Month: April 2021

  • Porsche 911 GT3 & things that made last week

    Porsche 911 GT3

    Yes the Porsche 911 GT3 is a car faster than most people can drive. Yes they all look very similar unless you are a truly devoted petrol head. But I was struck by this review of the Porsche 911 GT3 by Chris Harris.  In the early part of his review, he ran the car in to put 1,000 miles on the engine. During that time he focused on the simple joy of driving, which gave me a real hankering to get behind the wheel of a car again. What really struck me was the comments Harris makes about that primally magic time for driving as the light goes down in the evening or the sun comes up in a morning.

    Some of my most visceral early memories are of being in the back seat of the family car (unencumbered by a back seat seat belt) during this time. The magic of the early dawn light on winter clouds and wisps of smoke from rural houses as we drove back to the family farmstead in Ireland. Harris’ Porsche 911 GT3 review brought it all rushing back to me.

    Media ideas

    Thought provoking interview on the future of media, ‘lazy-endism’, balancing hyper-personalisation with wider insight and empathy, and the power of context in media. You won’t necessarily agree with all of it, but it took my thoughts on marketing to interesting places for exploration. Jerry Daykin heads up media for GSK’s consumer business across EMEA.

    C-suite’s diminishing appreciation of brand

    The Financial Times and the Institute of Practitioners in Advertising put together research on the c-suite’s lack of appreciation of marketing. The decline has been taking place over decades.

    China’s telecommunications ambitions

    Interesting roundtable on information technology and communications which provides great power advantage. Interesting perspective around standards and technology advantages looking at past case studies. China explicitly talks about its desire to project power through the ICT industry basic inputs, supply chain, standards and applications. It looks to build leverage internationally and independence domestically. They want to lock-in their power. It isn’t just about spying but international coercive control.

    Hands free airline toilet door

    ANA the Japanese airline have rolled out a kit that turns airplane toilet doors into hands free operation. It’s a brilliant piece of design. The work was done by JAMCO – a Japanese company that specialises in the design and manufacture of aircraft interiors.

  • JTI + more things

    JTI

    Tobacco giant JTI placing stealth adverts for its brands on Facebook and Instagram — The Bureau of Investigative Journalism – some of this stuff by JTI is pretty fiendishly clever in strategy and execution. I would have expected to be done by the likes of JTI in emerging markets and Eastern Europe rather than Germany. More related content here.

    China

    China’s soft power in Europe: falling on hard times | Merics 

    Revealed: residency loophole in Malta’s cash-for-passports scheme | Malta | The GuardianHenley’s files reveal that in the early years of the scheme, many applicants told the government upfront that they planned to develop only the most superficial links to the country, with most disclosing that they planned to spend just a few weeks in Malta during the supposed 12-month residency period

    US Sanctions Help Crack Malaysian Crime Ring — Radio Free Asia“This continues a pattern of overseas Chinese actors trying to paper over illegal criminal activities by framing their actions in terms of China’s Belt and Road Initiative (BRI), the China Dream, or other major initiatives of the CCP [Chinese Communist Party],” the government agency said, referring to China’s ambitious program of building a modern-day Silk Road through a network of infrastructure projects stretching through Southeast Asia, South Asia and elsewhere.

    Hong Kong

    Wells Fargo plans to shift Asian hub from Hong Kong to Singapore | Financial Times – The plan would involve slowly building up Singapore as Wells Fargo’s Asian hub through a mixture of new hires and redundancies in Hong Kong, according to four people with knowledge of the matter. It would still maintain a presence in the territory. One former employee said the plan was dubbed internally “project sun”.

    Luxury

    Social CRM in China: Inciting Engagement, Gaining Meaningful User Insights 

    Longchamp CEO Jean Cassegrain: “We Need To Continue To Stay Relevant.” 

    The mystery mansion near Calgary that has everyone talking – Macleans.caClass is something polite Canadians avoid discussing. We think of our country as comparatively classless, and we manage the cognitive dissonance presented by the haves and have-nots of housing by requiring our rich people to keep quiet. They should wear clothes that are well-cut and well-designed, but not flash. Buy the multi-millionaire’s car, but paint it in a sedate hue. Wealthy neighbourhoods should feature winding streets with mature trees and large lots, the better to conceal the true size of the homes built upon them

    Inside the ‘digital cleanse’ companies taking on cancel culture | Financial TimesFormer Sainsbury’s boss Justin King, one of The Marque’s clients, tells me that part of the appeal of having an SEO-optimised profile was that he was sick of people looking him up on Wikipedia and emailing him to ask if he was the guy who took away the Christmas bonus. “Forever, my Wikipedia profile will tell you that I’m Scrooge,” he says. “The idea that you could keep a single source of truth in one place – my truth about me and what I do – was very appealing.” – the idea of SEO as a ‘luxury’ good is interesting. More related content here.

