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As we wait for HRCT to engage check out the following and click anywhere:
http://www.saab-stuff.com/pop.swf
Property rules in China:
WSJ 9/5/06
SHANGHAI -- Two major Chinese government organizations have published details of rules aimed at slowing foreign investment in the nation's property market, even as one of the largest real-estate transactions yet in China was announced.
The State Administration of Foreign Exchange and China's Ministry of Construction, in a joint statement yesterday, said the aim of the rules is "to promote the healthy development of the property market."
The 12 points in the document flesh out some elements of plans issued by various government arms in late July and are "mostly technical," according to Kenny Ho, an associate director at Jones Lang LaSalle in Shanghai.
The rules issued in July -- though seemingly tough -- aren't aimed at cutting off foreign investment. "Foreign investors in the real-estate sector must deal with additional regulatory hurdles," according to Freshfields Bruckhaus Deringer, a law firm.
Property prices in 70 of China's largest cities were up 5.7% in July from a year earlier, compared with 5.8% in June, according to the country's economic planning agency, the National Development and Reform Commission. Ma Kai, director of the agency, has repeatedly warned that controls on the property sector could be stepped up.
Chinese leaders remain concerned that high property prices are a threat to the economic success the country has achieved in recent years, putting pressure on the currency and inflation rates.
While few people see signs that the government is promoting lower property prices, analysts say Beijing is loath to encourage foreigners to speculate aggressively and push the country's $954.5 billion in foreign-exchange reserves much higher. Growing reserves are an important indicator of foreign-currency inflows.
The July rules, which established residency requirements and borrowing limits for certain transactions, will have their biggest impact on the margins of the market, partly because foreign investment is such a small portion of the property business.
The details unveiled yesterday apply to foreign corporate, institutional and individual buyers. SAFE, China's agency for enforcing capital-control rules, said it will more carefully scrutinize inflows of dollars aimed at property investment. Individuals, for instance, will be required to show one year of residency. Foreign companies will need to provide at least 35% of the development capital of a project before they can borrow, according to the SAFE rules.
The requirement for companies and individuals to have a physical presence in China adds a hurdle for investors. The body of rules "definitely makes it more expensive to structure an onshore transaction," said Matthew Brailsford, director of investment in Shanghai for Savills PLC.
Even so, Savills, based in the United Kingdom, announced yesterday the completion of a deal it brokered, a $300 million purchase of a 33-story building being developed close to the Shanghai riverfront. Hopson International Tower, due for completion in early 2008, was purchased by a Hong Kong company from its Chinese developer. Savills said it is among the largest property transactions to date in China's commercial capital.
The July rules were considered an effort to shake away marginal investors but could be followed up later if authorities feel their impact isn't sustained.
"Those regulations are more of a warning sign, which in fact already cooled off the market," said Frank Jiang, head of advisory services at Shanghai Urban Real Estate Appraisal/Surveyors Co.
OT:
A short timeline on John Delorean:
1972 John DeLorean left GM to start a car company in Northern Ireland.
(WSJ, 6/19/96, Adv. Supl)
1982 Oct 19, Carmaker John DeLorean was arrested in Los Angeles and charged in a 24-million-dollar cocaine scheme aimed at salvaging his bankrupt sports car company. He was found not guilty due to entrapment on August 16, 1984.
(http://en.wikipedia.org/wiki/John_De_Lorean)
1984 Aug 16, A federal jury in Los Angeles acquitted auto maker John Z. DeLorean of trafficking in cocaine due to entrapment.
(http://en.wikipedia.org/wiki/John_De_Lorean)
1986 Dec 17, A federal jury in Detroit cleared automaker John DeLorean of all 15 charges in his fraud and racketeering trial.
(http://openweb.tvnews.vanderbilt.edu/1986-12/1986-12-17-ABC-11.html)
2005 Mar 19, John Z. DeLorean (b.1925), developer of the gull-winged sports car, died in Michigan. He quit GM in 1973 to launch the DeLorean Motor Car Co. in Northern Ireland. Eight years later, the DeLorean DMC-12 hit the streets.
(AP, 3/21/05)
I'll have to check with my lawyer on that.
The Winona Ryder sounds pretty good. Does that cover liquor stores also?
Trading again @.051.
I'll have to run that one by my physician.
I do not think my medical insurance covers wine. LOL
I think a get a touch of it every time I complete a full bottle.
HRCT not trading this morning??
I'm only 59 and a 1/2. When do I get to meet ED?
"It's always smart to grab a glass of the good wine before eyeballing the rest of the attractions."
(AR, 8/30/06, IHUB)
As an aside I just knocked off a nice 2005 Fume Blanc from Castoro Cellars, Paso Robles, Ca. Found it at our local Trader Joes grocery. The logo on the label reads "Dam Fine Wine" and I have to agree.
Is ED the name of your girlfriend?
Gosh are Minnesota wines that good? There is also the obverse possibility.
