Warren Buffett bets on Asia for expanding reinsurance, ice cream businesses

NEW YORK: Warren Buffett, the billionaire chairman of Berkshire Hathaway, said he’s pursuing more opportunities in Asia after boosting reinsurance sales and expanding the Iscar Metalworking Cos. unit on the continent.

“Korea, Japan and you name it,” Buffett, 81, said May 5 at Omaha, Nebraska-based Berkshire’s annual meeting.
Buffett visited South Korea, Japan and India last year, and China in 2010. Berkshire owned almost 4 million shares of South Korean steelmaker Posco and a stake in Chinese carmaker BYD as of Dec. 31, according to regulatory filings.
Japan, rebounding from a March 2011 earthquake and tsunami, and Thailand, which suffered record floods last year, are among countries where Berkshire has increased sales.
The reinsurance unit has done “far more business in Asia” in recent months that it did a few years ago, he said at the meeting. Berkshire’s International Dairy Queen ice-cream unit, led by CEO John Gainor, recently opened its 500th store in China, where the Green Tea Blizzard dessert is the No. 1 seller.
The subsidiary has more than 270 outlets in Thailand and expanded into Singapore last year. China “is far and away our fastest-growing market,” Gainor said yesterday in an interview for Bloomberg Television’s “In the Loop” program with Betty Liu.
Asia, a region with the world’s two-fastest-growing major economies, has become a focus for Berkshire as subsidiaries seek new markets. China’s gross domestic product expanded by 9.2% last year and India’s by 7.1% as US GDP growth slowed to 1.7% from 3% a year earlier, according to data compiled by Bloomberg.
“China’s got some huge companies,” Buffett said. “They may eclipse in market value some of the ones such as Coca-Cola that we’re talking about.” Berkshire is Atlanta-based Coca-Cola Co. (KO)’s biggest owner, with 200 million shares on December 31, a stake of almost 9% that was valued at $15.4 billion at the end of last week.
A shareholder at the meeting asked Buffett and Berkshire vice chairman Charles Munger what advice they might give China’s political and business leaders. “We’re not spending much time giving advice,” Munger said. “China’s been doing very well from a tough start.
In some ways we should seek advice,” he said. Demand for electric cars such as those produced by Shenzhen-based BYD will grow and the automaker’s products will take market share in the US, Munger said. “The car market in China is a huge market,” he said. “I think the first cars they start to bring here will be fleets to California.”
Berkshire announced its entry into India’s insurance market last year by selling motor coverage after striking a deal with Pune-based Bajaj Allianz General Insurance. The company is expanding in Europe, too.
CTB, the farm-products firm that Buffett bought in 2002, agreed to acquire Oostzaan, Netherlands-based Meyn Holding to expand into neck breakers and eviscerators for chickens.
Buffett, who’s also Berkshire’s chief executive officer, visited Japan in November to tour a factory run by Iscar’s Tungaloy unit, which makes tools for the automobile and aviation industries. He had canceled a trip in March 2011 after the earthquake and tsunami triggered a nuclear meltdown.
Buffett said the event created a “buying opportunity” for investors because it wouldn’t change the country’s economic future even as it would take time to rebuild.
Buffett paid $4 billion in 2006 for an 80%stake in Tefen, Israel-based Iscar, which also has invested in TaeguTec, a cutting-tools maker based in Daegu, South Korea.