British Steel has entered the insolvency process, jeopardizing 5,000 U.K. jobs and endangering a further 20,000 in the supply chain.
EY has reportedly been appointed as special manager by the British government’s Official Receiver, after a breakdown in rescue talks between the government and the company’s owner, Greybull Capital.
“The company in liquidation is continuing to trade and supply its customers while I consider options for the business. Staff have been paid and will continue to be employed,” an official spokesperson said in a statement Wednesday.
Greybull, which specializes in trying to turn around distressed businesses, paid former British Steel owners Tata Steel a nominal £1 in 2016 for the U.K.’s second largest steel producer.
British Steel had requested a £75 million government loan but has since cut the figure to £30 million after Greybull agreed to inject more money, according to Reuters.
The company’s troubles have been linked to declining orders from European customers due to uncertainty over the U.K.’s departure from the European Union, along with the weakness of sterling and the escalating U.S.-China trade war. Cheap Chinese steel has long weighed on demand for the company’s product.
About 3,000 of the firm’s employees are based in Scunthorpe, northern England, with its flagship plan supplying 95% of rails to Network Rail, which manages most of Britain’s railway network.
Greg Clark, Secretary of State for Business, said this will be a “deeply worrying time for the thousands of dedicated British Steel workers, those in the supply chain and local communities.”
“In the days and weeks ahead, I will be working with the Official Receiver and a British Steel support group of management, trade unions, companies in the supply chain and local communities, to pursue remorselessly every possible step to secure the future of the valuable operations in sites at Scunthorpe, Skinningrove and on Teesside,” he added.
Tim Roache, general secretary of steelworkers’ union GMB, said the news was “devastating” for the thousands of workers in Scunthorpe and beyond and criticized the government’s handling of the crisis.
“Ministers should have been ready to make use of all the options – including nationalisation – in order to save British Steel but they either don’t care or wouldn’t take off their ideological blinkers to save hard working people and communities,” said Roache.
He demanded urgent reassurances on what the future holds for British steelworkers and their families.
Chinese consumers buy fewer apples as prices soar
A woman buys apples at a market in Beijing on April 11, 2019.
Nicolas Asfouri | AFP | Getty Images
The price of apples in China has surged nearly 30%, and consumers are cutting their purchases of the fruit, according to data from grocery delivery platform Dada-JD Daojia.
That’s just one example in several jumps in food prices in the country. The rapid increase is worth watching for any impact on consumer sentiment and spending, especially since Beijing is putting great emphasis on consumption as a way to keep the economy steadily growing.
Government figures released Wednesday showed China’s consumer price index rose in May to 2.7%, its highest in more than a year, boosted by an 18.2% climb in pork prices and a 26.7% increase in fruit prices.
African swine fever has hit millions of pigs, while bad weather has hit the fruit crop.
The cost of half a kilogram of apples jumped to 15.19 yuan at the beginning of June from 11.81 yuan at the end of April, Dada-JD Daojia said. That’s an increase from about $1.55 a pound to nearly $2 per pound.
As a result, between April and early June, sales of apples on the delivery site fell 5.7% from the same period a year ago, the company said. Year-over-year data for overall fruit sales was not available at time of publication, but the firm said sales in the category did increase 15% in May from the prior month, led by lychees, bananas and watermelon.
Dada-JD Daojia says it has more than 30 million monthly active users in more than 90 Chinese cities. The company, backed by Walmart and e-commerce site JD.com, also claims it can deliver orders to customers in less than an hour. The platform is one of a few major players in China’s growing market for fresh produce delivery.
China is the largest producer of apples, followed by the U.S., according to the U.S. Apple Association.
In April and May, frost, heavy rain and hail significantly damaged apple crops in major producing provinces, the U.S. Department of Agriculture’s Foreign Agricultural Service said in its June report.
As a result, China’s production of apples is expected to drop 25% to 31 million tons, its lowest in 9 years, the report said. That will contribute to an 8-year low in worldwide apple production, according to the report.
Apples entering China from the U.S. face a 50% retaliatory tariff from Beijing, the report noted. The projected 12,000-ton increase in Chinese imports of the fruit are expected to come primarily from New Zealand and the EU.
The jump in fruit prices has caught the national government’s attention.
On June 5, the Ministry of Commerce published a statement aimed at providing assurance that the increase in apple, pear and other fruit prices was temporary. During a visit to the apple-producing province of Shandong late last month, Premier Li Keqiang stopped by a fruit seller and emphasized prices would remain reasonable, according to a report from state news agency Xinhua.
“Although inflation data continues to rise, future increases are limited, and the overall pressure is controllable,” said Jianguang Shen, chief economist at JD Digits, which was spun off from Chinese e-commerce company JD.com. He was formerly the chief economist at Mizuho Securities Asia.
One reason for that sanguine assessment is that pork prices have risen less than expected, and he expects fruit prices will likely stabilize as more produce comes to market in the future, according to a CNBC translation of Shen’s Chinese statement. He also said the consumer price index will likely remain within 3% for the year overall, and that the slight inflation may allow for some monetary easing.
Apple futures on the Zhengzhou Commodity Exchange have also garnered significant attention from local traders. Prices surged 19% in May before falling about 6.5% so far this month, and the product ranks among the top 20 commodities futures contracts by open interest, according to financial information database Wind.
SoftBank-backed India hospitality chain OYO plans for China market
A Chinese national flag flies in front of a building under construction in the central business district of Beijing, China.
