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500
Best
CEOs
500
Luxury
Brands
Luxury
Watchmakers
Luxury Goods Industry

Distinction
Market
Distinctions
xxxx
Victorious
China
I
n 2008, China presented a balance sheet that was relati-
vely better than that of emerging countries but also than
the rest of the world. China has not experienced a real
liquidity crisis. In fact, if in the United States, it were possible
to obtain a mortgage of more than 100% of the propertys real
value, Chinese banks according to The Economist, demanded
a 20 to 30% deposit. Thus, this policy enabled the country
to protect itself from a market volte-face, by accumulating
monetary protection. To this we add the fact that Chinese
banks unlike Western banks, obtain their liquidity from depo-
sits, the two-thirds of which are allocated to loans at a lower
rate than in the West. The Chinese usually get into debt up
to 13% of the GDP, against 100% in the United States. As a
result, the population was able to exhibit delightful purcha-
sing power for retail sales. Faced with slowing global growth,
China should cope well, as the crisis is beneficial for it in terms
of reducing the threat of economic overheating, which it was
seeking to solve.
For 2009, the World Bank reviewed its estimate of an initial
growth of the Chinese economy by 9.2% to 7.5%, according
to information from the AFP. The Bank estimates that this
reduction would sever the countrys GDP by somewhat less
than one point, but that the Chinese economy has become
moderate in order to reach a more viable pace. By the end of
the year, China should thus, pass below 10%, against 11.9%
for the previous year.
These projections have been thwarted by the announcement
of the New China agency, which presents a gure of 10% for
2009. In a AFP press release, Zhang Liqun, an economist at
the research Center for Development, an advisory board of the
Chinese government, argues that the dynamism reected by
this rate is linked to the countrys internal impulsion capacity:
Although the weak global economic climate has led to a
weakening in external demand, the important potential of
the countrys development will enable the Chinese economy
to maintain a high growth rate. According to Mr. Zhang, the
rural exodus of millions of Chinese to the various cities across
the country and the increased individual earnings will lead to
keeping-up a certain economic dynamism. Thus, the strong
demand for housing and cars would also contribute to the
assurance of a certain stability. Despite these claims, it seems
that the 9% growth recorded in the third trimester shows the
lowest rate experienced by the Asian giant for more than ve
years, which could raise doubts concerning the optimism of Mr.
Zhang for the year 2009. The government, however, predicts a
growth of 8 to 9% during the following year, a gure conrmed
by the Central Bank governor Zhou Xiaochuan. The World
Bank claims to this eect that Beijing has drawn up an action
plan from the previous summer, aiming to revive its economy
over a period of two years by injecting the equivalent of 586
billion dollars. Enforced two weeks ago, it should contribute to
support growth, with China focusing on an increase in invest-
ments and a strengthening of macroeconomic strategies.
If the World Bank estimates were to be accurate, in 2009, China
would suer its lowest growth for 19 years. However, thanks
to its tax plan, it should be able to compensate the losses from
the decline in exports. Let us emphasize that loans represent
0.7 times the banks savings, putting the country in a favorable
position, in opposition to Russia, for example, where the ratio
is of 1.6, or to Korea, where it is yet at 1.4.
Joseph Allimann
34 Market500.eu | winter 2008 -2009
DI STI NCTI ON
china
Best Country
of the Year
for Economical
Development
Distinction
Best lnvestor
of the Year
with Best
Performance
Distinction
Best Company
of the Year
with Best Stock
Price Performance
Distinction
Best Finance Professional
for Economic Previsions
and Capital Protection
Distinction
Herms, an
exception on
the luxury market
Luxury market
From 1
st
January
to 13
th
November 2008.
Best Country
of the Year
for Economical
Development
Distinction
Best lnvestor
of the Year
with Best
Performance
Distinction
Best Company
of the Year
with Best Stock
Price Performance
Distinction
Best Finance Professional
for Economic Previsions
and Capital Protection
Distinction
W
hile the global market for luxury products
seemed to have been spared by the
economic crisis, most prestigious brands are
beginning to suffer the effects of the global slowdown.
However, on the European luxury landscape, the
Hermes International company is well and truly withs-
tanding the stock-market turmoil.
For the rst nine months of 2008, Hermes turnover was
set at 1.22 billion Euros up by 9.7% at current exchange
or 14% at constant exchange. By mid-November,
while all the values of European luxury such as LVMH,
Richemont or Burberry displayed decreases comprised
between 30% and 80% since January 1, Hermes showed
an increase of 31% (see chart). In a completely booming
luxury market, the growth of Hermes never appeared as
exceptional. It is only in slowdown phase that it unveils
its strength, which results from various aspects.
This year, six new family members were appointed
to the management committee, demonstrating the
commitment of the founders descendants to the brand.
Despite the repeated denials pertaining to a possible
change in the shareholding of the group, of which 73%
are family shareholders, the evaluation of the Hermes
International title is unanimously considered excessive
by analysts. Another of the brands assets is that Hermes
benets from its status of defensive security of luxury.
Its products are ranked in the very high-end and waiting
lists for its famous Kelly and Birkin bags ensure a
certain income. In connection with the brands notoriety,
Hermes ability to raise prices and withstand the eects
of fashion also plays an important part.
