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REWIND: International Business News #24

Posted on May 17th, 2012 | Author:

  • In what could be troubling news just days ahead of Facebook’s IPO, General Motors announced its plans to stop advertising on the social media website.  General Motors said its decision came after the company conducted a review of its marketing budget allocation.  Executives felt that the paid advertisements had little impact on consumers despite spending approximately $10 million annually on Facebook since 2008.  The company will still maintain a presence on the site, as it will continue to create content and promote its products there. Notwithstanding the untimely news, GM’s advertising expenditures represent only a small percentage of Facebook’s $3.7 billion in revenue for 2011.  And in contrast to GM’s decision, other car manufacturers, including Kia and Honda, have indicated they will increase advertising on Facebook.
  • Shares of Taiwanese smartphone maker, HTC, fell to a five-month low after an announcement by the company that shipments to the U.S. of two HTC phones, the One X and the EVO 4G LTE, have been delayed.  The delay is a result of an exclusion order issued by the U.S. International Trade Commission in relation to a patent infringement suit brought by Apple against HTC.  In December, the ITC found that certain HTC phones infringed on Apple patents concerning the formatting of data in unstructured documents.  HTC indicates that new versions of the phones do not include the infringing technology, but the shipments are still under review by the U.S. customs authority.  It is unclear how long the review may take.  As a result, the exclusion order has also impacted U.S. wireless carriers, such as Sprint Nextel Corp. and AT&T Inc. which carry the phones but currently have none in stock.
  • Following the news that two companies will begin mining in Haiti’s northeastern mountains, the Haitian government has begun drafting new legislation to regulate the mining industry.  The companies believe there may be as much as $20 billion in precious metals in that region, including gold, copper, and silver.  Prime Minister Laurent Lamothe stated that the country intends to draft legislation that would both protect Haiti while keeping the country attractive to investors.  The revised legislation will apportion royalties between mining companies and the government, and settle protections for the people and environment that could be affected by mining activities.
  • The familiar melted red wax seal on Maker’s Mark bourbon whiskey has been given some legal fortitude after a court has determined it to be protected trade dress.  In 2003, Maker’s Mark Distillery Inc. brought suit against Casa Cuervo, S.A. de C.V. and Jose Cuervo International Inc., following Cuervo’s decision to use a dripping red wax seal on bottles of their “Reserva de la Familia,” a premium tequila.  Despite Cuervo’s arguments against the strength of the mark, Judge Martin of the U.S. Sixth Circuit Court of Appeals determined the iconic bottle’s seal was indeed distinctive and due protection.
  • The global telecom company Bharti Airtel is being investigated by the Indian Enforcement Directorate, as well as the government’s Central Bureau of Investigation.  Indian government authorities allege the company has engaged in money laundering and breaking foreign exchange usage rules.  Specifically, authorities are investigating whether Bharti was hoarding excess spectrum, as well as whether additional airwaves spectrum was allotted to the company, in violation of the subscriber-linked criteria in effect from 2001 to 2008.  The investigation stems from an audit of the award of mobile licenses that has resulted in the cancellation of licenses and affected several global telecom companies, including Norwegian Telenor and Russian Sistema.
  • Foreign Direct Investment in China fell for the sixth consecutive month.  A combination of the still sluggish global economy and signs of a slowing Chinese economy may have contributed to the decline.  Analysts cautioned investors that reports of below expectation trade figures may indicate lower growth potential for the country.  Chinese officials have taken steps to give the country’s economy a boost.  Earlier this week, the government reduced the bank reserve requirement in an effort to improve lending.