In Gurgaon, India, Dynamism Meets Dysfunction

Although India is considered to be as economically promising as China, and its population is predicted to surpass China's in coming years, the two countries share little in common.  While both have embraced capitalism, the role of government in fostering economic prosperity is widely disparate.  In China, a strong central government has invested billions in infrastructure to permit companies to prosper and goods to move freely.  In India, however, a weak government means that businesses there prosper in spite of, not because of, the government.  One example is the city of Gurgaon, near New Delhi.  Gurgaon is a booming city filled with malls and businesses, but it lacks basic city infrastructure such as a functioning sewer system, reliable electricity or water, public sidewalks, parking, decent roads, or any system of public transportation.  Companies that operate in Gurgaon therefore provide these services to their workers, as this excellent and eye-opening article in the New York Times explains.

In Gurgaon, India, Dynamism Meets Dysfunction - NYTimes.com

Chesapeake Bay Candle Struggles to Open U.S. Factory

Chesapeake Bay Candle is a major player in the multibillion dollar scented candle industry.  In spite of its name, all its candles are made in Vietnam and China.  Recently, due to increasing wages in those countries and high shipping costs, the company decided the time was right to start making candles in the U.S.  What the company did not account for was how much more expensive it is to build a factory in the U.S., with many laws and codes to comply with.  The factory is now over budget and delayed, and the founders are wondering whether the U.S. is ready to compete with Asia for manufacturing business.

Chesapeake Bay Candle Struggles to Open U.S. Factory

Skin-Deep Gains for Amazon Tribe

The plant on the left is urukum, which is used to make a pigment dye for Uruku lipstick, made by Aveda on the right.  Aveda, a unit of Estee Lauder, buys Urukum from the Yawanawa Indian tribe in Western Brazil, where they have used urukum to make body paint for a long time.  Aveda joins a long list of companies, including Starbucks, Ben & Jerry's, Whole Foods, and The Body Shop, which uses cause-related marketing to convince consumers that their product are eco-friendly and can lead to sustainable community living as well.  The Yawanawa, however, don't make enough money selling the dye to Aveda to support themselves.  The project has become simple philanthropy for Aveda, not the sustainable business model it had hoped for.


Skin-Deep Gains for Amazon Tribe - WSJ.com

GE Remodels Businesses in India

Like many multinational companies, GE has struggled with India.  High levels of bureaucracy, corruption, and differing consumer needs and tastes made commercial success difficult in the wide array of industries GE competes in, from locomotives to jet engines to medical equipment.  Now, the company is starting to see results from a turnaround that started with a realignment of the business.  The company started by creating a separate P&L for all of India, something the company rarely does at the country level.  Then, it focused not just on marketing and sales, but also on research and development for low-cost products for India as well as other developing countries.  The company sells a baby warmer, for example, for $3000 to hospitals throughout India and other parts of the world, while incubators in the U.S. sell for four times that price.

GE Remodels Businesses in India - WSJ.com

Internet Start-Ups Cater to India's Affluent

Although India is home to many internet-based or IT companies, there's surprisingly little e-commerce happening within the country.  That's beginning to change, as more companies try to become India's next Amazon or Groupon, as this WSJ article explains.

Internet Start-Ups Cater to India's Affluent - WSJ.com

Finding Top Talent in China, India, Brazil

In rapidly growing countries such as Brazil, China and India, tapping expatriates is becoming obsolete. Instead, global businesses are looking for leaders who have the ability to move easily between different cultures and have deep local roots as well as international operational experience. This talent pool is very small, and they command salary premiums as a result.

Finding Top Talent in China, India, Brazil - WSJ.com

China's Crackdown Signals Shift

The artist who designed the Bird's Nest stadium for the 2008 Olympics (and then boycotted the opening ceremony), and more recently installed an incredible piece of art at the Tate Modern in London involving hundreds of thousands of hand-painted porcelain seeds, has been arrested by Chinese authorities and is missing.  The crackdown on dissidents signals a shift towards more repression as the government tries to maintain social stability in China.