Good cartoon... LOL
China and Foreign Investors: WSJ: 8/30/06
BEIJING -- China's government has been throwing up some new hurdles for foreign investors in recent months, including increased scrutiny of foreign-backed mergers and proposed restrictions in areas from banking to retailing to manufacturing.
It's not a wave of popular anti-foreign sentiment, of the kind that was on display, for example, after the U.S. bombing of the Chinese Embassy in Belgrade in 1999, that is motivating Beijing. Rather, it is the government's growing preoccupation with helping China's expanding universe of domestic companies and pressing social issues such as poverty and wealth disparities.
Top leaders insist that fast-growing China, the developing world's biggest recipient of foreign investment for many years running, isn't closing off its economy. But the new restrictions are particularly alarming for foreign companies because they stem not from some temporary interest in penalizing foreign businesses but from a broader shift in China's priorities.
Increasingly savvy domestic companies -- some of whom have been stymied in their efforts to expand overseas -- are seizing the moment to push for moves they hope will strengthen them against outside competitors.
In automobile production, for instance, a business long dominated by foreign companies operating through joint ventures, the government said in March that it won't approve any new expansion of capacity unless companies meet requirements, as yet unspecified, to make local brands and support domestic product development.
That policy should give a boost to companies like Shanghai Automotive Industry Corp., which has long had ventures with General Motors Corp. and Volkswagen AG but now says it wants to make cars under its own name and challenge the big brands for a share of the market.
"As local Chinese companies become more competitive, they are becoming more sophisticated in using whatever means are available to them to maintain their position," says Henry Wang, a lawyer with DLA Piper Rudnick Gray Cary in Shanghai. "They are using a combination of the media and government help."
Another example is a proposed rule restricting the expansion of large-scale chain outlets, which is largely the result of intensive lobbying by Chinese retailers, according to people familiar with the matter. The rule, if passed, is likely to put foreign companies such as Wal-Mart Stores Inc. and Carrefour SA at a disadvantage. Another set of rules issued in July could make it more difficult for foreign companies to operate Internet businesses, while banking regulators in August circulated draft rules that are likely to make it more difficult for foreign banks to expand their retail branches.
China these days lets foreign businesses compete in its domestic markets to an extent that few if any developing countries have matched. Since joining the World Trade Organization in 2001, China has systematically stripped away many of the previous barriers to entry for foreign companies. Roughly 280,000 companies backed by foreign investors operate in China, doing everything from delivering packages to building cars and selling toothpaste. But while China continues to attract staggering amounts of new foreign investment -- on the order of $60 billion a year -- those inflows have peaked over the past couple of years and are unlikely to increase further unless a major new set of opportunities crops up.
The government's inward turn in recent months is creating questions about China's openness at a pivotal time. There is growing concern that the government's pace of market-opening reforms could slow markedly or even stop once China completes most of its obligations to the WTO at the end of this year.
Frank Lavin, U.S. undersecretary of commerce for international trade, said that the recent calls to limit foreign investment are a "worrisome trend." China's leaders may not have the appetite for further reforms that would benefit foreign business, he said in a speech this month to U.S. businesspeople in Beijing. Meanwhile, U.S. Trade Representative Susan Schwab said this week she is watching for any signs of a substantive shift toward economic nationalism in China.
That sentiment also threatens to throw up new obstacles for foreign companies interested in acquiring Chinese businesses. The China Bearing Industry Association is publicly opposing a preliminary agreement by Schaeffler Group of Germany to buy Luoyang Bearing Group, one of the major domestic firms in the sector. In August, the China Cement Association asked the government to review any foreign acquisitions of domestic cement companies that exceed $100 million in size. Even soybean processors are getting their day in the sun, as lobbyists in July asked the government to restrict any expansion of the strong foreign presence in the sector.
Though those campaigns haven't yet yielded results, there are other instances of local industry groups getting more directly involved in policymaking. One example: After the government in June published a document declaring the machinery and capital-equipment industry a "pillar" of the national economy that would receive special support, the China Machinery Industry Federation worked with officials to draft specific policies. A key provision: ensuring extra scrutiny of any foreign-led acquisitions in the industry. The new policy has contributed to the uncertainty around private-equity firm Carlyle Group's attempt to buy construction-equipment maker Xugong Group, which has been held up in the approval process for months.
"There's definitely a feeling that investment opportunities are tightening up, that there are more difficulties than before," said Elizabeth Knup, managing director at Kamsky Associates, a Beijing-based consultancy firm that helps foreign firms invest in China.
These different regulatory efforts haven't been particularly well-coordinated, suggesting that the government is responding ad-hoc to individual situations, rather than pursuing a broad agenda of restricting foreign business activity. And there have been recent signs that the government is trying to rein in some of the anti-foreign rhetoric, by giving prominent media exposure to those who support increased economic openness.
