The Weekly News Update is a weekly roundup of business news from around the Asia-Pacific region, covering Fusion Consulting's core industry practices: chemicals, consumer & retail, financial services, industrial & logistics, information & communication technology, life science and media & leisure. If you have colleagues or friends who may be interested in subscribing, please forward this email to them and copy knowledge@fusionc.com.      Offshore Services & Equipment   Offshore exploration continues to breach new frontiers, driven by new finds,  technology and surging energy demand in China and other growth economies.  Opportunities abound for equipment and services vendors able to meet the sector's  exacting demands. Find out where the opportunities lie.  In the news this week l 11-Jan-08 China shows strong potential for pharma outsourcing

Most global pharma companies have been trimming back or closing manufacturing capacity. Merck has cut 20% of its manufacturing sites, while Pfizer has divested at least 29 sites. Under increasing cost pressure, Pfizer, AstraZeneca and Merck are turning to China with a view to cut cost through the outsourcing of drug development and production. AstraZeneca plans to outsource part of its production to China to save time and money. Meanwhile, Shanghai-based drug-research-outsourcing company Wuxi PharmaTech (Cayman) is buying US medical research firm AppTec Laboratory services to capture an even larger share of the growing global market for outsourcing of drug development. Chinese pharma research outsourcing firms such as Wuxi could eventually become significant rivals to US contract research organisations, which include Covance and Quintiles Transnational Corporation.

Chemical India - India wants Exxon, Chevron to bid for oil, gas deals Source: Business Times Singapore, 9 January 2008 India, Asia's third-biggest oil consumer, wants ExxonMobil and Chevron to explore for oil and gas in the country, as record crude prices of more than US$100 a barrel spur a search for new hydrocarbon reserves. India depends on imports for 70% of its oil needs. India is competing with Africa and South America to attract global oil companies to seek reserves and meet surging demand as decades-old fields in North America and the North Sea begin to dry up. India wants Chevron, Exxon and BP plc to bid as local companies don't have the technology to search for reserves in deep waters and remote regions. Japan - Japanese Hodogaya Chemical, UPL to set up JV Source: Japanese News Digest, 4 January 2008 Japanese chemicals producer Hodogaya Chemical and major Indian pesticides producer United Phosphorus Limited (UPL) will set up in March 2008 a pesticides manufacturing and trading joint venture in Tokyo to expand their business in the promising Japanese market. To be called Hodogaya UPL, the joint venture will be 60% held by Hodogaya Chemical and 40% by UPL. Mumbai-based UPL currently boasts to be the world's 10th pesticides producer. Hodogaya Chemical is headquartered in Tokyo and currently runs four factories and one research laboratory in Japan. The company has two affiliates abroad. These are in China and in the United States. Malaysia - Tape maker Visko to build US$9 million plant Source: Business Times (Malaysia), 4 January 2008 Self-adhesive tape maker Visko Industries, a joint-venture company between Taiwan's Alpha Beta Enterprise and Indonesia's PT Ekadharma International Tbk., plans to invest RM30 million (US$9 million) to build a 2ha manufacturing plant in the Port Klang Free Zone (PKFZ). The company already has two plants in Indonesia and three in Taiwan. The plant in PKFZ will have a monthly capacity of between 30 and 35 million sq m and there are plans to double capacity in two years. According to Visko Industries managing director Judi Widjaja Leonardi, Asean demand is around 100 million sq m a month. View an example of our experience in this industry.

