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