"Foreign companies don't need to worry about China backtracking," says Wang Zhile, director of the Research Center on Transnational Corporations, a body that advises the central government. Mr. Wang says those calling for restrictions on foreign investment do not represent mainstream opinion in the government.
Still, the succession of regulatory changes and louder criticism of foreign business coincides with a bigger shift in China's priorities. Since taking power in 2003, the administration of President Hu Jintao and Premier Wen Jiabao has said they want China's growth to be more sustainable, more domestically focused and less wasteful of resources -- a shift from the previous administration's focus on fast, export-led growth. The government also recently released its latest five-year plan -- the country's 11th -- which calls for a concerted push to make sure that Chinese companies have the trappings of 21st-century businesses, from a storehouse of patents and trademarks to recognizable brand names.
As part of that, the government is giving itself new tools to be more discriminating about foreign investment. At the end of last month, China's securities regulator published a new takeover code, which declared that acquisitions involving publicly-traded companies "must not harm national security or the public interest."
This month, the Ministry of Commerce declared that it will have to approve any foreign acquisitions that could affect economic security, or involve "key" domestic industries or well-known trademarks. Lawyers say the provisions give the government broad discretion to intervene in deals.
A think tank affiliated with the National Development and Reform Commission, the chief economic planning agency, also said in a report this month that China should "draw on international experience" and set up a government organization to assess the impact of foreign purchases of state-owned enterprises. The proposal mimics the Committee for Foreign Investment in the U.S., a panel that reviews the national-security implications of foreign transactions and can recommend that the president cancel a deal.
Analysts and industry watchers say the extent to which China has already opened its market has made local businesses fearful they cannot survive tough foreign competition. On top of that, a nascent push for Chinese businesses to expand overseas has also been stymied by political difficulties and the firms' own inexperience with international practices. Combined with the persistent criticism of China's low-cost exports for taking jobs away from U.S. and European manufacturers, there is increasingly a feeling that China owes foreign companies no favors.
"It's a comfortable time to get tougher with foreigners. Having more of them hang around is not the top priority," says Nandani Lynton, the Beijing-based vice president for Asia at Thunderbird, the business school.
Aug 23, Medical diagnostic test makers Nanogen Inc. and American Bio Medica Corp. said Wednesday they have signed a supply agreement under which American Bio will sell drug tests to Nanogen.
Aug. 24 /PRNewswire-FirstCall/ -- Nanogen, Inc. (Nasdaq: NGEN), developer of advanced diagnostic products, announced today that it has been issued six patents by the U.S. Patent and Trademark Office for inventions related to diabetes and Alzheimers disease and biomarkers.
"Since I'm a WINO, I let the wine determine the meal."
I'm surprised you say that. You look more like an albino to me.
I found a 2001 Taft Street Cabernet ($7.50) at the same store that carries the Crane Lake. I was very pleased with it. Thank's for the tip.
I usually let the meal determine the wine. And since I like SB so much I usually make sure the food I make suits my meager 3 bottle cellar, most often composed of 2 SBs and a red. I call this self control and a good way to age my reds for an extra week or so.
The Crane Lake is a remarkably good SB. I found it after local papers mentioned it as a good wine for under $10. I overstated the price... its actually 3.29, but my local source is down to its last case, so the bargain is due to end soon.
Solvang is a beautiful part of Central California.
I'll keep my out for the Limestone Hill.
The 2 or 3 fine wines that I have tasted have not helped my looks at all. Perhaps I need a few more.
I didn't realize you were so cute.
I've been settled in with Crane Lake (Calif) SB, 3.49 at the local drugbarn. Some deals are hard to beat.
Am off to the wine store with your list hand.
This has been covered in previous posts but FYI Dr. Hu has asked Washington's former Gov. Gary Locke to sit on an advisory board for Hartcourt. Mr. Locke is now associated with a law firm that does significant business in China. See posts 72504 and 72498, and which will now represent Hartcourt.
http://www.dwt.com/lawdir/attorneys/LockeGary.cfm
Education in China
The Economist 8/12/06
THE students at Shengda Economics, Trade and Management College, in the quiet rural town of Longhu, in the central province of Henan, are among the most privileged in China. So why did they go on a rampage at the beginning of summer? In June thousands of them stormed through the grounds of their college, smashing windows and throwing stones at police cars. It was one of the biggest and most unruly protests on a university campus reported in China since the 1980s.
At first glance, the cause of the riot might look unremarkable. Shengda students have long been unhappy with the college's strict regime. This includes compulsory physical exercise at 6.30am, a ban on alcohol and smoking, and confinement to campus at weekends except for those with written permission to venture out. What self-respecting student wouldn't protest? But the trigger for the violence was in fact quite different. It was the college's decision to add the word “Shengda” to its students' graduation certificates. The fact that this apparently trivial change provoked a riot illustrates the parlous state of China's education system—and the difficulties of reforming it.
