Asia Pacific (APAC), Global Politics

Cross-strait News Daily Round-up for Dec. 17

Makalot to expand its business in Vietnam

Makalot Industrial Co (TPE: 1477), a Taiwanese diversified garment manufacturer for brand names and major clothing retailers, announced on Dec. 16 a three-year plan of an investment between US$10 million and US$15 million per year in Vietnam, where the company is planning to build new textile plants.

Frank Chou (周理平), chairman for Makalot, said during an investors’ conference that the company has its eye on the potential zero-tariff benefits brought by Vietnam’s free-trade talks with the EU and its involvement in the proposed Trans-Pacific Partnership.

“As of November, Vietnam has surpassed Indonesia to become Makalot’s largest production area, accounting for 32% of the company’s total capacity,” he said.

Indonesia accounted for 30% of the firm’s total capacity, while Cambodia accounted for 24% and China and The Philippines accounted for 6% each, Chou said.

Between January and last month, Makalot posted a revenue of US$615.4 million, up 15.9% from a year earlier. With full-year sales expected to top US$666 million, Chou said that its employees can be expecting an annual bonus of more than 12 months.

V Air to launch eight to 10 new routes next year

V Air, TransAsia Airways Group’s budget carrier, said that another eight to 10 new flights will be launched in 2015, while it launched its maiden flight from Taipei to Bangkok on Dec. 16.

In addition, V Air is also planning to launch a chartered flight service to Siem Reap in Cambodia since Jan. 6, and begin to operate its second regular route to Thailand on Jan. 7, which will fly from Taipei to Chiang Mai.

“Aside from our service network, we also plan to expand our fleet. We aim to have five aircraft covering eight to 10 routes by the end of next year,” said Vincent Lin (林明昇), chairman for V Air.

He said that flights to Northeast Asia, such as major cities in Japan and South Korea, are V Air’s next potential market, with the company seeking to launch flights to destinations in that area in the first half of 2015.

Lin said that the expansion plan is aimed at helping V Air reach economies of scale and allow the airline to break even and start generating profit in 2016.

Tencent to stream Sony Music artists in China

Tencent (HKG: 0700) signed an agreement with Sony Music Entertainment on Dec. 16 to exclusively manage online distribution of Sony’s music library in China.

The alliance came on the heels of Tencent’s announcing other distribution deals with Warner Music Group and HBO, as Tencent sought to build up its entertainment portfolio to compete with online rivals Alibaba (NYSE: BABA) and Baidu (NASDAQ: BIDU) in using entertainment as a hook to attract more than 600 million internet users in China.

Honda to recall more than half million vehicles in China due to air bag malfunction

Honda (TYO: 7267) said on Dec. 16 that it will recall 569,769 cars it sold in China due to potentially defective air bags that were made by Japan’s Takata Corp (TYO: 7312).

China’s General Administration of Quality Supervision, Inspection and Quarantine said in a statement that the damaged airbags could cause “shell fragments to fly” that may hurt passengers.

Almost 20 million vehicles have been recalled globally since 2008 due to defective Takata inflators, which have been linked to five deaths.

A Beijing-based Honda spokesman said that there had been no injuries or malfunctions reported in China so far.

Taiwan’s Academia Sinica raises GDP growth forecast to 3.42%

The Academia Sinica raised its GDP growth forecast for this year to 3.42% on Dec. 16, from the 3.31% estimated in July.

“The pace might decelerate to 3.38% next year, as China’s economic slowdown could dampen external demand and government spending is set to contract further from this year,” said Ray Chou (周雨田), a Academia Sinica research fellow.

China, however, may not see aggressive economic growth in the future because of an increasingly large base and continued economic reform, although it accounts for approximately 40% of Taiwan’s exports, Chou said.

“The trend, together with disappointing showings in Europe and Japan, is unfavorable for Taiwan’s export-reliant economy,” Chou said.

Uncertainty emerged last quarter and has become more evident this quarter, with GDP growth likely ebbing to 2.83%, weaker than the 3.64% expansion in the first three quarters of the year, the research institute’s semiannual report said.