    Marketing

    Facebook advertising chief worried about whether it overstated reach | Financial Times – “We are going to get really criticized for that (and justifiably so),” she said. “If we overstated how many actual real people we have in certain demos, there is no question that impacted budget allocations. We have to prepare for the worst here.” Two months ago, other documents in the case revealed that the Facebook product manager in charge of the reach metric said in an internal email that the company had made “revenue we should have never made given the fact [the metric is] based on wrong data

    Media

    Daily Mail owner sues Google over search results – BBC News 

    Security

    Facebook PR Memo: Company to Downplay ‘Scraping’ Data Leaks 

    Tools

    How to access a Mac remotely to help friends or family members | Macworld 

    MANUZOID – every manual you could imagine online

  • Mi Air Charge & things that made last week

    Mi Air Charge

    Mi Air Charge is a smartphone controlled air purifier by Xiaomi. The ad promotes it as being an essential item in a dystopian austere bachelor pad. I am not sure why the Mi Air Charge was controlled by an app, except to sell more It reminded me of a product advert specified and designed for the engineers that likely worked on the product.

    Dyson has done similarly sparse interiors in its ads, but they usually cast a couple or family.

    Bob Ross paintings

    Anyone who has watched TV in the middle of the night has likely come across the TV series of Bob Ross painting landscapes. For each show that he did, there were three paintings. Bob Ross’ paintings have never come up in auction. They were given to friends and the rest held in an archive by the company that carries his name.

    Uniqlo Japan AIRism advert

    Uniqlo set a high standard for adverts and creativity. This particular example for its AIRism casual wear is notable for its natural portrayal of a Japanese lesbian couple. Usually Japanese advert portray the struggles that the LGBTQ community face. Whereas this normalises its protagonists with a slice of life approach.

    https://youtu.be/PsfpCd0TAxU

    Luther Vandross would have been 70 last week

    On April 19, the Google Doodle celebrated Luther Vandross’ 70th birthday with a new animated video to accompany his track Never Too Much. The animation was done for Google by Sam Bass.

    And here is the original video from 1981. I love the way the video intercuts film that they shot on the street into the track. The song was recorded using a Studer A800 multitrack recorder.

    The Mercedes Benz 500E was inspired by AMG’s efforts with the Hammer and increased competition from the likes of Lexus. This video gives a good guide to the car, including clarifying that Porsche helped in the assembly but its not a Porsche sedan.

  • 911 restomod + more things

    911 restomod

    Perfect Porsche? This British-built 911 restomod comes close : CityAM – the idea of the perfect Porsche is contextual and highly personal. I would prefer a car that looks like an early air-cooled car, with no aerodynamic spoiler or flared arches and Fuchs wheels. There are a number of vendors doing a restomod 911. US company Singer is probably the most famous with its muscular looking restomod 911 models. In the article, there is a particularly interesting bit is about the redistribution of parts and lightweight replacement parts in the 911 restomod by Theon Design.

    China

    EXCLUSIVE China’s Ant explores ways for Jack Ma to exit | Reuters – this looks as if its much more focused on Jack Ma and possibly his links to the Jiang Zemin faction. Ma may not be even keeping the money

    Chinese censors take aim at former premier Wen Jiabao’s essay | Financial Times – really interesting that this appeared in a Macao publication, like it was designed to give it a few days out there. Wen was generally a bit more soft-hearted than Hu when the two were in the politburo. And Hu was moderated by the committee approach of the politburo. Xi had learned from Bo Xijlai that populism and nationalism worked and has a hawkish view that is untempered by the politburo.

    Consumer behaviour

    Siu mai or egg waffles? Hong Kong foodies cut through political divide to share reviews, photos in online ‘concern groups’ | South China Morning Post – it also reflects a deepening sense of localism in the community, but in a harmless way – food speech instead of free speech

    China’s keyboard warriors like to fight . . .  each other | Financial TimesChina’s grassroots nationalist bloggers seem less like that unified “main force” than dispersed militias which argue with one another as much as they do with external enemies. “The difference between Chinese nationalist factions is probably bigger than the difference between all of them and an American patriot,” says one Beijing-based blogger who is researching a book on Chinese internet culture. And while the CCP’s professional trolls may generate reposts and likes, “volume is not influence”, he adds – interesting article. I keep thinking about how different red guard groups used to fight against each other during the cultural revolution

    Design

    Trapped on Technology’s Trailing Edge – IEEE Spectrum Repairing the system entailed either redesigning a few circuit boards and replacing other obsolete integrated circuits for US $21 million, as the B-2 program officers chose to do, or spending $54 million to have the original contractor replace the whole system. The electronics, in essence, were fine—they just couldn’t easily be fixed if even the slightest thing went wrong. – which makes me wonder about the internet of things.