Consumer & retail China - Toy exports rocket despite recalls Source: Today (Singapore), 7 January 2008 Exports of Chinese toys increased in the first 10 months of 2007 despite a wave of high-profile recalls of products made by China. In the period from January to October, China shipped US$7.1 billion worth of toys abroad, a rise of 20.1% from the same period a year earlier. Even exports to the United States, which has been rattled by a series of widely-publicised recalls, rose 13.3% in the first 10 months of 2007 from a year earlier. China is the world's top toy exporter, selling 22 billion toys overseas in 2006, or 60% of the globe's total. But it came under embarrassing international pressure last year after millions of toys exported to the United States and Europe were found to have dangerous defects. India - Food processing industry looks bright Source: Channel NewsAsia, 8 January 2008 Prospects for India's rapidly growing food processing industry look bright as more and more busy Indians rely on meals that are easy to prepare. Changing lifestyles and modified eating habits in India's growing urban sector have catapulted its processed foods industry to a new status. Processed foods currently account for just 2% of total food production in India, a country that is largely dependent on agriculture. But with rising income levels and longer working hours, there is growing demand in major cities for convenience foods. By the end of the decade, India's processed foods industry is expected to expand by 10%, with the growth rate reaching 25% by 2020. Japan - Edion courts Best Denki for partnership Source: Japan Times, 9 January 2008 Edion Corporation has asked Best Denki to forge a capital and business tieup in a sign of further shakeups in the home electronics retail business. Edion is currently Japan's No. 2 electronics retailer while Fukuoka-based Best Denki is No. 7 in the business. A tieup with Best Denki would give Edion access to a retailer with about 600 stores, including outlets in Singapore, Taiwan and Indonesia. Japan's electronics retailers have been undergoing a major consolidation as rivals try to boost their bargaining power against consumer electronics giants like Matsushita Electric Industrial and Sony Corporation. View an example of our experience in this industry.

Financial services Indonesia - UOB plans holding firm for Jakarta banks Source: Business Times Singapore, 5 January 2008 United Overseas Bank (UOB), Singapore's second-largest bank by assets, plans to create a holding company for its two Indonesian lenders by 2010 to meet ownership rules. The holding company will help UOB meet a regulation restricting control of more than one financial services company in Indonesia. UOB owns 61% of Bank UOB Buana and also has its own Indonesian branch called PT Bank UOB Indonesia. UOB and other investors including Singapore's Temasek Holdings and Malaysia's Khazanah Nasional must sell their holdings in Indonesian banks, merge them or put them under a holding company, according to central bank regulations. Korea - Credit card spending hits record high in 2007 Source: The Korea Times, 4 January 2008 Credit card spending in Korea hit a record high in 2007, pointing to signs of a recovery in private consumption. Spending via credit cards amounted to W254.8 trillion (US$271 billion) in 2007, up 15% from a year earlier. The figure is the highest since 2003 when the data was first tallied. Yearly card bills have been on the upward trend since 2003 when spending reached W162 trillion (US$172 billion). An economist at LG Economic Research Institute said the "US subprime mortgage turmoil seemed to have little impact on private consumption in the country." Monthly card spending also set records last year with the December bills amounting to W24.9 trillion (US$26 billion). Vietnam - Hike in foreign ownership cap in bank proposed Source: Nhan Dan, 5 January 2008 Vietnam Association for Financial Investors has recommended raising the foreign holding in banks from the current 30% to 35-37% to mobilise more capital for the securities market and the commercial banking system and make the stock market more attractive to foreign investment in terms of commodities. In April 2007, Vietnam raised the cap for shares held by strategic foreign investors in local joint stock banks to 15% from previous 10%, leaving it open for the prime minister to raise the limit to 20% on a case-by-case basis. However, Vietnam maintains the total foreign ownership ceiling at 30%, while the maximum stake a non-strategic foreign investor can hold remains at 5% for an individual investor and 10% for a foreign bank. View an example of our experience in this industry.

