenges such as intense competition, price pressures on the Groupon business model, and a fractured market.  Groupon hopes to overcome some of these challenges by capitalizing on the business knowledge and relationship network of its local Chinese partner, one of China's largest internet companies.

Groupon's Big China Gamble - WSJ.com

Foreign Investment Ebbs in India, and Questions Begin

Although India's economy is growing at a healthy 9 percent per year, and a growing middle class is consuming goods at historic levels, foreign direct investment (FDI) into India shrank by 31 percent in 2010, according to the United Nations.  The decline highlights the challenges foreign companies face when trying to operate in India, where extremely restrictive laws, inefficient bureaucracy, and corruption are starting to scare away investors.

Foreign Investment Ebbs in India, and Questions Begin - NYTimes.com

Huawei waits for White House review before selling unit

It was the deal that almost slipped under the radar screen -- in May, Chinese telecom equipment maker Huawei purchased U.S. startup 3Leaf Systems for $2 million, a tiny deal in the world of M&A.  3Leaf creates technology that allows groups of computers to work together like a more powerful machine.  When the Pentagon found out about the deal, however, it asked the company to file for a review with the Committee on Foreign Investment in the United States (CFIUS), an interagency committee that reviews FDI into the U.S. that may pose a national security risk.  Now, CFIUS has recommended Huawei unwind the deal and divest 3Leaf, something Huawei doesn't want to do.  The company has appealed to President Obama for a final decision.

BBC News - Huawei waits for White House review before selling unit

Uniqlo Parent Fast Retailing Pursues Global Deals - WSJ.com

If you've never heard of Uniqlo before, you may soon. The Japanese fashion retailer (think Japanese version of Gap) announced plans yesterday to spend up to $11 billion to acquire a strong U.S. or Europe company to become bigger than Gap or H&M. Chairman and Chief Executive of Fast Retailing Co., Uniqlo's parent company, Tadashi Yanai (pictured here and one of Japan's richest men) told the WSJ that "we could grow organically,, but it would take a long time." The solution therefore is to buy another company! "The bigger the better" he says.

The company won't necessarily bring in the Uniqlo brand. It tried several years ago in the U.S., and all closed down except the outlet in SoHo. Yanai believes Uniqlo should only expand in major urban areas more accepting to foreign brands.

So what kind of U.S.-based clothing retailer can $11 billion buy these days?

Uniqlo Parent Fast Retailing Pursues Global Deals - WSJ.com

Shiseido to Buy Bare Escentuals for $1.7 Billion - NYTimes.com

The stock market is down this morning, but Bare Escentuals (NASDAQ: BARE) is up 42% to $18.10. Yesterday, after the markets closed, Japanese cosmetics manufacturer Shiseido made a tender offer to purchase all BARE shares for $18.20 each, or a total purchase price of $1.7 billion. The acquisition allows Shiseido a quick entry into the major U.S. market since Bare Escentuals has a major presence here, including through Sephora and its own stores. The mineral makeup market is also growing rapidly, and Shiseido lacked an entrant in this market. Looks like 2010 is off to a big start in M&A activity!

Shiseido to Buy Bare Escentuals for $1.7 Billion - NYTimes.com

When Outsourcing Reverses Itself

Yesterday in class I made the bold proclamation that if we aren't careful about how we manage the economy going forward, we may all end up working for the Chinese one day. Today the New York Times ran a story about how this is already happening in some segments of the computer industry (just ask former IBM Thinkpad employees).

We all know computer companies like HP and Apple don't actually have any factories of their own. They design a cool gadget like a new color printer or iPod, then ask a contract assembler in Taiwan or China to put it together for them. For years, that's how it worked.

Now, those contract assemblers are starting to grow up. With names like Quanta or Foxconn, most Americans have never heard of these companies before. These two in particular, however, are investing millions of dollars into new technologies and startups, sometimes in the U.S., so that they can eventually compete with... their own customers.

Asian Computer Makers Move Into Riskier Ventures - NYTimes.com