BEIJING – Toyota President Akio Toyoda's visit to China to talk about his company's quality problems reflects the fast-growing Chinese market's importance to automakers as they struggle with weak global sales.
Toyoda is due to speak at a news conference Monday evening in Beijing in his second foreign appearance following last week's visit to Washington, the company said. Japanese news reports said he would meet with Chinese officials.
"The fact that he is going to China second, after the United States, tells you the importance they place on China relative to other markets," said John Bonnell, a J.D. Power analyst. "Toyota wants to make sure it puts its best foot forward, not only with its best products but in instilling confidence."
The number of Toyota vehicles being recalled in China is small compared with the 8.5 million vehicles recalled worldwide since October for sticky gas pedals, faulty floor mats and glitches in braking software.
Automakers are looking to China for sales at a time of sluggish global demand and as a major driver of the industry's future growth. China overtook the United States as the biggest auto market last year with a 48 percent jump in sales, driven by government tax cuts and subsidies to buyers.
China could be critical to Toyota as quality worries batter sales elsewhere, said Zhang Xin, an industry analyst for Guotai Junan Securities in Beijing.
"It's very important. Toyota in the North American market was almost finished in the short-term, so it has to secure its Asian market. Its biggest market in Asia is China," Zhang said. "It must focus on this."
China's state-controlled media have made only muted comment on the recalls, in contrast to the United States, where Toyoda faced blistering criticism from American lawmakers.
"I think he is also coming to say, 'Thanks.' The U.S. side continues to put him under great pressure, but China doesn't," said Rao Da, general secretary of the China Passenger Car Association, an industry group.
The flood of recalls in the United States has shaken confidence in Toyota's reputation for excellent quality. In China, the company announced a recall of 75,552 RAV4 sport-utility vehicles in late January due to the gas pedal problem.
Financial analysts say Toyota's China sales fell in January compared with December, but it was unclear whether that was linked to the recalls. Spending on many goods sees a lull in January and February due to the weeklong Lunar New Year holiday, and auto sales growth this year is expected to slow after 2009's surge.
The state-sanctioned industry group, the China Association of Auto Manufacturers, said Toyota's China sales in January fell 16 percent from December, according to Zhang. The CAAM refused to release its data, which it said are given only to paying customers.
"It's not about their crisis management ability but also their products. If they can solve the problem, the damage will only be short-term," Zhang said.
Toyota got a relatively late start in China, after fitful efforts to break into the market using tie-ups between its subsidiary Daihatsu Motor Co. and state-run Tianjin Automobile Industry Holding Co.
Toyota rolled out its first made-in-China Camry in May 2006 in a partnership with Guangzhou Automobile Group in southern China. Toyota also a partnership with state-owned FAW Group in the north.
Toyota saw slower sales growth than other foreign brands last year due to its focus on bigger, more-expensive cars while the government was promoting smaller, fuel-efficient vehicles with tax breaks and subsidies. Toyota sales were up 50 percent, compared with 76 percent for Volkswagen AG and 219 percent for General Motors Co.'s Chevrolet unit.
The company is preparing to launch a lower-cost brand for China in response to demand for smaller cars, according to analysts.
AP Business Writer Elaine Kurtenbach in Shanghai and Associated Press researchers Bonnie Cao in Beijing and Ji Chen in Shanghai contributed to this report.
HONG KONG – Asian stock markets advanced Monday, with Hong Kong's index up nearly 2 percent, after China said manufacturing continued to grow last month albeit at a slower pace.
Every major market was higher as the region posted its second day of gains. Crude oil prices climbed over $80 a barrel, and the dollar strengthened against the yen and the euro.
China's said its purchasing managers index, a survey of manufacturers, indicated manufacturing activity expanded in February but at a lower rate compared to the previous month. The slower growth came as the government steps up efforts to curb overcapacity and inflation amid a booming economy by preventing excessive bank lending.
In Japan, the Nikkei 225 stock average rose 68.42 points, or 0.7 percent, to 10,194.20.
In greater China, Hong Kong's Hang Seng benchmark jumped 368.26 points, or 1.8 percent, to 20,976.10 and Shanghai's market was up 0.9 percent at 3,080.23.
Elsewhere, Singapore's market rose 0.8 percent and Taiwan's index climbed 2.4 percent.
Markets in South Korea, India and Thailand were closed.
Friday in the U.S., markets eked out a small gain.
The Dow rose 4.23, or less than 0.1 percent, to 10,325.26. It fell 0.7 percent for the week but rose 2.6 percent for the month.
The broader S&P 500 index rose 1.55, or 0.1 percent, to 1,104.49. It fell 0.4 percent for the week and climbed 2.9 percent in February.
In oil, the benchmark contract rose 42 cents to $80.10 after adding $1.49 on Friday.
In currencies, the dollar rose to 89.07 yen from 88.84 yen. The euro was lower at $1.3606 from $1.3623.
BILLERICA, Mass. – Germany's Merck KGaA said Sunday that it will pay $6 billion in cash to buy U.S. biotech equipment maker Millipore Corp. in a move to expand its presence beyond drugs and chemicals and into the life science sector.
The deal ends more than a week of speculation over Millipore's future.
Shares of the Billerica, Mass., company soared last week after reports said lab instrument maker Thermo Fisher Scientific Inc. had made a $6 billion offer. Millipore, which supplies tests and equipment to the biotechnology industry, then confirmed that it was evaluating strategic alternatives — including a possible sale. The company hired advisers Goldman Sachs and Cravath, Swaine & Moore LLP to help it consider its options.
Based on Millipore's 56.3 million shares outstanding at Dec. 31, Merck's $107-per-share offer is worth $6.03 billion. Including assumed debt, Merck values the deal at $7.2 billion.
"This transaction is very attractive to shareholders, customers and employees of both companies," Karl-Ludwig Kley, chairman of Merck's executive board, said in a statement. The company said the acquisition will be a strong strategic fit that allows it to expand the breadth of its business, and will create a $2.9 billion partnership in the life science sector.
Merck said that currently, its chemicals business generates around 25 percent of the company's total revenue. Following the transaction, the chemicals business will contribute 35 percent of sales.
Merck's offer marks a 50 percent premium to Millipore's $71.34 closing stock price on Feb. 19, the last trading day before takeover reports surfaced. The deal is expected to be completed in the second half of 2010.
Millipore, which has about 6,000 employees across more than 30 countries, generated sales of $1.65 billion in fiscal 2009. Merck said it will keep the company's headquarters in Billerica, combine it with Merck's U.S. chemicals headquarters and retain Millipore's senior management. Merck anticipates the combined business will create savings of $100 million (euro75 million) in the three years following the close of the deal.
Millipore shareholders still must approve the deal.
Merck, based in Darmstadt, last week reported 2009 earnings of euro366 million ($498.7 million), nearly unchanged from 2008. The company, which makes the cancer drug Erbitux, multiple sclerosis treatment Rebif and also produces liquid crystal displays for televisions and computer monitors, said revenue rose 2 percent to euro7.8 billion ($10.63 billion).
Merck said it will fund the deal with available cash and a term loan provided by Bank of America Merrill Lynch, BNP Paribas and Commerzbank. Merck plans to replace part of the facility by issuing bonds.