Giulia Marchi | Bloomberg | Getty Images
For many foreign firms, China’s market is a notoriously tough nut to crack.
Tech giants such as Amazon, eBay and Uber — which have a significant market presence in the United States — all called it quits on China after finding themselves unable to survive the cutthroat competition with local firms there.
But Indian budget hotel chain, On Your Own Rooms, managed to be the exception to the rule.
The Softbank-backed hotel start-up was founded in India in 2013, and has since grown to become one of South Asia’s largest hotel and accommodation chains.
Since OYO Rooms ventured into the Chinese market in November 2017, it has expanded at a breakneck pace. OYO Jiudian — its Chinese subsidiary — currently has nearly 10,000 hotels and 450,000 rooms across 320 cities under its name.
“In a brief period, we have emerged as the country’s second-largest hotel group and company,” Sam Shih, the chief operating officer of OYO Jiudian, told CNBC.
China is the company’s biggest market today, OYO’s Chief Executive Officer Ritesh Agarwal said at a travel conference in Singapore in late May.
“We’re opening roughly 10 to 12 buildings a day in China,” Agarwal announced at the inaugural Skift Forum Asia.
He outlined two key traits of his business that allowed the company to reach the success it has in China’s market: strategic partnerships and a local entrepreneurial mindset.
Agarwal said at the conference that the company has signed a “very strong, strategic partnership” with Ctrip, China’s largest online travel aggregator (OTA).
“OYO Hotels used to distribute on Ctrip, but we had a very local traveler partnership — it was never really at a brand level,” Agarwal said.
OYO’s “great working relationships” with prominent travel aggregators like Ctrip opens up new opportunities for the hotel chain and strengthens its reach to local communities, Shih told CNBC.
The OYO Dongxing Wenquan Hotel in Zhengzhou, China.
That partnership will help its Chinese subsidiary reach its goal of giving China’s middle-income population — estimated by the government to be about 400 million, or less than a third of the population — a “great living space” for less than 150 Chinese yuan ($21.71) per night, Shih added.
“We’re excited by the possibilities of these mutually beneficial relationships,” he said.
OYO Jiudian’s success also stems from how it’s positioned itself in the world’s second-largest economy, Agarwal said.
When OYO entered the Chinese market, the company viewed itself as local Chinese entrepreneurs “who were copying OYO Global,” he explained.
“Why design a global company that will never be successful, versus a local entrepreneur? … That mindset enabled us to think two levels ahead of anybody else,” Agarwal said.
With that in mind, the hotel chain “nativized” its offerings from the “point of view of a traveler in the country and what was lacking from his/her experience earlier when OYO was not around,” COO Shih said.
“For instance, most foreign companies look at recruiting bilingual management teams in a different country,” he explained. “We didn’t make that a criterion because a Chinese company operating in the country wouldn’t have that constraint — and if we had that constraint, we would narrow our talent pool.”
This helped the company to build a strong team of over 7,000 “OYOpreneurs” in China, with less than 20 of them English-speaking, he added.
“In short, OYO copied what OYO itself has been executing since its inception in India to gain this momentum in China,” Shih said.
Big bets on China
When asked about the firm’s plans for the Chinese market, Shih said the company is “betting big on China” as it is their “home market.”
Today, OYO Jiudian makes up less than 2% of the country’s lucrative accommodation market — which stands at approximately 35 million rooms, Shih said.
He said OYO has allocated $600 million from the $1 billion it obtained from its last round of funding in order to “strengthen our capabilities for the market and drive our next wave of growth in the country.”
“We have an incredible opportunity ahead of us and we are just getting started,” Shih added.
St Louis Blues beat Boston Bruins to clinch maiden NHL’s Stanley Cup
The St. Louis Blues celebrate after defeating the Boston Bruins in Game Seven to win the 2019 NHL Stanley Cup Final at TD Garden on June 12, 2019 in Boston, Massachusetts.
Rich Gagnon | Getty Images
With the victory, the visiting Blues not only completed a remarkable turnaround considering they were dead last in the NHL in early January but also ended the longest wait in NHL history — 51 seasons — for a team to win their first championship.
The Blues scored two goals late in the first period and then put on a defensive masterclass while Jordan Binnington made 32 stops, including the save of the game when he got a leg out to stop by Joakim Nordstrom from in close midway through the third.
The Bruins, who had never before hosted a Game Seven of a Stanley Cup Final, made a solid start and created all sorts of pressure but it was the Blues who jumped out to an early 2-0 lead despite being outshot 12-4 in the opening frame.
Ryan O’Reilly opened the scoring with about three minutes left in the period when he cleverly re-directed a shot from the point by Jay Bouwmeester that went right through Boston goalie Tuukka Rask’s legs.
Blues defenseman Alex Pietrangelo added another with eight seconds left in the period when he skated in and used a nifty backhand deke to beat Rask and silence the stunned home crowd.
St. Louis nearly added a third midway through the second period but Zdeno Chara managed to swat the puck away from the goal line after a shot from Brayden Schenn went off the crossbar and Rask’s shoulder before dropping in the crease.
Schenn did make it 3-0 when he took a centering pass from Vladimir Tarasenko and fired it off the post and past Rask with under nine minutes to play before Zach Sanford put the game out of reach with his first of the playoffs with under five minutes to play.
Boston broke Binnington’s shutout bid when Matt Grzelcyk found the net with just over two minutes to play.
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