Since the early 1990s, China's embrace of market forces has upturned the provision of public services. Although most schools and colleges are still funded by the government, they now operate much more like businesses. They are allowed to generate extra revenue and so improve their facilities and attract more students. And, crucially, they have been permitted to raise fees—often in a disguised form to evade nominal government-imposed limits. The Chinese Academy of Social Sciences says that households now spend more on education than anything else, even though town- and city-dwellers are allowed to have only one child. In 2004 fees provided 18% of the revenues of schools and colleges, up from 4.4% in 1991.
A common way for state schools and universities to earn extra cash is to start schools of their own, which they then run, in effect, as expensive private schools. The trend began some 15 years ago among primary and junior schools, and has reinforced an existing inequality. For most of the communist era, a two-tier system identified a few “key schools” that receive extra money and other favours in order to nurture pockets of academic excellence.
In June, a revision to the education law abolished the key-school system, which had caused much resentment. This left these pampered establishments in an excellent position to attract the highest fee-payers to their new quasi-private facilities. They can also charge high fees from students from outside their official catchment areas. This levy, which is known as a “school selection charge”, can amount to thousands of dollars. Many less privileged state schools are also prospering: after dividing their intake into separate streams, for example, they charge more for the classes with better teachers and facilities.
Following the schools' lead, state universities had by the end of the 1990s also increased their incomes, often in partnership with private capital. Shengda, which was founded in 1994, was an early pioneer. A decade later, China had 249 such quasi-private colleges with a total of 680,000 students, more than half a million of them studying for undergraduate degrees.
At every level, the rich now have much better access to good education than the less well-off. At the same time, the opacity of the privatisation process stops fair competition between fee-charging institutions. State-funded institutions, especially those formerly designated key schools, dominate the market and deter genuine private investment.
In the past two years, local governments have begun imposing business taxes on (genuine) private schools. Unable to make ends meet, some are now going bust. One of the biggest private education companies, South Ocean Education Group, which ran ten schools with some 10,000 pupils and 400 teachers, collapsed last year after officials in one province accused it of raising funds illegally. Even the official media suggested that its fate was more related to the reluctance of state-owned banks to lend to private schools.
Shengda, a quasi-private college, has been blessed with more than 200m yuan ($25m) from a Taiwanese entrepreneur. This has enabled it to build an attractive lakeside campus. But what matters more to the students is the name of its parent institution, Zhengzhou University, one of the most prestigious in central China.
Shengda students pay more than twice the fees of a Zhengzhou University student in exchange for a degree certificate with the words “Zhengzhou University” on it. The decision in June to add the word “Shengda”, they felt, drew unwanted attention to the fact that this was not quite the real thing. In a fiercely competitive job market (despite rapid economic growth, graduate unemployment has been rising), one word could make a grave difference. Employers often regard graduates from private or quasi-private universities as inferior to those from state institutions.
The authorities moved quickly to contain the violence at Shengda, which erupted on June 15th. Hundreds of riot police were sent in. Their mere presence was enough to quell the riot. Sit-ins continued on the following day, but with the summer break looming they quickly fizzled. Even so, the authorities were worried enough to order a complete news blackout. To appease the students, the college principal was fired. But Zhengzhou University is still insisting on putting the word Shengda on the graduation certificates.
It has no choice in the matter. The Ministry of Education, after years of indecisiveness over how to manage the rapid growth of hybrid state-private facilities, is now trying to draw a clearer distinction between them and their parent bodies. Regulations issued three years ago—but implemented by parent universities with little enthusiasm—require the full name of quasi-private colleges such as Shengda to be spelled out on graduation certificates. It has been galling for Zhengzhou University graduates to end up with roughly the same certificate as their Shengda counterparts, who they will have had to outperform in exams in order to win their university place. Encouraging further confusion between the two institutions, Shengda has nearly half as many undergraduates as Zhengzhou University, which has 32,000.
In recent months a handful of other campuses have seen protests similar to Shengda's. An education-ministry official says concerns about possible unrest are slowing efforts to separate the hybrid universities from their parent bodies. And pressures are growing from the less affluent parents who often cannot even think of sending a gifted child to university at all. An official revealed in July that more than a quarter of bursary applications from impoverished students are turned down. In 2003, some 5,500 people, including teachers and parents, visited the education ministry in Beijing to seek redress over issues ranging from high fees to corruption and unpaid wages for teachers. In 2004, the number rose to 7,000.
A big part of the problem is the central government's disinclination to spend money on solving it. Government spending on education has failed to match the pace of economic growth. It has not come close to meeting the demands of a compulsory education law introduced in 1986 that required local governments to ensure that all children receive nine years of free education. Nor has there been enough money to cope with the more than threefold increase in the number of tertiary students since 1999, to some 15m today. By 2010, this is expected to rise to 25m. Schools and universities have been turning to banks for help, which has encouraged them to raise fees and other charges even higher in order to meet interest payments. Many universities are now saddled with large debts that are likely to turn into bad loans.
