50% Stake in Habanos SA to be Sold to Chinese Cigarette Firm

[SenorPerfecto]

A half hour later, they wanted to buy the other 50%

[kalibratecuba]

A half hour later, they wanted to buy the other 50%

I hope you meant it like I took it.

I blame the MSG.

Sent from my GM1917 using Tapatalk

[Meklown]

16 hours ago, bundwallah said:

Is there any chance of the product being affected?  I recall reading that China was setting up large tobacco plantations. Probably for the local cigarette trade.  I also recall a website popping up that claimed Hiroshi Robaina was part of a new Chinese cigar company. It turned out to be BS, but given how easily products get "replicated" in China it has a potentially negative aspect.  There's rumors of fake French wines being mass produced there.  I remember you could also buy tons of fake cigar boxes on alibaba.com.  Perfect looking Behike boxes with all the components, right down to the smelly slip cover.  And most troubling, "old" Cuban Davidoff boxes.  Even if any of that is true to a degree, one would have to ask why buy a 50% stake in a company whose products you might be trying to counterfeit??  

I think prez called it correctly to say that objectively, this is a brilliant investment. Once the embargo goes down (and I'm 100% sure one day it will), the company will be worth a lot more than today. The value of the company is dependent on the ability of it to produce and sell tobacco, and will never go down unless Cuba somehow becomes unable to grow any more tobacco - nuclear fallout anyone? There is also no close substitute to this product - sure, you could switch to NCs but are they really the same thing? The demand will only increase and supply will always have limited room for expansion. CC prices will keep going up and hence profits for HSA will keep going up.

I'm sure the Chinese and many other countries are counterfeiting things at breakneck speeds. Even in cultures like Japan, I saw old (used) Hibiki bottles for sale. I can only imagine one thing that they will be used for.

I also assume that the company buying a stake in HSA does not do the counterfeiting. If anything, a Chinese company owning HSA may even lobby the Chinese government to step up the clampdown on fakes! Of course the Chinese government will want to take the profits for themselves?

[PigFish]

I had mentioned that Cuba's next logical partner was China here years ago and I was scoffed at! 

Cuba is a failed communist state, and China is a yet to fail communist state! The match is perfect.

Cuba is in for a big surprise. The Chi-Coms will simply crush Cuba if she does not succumb! This is how it works over there... I proffer they will use and support Cuba just like the Soviets and this is the kick-off of that partnership. I am believer in history repeating itself.

As far as cigars, well the Chinese make everything from glorious to garbage! They know how to produce and make money. They also know how to work with other lower tier communist states, such as NK, to get them to do their bidding while feeding them peanuts.

This could amount to just about anything, from the rebirth of the Cuban cigar to the rebirth of the cold war!

I appear to be the only one thinking that this is just as much about global politics as it is tobacco. We shall see!

-tP

[Nino]

3 hours ago, PigFish said:

I appear to be the only one thinking that this is just as much about global politics as it is tobacco. We shall see!

-tP

No you are not ...

The Chinese are deeper into the Cuban economy than you think possible.
Especially outside of tobacco.

[Rhinoww]

The Chinese are deeper into third world economies deeper than you believe. Just look at the rate at which they are developing ports and look at the onerous terms they require and enforce. 

[argrovesjd]

58 minutes ago, nino said:

No you are not ...

The Chinese are deeper into the Cuban economy than you think possible.
Especially outside of tobacco.

Very true. And looking to get deeper every chance that they get.  

[El Presidente]

5 hours ago, PigFish said:

I appear to be the only one thinking that this is just as much about global politics as it is tobacco. We shall see!

-tP

God forbid!!!  Imagine superpowers interfering in the machinations of third world countries ! 

 

[SmokyFontaine]

Having been through working for a Chinese VC-funded company and in my current job, having the company recently be acquired by a Chinese group, I have nothing but negative things to say about management style, short-sightedness of business strategy, strong-arm tactics, arrogance, and a general lack of international business norms and culture. I have no experience with Cuban businesses, but outside of the obvious style of government (although in reality China is arguably the most capitalist country in the world, where morals and international laws are a distant second thought), this would be fascinating to me if I didn't enjoy Cuban cigars. Hong Kong Chinese are my experience and that of my peers, radically different than mainland.

I do not see a single redeeming property in this acquisition. 

Wait...there is one. Beijing is obviously terrific at the ...umm...gated re-education enrichment village thing. Maybe for the really, really bad rollers, they can set them aside and re-educate them in the interest of consistency.  

[El Presidente]

3 hours ago, nino said:

The Chinese are deeper into the Cuban economy than you think possible.
Especially outside of tobacco.

