Turning The Final Page

            This weekend Borders UK, the failed bookseller launched a stock liquidation in its 45 stores over the weekend as administrators prepare to shut down its shops.

The firm has been under severe pressure for a year from the internet competition and supermarkets selling books at heavy discounts. The company is not taking orders through its website and has launched "closing down sales" at some stores. Administrators at MCR said the business will continue to trade while a buyer is sought. Borders UK has struggled with "severe" cash-flow pressure this year as sales falls increased. Stock levels were also hit as several of its suppliers stopped or reduced its credit limits.

Up to 1,100 Borders UK staff could lose their jobs. MCR, the administrator, is preparing to appoint the restructuring specialist Hilco to liquidate the failed company. Many rivals including HMV and Foyles are believed to be interested in picking up a few stores located in desirable areas, but as yet there has been no interest for the business as a going concern. The fire sale will threaten Border’s bookseller rivals who will have to compete over the crucial Christmas period with the discounted stock.

Back in May during my trip to London I dropped to Borders and drank coffee at its Starbucks on Oxford Street. I remember that only at this shop I found a book that I relentlessly looked for for several months. Imagine my surprise in September when I returned to UK, but couldn't find a trace of this shop. And now I found out why.

The Guardian told the sad story of rise and fall of the company in two articles closing the chapter and ending it. I was surprised how caring and sad were the authors. Both articles are written in a reminiscing style that can't help reminding of the cosy atmosphere inside every bookshop in the chain. The author encapsulated the good and  the bad in the industry and guided us to the times of enormous anxiety about the booksellers' future concerns and suggested economic models.

BBC News is concise as usual. Facts and a little notice about the employees who were contacted to be updated on the situation.

Times Online explained the role of Hilco that is expected to wind down the shop before closing them as well as stating the possibility of saving a small number of jobs.

The Daily Mail honoured the legacy of Borders with a little article sorting out those who cast a potentially fatal blow upon the struggling company.

The Independent gathered the specialists' opinions and gave a little overview of potential acquirers of the failed company. It also offers the figures for partner companies, expressing awareness for their possible losses.

Happy Groceries' Christmas Battle

          Tesco, ASDA and Co launch their annual war of prices attracting discount-hunters for the festive products.

Rival groceries informed their customers of money-saving Christmas offers on the same day with a little difference: ASDA unveils £150m while Tesco promises £250m axing off. Chief financial officer at Asda, stated that “This Christmas will be the most aggressive in pricing for a decade.” This was quoted by the all the 4 newspapers I looked through, as well as some other facts:
  • Like-for-like sales grew by 5.6 per cent, excluding fuel and VAT, in the three months to September 30, down from 7.2 per cent in the second quarter.
  • The company increased its market share from 16.9 to 17.3 per cent, stretching its lead over J Sainsbury.
  • Asda is the only supermarket if the big 4 that is not offering an enhanced loyalty scheme in the coming Christmas.
But why did I stop over this piece of news? Thanks to Daily Mail again. It told me everything in few words Asda declares festive price war on Tesco. The Telegraph was more distant and decided not to point out the main character naming its article just Supermarkets start Christmas price war. Times Online seemed to forget that the war supposes several participants, that's why it focuses on Asda signals supermarket war with £150m price cuts. But compared to Independent's dry title Asda sales growth hit by fallin food prices quarter others seem really tasty. 

However, let's take  a closer look. The Daily Mail is definitely writing a war-novel. The gloves are off in the battle, the crucial numbers are unveiled, the rival is Leeds-based and it is filled with dignity that the one can't buy customers with a plastic card. Guess, you got the clew. 

But The Telegraph makes you shrink with cold beginning with the frozen meat and party food. So follow carefully who is keen to take advantage of the demise (are all papers are crazy on historical novels?), why analysts consider the retailers nervous and just get your pen ready to write down who offers the best rate for 75 sausages and where to rush for your new Wii set.

