Archive for the ‘Globalization & International Trade’ Category

21
Jan

By STEVEN RATTNER

As recently as 2006, when I first visited India and China, the economic race was on, with heavy bets being placed on which one would win the developing world sweepstakes.

Many Westerners fervently hoped that a democratic country would triumph economically over an autocratic regime.

Now the contest is emphatically over. China has lunged into the 21st century, while India is still lurching toward it.

That’s evident not just in columns of dry statistics but in the rhythm and sensibility of each country. While China often seems to eradicate its past as it single-mindedly constructs its future, India nibbles more judiciously at its complex history.

Visits to crowded Indian urban centers unleash sensory assaults: colorful dress and lilting chatter provide a backdrop to every manner of commerce, from small shops to peddlers to beggars. That makes for engaging tourism, but not the fastest economic development. In contrast to China’s full-throated, monochromatic embrace of large-scale manufacturing, India more closely resembles a nation of shopkeepers.

To be sure, India has achieved enviable success in business services, like the glistening call centers in Bangalore and elsewhere. But in the global jousting for manufacturing jobs, India does not get its share.

Now, after years of rocketing growth, China’s gross domestic product per capita of $9,146 is more than twice India’s. And its economy grew by 7.7 percent in 2012, while India expanded at a (hardly shabby) 5.3 percent rate. Read more…

Steven Rattner, a long-time Wall Street financier, led the restructuring of the auto industry in 2009 as counselor to the Treasury secretary under the Obama administration.

As published in www.nytimes.com on January 19, 2013 (a version of this article appeared in print on 01/20/2013, on page SR12 of the NewYork edition with the headline: India Is Losing The Race).

16
Jan

By Jeongwen Chiang

Apple staff welcoming customers in the new Apple store at WangFujin business district in Beijing on October 20, 2012

Apple CEO Tim Cook expects China, the world’s most populous country, to become the No. 1 market for the company.

Equally heavyweight tech companies Google or Facebook can only watch with envy. It is not because of lack of effort that they are nowhere near the success of Apple in China. Their businesses are just too different.

The Chinese government’s tight control on freedom of information flow applies especially to the Internet. Web access is filtered on a regular basis. Social media websites such as Facebook and Twitter are blocked because the government deems them as potential hot spots for facilitating politically sensitive or socially inappropriate content.

Meanwhile, Google is operational in China but has to route all searches to its Hong Kong site, and the access is often interrupted. So, it is fair to say that the Chinese government is the reason why companies such as Google and Facebook are not doing well in China.

In contrast, Apple mainly sells hardware, so it has not run into any censorship problems.

Chinese consumers love electronic gadgets. Mobile phones are ubiquitous. Apple is doing incredibly well because its products are so much more attractive and pricy. The iPhone quickly become a status symbol product in Chinese social circles since its debut. Likewise, the iPad also joined the must-have list as soon as it was launched.

If someone wants to lubricate his “guanxi” — relationship — with an important person, these two products are often the gift of choice. Before the iPad reached China, a businessman in Shanghai told me that in the back of his car trunk, he had stocked at least 20 iPads, all bought in Hong Kong. “It is the most-loved present for government officials,” he claimed.

The social pressure of having an Apple product is strong, especially as the wealthy elites set the trend. If a middle class Chinese consumer cannot afford an expensive car or watch, sporting an iPhone may be just as good. Even the bad press surrounding Foxconn, the main manufacturer of Apple products, did not make too much of a dent on the company’s sales. Read more…

Jeongwen Chiang is professor of marketing and chair of the department of marketing at China Europe International Business School.

As published in www.cnn.com on January 15, 2013.

14
Jan

Japan, Israel and Britain are facing big problems of their own just as the U.S. needs their help.

By Ian Bremmer

There are three big unfolding stories for international politics and the global economy: The next stage of China’s rise, the continuing turmoil in the Middle East and the redesign of Europe. The three countries with the most to lose from these trends are, respectively, Japan, Israel and Britain. They also happen to be America’s most reliable allies in the world’s three most important regions. As 2013 unfolds, the special relationships that these countries enjoy with Washington won’t protect them from the worst effects of these sweeping changes. That is also bad news for U.S. foreign policy.

The further expansion of China’s political, economic and military power leaves Japan in an increasingly tough spot. The broadening and deepening of China’s consumer market creates critical opportunities for Japanese companies, but Beijing’s new assertiveness, particularly on territorial disputes involving Japan, is fueling nationalist anger inside both countries. The risk isn’t that the two countries will exchange fire but that emerging frictions will undermine the exchange of everything else, reversing the momentum in a commercial relationship that has become especially important for the buoyancy of Japan’s economy.

In September, the battle over a string of contested islands in the East China Sea rattled Japan’s economy. A move by Tokyo to assert ownership of the Senkaku-Diaoyu islands ignited anti-Japanese fury inside China, and Beijing let protests burn longer and hotter than usual. In the process, Chinese protesters destroyed Japanese stores and products in several cities and launched boycotts of Japanese companies. That month, Toyota and Honda’s year-on-year sales in China were down, respectively, 49% and 41%.

