One country, two systems - the much-praised formula under which Hong Kong is governed as a Chinese special administrative region - has landed executives at ArcelorMittal, the world's largest steel company, in an interesting predicament.

Earlier this year, as it acquired a 28 per cent stake in China Oriental, a small Chinese steelmaker, ArcelorMittal was also engaged in delicate negotiations with the company's controlling shareholder, Han Jingyuan, to buy out his 45 per cent interest.

China Oriental may be a private enterprise registered in Bermuda and listed in Hong Kong, but foreign ownership of Chinese steel assets is still a sensitive matter. ArcelorMittal was, therefore, careful to emphasise that its deal with Mr Han was subject to Chinese government antitrust clearance.

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Enter then Hong Kong's regulator, the Securities and Futures Commission.

The SFC was concerned that ArcelorMittal had been acting in concert with Mr Han for months and was, therefore, obliged to make a general offer for minorities' 27 per cent interest in China Oriental.

It referred the matter to the territory's seldom-convened Takeovers Panel, which could not care less about ArcelorMittal's delicate regulatory dance north of the border, and duly forced the company to make an unconditional general offer to China Oriental's Hong Kong minorities.

So while awaiting Chinese government approval to take a controlling 73 per cent interest in China Oriental, ArcelorMittal is also proceeding with another deal that would give it an equally controlling 55 per cent of the company. No word back yet from China's regulators, who have a month to rule.

Rexam thriller

Leslie Van sometimes takes with him on his travels a James Bond-style attach� case with a foam interior, moulded to accommodate his weapons. In place of 007's Walther PPK and accessories, the chief executive of Rexam packs an array of the company's products - high-tech perfume, cosmetic and beverage dispensers that Q himself would be happy to have designed.

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Judging from yesterday's trading update, however, there is no silver bullet to take out Rexam's traditional foes: all year, the falling dollar, rising energy costs and increasing commodity prices have been sniping at the company's bottom line.

But these pressures, surely, were already built into the share price. The stock had fallen 14 per cent between the start of October and Wednesday's close. Why would it tumble a further 16 per cent yesterday on what looked at first glance like minor adjustments to the outlook? Blame the gloomy mood of the market - ready to punish even comparatively small amendments to expectations. Most analysts had already discounted a difficult 2007, but they may not have expected 2008 to open under the shadow of higher freight and raw material costs, however well-hedged.

As a company, Rexam continues to pour on capital expenditure - �300m ($612m) this year, and the same amount next. As a board, directors showed their confidence yesterday by buying the shares at their knockdown price/earnings ratio of between 11 and 12 times forecast earnings for 2008. The shares ought to be attractive to other investors but, for the moment, it looks as though Mr Van de Walle's gadgetry and his directors' enthusiasm are providing only scant encouragement.

Nespresso, what else?

George Clooney - the Hollywood actor who has been endorsing in Europe Nestl�'s fastest-growing brand, Nespresso - did not show up at this week's grand opening in Paris of the Swiss multinational's lavish new coffee shop on the Champs-Elys�es. But Sharon Stone turned up instead to ensure maximum publicity for what, after all, has become Nestl�'s biggest marketing success story in recent years.

Sales of Nespresso coffee machines and capsules have been growing during the past six years by an average of 30 per cent a year. Last year, they increased by 42 per cent to SFr1.16bn and are expected to hit the SFr2bn mark by 2009. The Swiss food group is planning a massive expansion of Nespresso boutiques round the world, targeting luxury shopping streets such as Rodeo Drive in Beverly Hills.

The idea is to turn Nespresso into a luxury brand that can sit alongside a Louis Vuitton or Harry Winston store. Nestl�'s star brand risks facing the same dilemma as a pharmaceutical group's blockbuster drug. The Swiss company will lose the patent on its precious Nespresso coffee capsules in 2012. By then, it hopes to have developed such a cult for its coffee and boutiques that the patent expiry will make little difference to its continued success as a luxury brand. "What else?" as Mr Clooney would say.

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