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Asia Watch

GOING DOWN: Isetan Co. Ltd. announced a drop of 38.5 percent in net profits to $66.4 million for the fiscal year ended March 31. Operating profits dropped 19.4 percent to $155.2 million, while sales decreased 2.2 percent to $5.2 billion compared with...

GOING DOWN: Isetan Co. Ltd. announced a drop of 38.5 percent in net profits to $66.4 million for the fiscal year ended March 31. Operating profits dropped 19.4 percent to $155.2 million, while sales decreased 2.2 percent to $5.2 billion compared with a year ago. All the figures were on a consolidated basis and converted at current exchange rates. Severe business condition, including slower consumption, affected sales, according to the retailing group of 34 subsidiaries.

Selling, general and administrative costs in the fiscal year made up 3 percent of sales compared with 3.6 percent the year before. In the fiscal year, Isetan reported $17 million of extraordinary losses mainly derived from devaluation of the stocks.

Isetan’s largest unit, in Shinjuku, generated $2.1 billion in sales, 1.4 percent down from a year ago. Barneys Japan, a subsidiary of the Japanese major department store, had sales of $58.6 million, 1.4 percent down, in its Shinjuku store and $32.4 million, a 2.9 percent decrease, in its Yokohama store.

For the fiscal year ending March 31, 2004, Isetan projects net profits of $70 million and sales of $5.3 billion in sales. — Koji Hirano

VIETNAM’S GOAL: Two weeks after signing a deal that would set quotas on its garment exports to the U.S., Vietnamese authorities began pressing for progress on World Trade Organization membership. The country applied for membership in 1995 and wants to join the WTO by 2005. The World Bank estimates that 2007 is a more likely target date.

After signing the quota agreement, Tran Duc Thinh, general secretary of the Vietnam Textile and Apparel Association, said: “We will suffer a lot if we have not yet joined the WTO by 2005.”

Apparel and textiles account for 17 percent of Vietnam’s overseas shipments, making it the country’s second-biggest export after crude oil. Under the newly signed agreement with the U.S., Vietnam has agreed to quota limitations on the volume of textiles, yarn and a variety of apparel items it ships to America. The deal expires on Dec. 1, 2004. If it is not renegotiated or terminated by that date or by any Dec. 1 before Vietnam joins the WTO, the agreement will roll over for one additional year.

As reported, the deal was prompted by U.S. textile manufacturers’ alarm at the large increase in Vietnam’s clothing exports to America. According to the U.S. International Trade Commission, Vietnamese exports rose more than 18 times last year to $873 million. — Constance Haisma-Kwok

JAIL SENTENCES: After years of legal wrangling, Cheung Sing-chi, the former chairman of Hong Kong fashion company Gay Giano, was sentenced to a 16-month jail term for conspiracy to defraud shareholders between October 1999 and October 2000. Cheung’s older brother, Cheung For-sang, was found guilty of the same charges and was sentenced to 13 months. After his sentencing, Cheung Sing-chi caused a sensation by protesting his innocence. He twice yelled, “I didn’t do it, stupid judge!” to Judge Bernadette Woo, who had already left the court chambers when the outbursts occurred.

The Cheung brothers have been banned from holding any company directorship for three years.

In the case, the Cheungs were found to have enlisted two stockbrokers to create the appearance that Gay Giano stock was being heavily traded after its IPO in April 2000. — C.H.K.

TOUGH TIME: Wacoal Corp. reported a decline of 41.8 percent to $25 million in net profits for the fiscal year ended March 31. The figures are on a consolidated basis and include Wacoal America Inc.

Operating profits rose 1.1 percent to $62.6 million, while sales inched up 0.5 percent to $1.4 billion. The firm reported extraordinary losses for devaluation of stocks of $30.7 million compared with last year’s $4.4 million.

Sales in Europe and the U.S., 8.3 percent of total sales, were up 10.8 percent from a year ago to $117 million.

For the fiscal year ending March 31, 2004, the firm projects net profits of $50 million, operating profits of $71.6 million and sales of $1.4 billion. Dollar figures were converted at current exchange rates. — K.H.

NEW LISTINGS: It was announced this week that Yue Yuen Industrial and Cosco Pacific would replace two stalwart property companies on Hong Kong’s Hang Seng Index beginning June 9. Yue Yuen is the world’s largest shoemaker, with contracts to produce athletic footwear for Nike, Adidas, Reebok, Rockport, Timberland and other well-known brands. It also operates retail outlets in mainland China. Yue Yuen’s production operations are also primarily located in China and its addition to the blue-chip index is seen as further proof of China’s importance in the Hong Kong stock market.

Yue Yuen has a market capitalization of $3.18 billion. Cosco Pacific is a shipping company with a market cap of $1.19 billion. — C.H.K.

LOW CEILINGS: Plans to add a wing to Hong Kong’s Convention & Exhibition Centre hit a financial snag when the Wan Chai district planning board ruled that the height of new buildings in the reclaimed waterfront area could not exceed 64 meters. The government had planned to build a 94-meter-high hotel in the space. In exchange for funding the construction of the 800-room hotel, the government would give the development and management of the hotel to private developers. The government may now need to set aside at least $12.9 million to fund the convention centre’s new phase.

Besides the new wing of the exhibition center, redevelopment plans for the area include a promenade with shops and cafes, and a harborside park. — C.H.K.

SHIPPING NEWS: Maersk Sealand, the Danish shipping giant, announced that it would start new services between Asia and the Mediterranean and the Far East and the U.S. West Coast this month. The new services are designed to increase coverage of the booming China market. Five 3,700 teu vessels will service the trans-Pacific route to the U.S., making port calls in Japan as well as Shanghai and Ningbo. The latter are key port cities in the Yangtze River Delta manufacturing base.

Growing even more significantly is the Asia-Mediterranean service. Maersk is adding nine ships of around 4,000 teu in capacity. In the first quarter, the trade lane has seen a 20 percent increase in comparative volume. The new service, the AE6, will cover the north China market with direct calls at Dalian, Tianjin and Qingdao. — C.H.K.