As a proportion of GDP, government spending on education hardly changed at all in the 1990s. A target set in 1993 of raising this to 4% of GDP by 2000 has yet to be achieved. The aim now is to reach this level by 2010. According to a recent OECD study, China's total spending on education, including both government and private as a proportion of GDP, was just ahead of India's in 2001. But it was lower than in several other Asian developing countries with a similar age structure, such as Thailand and the Philippines. Government spending in India was higher as a proportion of GDP than in China.
Compounding the problem has been the huge share of the spending burden that is borne by the lowest levels of government. For rural governments, the obligation to provide schooling for all has meant devoting the lion's share of their budgets to the task. In many cases it has still been insufficient. In poorer areas teachers often go unpaid for months, and school buildings unrepaired. Recent central-government efforts to reduce the tax burden on rural folk have left many local administrations even shorter of cash. This year the government announced that, by the end of 2007, fees would be entirely abolished at rural schools, given rising dropout rates in poorer areas. But it is unclear who will pay for this. Local governments fear that they will again be left with the tab.
A recent report by the Chinese Academy of Social Sciences found that the “commercialisation” of education had led to “a serious collapse of its public reputation”. The education ministry appears to have no clear idea of how to separate state-funded schools and universities from their new private add-ons. The recent revision of the education law will—when it takes effect in September—ban local governments from “changing the nature of state schools”. This has been interpreted as meaning that setting up quasi-private schools will be prohibited. But the official media have expressed some scepticism, suggesting there would be strong resistance from state schools as well as from private ones affiliated with state institutions. The revised law also says that fees will be scrapped, but does not suggest who will pay for the policy.
A ministry spokesman caused an uproar in March when he clumsily compared education to shopping for clothes, saying it was natural that “a well-off man can go to a brand-name store to buy a 10,000 yuan suit, while a poor person can buy a 100 yuan suit from a vendor.” At least China's clothing market, unlike the education sector, is not dominated by a state monopoly with little concern for the majority of its customers.
There was a book review in today's WSJ that I believe is apropos
to the Wave Systems story:
2006 Pip Coburn authored “The Change Function.” He argued that technology will be successful if the pain associated with adopting it is less than the pain associated with the status quo and that successful technologies tend to exploit crisis in one form or another.
(WSJ, 8/9/06, p.D12)
Easter in August.
He has resurrected.
Praise the Moodyblue.
No wonder you took so long. You had poor Dr. Hu jumping up and down waiting for you to bring his card back.
The EQ hit just before you went to the john. But it may have well stimulated your need to go. Nobody else noticed it at the time, except for Dr. Hu.
A agree: Dr. Hu did not say a stock split was imminent in the near future.
Dr. Hu said he plans to set up an advisory committee for Hartcourt that would include former Washington Gov. Gary Locke.
As the meeting came to a close at 8:10 and all present gave thanks to Dr. Hu for his time and clarity, the earth beneath our feet rattled in approval as a 4.1 tremor shook northern California. Dr. Hu turned to me and asked if there had just been an earthqauke. I did not feel it and said perhaps it was just a gust of wind.
I'm a born masochist. It feels great.
I think that sentence was a bit inappropriate and just leads to confusion. Like I said earlier... we were told that we can expect some good news by the weekend.
No. The business plan will be forthcoming. It will in essence describe the focus on the education market.
Correct. There was a missing period there.
RE: SF Meeting
Dr. Hu presented a 5-point immediate plan:
1) To make public his detailed business plan asap.
2) To communicate with shareholders and significant parties on a regular basis and to keep channels of communication open.
3) To establish and maintain good corporate governance.
4) To establish and maintain direct relations with subsidiaries.
5) To resolve all past issues asap.
Dr. Wang had already departed for China so only Dr. Hu was available for questions. 7 shareholders participated and we spent about 2 hours asking questions. Dr. Hu answered all questions directly and let us know that we could expect some good news before the weekend.
Hartcourt's focus will now be on the education market in China. He has already targeted a number of institutions in the Shanghai area and hopes to confirm deals in the 3-6 month timeframe. These deals will focus on the business aspects of technical school education, not on real estate and capital goods.
All shareholders present agreed that Dr. Hu looked like the right man to lead Hartcourt forward.
Other participants took lots of notes. I'll let them post some comments before I post more.
Mssr. Barge
Actually you are guilty on at least one count.
Your Ka Boom signature is way too small.
Any word on the Jump acquisition?
Western Australian Wines:
SFC 7/13/06
Perth, Australia -- Everyone knows about Australia's inexpensive, fruit-driven, mass-produced wines -- think Yellow Tail, the largest-selling wine brand in U.S. food stores by dollar volume, according to ACNielsen.
But there is a wine-producing part of the country that shatters just about every aspect of that image.
By far Australia's largest state in terms of land -- about 1 million square miles -- Western Australia is like California before the railroads. It's isolated from the rest of the country, and far from the more well-known wine regions of the Barossa and Yarra valleys. Perth, its capital, is closer to Singapore than to Sydney.