China's Crackdown Signals Shift - WSJ.com

How to Get a Real Education at College

Here's a wonderful essay from Scott Adams, Dilbert's creator, on why entrepreneurship education is so important, and why business school generally is more valuable than say... art history.  If the link takes you to a firewalled site, type in the article title into news.google.com and follow the link from there.


How to Get a Real Education at College - WSJ.com

Yep, it's Spring in Dayton

Taken at 7 AM this morning, University of Dayton RecPlex.

Disney to Open Park in Shanghai

It will be "authentically Disney but uniquely Chinese." That is how company officials are describing Shanghai Disneyland, which broke ground today and is expected to open in 2015.  The $4.4 billion theme park is a huge gamble for Disney into the huge Chinese market.  With 330 million people within a 3 hour drive of the site, Disney hopes it can capture hearts and pocketbooks of generations of Chinese consumers.  Disney only owns 43% of the company owning Shanghai Disneyland, with the balance owned by a consortium of state-owned companies, but will own 70% of the company that manages the park.  After a bad start in Hong Kong (Chinese consumers take 40 minutes to eat meals, as opposed to 20 minutes for Americans, leading to crowded restaurants), the company hopes to apply its lessons in cultural sensitivity into building a brand and business in China.

Disney to Open Park in Shanghai - NYTimes.com

CHART OF THE DAY: Reminder, The Deficit You're Freaking Out About Is Bush's Fault

As we head for a possible government shutdown, I wondered why the budget deficit was so high and why the government is in so much debt. Then I found this explanation. Just saying.

CHART OF THE DAY: Reminder, The Deficit You're Freaking Out About Is Bush's Fault

Auto Industry's Castoffs Benefit From New Owners

Just as Ford is finishing up its sale of Jaguar and Land Rover to the Indian firm Tata, the brands are experiencing a renaissance in sales. JLR posted profit of $443 million in the most recent quarter, something it rarely achieved while under Ford ownership.  It is now exploring building cars in China, something Volvo, another former Ford brand, is also exploring.

Auto Industry's Castoffs Benefit From New Owners - WSJ.com

India Graduates Millions, but Too Few Are Fit to Hire

In spite of the fact that there are thousands of new college graduates in India, very few of them are landing employment. The reason is that they lack the skills companies are looking for. Many cannot communicate effectively in English, and and many lack basics such as reading comprehension. A lack of investment in educational systems, pervasive passing grades, corrupt teachers open to bribes, and a focus on rote memorization are taking their toll on the quality of India's college graduates.

India Graduates Millions, but Too Few Are Fit to Hire - WSJ.com

Groupon's Big China Gamble

 
On Monday, Groupon launched its operations in China, the world's largest Internet market.  In doing so, the company faces daunting challenges such as intense competition, price pressures on the Groupon business model, and a fractured market.  Groupon hopes to overcome some of these challenges by capitalizing on the business knowledge and relationship network of its local Chinese partner, one of China's largest internet companies.

Groupon's Big China Gamble - WSJ.com

Hong Kong’s Couples Invited to Wed at McDonald’s

In 2006, Hong Kong changed its marriage law to permit for weddings to be held outside places of worship or City Hall.  Since then, weddings have taken place on boats, in underwater theme parks, and shopping malls.  The latest company to cash in on this trend is... McDonald's.  A McWedding starts at $1280, which includes food and drink for 50 people, a "cake" made of stacked Apple Pies, gifts for the guests, and invitation cards with photos of the couple.  McDonald's employees dress in black suits, greet guests, and deliver Big Macs and fries with the proper pomp.  There is no alcohol -- toasts are accomplished with sundaes or shakes.