Japanese policy makers know they must hedge bets on trade with China by bolstering ties elsewhere in Asia. But Japan remains dangerously exposed over the long term to its dependence for growth on Chinese markets. New Prime Minister Shinzo Abe wants to expand U.S.-Japanese security ties, and Washington can help defend Japan’s interests in the East China Sea. But it can’t protect Japanese companies doing business in China from the fallout over growing frictions in Chinese-Japanese relations—and that is the greatest immediate threat to Japan’s future. Read more…

Ian Bremmer is the president of Eurasia Group, a research and consulting firm on global political risk.

As published by The Wall Street Journal on January 11, 2013 (a version of this article appeared January 12, 2013, on page C2 in the U.S. edition of The Wall Street Journal, with the headline: Three Troubled Allies, One Superpower).

10
Jan

Mammon’s new monarchs

Written on January 10, 2013 by Ángeles Figueroa-Alcorta in Asia, Culture & Society, Foreign Policy, Globalization & International Trade

The emerging-world consumer is king

Intelligence agencies seldom take a sunny view of the world. Yet the latest report from America’s National Intelligence Council (“Global Trends 2030: Alternative Worlds”) is rather cheerful. The council frets about threats ranging from cyber-sabotage to nuclear holocaust (in a brilliant piece of understatement it warns that “Russia could become a very troublesome country”). But it argues that the most important trend in the coming decades will be the growth of the global middle class.

Britain, where the industrial revolution began, took 150 years to double its income per head. America took 30. China and India have pulled off the same feat in a fraction of the time and on a larger scale. The result is an explosion in the number of people who can afford middle-class luxuries, such as a nice home and a good start for their children.

The council is not alone in thinking that, despite the threat of bubbles and hard landings, the new middle class is the future. The Boston Consulting Group (BCG) predicts that there will be nearly a billion middle-class Chinese and Indians—some 320m households—by 2020. McKinsey & Co, another consultancy, points out that consumption tends to follow an “S” curve. When people’s income hits a certain point, demand for consumer goods surges. It later levels off: a family’s first fridge is a colossal blessing, but two would make the kitchen seem crowded.

Western companies ask: how can we appeal to the new kings and queens of consumerism? And how can we compete with sharp-elbowed rivals from the emerging world? Dozens of books and articles have tried to grapple with these questions. Two stand out: “The $10 Trillion Prize” by Michael Silverstein and three colleagues at BCG and “What Chinese Want” by Tom Doctoroff, of J. Walter Thompson, a marketing company. Read more…

As published in www.economist.com on January 5, 2013.

9
Jan

The New Power Map

Written on January 9, 2013 by Ángeles Figueroa-Alcorta in Energy & Environment, Foreign Policy, Globalization & International Trade

World Politics After the Boom in Unconventional Energy

By Aviezer Tucker

Dmitri Medvedev wishes “Good Luck!” to the Nord Stream pipeline. (Alexander Demianchuk / Courtesy Reuters)

The energy map of the world is being redrawn — and the global geopolitical order is adrift in consequence. We are moving away from a world dominated by a few energy mega-suppliers, such as Russia, Saudi Arabia, and Venezuela, and toward one in which most countries have some domestic resources to meet their energy needs and can import the balance from suppliers in their own neighborhood. This new world will feature considerably lower energy prices, and in turn, geopolitics will hinge less on oil and gas. Within the next five to ten years, regimes that are dependent on energy exports will see their power diminished. No longer able to raise massive sums from energy sales to distribute patronage and project power abroad, they will have to tax their citizens.

The revolution in unconventional energy production results from technologies that make drilling and extraction from underground shale formations increasingly easy and cheap. One cutting-edge procedure, hydraulic fracturing, involves injecting a mixture of sand, chemicals, and either water, gel, or liquefied greenhouse gases into shale rock formations to extract hydrocarbons. Although the technique was first conceptualized in 1948, only recently have other technologies arrived to make it commercially viable. (One such procedure, horizontal drilling, allows operators to tap into shallow but broad deposits with remarkable precision.)

Hydraulic fracturing has been used widely for only about the past five years. But the result — a staggering glut of natural gas in the United States — is already clear. The price of natural gas in the country has plunged to a quarter of what it was in 2008. The low price has prompted changes throughout the U.S. economy, including the projected retirement of one-sixth of U.S. coal power generation capacity by 2020, the conversion of hundreds of thousands of vehicles from gasoline to compressed gas, and the construction and repatriation from China of chemical, plastic, and fertilizer factories that use natural gas as both raw material and fuel. By 2025, the professional services firm PricewaterhouseCoopers predicts, energy-intensive industries will create a million new U.S. jobs. Read more…

Aviezer Tucker is Assistant Director of the Energy Institute at the University of Texas at Austin.

As published in www.foreignaffairs.com on January 9, 2013.

 

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