And it looks and feels like California, except, of course, for the kangaroos. The Margaret River area, Western Australia's best-known wine-producing region, could pass for Sonoma. The climate and topography are similar: unspoiled rolling farmland dotted with manicured vineyards and the occasional splendiferous spa.
Although it may seem remote, the region produces wines that are sophisticated and cosmopolitan. It accounts for only 5 percent of the country's wine, yet it produces 25 percent of Australia's premium wine (more than $15 a bottle) and wins a disproportionate share of awards and trophies at Australian wine competitions.
Western Australian wines "have a lot more in common with the French style than they do with South Australia," says Chuck Hayward, wine buyer for the Jug Shop in San Francisco. "They're more food-friendly -- not as oaky. The Shiraz is very spicy, gamy, meaty. The Cabernets are very sophisticated, very elegant. The most exciting area is Chardonnay. They're dead ringers for white Burgundy, especially Puligny-Montrachet. There's a chalky, white chocolate component in there. They're lovely."
Western Australia joined the rest of the country in 1901 only after "other siders" -- as the Easterners were called -- flooded the region with the discovery of gold and voted for federation. Fiercely independent, the state has had several waves of secessionist fervor since its 1829 founding. Its independent spirit remains in both the style of its wines and the character of its winemakers.
The proximity of Western Australia's vineyards to the Indian and Southern oceans explains why its wines are so different compared with those from South Australia, the country's major wine-producing state. The cooling maritime influences allow grapes more time to ripen and develop complex flavors, resulting in wines that are more refined and less alcoholic than those from the hotter Barossa Valley in South Australia.
Unlike the rest of the country, which has made Shiraz its signature grape, Cabernet Sauvignon and Chardonnay are the most planted varieties in Margaret River, Western Australia's most important appellation. Riesling captures everyone's attention in Great Southern, Western Australia's other major growing region.
Denis Horgan, the owner of one of Margaret River's best-known wineries, Leeuwin Estate, and one of that region's "founding fathers," notes that the wine industry in Western Australia is the antithesis of the Australian wine business in general, 85 percent of which is controlled by 20 companies (60 percent is controlled by five companies: Foster's Group Lt., Hardy Wine Co./Constellation, McGuigan Simeon and Pernod Ricard Pacific).
Horgan estimates that Leeuwin Estate produces 0.05 percent of Australian wine and notes wryly, "The big guys spill that much."
Even Evans & Tate, the largest winery in Margaret River, produces only 500,000 cases annually, which represents about one-third of all Margaret River wine. (Yellow Tail exports 6 million cases annually to the United States.)
Industry takes root
Though grapes have been planted in the Swan District east of Perth since the 19th century, the modern history of Western Australia's wine industry started in the 1950s, when the Western Australian government invited the late Harold Olmo, professor of viticulture at UC Davis, to explore the idea of "cool climate viticulture" south of Perth.
Olmo suggested that two subregions within the large Great Southern appellation -- Frankland and Mount Barker -- showed great promise for making elegant table wines in the European tradition. Later, he also wrote that the Margaret River region shared similar soil and climate to Bordeaux.
Though it is clear he was correct about the potential of both the Great Southern and the Margaret River regions, growing premium wine grapes was slow to catch on. Ironically, a recession allowed the potential for great wine to be realized.
Merv Lange, founder and owner of Alkoomi Wines, was considered either a visionary or a lunatic when, in 1971, he planted Cabernet Sauvignon vines in Frankland, southeast of Perth. Lange says he only planted a vineyard because he was "desperate." The consummate independent farmer -- he still refuses to use bank loans -- grew up in the region and took over a large traditional farm that raised sheep and grew wheat.
In the late '60s, prices for these products fell dramatically and he realized he needed to diversify. The local agricultural department recommended grapevines, but as Lange points out, "It could have just as easily been pumpkins or strawberries."
Initially he followed his plan and grew grapes to sell, but by 1976 he was making wine under his own label, mostly Cabernet Sauvignon and Malbec. He currently has 285 acres under vine and is out of the farming business entirely. Lange is especially enthusiastic about his white wines, notably the Semillon-Sauvignon Blanc blends, but his Shirazes are fabulously complex and suave.
The recession drove more than a few self-reliant people into the wine business. In the nearby Mount Barker area, south of Frankland, Tony Smith, a feisty Englishman who had become a sheep and cattle farmer, faced the same economic downturn. He says it was "dumb luck" for him to decide to grow grapes, which he sold to Houghton Winery, a large producer in the Swan District that is now part of the Hardy Wine Co.
Smith sold grapes for several years before he started making his own Riesling in 1974 and struggled for another decade before turning a profit. According to Smith, the hurdle was convincing people that winemaking in the Mount Barker area was a viable option. The locals insisted that Mount Barker was apple, not grape, country.