Hong Kong’s Couples Invited to Wed at McDonald’s - NYTimes.com

Foreign Investment Ebbs in India, and Questions Begin

Although India's economy is growing at a healthy 9 percent per year, and a growing middle class is consuming goods at historic levels, foreign direct investment (FDI) into India shrank by 31 percent in 2010, according to the United Nations.  The decline highlights the challenges foreign companies face when trying to operate in India, where extremely restrictive laws, inefficient bureaucracy, and corruption are starting to scare away investors.

Foreign Investment Ebbs in India, and Questions Begin - NYTimes.com

Russia's WTO Membership Faces Rocky Road

Russia remains the only major world economy that is not a member of the World Trade Organization (WTO).  In large part, this is because Russia's major export, oil, is already tariff free around the world, so Russia hasn't felt the pressure to join the WTO in order to obtain market access for its companies.  However, foreign investors are increasingly putting pressure on Moscow to enter the global group.  Entry is supposed to happen in 2011, but it won't be easy.  Russia still has steep tariffs, high levels of corruption, and customs controversies over goods valuations that will cause Russia many more transition problems than China, which entered the WTO in 2000.


Russia's WTO Membership Faces Rocky Road - WSJ.com

Dollar's Fall Rocks Far-Flung Families

The U.S. dollar is struggling.  Against all major world currencies, a dollar buys less currency today than it used to.  Within the U.S., this makes imports more expensive but also helps the export competitiveness of U.S. companies by making U.S.-produced goods cheaper overseas.  Outside the U.S., however, the dollar's fall is having dire consequences for many economies that rely on the exchange rate.  One such economy is the Philippines, where the exchange rate has strengthened the Philippine peso 15% against the dollar in the last year.  Over 10% of the Philippines GDP is made of remittances, where Overseas Filipino Workers (OFW) send money back to the Philippines.  These workers typically earn U.S. dollars, which means their remittances are now worth less in the Philippines.  This had led some in the Philippines to argue that the time has come to stop depending on these remittances and to start creating job opportunities at home.

Dollar's Fall Rocks Far-Flung Families - WSJ.com

Alabama Sock Town Suffers as Cotton Soars

Fort Payne, Alabama, calls itself the "sock capital of the world."  Ten years later, about one in eight pairs of socks came from Fort Payne.  Sock manufacturing is largely automated, so labor is not a huge component of the cost.  The closing of the sock's toe, however, is still done by hand so any cost advantage becomes important when multiplied over high volume.  A few years Ft. Payne fought to re-instate a sock tariff to protect itself from cheaper laborers in South America, but today, more mills are still closing in Ft. Payne.  The culprit this time is the high cost of cotton, up to $2.40 per pound, double last year's price.  Only 10 mills remain in Fort Payne, and while some are focusing on higher end (and profit) product like organic socks, the industry is once again in deep trouble.

Alabama Sock Town Suffers as Cotton Soars - WSJ.com

Huawei waits for White House review before selling unit

It was the deal that almost slipped under the radar screen -- in May, Chinese telecom equipment maker Huawei purchased U.S. startup 3Leaf Systems for $2 million, a tiny deal in the world of M&A.  3Leaf creates technology that allows groups of computers to work together like a more powerful machine.  When the Pentagon found out about the deal, however, it asked the company to file for a review with the Committee on Foreign Investment in the United States (CFIUS), an interagency committee that reviews FDI into the U.S. that may pose a national security risk.  Now, CFIUS has recommended Huawei unwind the deal and divest 3Leaf, something Huawei doesn't want to do.  The company has appealed to President Obama for a final decision.

BBC News - Huawei waits for White House review before selling unit

Groupon in Japan Faces Growing Pains

Groupon isn't just a hit in the U.S. -- it's rapidly expanding overseas as well, with 50 million subscribers in 35 countries.   Part of its expansion strategy, however, is to acquire local startups rather than compete with them, which has led to some growing pains for Groupon.  Most recently, a nationwide deal in Japan went bad, forcing Groupon founder Andrew Mason to post an online apology to Japanese customers (above).  The two-year-old company now pulls in more than $1 billion in revenue, and the business model of offering huge discounts to popular goods and services looks set to flourish in international markets.  Apparently a good deal transcends all cultural barriers.

