Hong Kong Financial News

No more sugar-glazed donuts in Hong Kong soon! US-based Krispy Kreme (KKD) franchisees in Hong Kong are getting liquidated. This time the financial turmoil has gone through a full circle: the crisis first started with subprime in the US, then it spread to HK, and now it is affecting a US-based company!

There are seven stores in Hong Kong. Five will be closed immediately and the other two in the Hong Kong International Airport will remain operational until further notice.

I am always amazed at how these donuts can become more popular in Asia than in the US. In the US, Krispy Kreme was a fad: every one wanted to try their deep-fried sugar-glazed donuts at least once, but then after a while people seem to forget about it and become worried about the unhealthiness of these sugar blocks. But, to my amazement, I saw in Tokyo last year that there were actually people lining up for Krispy Kreme during lunch! And in Hong Kong, the stores were definitely more packed than those in the US.

Surprisingly KKD is up 4% at this very moment and is not affected by the HK liquidation at all. But I am happy to know that soon the smell of those oily deep-fried donuts will disappear in Hong Kong.

October 27th, 2008 | Tags: Hong Kong, KKD, Krispy Kreme, liquidation, Tokyo | Category: Companies | Leave a comment

There is another piece of news on the fall of another factory in the Pearl River Delta region owned by Hong Kong-listed company. BEP International’s Shenzhen subsidiary, Bailingda Industrial (Shenzhen) Co., Limited, which manufactures small home electrical appliances like irons and water boilers, will close its Shenzhen factory this Monday, affecting around 1500 workers. They expect the closure of this subsidiary would lead to intervention such as forced liquidation from the PRC local authorities. On the other hand, they expect their listed entity is not affected and from now on it will move its focus from manufacturing to trading of home electrical appliances and certain electronic components such as valves and sensors. The listed company will start its trading business under a Hong Kong subsidiary called Smart Luck Trading Limited.

It is not too healthy to see companies being shut down every one or two day. It caught my surprise too that a 62-year old renowned home appliance retailer, Tai Lin, was insolvent and shut down last Friday. The financial crunch that got started from subprime in the US last year has spread to Hong Kong in full speed. I am definitely not surprised to see a few more well-known Hong Kong enterprises to go under in the next few months.

October 19th, 2008 | Tags: 2326, Balingda, BEP International, insolvency, liquidation, Smart Luck Trading, Tai Lin | Category: Companies | Leave a comment

Another listed company is in trouble again. This one is Smart Union Group (Holdings) Limited (2700), a toy manufacturer company that went IPOed just two years ago. Yesterday two of their factories in Dongguan were shut down and more than 7000 workers were picketing outside of the factories demanding for unpaid wages that were in the range of HKD 20 million.

The company was a manufacturer for Mattel products that include Barbie and Sesame Street. The company has not been in good shape since beginning of this year. In the half year of 2008, they have reported a loss of HKD 200 million, mainly due to a flooding event in the Dongguan factory and the amount of defect products manufactured. Also,  it has quite a big amount of short term liabilities that probably cannot be refinanced easily in this environment. Today, the company has appointed John Lees & Associates as the provisional liquidators for the company.

A storm is definitely blowing strongly towards small and medium enterprises (SMEs). Factories in the Pearl River Delta region will need to weather the soft demand from Europe and the US and the tightened credit environment. I expect a lot of manufacturers (even the bigger, listed ones) to go down in the coming months.

October 17th, 2008 | Tags: 2700, John Lees & Associates, liquidation, Pearl River Delta region, provisional liquidation, Smart Union, toy manufacturers | Category: Companies | Leave a comment

Probably because U-right (627) is a quite well-known brand in Hong Kong, the HK media have a reasonably wide coverage on the provisional liquidation of U-right today. TV News, Web Site News all have features on U-right today. According to these news reports, U-right owes around HKD 1.3 billion to banks. They will close around 10 out of the 90 stores that have in Hong Kong and the people who are fired are mainly back-office staff. The provisional liquidator also reveals that there are 3 suitors interested in bidding for U-right. Is it Bossini? Giordano? Or do the suitors just want the listed shell?

October 10th, 2008 | Tags: 627, liquidation, provisional, U-right | Category: Companies | Leave a comment