Times Online left all literary expressions behind, providing the full economic overview of supermarkets' Christmas activities. It states facts going more in economic details than pricing policies. The one can learn the state of affairs in the UK grocery market, learn about the main players and read the CEO's opinions about the recovery paces.

The Independent is catching up combining the dry financial figures, analysts' comments and "the grocers do battle" question. However, the paper is not that independent, because from the first paragraph it's trying to find who to blame for a slowdown. The article stresses out that families watching X Factor on Saturday nights are the main "accelerators" in sales volume. 

Summing it up, I would like to say that all this war prices are extremely interesting to watch. I never saw such quick reactions in Russia. You can walk from Tesco to Sainsbury and drive to Asda picking up particular goods in each shop, because you know where the best value is at the moment. It's a pity I won't be in the UK during the hottest days shortly before Christmas, but I will definitely check the latest war-novel chapter at Daily Mail.

Fabulous Opel

            General Motors (GM) has decided to retain ownership of its heavily indebted Opel unit. The decision reverses GM's September tentative consent to sell a majority stake in its European Opel and Vauxhall operations to a consortium including Canada's Magna International Inc. and Russia's Sberbank.

GM's board decided to axe the deal after EU officials asked the company whether it would have agreed to the deal had it known Germany's 4.5 billion euros ($6.58 billion) in state aid would have gone to any buyer, Reuters reported on Tuesday. Instead GM is pursuing a 3 billion euro ($4.42 billion) restructuring plan.

Let us recall that under the terms of the deal, the "New Opel" consortium would have reduced GM to a 35% stake, Russian Sberbank was to take another 35% stake and the Canadian-Austrian parts supplier Magna was to about to obtain 20%, with the remaining 10% held by Opel's employees. Russian oligarch Oleg Geripaska's GAZ plant was to become the "industrial partner" to pay nothing into the venture, though offering its car factory in RF to produce Opel cars there.

That is why GM's abrupt decision caused the rush of indignation in German and Russian media, unlike the US and UK sources. The BBC News article makes a thorough analysis of the situation to conclude that "car analysts were not too surprised by GM's announcement". All this happened only due to their had financial situation, and Magna International regarded this decision with favour, RIA Novosti reported. In the meantime, the German labour union IG Metall intends to stage a strike and is ready to stop the factory for several days to oppose the GM's decision. According to Deutsche Well, Fritz Henderson, the Head of Opel Germany, is extremely negative about the announcement as well. He believes the restructuring failure could end in Opel's bankruptcy.

On the other hand, the Russian journalists are questioning whether this deal was a fake from the beginning. Due to extraordinarily calm reaction of the authorities, the deal is believed to be more a political issue than a real venture. ITAR-TASS hastened to assure that the cancellation of the deal caused no harm to Russia, although  the Prime Minister's words towards GM were quite accusing. The Guardian story is quite bias, and make an emphasis on Putin's indignation over the American "original culture when dealing with counterparties".

However, let's try to learn some lessons out of this story.

What happened? The Anglo-Saxons played for Sberbank that tried to evade it by allying with Magna. However, Magna didn't back Sberbank up in the end as well, because it supported GM's decision. German labour unions threatened the company with strikes, but GM menaced back with making Opel bankrupt. The story has two aspects.

At first comes the geopolitical aspect. The Anglo-Saxon world seems to lead a cautious, but unreconcilable war which aims to make Russia unstable. In this case, they consider that they slow down the technical development of the enemy. This policy consistently proceeds for more than 200 years, and there's no point to expect that it will miraculously change in the next 20 years. That means the opposition of Anglo-Saxon world to Russia will go on. Forewarned is forearmed, that is why Russia has to take measures beforehand not to let anyone harm it in the crunch times. Apparently, Putin understood it, judging by his "scornful" remark about the takeover failure.

