Here’s Why Procter & Gamble is Dissing the U.S.

[WallyWeaver]

Here’s Why Procter & Gamble is Dissing the U.S.

By Eric McWhinnie

May 11, 2012

In 2007, legendary commodity investor Jim Rogers moved to Singapore. He saw great opportunities in the region and decided to take action. In an interview with MoneyWeek, he explained, “Asia is extremely exciting. It’s like moving to London in 1805 or New York in 1905. The future is Asia.” Apparently, Procter & Gamble Co. (NYSE:PG) feels the same way.

On Thursday, the consumer products giant announced it is relocating its global skin, cosmetics and personal-care unit from its Cincinnati headquarters to Singapore. The move will take around two years and see about 20 employees move to the new location. However, not everyone will be making the move. Virginia Drosos, the president for the global skin care unit, decided to retire rather than move her family overseas. “She has aspirations to lead another company but right now she’s going to be very focused on transitioning these businesses to their new leader,” a spokesperson for P&G said.

Why did P&G decide to relocate across the globe? One reason is that the Asian beauty market is growing quickly and the company wants to be closer to its customer base. According to the Euromonitor, the Asia-Pacific region accounts for nearly half of the world’s $96 billion market for skin care. In 2011, the region grew almost $5 billion to account for $42.3 billion, compared to $37.6 billion in 2010.

In addition to fueling future beauty sales, the move to Singapore is also likely to bring tax benefits to P&G. While the headline corporate tax rate in the United States is 35 percent, it is only 17 percent in Singapore, down from 25.5 percent in 2001. Bob McDonald, P&G’s President and Chief Executive Officer, has been active in the past in regards to lowering America’s corporate tax rate. In March, he participated in a meeting with a dozen other CEOs in order to push for a headline corporate tax rate of 25 percent. However, through corporate tax loopholes, P&G reported a tax rate of about 22 percent last year. For the annual period ending Jun 29, 2011, the company posted nearly $15.2 billion of income before taxes, but reported $3.4 billion in tax expenses. Even with the loopholes, P&G still looks poised to reduce its tax burden in Singapore.

Shares of P&G climbed nearly 1 percent higher on Thursday. It was one of the best performers in the Dow Jones Industrial Average, behind Pfizer Inc. (NYSE:PFE), Chevron Corp. (NYSE:CVX) and Coca-Cola Co. (NYSE:KO). However, shares have fallen 3.85 percent year-to-date. For the most recent quarter, P&G reported earnings of $2.41 billion, representing a 16.1 percent decrease from a year earlier. The financial results also prompted a downgrade from Wells Fargo & Co. (NYSE:WFC) analyst Timothy Condor, citing falling operating margins. Earlier this week, Warren Buffett (NYSE:BRKA) was asked about his position in P&G and admitted to still being a long-term holder of the stock, but would not answer if he might consider selling shares.

Link: http://wallstcheatsh...g-the-u-s.html/

[lenoree]

I saw that when i was watching cnbc other day and was disappointed but not surprised. my niece worked for P&G for the Olay line which has become huge and she had to go to China a few times a year and knew that eventually she would have to move there but found a diff job instead..this has been in the works for about 10years..and it will take away a lot of jobs in the production of Olay products..i don't care what management says..it is always about profit/money and the USA which gave P&G it's original opportunity will suffer..that company is so wealthy it could easily stay put but of course will not..just like GE and many more..I am tempted to remove it from my portfolio but will not because it's a pretty good stock to hold..haha..so i am no better than they are.

[WallyWeaver]

I saw that when i was watching cnbc other day and was disappointed but not surprised. my niece worked for P&G for the Olay line which has become huge and she had to go to China a few times a year and knew that eventually she would have to move there but found a diff job instead..this has been in the works for about 10years..and it will take away a lot of jobs in the production of Olay products..i don't care what management says..it is always about profit/money and the USA which gave P&G it's original opportunity will suffer..that company is so wealthy it could easily stay put but of course will not..just like GE and many more..I am tempted to remove it from my portfolio but will not because it's a pretty good stock to hold..haha..so i am no better than they are.

Yup, the bottom line, lenoree, is PG is in it for the money, period. But isn't that what running a business is all about: the bottom line? Once a company ceases to make profits or sees profits declining can anyone really blame them for doing everything they can to at least maintain those profits? If that means moving to a different country than that's what that means.

I posted 2 articles today with the same theme: if the US wants to keep wealthy individuals and successful companies here it better start working towards creating a more business friendly environment (ie. lower taxes and much, much less regulation).

This is even a common theme here on DV. I mean, the whole point of joining VIP and OSI is, in the result of a generous rate of exchange for the IQD, to try to keep as much of the profit as possible while giving the US government as little as possible.

I would say, rather than being upset with PG, or James Cameron (Titanic, Avatar, etc., moving to New Zealand), or Jim Rogers, etc. we should be looking at why they are leaving and try to create conditions that will encourage the wealthy and successful to stay.

Oh, and by the way, as an investor yourself I'm sure you are aware that starting in Jan. of 2013 the capital gains tax rate is going from 15% to about 25%. I cannot hardly wait to start paying the higher rate, myself, because I am so confident that the Federal government will spend it in a fiscally disciplined and responsible manner....... right.

Thank you for your input and successful investing to you.

WW.

[20MillionDinar]

WW,

You nailed it with this one sentence: If the US wants to keep wealthy individuals and successful companies here it better start working towards creating a more business friendly environment (ie. lower taxes and much, much less regulation).

It is only common sense. Businesses are in the business of making money. Countries with more business friendly environments and better tax rates will benefit the most. Just wish the politicians understood a little more about business.

They only know how to spend, on top of that, they spend money that isn't even theirs! I wish I could do that...

If I am running an investment business online I could choose to do business in the USA or let's say Panama.

USA - 35% - 50% Taxes

Panama - 0% Taxes

So if I make $100k in one year in the USA I only get to keep about $50k or so

If I make $100k in one year in Panama, I keep $100k

The US government gets a pretty sweet deal. Every person working in the USA pays them 35% or so of all of their earnings. This is why Businesses should be taken care of, they create jobs, which create employees, which end up being "partners" with the government via taxes. If the government doesn't take care of the businesses, then the businesses will leave, which will end up taking away employees that pay the government taxes! It really isn't that difficult to understand, not sure why all of these politicians can't understand the concept.

[20MillionDinar]

Due to the fact that the only source of the US governments income is TAXES, they better start taking care of the ones who create their taxpayers aka BUSINESSES!

Thanks WW for posting this. I think this is BIG news as Procter & Gamble is the 4th largest corporation in the world! I wonder who's going to leave the USA next...