Smith laments, "When I grew grapes successfully, my neighbors said, 'You can't make wine in Mount Barker.' When I did, they responded, 'You can't sell it.' Finally they tasted the wine and remarked, 'Well, maybe you can.' "
Currently, Smith's Plantagenet Wines, known for its stunning Rieslings, produces 120,000 cases annually.
Riesling country
The soil in Mount Barker is ordinary gravelly loam, not the schist or slate that usually nourishes great Riesling. The cooling influences from the Indian and Southern oceans explain the uniqueness of the Riesling grown here.
Unlike the flowery, fruity style from Germany's Mosel River, or the drier, higher-alcohol ones from Alsace, Mount Barker Rieslings are infused with minerality combined with an attractive citrus rind, almost grapefruit-like character, intermingled with flavors of pears and apples. These racy Rieslings are waiting to be discovered by wine drinkers outside of Australia.
Although recession may have jump-started the wine industry in the Great Southern region, newcomers are now diving in because of the success of Alkoomi's and Plantagenet's endeavors. Ferngrove was founded in 2000 and has grown rapidly to become the third-largest producer in Western Australia, but still with only about 250,000 cases annually. Ferngrove has vineyards in Mount Barker -- from which it also makes stellar Riesling -- and Frankland but has expanded outside of the Great Southern and owns vineyards in the Margaret River region, from which it makes great Cabernet and Shiraz.
Despite the same maritime influences, the Margaret River region is very different from the Great Southern. While the Great Southern is largely uninhabited -- there are more kangaroos than cars on the road -- and its wineries are scattered -- the Margaret River is home to many top-notch producers whose picturesque properties are practically side by side. Lange says Margaret River wineries receive 3,000 to 4,000 visitors a week, whereas wineries in the Frankland River area of the Great Southern will have 30 to 40 visitors a week -- "most of whom are lost."
Margaret River's popularity is aided by its location, an easy three-hour drive south from Perth, and by its reputation as a major surfing destination.
Although Olmo's report was the first time a scientific study identified the Margaret River as a place to grow a specific grape variety -- Cabernet Sauvignon -- it was tax shelters that launched the wine industry in this unlikely region, which juts out into the Indian Ocean. It was originally called the "medical belt" because physicians, largely from Perth, founded the wineries, in part for tax reasons. Now with their success, they'll need to find other tax shelters.
The first wineries in Margaret River -- Vasse Felix, Cullen, Moss Wood, Juniper Estate, Leeuwin, Woodland, Xanadu and Cape Mentelle -- shared ideas and equipment as they found their way in this unexplored area. The wineries are still small and the atmosphere among winemakers and owners remains collegial.
Currently there are about 150 wineries in Margaret River, and about 10,000 acres of vines. Compare this with more than 500 wineries and 170,000 acres of vineyards in South Australia, according to Australia's Winebiz.com.
Room to expand
Roger Hill, owner of Juniper Estate, an excellent small producer whose wines are unfortunately not available in the United States, estimates that another 10,000 acres in this 60-mile-long-by-18-mile-wide region could be planted.
Although Margaret River is best known for Cabernet Sauvignon -- it accounts for more than 50 percent of the red vines planted -- and Chardonnay, Horgan thinks most varieties will work well in the area. There's about half as much Shiraz planted as Cabernet because substantial amounts were pulled out or grafted to other varieties in the 1970s. Nonetheless, Margaret River Shiraz is alluring because it has less alcohol and ripeness, which gives it complexity and finesse.
Howard Park Wines, a family company celebrating its 20th anniversary, exemplifies the style of wine coming out of Western Australia, with its focus on the excellent Riesling from the Great Southern and superb Cabernet Sauvignon from Margaret River.
Michael Kerrigan, the winemaker, had what he describes as a personal epiphany: "When I tasted my own wines and didn't like them, I changed the style to ones that are less alcoholic, less oaky, and generally less overt," he says. The obvious implication is that the winemaker adjusts the style to what is appropriate for the region, in this case lighter and less alcoholic wine.
Save Margaret River, few of the regions of Western Australia have name recognition in the United States. Pemberton and Geographe are obscure, even by Western Australian standards. Nonetheless, these areas are poised to put great wines on the world's stage.
Pinot from Pemberton
Pemberton, west of the Great Southern and only about 20 miles from the coast, is cooler than Margaret River and well suited for Pinot Noir.
Geographe -- the name of the area comes from the French, who explored the west coast of Australia even before the English -- is located near the coast between the Margaret River and Perth. The leading winery in the region -- and judging by its wines, one of the best in all of Western Australia -- is Capel Vale, founded by a shy physician, Peter Pratten, who was willing to think outside of the box. Even when he planted his first vines in 1974, Pratten felt there was potential for making great wine outside of the Margaret River and Great Southern. Capel Vale's Merlot and Chardonnay from Geographe indicate he is correct.
The Jug Shop's Hayward says many Bay Area residents who buy Western Australia wines discovered them when visiting there.
