Monthly Archives: February 2016

Modern Slavery Act 2015

The advent of the internet has made it easier than ever find new suppliers, benchmark prices and drive down production costs – but a few random e mails give you little or no understanding of who you are dealing with, and whether your business partner is reputable. Good communication and a good website should not be mistaken for a suitable partner.Putting aside the long term reliability of an unknown production source, we expect to see increasing pressure on all companies to meet the requirements of the Modern Slavery Act 2015. From October 2015, the Transparency in Supply Chain Provision requires that companies with a turnover of over £36m to issue an annual statement explaining what they are doing to eliminate slavery from their supply chains. This requirement will inevitably be passed on to their suppliers, and a burden of proof required (as has been seen increasingly with Dodd-Frank Wall Street Reform & Consumer Protection Act Section 1502).Conformity to the Modern Slavery Act is perhaps not as straight forward as is perceived. Luke Wilde, Chief Executive at twentyfifty commented; “While at first sight we might think this doesn’t apply to us, when we look into most global supply chains there is a high chance that somewhere someone is working under threat of punishment, is indebted or has their freedom constrained in some way. Slavery remains present in the UK, and all over the world and while China has made great strides to improve its working conditions, it can’t be assumed that standard Labour Audits will pick up where there is a risk of modern slavery. One of the difficulties is that established practices in a particular culture, such as a company withholding employee pay before Spring Festival could constitute modern slavery, as it is essentially forcing an employee back to work, and the another challenge is that the Act doesn’t limit itself to direct suppliers but encourages companies to look along the length of their supply chains.”There are no criminal or financial consequences of non-compliance with the reporting requirements, but companies will need to be proactive in ensuring that they comply on legal and moral grounds before reputations and brands face the consequences. This means buyers will be asked to do their own due diligence on suppliers, and ‘knowing your supplier’ will have renewed importance.

By |February 25th, 2016|News|0 Comments

China goes shopping…

It has been an encouraging start to 2016 for the M&A teams, with ChemChina finding a spare $43 billion to put in an irresistible offer for seed and pesticide specialist Syngenta. This comes on top of moves for Chicago Stock Exchange as well as Legendary Entertainment from Chinese groups, and whilst Syngenta makes the headlines, nearly $80 billion of deals have already been announced 2016, with last year’s $110 billion starting to look like a modest target to beat. The recent slow-down in the Chinese economy does not seem to have dented the ambitions for growth and has perhaps increased the need for attention on foreign acquisition. A year ago, the State Council set out their vision for the future growth in ‘Made in China 2025’ and the proposed Syngenta deal by the state owned organisation would seem to tick many boxes. China has a long term security concern over its food production in terms of productivity, quality, and more recently its impact on the environment. ChemChina will be well placed to use their new knowledge to help transform agricultural production which has been unable to keep up with the growing demands of a developing population. MiC2025 sets out ambitious plans to upgrade China’s manufacturing sector and take a greater share of the hi-tech future by 2025. Whilst the proposals are ambitious, they will be a whole lot easier to achieve with acquisition, and I would suggest this points to a busy few years for those in the M&A world. China has an interest in not only keeping the production it has (about 20% of global supply) but increasing its proportion of supply chain to 70% by 2025. With a focus on Automation, Aerospace, Marine, Power and Green Technologies amongst others – UK companies might well be on that long shopping list.

By |February 11th, 2016|News|0 Comments

Year of the Monkey

Happy New Year (in Mandarin: sshin-nyen kwhy-ler) to all our Chinese colleagues and friends – it is time to welcome in the Year of the Monkey.Monkey is the 9th of 12 characters in the cycle, and we are entering the 4,713th Chinese year on 8th February.If you’re a Monkey – born in the Chinese calendar year of 1956, 68 or 80 – your lucky numbers are 4 and 9 (avoid 2 & 7), your lucky colours are white, blue and gold (avoid red), and your lucky flower is chrysanthemum.If you are looking for love, look for an Ox or Rabbit (not literally!) – avoid Tigers and Pigs (naturally!).Monkey character traits include curiosity, mischievousness, and intelligence – but there is no guarantee that this year will be good for you. It could be a good investment to buy the official postage stamp set – those bought in 1980 for RMB4.80 are now worth RMB1.5 million.We send our good wishes to all our colleagues and suppliers.

By |February 4th, 2016|News|0 Comments