Nino, so true. 

Once you take away the ability to move money globally, Cuba's assets and opportunities  are only attractive to those who can. 

Chinese interests will continue to get a limousine ride to cherry pick Cuban opportunities while the current restrictions are in place.  There is simply little competition. 

 

[PigFish]

2 hours ago, El Presidente said:

God forbid!!!  Imagine superpowers interfering in the machinations of third world countries ! 

 

... yeah! I understand that interference with our elections has now even involved the Auzzies! Shameful!!! Damn superpowers!!!

?

[MC4]

I wonder if they'll force the use of pesticides and chemical fertilizers to maximize production !!!

[Mikeltee]

If anything, the prices will go down. I however see cuba exporting leaf to have slave labor do the rolling in china. Once the prices drop and the demand is up then comes mixing in the non cuban leaf. We will see fakes like we never have before. Dead nuts accurate!

[El Presidente]

2 minutes ago, Mikeltee said:

 I however see cuba exporting leaf to have slave labor do the rolling in china. 

For the record ...Average chinese factory workers are paid  $30 USD a day.  Cuban factory workers are paid 20 USD (CUC) a month. 

[NSXCIGAR]

17 minutes ago, MC4 said:

I wonder if they'll force the use of pesticides and chemical fertilizers to maximize production !!!

HSA/China has nothing to do with tobacco until it reaches factory floors. They only make requests of Cubatabaco. Cuba was smart to separate the two entities in the 90s. Cuba could shutter HSA overnight if needed and clear out any investor while still maintaining 100% control of their tobacco.

8 hours ago, PigFish said:

As far as cigars, well the Chinese make everything from glorious to garbage! They know how to produce and make money.

Absolutely. If the Spanish and British could do it China certainly can. I don't see any risk of the top shelf product worsening. And China's skill in standardizing product might create more uniform quality across the board, particularly in regular production.

1 hour ago, SmokyFontaine said:

although in reality China is arguably the most capitalist country in the world,

That's an illusion. There's still something of a caste system there in terms of opportunity and access to capital. The gov't is involved heavily in almost every aspect of business. They are major currency manipulators. Entrepreneurship was virtually non-existent for almost everyone until very recently and regulations and labor laws are complex and often arbitrary.

In terms of free market economy Singapore and Hong Kong are still the leaders. China barely breaks the top 100 countries.

[NSXCIGAR]

12 minutes ago, Mikeltee said:

If anything, the prices will go down. I however see cuba exporting leaf to have slave labor do the rolling in china. Once the prices drop and the demand is up then comes mixing in the non cuban leaf. We will see fakes like we never have before. Dead nuts accurate!

As Prez notes, the slave labor is in Cuba. And Cubatabaco decides who they give the tobacco to. I doubt any changes to their leaf exports will happen. 

I don't think prices will ever go down. They never have. Price increases have been regular since 2000 and they sell everything they roll and revenues continue to rise.

[Meklown]

1 hour ago, NSXCIGAR said:

In terms of free market economy Singapore and Hong Kong are still the leaders

I'm from Singapore and by no means it's a free market. They just have created the perfect facade/illusion to trick Westerners into believing so. Though having said that, it's generally fine to do business until you cross lines with the government.

Check out Singapore's press freedom though .. https://rsf.org/en/ranking

2 hours ago, SmokyFontaine said:

strong-arm tactics, arrogance, and a general lack of international business norms and culture

Sounds like descriptors for America as well .. except they have had the benefit of being able to force their "norms" and "cultures" onto the rest of the world, and hence that becomes "international". "MLB World Series"? Which other country takes part?

Norms and cultures differ everywhere you go in the world. If you do business in that particular country, you have to respect and adhere to the local culture. If you're trying to make their money, even more so! There is no proclaiming which culture is better than the other, only what you're used to and what you're not ?

[NSXCIGAR]

18 minutes ago, Meklown said:

I'm from Singapore and by no means it's a free market. They just have created the perfect facade/illusion to trick Westerners into believing so. Though having said that, it's generally fine to do business until you cross lines with the government.

Check out Singapore's press freedom though .. https://rsf.org/en/ranking

I suppose you never really know how free it is until you live there and try to do business. On paper it consistently scores #1. In practice it may not be so clear cut. Thanks for sharing. It's worth examining.

And of course, freedom of speech and media freedom is an entirely different metric from economic freedom, although not entirely unrelated of course. Norway, that index's #1, appears at #26 on the economic freedom index. And the US at #48 is ludicrous. By every metric the US has the most liberal free speech and free press laws in the world. This survey cites "violence against journalists" as some lone nut with a pistol going into a newspaper office. And no matter what Trump says, there has been no state action against any journalist or media outlet, nor has he even hinted at any action unlike other recent Democrat administrations that engaged in behavior that seems to not be taken into consideration by this index.