Industrial & logistics Japan - Vehicle sales fall to lowest in 2007 Source: Japan Times, 8 January 2008 Japan's vehicle sales fell in 2007 to the lowest in 35 years as declining wages and a shrinking population cut demand for automobiles. According to the Japan Automobile Dealers Association, sales of cars, trucks and buses excluding minicars dropped 7.6% to 3.4 million from 3.7 million in 2006. Car sales fell 5.8% to 2.95 million units, while truck sales fell 17.6% to 465,019 and bus sales were down 11.3% at 15,617 units. Japan Automobile Manufacturers Association has put its domestic sales forecast for 2008 at 3.427 million vehicles (excluding minivehicles), down 0.2% from sales for 2007. Japan is the world's third-largest vehicle market, lagging behind the United States and China. Korea - Hyundai eyes air cargo business Source: Korea Herald, 4 January 2008 Hyundai Group's affiliate Hyundai Logistics, which operates land transportation, is planning to enter the air cargo industry as part of the business group's efforts to find new growth engines. If Hyundai establishes an air transportation firm, it will become the first company to specialise in the air transportation sector in Korea after Korean Air and Asiana Airlines. Hyundai Logistics is facing fierce competition from rivals such as Korea Express and Hanjin Transportation in the ground-based delivery market in Korea. The local logistics market is highly competitive and Hyundai Logistics will need to find a niche to achieve further growth.  Vietnam - Automobile sales nearly doubled in 2007 Source: Channel NewsAsia, 8 January 2008 Vietnam automobile sales nearly doubled to more than 80,000 units in 2007 compared to 2006, driven by a 128% rise in demand for passenger cars. According to the Vietnam Automobile Manufacturers' Association (VAMA), total auto sales grew 97% to 80,392 units in 2007. Toyota topped the list of 17 car manufacturers in Vietnam with over 20,000 domestically-assembled units sold, followed by Truong Hai, GM Daewoo and Vinaxuki. Vietnam, an emerging economy with 8.5% growth in 2007, moved from bicycles to motorcycles in the 1990s and is now seeing a rise in car ownership, especially in cities, despite high import tariffs. View an example of our experience in this industry.

Information & communication technology   Hong Kong - Pacific Internet, Asia Netcom merge Source: International Herald Tribune, 9 January 2008 Pacific Internet and Hong Kong's Asia Netcom have sealed their merger in Hong Kong to become Pacnet. the integration of the two firms creates Asia's leading independent telecommunications service provider with the largest regional footprint and the region's most extensive sub-sea cable infrastructure. Other undersea cable operators in the region include Flag Telecom Group, owned by India's Reliance Communications, and Reach, owned by PCCW and Telstra. A strategic plan, which includes a possible listing, was also unveiled. Pacnet plans to raise between US$500 million and US$800 million from an initial share sale. Pacnet is seeking a listing in the United States in the fourth quarter of 2008. Korea - IT exports grow over 10% in 2007 Source: Korea Herald, 3 January 2008 Korean exports of information technology (IT) goods grew more than 10% in 2007, boosted by increased sales of handsets and flat panels in global markets. According to the Ministry of Information and Communication, Korean companies sold a combined US$125.1 billion worth of IT goods in 2007, up 10.5% from a year earlier. During the same period, Korea imported US$64.8 billion worth of IT products, up 9.9% from a year earlier. This brought the nation's IT trade surplus last year to a record US$60.4 billion. Singapore - Motorola to buy Asian online music firm Soundbuzz Source: Business Times Singapore, 8 January 2008 US cell phone maker Motorola plans to acquire Singapore-based online and mobile music provider Soundbuzz in an attempt to extend its mobile music service to more countries in the Asia-Pacific. Motorola already offers a service called Motomusic which allows consumers to download tracks directly to their mobile phones in China, Taiwan and Hong Kong. The Soundbuzz buyout will allow the firm to expand this offering to additional markets across the region. With stiff competition in the handset market, Motorola is turning to new business opportunities like digital music to complement revenue from its phones. The Soundbuzz acquisition will help boost its mobile phone sales in Asia and regain the No. 2 worldwide ranking it had lost to Samsung. View an example of our experience in this industry.