    Luxury

    Why Chow Tai Fook sees opportunity in rural China and lower-tier cities | Marketing | Campaign AsiaSurrey Pau, deputy general manager of Chow Tai Fook Jewellery Group, responsible for market expansion, explained how and why the brand intends to seize opportunities in China’s fourth-and-fifth-tier cities, despite a natural bias in the sector towards selling luxury items to tier-one markets. Charts comparing urban (blue) and rural (yellow) growth rates Growth in rural China “Some people believe that in rural areas you don’t have much of an income, that you rely heavily on agriculture and have a very simple economic structure,” Pau said. “However we believe that is just a myth.” Comparing household consumption and spending trends in rural and urban areas, Pau sees the countryside soon catching up with cities, helped by government support to rural areas. And along with higher incomes, the brand is seeing people shift to devoting more disposable spending to lifestyle improvements, including cosmetics and jewellery. The other macrotrend is the massive rise in ecommerce spending. And thanks to recent infrastructure investments in new networks, the digital playing field has been levelled to a great degree in China – I don’t think that there’s the growth in Chinese lower tier cities and rural areas that Chow Tai Fook thinks

    Marketing

    6 Elements Of Digital Brand Dominance | Branding Strategy Insider – The old adage “stick to your knitting,” for example, a colloquial version of “build on your core competence,” tends to narrow a company’s imagination. Yet a bold imagination is a requirement for leaders today. Netflix, Amazon, Facebook, and Google would not be what they are if their CEOs and executive teams had not imagined a future that did not yet exist. – but do these businesses also suffer from a lack of focus and a conglomerate discount at some point?

    Media

    Leaked ByteDance Memo Shows Blockbuster Revenue Projections – Bloomberg – convenient that this happened ahead of Hong Kong listing…

    Myanmar

    Activists have launched a pirate radio station out of secret safehouses in Myanmar – Rest of World – probably radio because of the disruption to the internet – Myanmar’s army is sending the country “back to the ’90s” – Rest of World

    Online

    Son’s SoftBank Vision Fund Profit Nears $30 Billion on Coupang – Bloomberg – of course Softbank needs to be able to cash out to realise the win

    More than half of Instagram influencers ‘engaged in fraud’, with 45 per cent of accounts ‘fake’ | PR Week Instagram mega-influencers and celebrities – those with more than one million followers – were the worst culprits, with two-thirds (66 per cent) of these accounts engaged in some form of fraudulent activity. 

    Nano-influencers – those with 1,000 to 5,000 followers – had the lowest proportion of fraud, occurring in 42 per cent of accounts. The most common tactics used included buying followers, likes and comments from click farms, buying story views, and engaging with comment pods – where a group of Instagram users get together and systematically engage with each other’s posts

    Security

    Huawei had unlimited access to millions of customer data from Telfort – NOS  – translation of Dutch original, more here – Dutch telecoms firm KPN: no sign Huawei has improperly monitored users, Telecom News, ET Telecom 

    Technology

    China’s Dystopian “New IP” Plan Shows Need for Renewed US Commitment to Internet Governance – Just Security – hinges around real ID and total surveillance

    Arm Battle With China CEO Escalates, Complicating SoftBank Sale – Bloomberg – I wouldn’t be surprised if China was pushing this to wrestle control of the group as part of its ‘war by other means’. I wonder if this news is connected – UK Forces Delay in Nvidia’s ARM Takeover, Citing National Security Concerns – ExtremeTech 

    US and Japan to invest $4.5bn in next-gen 6G race with China – Nikkei Asia 

    Wireless

    Lycamobile names CEO to lead digital push beyond expatriates | Financial Times – they’ve tried to do this previously. Lycamobile was usually the first SIM that EU migrants got to establish themselves in the UK. They then moved on to domestic aimed products. Brexit has made this move a life or death struggle now

    Verizon, AT&T, and T-Mobile kill their cross-carrier RCS messaging plans | Ars Technica 

  • Conglomerate discount

    Conglomerate discount wasn’t a concept that I was that familiar with. Conglomerates had gone out of style in the west during the 1960s to the 1990s.