[SmokyFontaine]

1 hour ago, Meklown said:

I'm from Singapore and by no means it's a free market. They just have created the perfect facade/illusion to trick Westerners into believing so. Though having said that, it's generally fine to do business until you cross lines with the government.

Check out Singapore's press freedom though .. https://rsf.org/en/ranking

Sounds like descriptors for America as well .. except they have had the benefit of being able to force their "norms" and "cultures" onto the rest of the world, and hence that becomes "international". "MLB World Series"? Which other country takes part?

Norms and cultures differ everywhere you go in the world. If you do business in that particular country, you have to respect and adhere to the local culture. If you're trying to make their money, even more so! There is no proclaiming which culture is better than the other, only what you're used to and what you're not ?

I agree with the norms and cultures to a degree, but it's really indisputable that Chinese business ethics are reliable, much like Cuban cigars are reliably inconsistent. Reliably non-existent. The IP theft, the government sponsored corporate espionage, it's unparalleled. And due to its dictatorial regime, complete lack of human rights, and veil of secrecy, the best you can say is that the government is reliably amoral. The US plays these espionage games and meddling at the government level to pursue regime-change (and personally I find that horrific, embarrassing, and evil), but to compare general norms (you don't violate patents, you don't copy other companies, you don't lie about your financial documents) without great risk of the US govt or the international community coming down on you.  This is how business is understood to be done in China. Of course it's all experiential, but with a lot of international business behind me, multiple businesstrips to China and to civilized nations, China is not at the level of other developed countries around the world. They just aren't. THAT is where the rest of the world is better. 

In the middle east, probably don't offer to take the customer to a strip club or ask for a BLT. That's unique culture. Hacking other companies' systems, copying hardware, embedding employees at companies so they can send back secrets. That's a norm for China, but it shouldn't be accepted as culture. It's illegal and amoral.

[El Presidente]

11 minutes ago, SmokyFontaine said:

I agree with the norms and cultures to a degree, but it's really indisputable that Chinese business ethics are reliable, much like Cuban cigars are reliably inconsistent. Reliably non-existent. The IP theft, the government sponsored corporate espionage, it's unparalleled. And due to its dictatorial regime, complete lack of human rights, and veil of secrecy, the best you can say is that the government is reliably amoral. The US plays these espionage games and meddling at the government level to pursue regime-change (and personally I find that horrific, embarrassing, and evil), but to compare general norms (you don't violate patents, you don't copy other companies, you don't lie about your financial documents) without great risk of the US govt or the international community coming down on you.  This is how business is understood to be done in China. Of course it's all experiential, but with a lot of international business behind me, multiple businesstrips to China and to civilized nations, China is not at the level of other developed countries around the world. They just aren't. THAT is where the rest of the world is better. 

In the middle east, probably don't offer to take the customer to a strip club or ask for a BLT. That's unique culture. Hacking other companies' systems, copying hardware, embedding employees at companies so they can send back secrets. That's a norm for China, but it shouldn't be accepted as culture. It's illegal and amoral.

I have to say that my experience with mainland China comes from the world of manufacturing. I suspect yours comes from finance and banking (forgive me if I am wrong). 

In terms of manufacturing, China has proven to be perfect partners for us (ShooAway) and hundreds of thousands if not millions of other companies around the world. It is the reason Apple is there. It is estimated 40% of product on Walmart shelves comes from China.  

On time every time and to a quality standard that you sign off on.   If one thing rubs off on Tabacuba.....let it be this!

This is how Chinese manufacturing works. In my experience when the screwing is done, it is generally Western companies looking for "cheaper prices " and with inflated business plans and models that they never get past the whiteboard. 

When it comes to manufacturing....the rest of the world doesn't come close.  china manufacturing costs are increasing significantly (have been for a decade) and we are seeing a rapid transition from people scale  to automation.  They see the challenge and adapt. The west see's the challenge and folds or moves to China/Sri Lanka/Bangladesh/Vietnam/Thailand.  We have been our own worst enemies. 
The issues you point out are relevant and largely at the next level. Again, as you have pointed out, they do not exclusively hold the batton for amoral superpower behaviour.  Go ask the little coffee truck vendor in Toronto

The Chinese government may  indeed be objectionable but it is in solid company. 

 

[Guest Nekhyludov]

Perhaps someone who has some experience in working with Chinese firms can shed some light here. This company, Huabao, sounds dodgy as hell. Secretive billionaire owners who no one outside of China has ever heard from, sanctions for pump and dump schemes, multiple subsidiaries with billion dollar market caps but no identifiable revenue.