Life science China - WuXi acquires US biopharma company Source: The Wall Street Journal, 5 January 2008 Asia's largest contract research organisation WuXi PharmaTech (Cayman) will acquire US-based biopharmaceutical company AppTec Laboratory Services, which offers research and testing services to pharmaceutical companies and medical-device makers, for about US$151 million. The deal underscores the Chinese company's ambitions to capture an even larger share of the growing global market for the outsourcing of drug development. By purchasing AppTec, WuXi PharmaTech will be able to provide a full range of outsourcing services to pharmaceutical clients, expand its operations in the United States and forge more deals and relationships with US drugmakers. China - Pharmaceutical exports from China Up 19.3% Source: Global Insight, 4 January 2008 China's National Bureau of Statistics (NBS) has confirmed that the country’s pharmaceutical exports are continuing to perform well. In the first 11 months of 2007, exports totalled RMB56.9 (US$7.8 billion), a 19.3% year-on-year increase. The province with the leading share of national exports in the period was Zhejiang (US$2.2 billion; up 7.95%), followed by Shandong, which grew its exports by a very strong 37% to US$1.1 billion. Jiangsu, Hebei, and Shanghai completed the top five, but the fastest-growing exporter was Xinjiang, which grew its exports by a spectacular 185.3% to a nevertheless small US$3.8 million. India - Alembic seeks acquisitions to push growth Source: Global Insight, 4 January 2008 As part of its inorganic growth strategy, Indian drug-maker Alembic has announced the acquisition of domestic firm Nirayu Pvt. Ltd. for a consideration of Rs175 million (US$4.4 million). Alembic is also looking for opportunities to make acquisitions in highly regulated overseas markets. The Nirayu acquisition will see Alembic obtain an active pharmaceutical ingredient (API) unit in Halol, located in the Indian state of Gujarat. The domestic acquisition is a relatively small one for Alembic but will work to strengthen its manufacturing capability. The company has outlined plans to establish presence in contract research and manufacturing services, partnering with global pharma majors. View an example of our experience in this industry.

Media & leisure China - China clamps down on Internet video Source: AFP, 6 January 2008 China has announced tough new rules to crack down on the explosion of audio-visual content on the Internet. Only state-controlled entities will have the right to operate websites that post audio-visual content. All content must be free of violence, sex, or gambling, and cannot reveal state secrets or portray morally, socially or politically harmful situations. Under the new rules, websites seeking to offer audio-visual services will have to seek a broadcast licence, renewable every three years. The rules are the latest attempt by China's communist government to control and patrol the Internet for content it deems unhealthy. China - Online travel service industry to grow over 40% a year Source: China Economic Information Service, 4 January 2008 China's online travel service will make RMB7.6 billion (US$1 billion) in revenues toward 2011 with annual compound growth of 43.6% in the period of 2003 to 2011. Analysys attributed the fast growth of online travel service market to the gradual maturing of online travel service industry and the popularisation of electronic tickets. The online travel service market scale reached RMB1.8 billion (US$247 million) in the first nine months of 2007, over half of which were controlled by Ctrip.com, Mango city.com and elong.com. India - India telecoms to pay 6-10% of revenue for IPTV Source: Reuters, 5 January 2008 Telecoms firms like Bharti Airtel and Reliance Communications have outlined plans to provide Internet protocol television (IPTV) in India. Telecom regulator Telecom Regulatory Authority of India (TRAI) said that telecoms operators who wish to provide television over Internet in India will have to pay between 6% and 10% of their adjusted gross revenue as licence fees, depending on the telecom zone they operate in. Analysts see IPTV as a promising technology, but say its growth in India will be held back due to the low broadband penetration in the country. According to TRAI, only 0.24% of India's population had broadband connections in September 2007. View an example of our experience in this industry.

Previous issues

Malaysia's Islamic hub taking shape [4-Jan-08] Epoxy producers in Japan strengthen setup to meet surging demand [14-Dec-07] Foreign firms buy into Taiwan's banking sector [7-Dec-07] Eyes on booming Asian luxury goods market [30-Nov-07] Korean petrochemical industry remains bullish [23-Nov-07] Korea braces for integration of its financial markets [16-Nov-07]     What you don't know can hurt you  Receive all the key news on your markets, industry and competitors each  week, with alerts for important breaking news, and avoid information  overload with human filtering. Find out more about our Market Monitoring   Service and web-based Intelligence Plaza system by emailing   marketing@fusionc.com.

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