"Because they're not big, obvious, in-your-face wines, people who are well-traveled, a little more sophisticated, tend to be into them," Hayward says.
Hayward says that until recently, the Western Australia wines that made it to San Francisco were both obscure and expensive, usually costing $30 to $60, but at least one of those qualities is changing.
"We're starting to see a lot less expensive Western Australia wines now, in the $10 to $20 range," Hayward says. "That's helped the category."
Western Australia will always remain isolated given its location, but with its quirky winemakers willing to try new ideas, its wines will not remain obscure for long.
This is good, thankyou.
IMHO
I suggest you drive to NYC and stay in Hoboken and use the left over change to buy more HRCT. LOL
Port primer
(SFC, 7/6/06, p.F5)
Port has a bewildering array of categories, and it can be tough to sort them out. Here are the basics.
Vintage
The most rare and expensive Port, vintages are "declared" about 18 months after harvest, but only in the best years when the wines show the highest quality and promise extremely long aging. Each house declares a vintage, but they tend to declare in the same years, when harvest conditions are most favorable. Properly stored, vintage Port tends to reach maturity about 20 years from harvest, though it typically lives much longer.
Single quinta
When a house decides not to declare a vintage, it may bottle its best wines as single quinta, or single vineyard, Port, with a vintage year noted on the bottle. Like vintage Ports, these are bottled two years after harvest and are meant to be aged a decade or more in bottle. They are less expensive because they are deemed to be early maturing.
Aged tawny
This Port is made from wines set aside a few months after harvest and aged in small (600-liter) casks called pipes. Through long-term aging -- 10, 20 or more years -- the wines develop an amber "tawny" color and flavors of nuts and dried fruits. These are blends of different years, meant to be drunk within two to three years of bottling.
Colheita
This is an aged tawny from a single vintage. These bottles tend to be rare and expensive.
Late bottled vintage
A relatively new style of Port, developed by Taylor Fladgate in the 1970s. Aged in large vats (instead of the smaller pipes used in aged tawny), LBVs preserve fresh fruit flavors and pair well with chocolate, and are ready to drink upon release.
Ruby
A young Port meant to emphasize fruit flavors, it is not meant for aging.
Tawny
A young Port with some wood influence and brief exposure to air, which gives it a tawny color. It is not for aging.
Other port
Many wineries in California and Australia produce Port-style wines by adding neutral spirits to stop grapes from fermenting before all their sugar converts to alcohol. Other than geographic location, the main difference between these and traditional Port is usually the type of grape used: Zinfandel and Cabernet Sauvignon are popular in California; Shiraz in Australia.
A French court on Tuesday convicted respected wine exporter Georges Duboeuf Wines of fraud after one of its wineries mixed a variety of grapes in its Beaujolais.
The court in Villefranche-sur-Saone in southeast France fined the vintner 30,000 euros ($38,370) — well below the 150,000 euros ($192,000) the prosecutor had requested.
While the small quantity of impure Beaujolais wine never made it to market, prosecutors were pushing for big fines to ensure that such practices don't spread in the struggling French wine industry.
The court also sentenced Sylvain Dory, former production director for Duboeuf's Lancie winery, to a three-month suspended sentence and fined him 3,000 euros ($3,800) in the case. Prosecutors had demanded 40,000 euros ($51,100) in fines and a six-month suspended sentence.
Duboeuf and Dory were convicted of fraud and attempted fraud for mixing a variety of grapes in 2,050 hectoliters (54,150 gallons) of wine, thereby violating rules for "appellation" wines that carry France's AOC seal. The seal guarantees that the wine was made from grapes of a specific region.
Company founder Georges Duboeuf, who testified in the trial but was not present for the verdict, denied any wrongdoing.
In a statement afterward, the company said it "formally contests" the conviction and might lodge an appeal.
Defense lawyers had argued that the charges should be dropped.
Dory, too, denied intentional wrongdoing but said he was very busy during the period in question and indicated any blending could have been an oversight. Dory's lawyer said he, too, might appeal.
An inspection in 2005 by the state consumer protection agency revealed that Beaujolais at Duboeuf's Lancie site had been combined with other grapes.
Prosecutor Francis Battut said he wanted tough fines to warn vintners against corrupting their wine with other, likely inferior, grapes and to signal they could have consequences for the wine-dependent region and for consumers.
In addition to the fines, Dory and Duboeuf were ordered to jointly pay 2,000 euros ($2,560) in damages to the UFC-Que Choisir consumer advocate group and one symbolic euro ($1.27) in damages to INAO, the body that sets yearly limits on each region's wine production. Both had filed civil suits in the case.
The Georges Duboeuf business produces 25 million bottles a year, and is responsible for 20 percent of all Beaujolais production. It exports 75 percent of its wine, primarily to the United States.
Duboeuf is known for its Beaujolais Nouveau, a light and fruity wine traditionally available on the third Thursday of November and only drinkable for a short period.
Rule #2: Never use one basket for all your eggs.