Second aspect is politico-economical. The Russian tried to buy a real item for dollars in the country that was minting these dollars. During the past 20 years nobody managed to do the opposite. The deals were crumbed as with Arabs, as with Chinese. It is a strange thing, but for dollars the one in USA can obtain only securities - shares, futures, treasury bonds, etc., nothing real. The Americans value their currency. Besides, there's a number of regulatory rules that forbid to sell the property under US jurisdiction for the other countries' sovereign funds money. That means the sales cannot be processed without US authorities' approval. The buying of shares to obtain the controlling stake won't do as well, because nobody sells shares now, they tend to sell obligations to sell shares. There's another law in the US that states it is not obligatory to supply the ordered goods upon sold futures, because it is enough to pay a margin between a contract price and the price on the delivery date. The Chinese understood these rules after several failures like Opel, and now they are trying to get rid of their $2 billion, investing in property that is still possible to buy for dollars (as in Africa, for example). But the more dollars they sell, the more dollars stay in the reserves. During the crisis, when customers prefer cheaper Chinese goods, China accumulates dollars faster than spends it. Such an inconvertible rouble from Russian fairy tales turns out.

However, so far the Russian authorities have not been selling the Russian property for currency anymore. Two years ago Putin declared that Russia didn't need paper money, if anyone wanted the gas fields, he should invest in gas-distribution networks. Ant it resulted in barter trade with Europeans: assets are exchanged for assets, not currency.

But in this case the Russian tried to buy a real venture for currency that is being minted abundantly in the US. The result is logical. The deal never happened.

iPhone Goes To China

          This Friday Apple finally launched its official Iphone sales in China with the non-contract price of $733.

When my eyes caught these words in the news feed, i was more than surprised. Two years later after the official release the most popular device ever reached the greatest mobile market with the most ridiculous price. But let me explain first what is the state of affairs with the Apple deal in China.

Chinese mobile market calculates more than 700m users. China Unicom is the country's second-largest carrier and the first telecoms group to make a distribution deal with Apple in China. The price set for the device without a mobile contract is 4,999 yuan ($733) and can reach 6,999 yuan ($1,025) depending on the model. China Daily states that this is more than half of the country's per capita urban disposable income, and about 25% higher than it is sold in Hong Kong.

However, the problem that is keeping buyers away is not the high price, but the phone's functionality. As the Associated Press noted this week, the Unicom handsets are missing one very important feature. Unicom's iPhones lack WiFi because it was temporarily banned by Beijing, which was promoting a rival Chinese system. The ban was relaxed in May after manufacturing had begun. Yi Difei, a Unicom spokesman, expressed the hope to have this feature added in the next batch of phones.

Moreover, the lack of WiFi is worsened by the presence of smuggled and grey phones. All the articles I've read are trying to evade discussing these consequences. Financial Times make a slight "afraid" remark, China Daily praises the celebrations and figures out only the positive points of buying the device (actually, it sounds more like a pr-campaign than a news article), two articles in Wall Street Journals turned to be the most informative: one gave the overview of the launching party and the other analysed the cost equation of the device. But for me the absence of WiFi and such a mature grey market are the key signals that the iPhone will have to fight its way to the buyers' hearts. Whatever the newspapers say, the key point of the device is internet everywhere. The 3G networks in China are developed, but not that much. WiFi is still much more popular. And the fact that Apple came officially only now let the people either smuggle the device from abroad (remember, the US price at the beginning was only $199), or buy it on the grey market. Needless to say, Chinese grey market produced half of the grey iPhones that were then sold all over Europe and Russia.

Actually, i still can't understand the Apple's policy in China or Russia. I remember the iPhone launch in Moscow last year. Guess, it was a fiasco. The prices were too high (around $1000 per 8GB model), the demand was too low. Everyone who wanted this phone has already brought it from US or (!) China. The only plus in buying the official version was good quality operating system that didn't need to be reinstalled once in two-months. However, the updates appear so often tha it makes the difference between versions quite vague. Besides the Chinese market remains very Windows-oriented, and this is another obstacle for Apple to fall short there.