At the end of 2008, however, Patrick Thomas, antici-
pated a slight decrease in the growth of the group,
bringing a gure initially estimated at 12,% down to 9 or
10% for the whole year.
Aurlie Despont
35 Market500.eu | winter 2008 -2009
DI STI NCTI ON
company
36 Market500.eu | winter 2008 -2009
DI STI NCTI ON
company
Omaha,
the super
hero
N
icknamed the Oracle of Omaha, Warren
Buffet, is known for his businessmans skill, for
his Berkshire Hathaway investment fund and
his generous donations to charity. He mainly concen-
trates his investments in undervalued companies with
good growth potential in the long term. His formula is
thus summed up: acquiring easy-to-understand busi-
nesses, at fair prices in a perspective of evaluation in
the long term.
According to him, emerging from the nancial crisis
is slow and painful. However, having become the
richest man in the world in 2008, he armed his faith
in the future of the U.S. economy. Despite the current
crisis, and thanks to a fortune amounting up to 62
billion dollars, he has increased his investment on the
markets as it is when the stock market is at its lowest
that one must take advantage . Indeed, last September,
when the credit market was frozen and shares were
collapsing, he invested 3 billion dollars in the conglom-
erate of General Electrics, which in his view, is the very
symbol of America. His preferred shares in GE yielded
him a 10% dividend.
In addition, he injected 5 billion dollars in the Goldman
Sachs investment bank. To these are added negotiations
about the U.S. group Constellation Energy. In addition,
last October, he stated in an interview to CNBC, that
he was ready to participate up to 1%, in the prots and
losses of the Paulson plan which must be funded with
700 billion in order to stabilize the American nancial
sector. Thus, Warren Buet was not overshadowed by
the crisis, but has been conferred the status of incompa-
rable businessman.
Florine Allimann
Best Country
of the Year
for Economical
Development
Distinction
Best lnvestor
of the Year
with Best
Performance
Distinction
Best Company
of the Year
with Best Stock
Price Performance
Distinction
Best Finance Professional
for Economic Previsions
and Capital Protection
Distinction
DI STI NCTI ON
investment

consumers, faced with the halting of loans by their banks, used their
credit cards but at reimbursement rates that can only be described
as usury, at 25 to 30%. Millions of Americans will nd themselves
without a home, car or a credit card, which will generate a very rest-
less market, where volatility will become even more important and
the amounts pledged for the Paulson plan will not be sucient. The
English have reacted very well during this crisis by using the 90s
Swedish model, the crisis of Sweden in 1995-96 being very similar
to the current one. In 1995, Sweden experienced a nancial deregu-
lation, a real-estate bubble, a decrease in household savings which
reached a negative level and the near-bankruptcy of major banks. It
took three negative years before experiencing a recovery.
We must expect 2009 to be a very tough year, where the winners
will be the Chinese and Japanese, rolling in cash and who will be
tempted to do their shopping in Eu-
rope and the United States. They know
their targets and will buy the right
companies at the best price without
overestimating them, as was the case
of the Japanese in the 1980-90. The
Chinese have a great advantage: that
of being able to rely on sound public
nances and large cultivated and intel-
ligent communities, based in Europe
and the United States. China will act
as a shrewd industrial treasurer, while
respecting the social morality of the concerned countries. It under-
stood that it could win ten years of industrial technology with this
crisis. It demonstrated, through its Olympic Games, that it is a great
nation, able to listen, to adapt itself and to succeed. Especially since
the next decade will be African. The new continent that will exhibit
a spectacular growth will be Africa. China has wonderfully succeed-
ed in its implantation. For China, this is an interesting growth relay
and a gateway to Europe.
It should succeed in its investment in its domestic economy by inject-
ing massive sums of money in urbanization projects, new energy,
such as solar energy, where, in a short period of time, groups such
as Suntech will become leaders. The Gulf States have realized the
benets of investing in China, with these major groups that provide
a visibility as well as a steadily-increasing domestic consumption.
We should witness industrial alliances between sovereign funds
of Qatar or the UAE, and Chinese mining, banking and industrial
groups. This nancial power will open signicant opportunities in
Europe and the United States.
The latter, who should announce a Marshall Plan of the green econ-
omy will experience a dicult year 2009. But thanks to their open-
ing-up on China and Japan and to their ability to bounce back rapidly,
they should emerge from the crisis faster than Europe.
The latter is facing several challenges: protecting its banks, its in-
dustrial tool and its currency, curbing ination and controlling un-
employment. All this with on
its doorstep, formerly East-
ern countries in a state of
implosion, and needing to be
nanced and the challenge
of accepting Russia within
its union: the only answer
to a current Russia which is,
authoritarian, expansionist,
with a backward industrial
level, living on its natural
resources, contemptuous of
its people and whose nuclear nuisance is important. Being short of
cash, will they not be tempted, to sell nuclear weapons to Iran, the
mullahs of which have become wealthy during this oil speculation?
In 2009, the danger, in terms of geopolitics, will concern Russia and
how Europe will manage it.
In this new year, there will be many opportunities in the real estate
eld in the United States and Europe, where gold will change hands
and prots will be considerable. Banks such as Morgan Stanley and
Goldman Sachs are expected to experience a signicant success. Pri-
ority will be given to investment in new energy and in the pharma-
ceutical industry.
38 Market500.eu | winter 2008 -2009
DI STI NCTI ON
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