Groupon in Japan Faces Growing Pains - NYTimes.com: "- Sent using Google Toolbar"

Rising China Bests a Shrinking Japan

It's official -- China is now the world's second largest economy, displacing Japan from a position it's held since 1967. At the same time, it's still one of the world's poorest economies, with over 100 million citizens living on less than $2 a day. This dichotomy is explored in today's WSJ article, as well as the video above.

Rising China Bests a Shrinking Japan - WSJ.com

WTO finds Boeing got billions in illegal subsidies, but how many billions?

While most are familiar with the bruising battle between Airbus and Boeing for market share as the only two competitors left in the large passenger jet market, with new competitors from Canada, Brazil, and China in the small passenger market nipping at their heels, it is the legal battle at the WTO between the two giants that is drawing the most blood.  Boeing and Airbus have been tied up in WTO litigation for years, each accusing the other of receiving various forms of subsidies from governments, all of which are illegal under WTO rules.  Boeing won a key victory last year when the WTO ruled Airbus did receive illegal aid, but this week the WTO signaled it would be handing Airbus a victory as well.  There are still major disagreements over which side received more subsidies, and over what to do next.

WTO finds Boeing got billions in illegal subsidies, but how many billions?

Auto Maker Nissan to 'Significantly' Reduce Exports From Japan

At Nissan, a move in the value of the dollar versus the yen by one yen in either direction is worth around 18 billion yen, or $219 million, of Nissan's operating profit on an annualized basis.  That's why the carmaker announced recently plans to dramatically reduce the number of exports from Japan and production increases in plants outside Japan.  Nissan joins Toyota and Honda, as all Japanese automakers have said it is difficult to export cars from Japan profitably when the Yen falls below 90 to the dollar (it is currently at 82).  Production of the Micra (above) will shift to India, the Micra to Thailand, the Juke to U.K., and the Rogue to Tennessee.

Auto Maker Nissan to 'Significantly' Reduce Exports From Japan - WSJ.com

In Nigeria, Used Cars Mark a Step Up for Middle Class

The World Bank predicts that the number of middle-class Africans, whose income exceeds their basic needs, will rise to 43 million by 2030 from 13 million in 2000.  That growth extends to Nigeria, the most populous country in Africa and a budding economic powerhouse.  The average income per capita is $2700, meaning that most Nigerians can only afford used cars.  This has led to a booming used car import industry, and the establishment of used cars as status symbols for middle class Nigerians.

In Nigeria, Used Cars Mark a Step Up for Middle Class - WSJ.com

G.E. to Share Jet Technology With China in New Joint Venture

When it comes to joint ventures, GE is notoriously shy, prefering to use its own substantial assets to enter a market in order to protect its intellectual property.  Those rules are thrown out the door in China, however, where an infant aerospace industry is taking shape.  The Chinese want to rival Airbus and Boeing one day, and in order to do so, they need technology.  GE, which is desperate to supply engines, avionics and other systems to any Chinese aircraft manufacturer as the market reaches $400 billion over the next two decades, has agreed to share its most prized technologies with the Chinese in a new joint venture as a condition to entering the market, as this report details.

G.E. to Share Jet Technology With China in New Joint Venture - NYTimes.com

Volvo Mulls China-Made Cars for U.S.

Volvo is a Swedish car company with a Chinese shareholder and a German CEO.  The company already builds a small number of cars in China for the Chinese market, but is now considering a major ramp-up in production in a new assembly plant (in Chengdu, where it's owner Geely has a major new plant), not just for the Chinese market, but also for the export market including the U.S.  Currently, American consumers readily purchase made-in-China consumer goods, but no one is selling a made-in-China automobile yet, and there is some concern that Volvo's customers may shy away from a Chinese-made vehicle.  This strategy is being driven partly by the desire to reduce currency risk.  Volvos produced in Sweden and Belgium are priced in Euros, and the exchange rate has eaten into Volvo's profitability.  The Chinese currency, the yuan, is pegged to the dollar and would provide Volvo with more protection from exchange rate swings.