Is this normal for Chinese firms, or is this as worrisome as it sounds?

[Meklown]

2 hours ago, SmokyFontaine said:

you don't violate patents, you don't copy other companies, you don't lie about your financial documents

These are all acts that shouldn't be happening but just look at the number of patent-related lawsuits filed against the biggest American tech corporations! 

In economic studies it's been established that for a country to develop, they either have to innovate or imitate. If you're decades behind on technology, the easiest thing to do is of course imitate.

46 minutes ago, Nekhyludov said:

This company, Huabao, sounds dodgy as hell

I don't know anything about this company either but a quick Google search shows it's listed on HK stock exchange (336.hk). If it passes the regulatory commission of the "trusted" HK financial system, I guess the business is sound.

The lack of information is also down to Google really; if we were better versed in Chinese, I'm sure we could Baidu some information. The size of the Chinese market is also large enough such that they simply do not need to export their products but still earn billions of dollars! 

[SmokyFontaine]

1 hour ago, El Presidente said:

I have to say that my experience with mainland China comes from the world of manufacturing. I suspect yours comes from finance and banking (forgive me if I am wrong). 

In terms of manufacturing, China has proven to be perfect partners for us (ShooAway) and hundreds of thousands if not millions of other companies around the world. It is the reason Apple is there. It is estimated 40% of product on Walmart shelves comes from China.  

On time every time and to a quality standard that you sign off on.   If one thing rubs off on Tabacuba.....let it be this!

This is how Chinese manufacturing works. In my experience when the screwing is done, it is generally Western companies looking for "cheaper prices " and with inflated business plans and models that they never get past the whiteboard. 

When it comes to manufacturing....the rest of the world doesn't come close.  china manufacturing costs are increasing significantly (have been for a decade) and we are seeing a rapid transition from people scale  to automation.  They see the challenge and adapt. The west see's the challenge and folds or moves to China/Sri Lanka/Bangladesh/Vietnam/Thailand.  We have been our own worst enemies. 
The issues you point out are relevant and largely at the next level. Again, as you have pointed out, they do not exclusively hold the batton for amoral superpower behaviour.  Go ask the little coffee truck vendor in Toronto

The Chinese government may  indeed be objectionable but it is in solid company. 

 

It's all a fair point and I can appreciate different perspectives and experiences. I actually work for an electronics hardware and software company. Pre-acquisition by a Chinese company we gave up fighting a futile battle against 2 Chinese companies trademarking our name and selling direct (and in this case, really poorly made) ripoffs of our niche products that we became increasingly successful in selling. There are some things I think they can brute force and do well in thanks to manpower, but at least in my experience the devil is in the details, and important things are missed. In our case some of the China market said the Chinese clone was good enough, others insist on buying our authentic products, but to have to fight the battle as the inventors has been...disheartening. 

[Fuzz]

4 hours ago, SmokyFontaine said:

It's all a fair point and I can appreciate different perspectives and experiences. I actually work for an electronics hardware and software company. Pre-acquisition by a Chinese company we gave up fighting a futile battle against 2 Chinese companies trademarking our name and selling direct (and in this case, really poorly made) ripoffs of our niche products that we became increasingly successful in selling. There are some things I think they can brute force and do well in thanks to manpower, but at least in my experience the devil is in the details, and important things are missed. In our case some of the China market said the Chinese clone was good enough, others insist on buying our authentic products, but to have to fight the battle as the inventors has been...disheartening. 

When you say 2 Chinese companies trademarked your name, I'm assuming that the company you work for did not trademark their name and file IP protection in China?

[Capt. Corona]

16 hours ago, SmokyFontaine said:

It's all a fair point and I can appreciate different perspectives and experiences. I actually work for an electronics hardware and software company. Pre-acquisition by a Chinese company we gave up fighting a futile battle against 2 Chinese companies trademarking our name and selling direct (and in this case, really poorly made) ripoffs of our niche products that we became increasingly successful in selling. There are some things I think they can brute force and do well in thanks to manpower, but at least in my experience the devil is in the details, and important things are missed. In our case some of the China market said the Chinese clone was good enough, others insist on buying our authentic products, but to have to fight the battle as the inventors has been...disheartening. 

Trust me when I say that they will figure out a way to automate rolling cigars and you will be hard pressed to be able to tell the difference between a hand rolled or an automated rolled cigar.  And the sad part will be they ALL will be marketed and sold as hand rolled!

I keep waiting for someone to pop up and say APRIL FOOLS on this thread but it's not close to April. ?