    Western conglomerates

    Classic conglomerate examples would be

    • GEC
    • ITT
    • Litton Industries
    • Lonhro
    • Teledyne
    • Textron

    Spivs and financiers bought in and broke them up into their constituent parts. Or a new CEO would do it themselves to focus on core competencies and release value for shareholders.

    Conglomerate discount

    A conglomerate discount is when the stock market values a diversified group of businesses and assets at less than the sum of its parts. This is because investors are worried about the management not being able to focus on improving the operational performance and figuring out a coherent strategic direction.

    Michael Milken moderating the panel on Investing African Prosperity  - Los Angeles, 1 May 2013
    Michael Milken who was famous for financing leveraged buyout deals

    Taking advantage of a conglomerate discount

    So our spiv financier could borrow money, buy the company at a discount. Sell off parts to pay off the loan and be left with more money than they initially had to borrow. Many of the constituent companies couldn’t be sold quickly as a going concern. Instead they were shut, machines sold for scrap and their factory land sold for redevelopment.

    Asian conglomerates

    Asian business people, especially those running Hong Kong and Chinese companies don’t view conglomerates in quite the same way.

    Li Ka Shing 李嘉诚
    Li Ka shing

    The Li family manage two publicly listed companies in Hong Kong. They came out of the merger of Cheung Kong Holdings and Hutchison Whampoa.

    Cheung Kong

    Cheung Kong Industries was formed in the 1950s as a plastic flower manufacturer during the post-war industrialisation of Hong Kong. It evolved into a property investment company after the 1967 riots and Cheung Kong Holdings was established in 1971. Over the next decades it became one of Hong Kong’s largest developers and land owners.

    In 2015, the group went under a reorganisation, the groups property assets were spun off into what is now CK Asset Holdings.

    Hutchison Whampoa

    Hutchison Whampoa was bought in 1979. HSBC had a strategic holding in the company and sold that on to Cheung Kong. They also provided Cheung Kong with the loan to make the purchase. In 2015, Cheung Kong bought the parts of Hutchison Whampoa that it didn’t already own. It eventually became CK Hutchison Holdings, incorporating all the non-property aspects of the Cheung Kong – Hutchison Whampoa combine.

    In addition, the Li family have some of the shares in businesses that they own held in the Li Ka shing Foundation (LKSF).

    CK Hutchison and CK Asset Holdings

    CK Hutchison Holdings and CK Asset Holdings both trade at a conglomerate discount. However, the Li family has a controlling share in them. This probably explains why they haven’t come under attack by an activist shareholder from within China or abroad.

    In his article for Apple Daily Yeung Wai-hong explains how the Li family uses the concept of conglomerate discount to their advantage.

    The CK Hutchison Holdings and CK Asset Holdings creation allowed shareholders to see clearly delineated businesses. One focused on property, the other one on non-property assets in 2015.

    CK Asset Holdings started to blur the lines buying into businesses that more sensibly fit into CK Hutchison Holdings – aircraft leasing, pubs and utilities. Creating conditions for a conglomerate discount that is disadvantageous to non-family shareholders. The bigger business has a larger turnover. Even if the profit margin is lower, management still have an excuse to raise their salary and benefits.

    CK Asset Holdings has a large amount of cash on hand indicating a lack of investment opportunities. Recently CK Asset Holdings bought shares in utilities from LKSF in exchange for shares in CK Asset Holdings.

    I’ll let Yeung Wai-hong explain the next bit

    …CK Asset promised to buy back shares equivalent to the amount of HK$17 billion and cancel them. Whether the equity will be diluted is up to the minority shareholders. If they do not accept buyback, their equity will be diluted; if they do, then it won’t. The buyback price is about 10% more than the average share price of CK Asset, so the minority shareholders do have a chance to cash in at a “high price.” However, the buyback price of HK$51 per share is only 53% of the net asset value after deducting the debt. So accepting the buyback is like allowing Li’s family to grab a bargain at half price.

    Conglomerate discount by Yeung Wai-hong, Apple Daily Hong Kong (March 29, 2021)

    If that happened outside Hong Kong there would be shareholder class action suits. The theory goes that these trades slowly put the squeeze on minority shareholders at a discount. Transferring value to the Li family. Eventually allowing for a gradual privatisation of the business at the expense of retail shareholders.

    Once this has been done the value of the assets at their full price can be realised. More finance related content here.

    More information

    ‘Conglomerate discount’ | Yeung Wai-hong | Apple Daily 

    Britannica, T. Editors of Encyclopaedia. “Conglomerate.” Encyclopedia Britannica, September 26, 2007.