Volvo Mulls China-Made Cars for U.S. - WSJ.com

Toyota Tries to Break Reliance on China

 

Toyota has a problem. The automaker, a leader in hybrid cars, is heavily reliant on neodymium (above, being mined), a rare earth metal that is used in magnets.  All electric cars rely on magnets in their motors.  These rare earths are mined almost exclusively in China (China makes 95% of the world's neodymium), making Toyota highly reliant on a supply chain that is vulnerable to import quotas, export tariffs (up 67% last year), political upheaval, and outright bans.  The price for these metals has soared recently as China orders more production to stay within China.  Toyota is forced to explore a new type of motor that doesn't rely on these metals.




Toyota Tries to Break Reliance on China - WSJ.com

Starbucks Brews Plan to Enter India

India remains a huge untapped market for coffee giant Starbucks.  The company plans to grow to 1500 outlets in China in the next five years, but doesn't have any retail stores in India yet.  That may change soon, as the company announced plans for an alliance with Indian conglemerate Tata Group.  Tata Coffee already owns Eight O'Clock brands sold in the U.S., and is a big coffee producer and exporter in India.  Indian law prohibits Starbucks from owning its own retail outlets.  The alliance starts with Starbucks purchasing coffee from Tata, and may grow to include joint operation of Starbucks-branded outlets in the country.

Starbucks Brews Plan to Enter India - WSJ.com

McDonald's Bets on Japan Big-Burger Blitz

Japan's top restaurant by number of outlets, McDonald's, rolled out its Big America 2 campaign last week, featuring the Texas burger (above).  It comes with chili, three buns, cheese and bacon, and comes in at 645 calories.  The Idaho burger features a quarter-pound patty, cheese, a hash brown, bacon, onions, and pepper-and-mustard sauce, for 713 calories.  In Japan, going big and unhealthy, and emphasizing its American roots, works well for McDonald's.  The company made $91 million in Japan last year.

McDonald's Bets on Japan Big-Burger Blitz - WSJ.com

Laos stock market opens to boost economy

Sandwiched between Vietnam and Thailand, Laos is one of the world's poorest countries.  The communist government has been trying to liberalize and attract foreign direct investment since the mid-1990's, and hopes to emulate China's model of gradual economic liberalization while maintaining a strong central government.  Yesterday, the country's first stock exchange opened.  It only lists two companies, but hopes to eventually serve as a fundraising tool to inject $8 billion into the economy.

BBC News - Laos stock market opens to boost economy

Vietnam Confronts Economic Quagmire

Although Vietnam's GDP is growing at 7% annually, double digit price increases, a downgrade on the country's sovereign debt, and an unstable currency make Vietnam's economy one of the most unstable in the region.  A big contributor to the instability is the existence of giant state-owned companies, especially Vinashin.  Vietnam's state-owned companies use 40% of the invested capital, but produce only 25% of the country's output.  Vinashin is now receiving a multi-billion dollar bailout from the government, and many investors believe that unless the Vietnamese government is willing to allow more state-owned companies to privatize or go under, the economy won't grow to its potential.

Vietnam Confronts Economic Quagmire - NYTimes.com

U.S. Ban on Mexican Trucking Is Reconsidered

Under NAFTA, the U.S. was supposed to allow Mexican trucks to operate on U.S. highways as long as they meet U.S. regulations.  Currently, goods trucked in from Mexico have to switch from Mexican trucks to U.S. trucks at the border.  Under pressure from labor unions, the U.S. has never implemented this portion of NAFTA, opening the door for Mexico to impose billions in retaliatory tariffs on a wide range of American agricultural goods.  This week, President Obama took tentative steps to resolve the dispute by proposing a concept document that would finally permit Mexican trucks into the U.S.

U.S. Ban on Mexican Trucking Is Reconsidered - NYTimes.com