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India Will Not and Must Not Become a Superpower

Indian historian and environmentalist Ramachandra Guha speaks of why India will not and must not become a superpower.

I broadly agree with Guha’s analysis about India’s last 60+ years since 1947, especially in the arena of inclusion/exclusion of communities in development process (e.g. tribals being mostly excluded), also the growing Maoism factor, and the polarization of religious communities who, unfortunately can have a foothold in mainstream politics with their religious agenda (e.g. Sangh Parivar via the BJP or the Muslim Parties such as the recently launched one by Akbaruddin Owaisi in Hyderabad).

But Guha is cautious not to completely belittle India’s progress in the last 7 decades and is in fact very hopeful of India’s future. This comes across in most of his writings.

India Flag As for Guha’s reasons why India should not become a superpower his talk mentions something to that effect. He is suspicious of superpowers because the 20th century’s experience with political/economic superpowers (Britain, USA, Russia mainly) is by and large not a good one when you see the record of colonial and post-colonial 20th century. Africa and all parts of Asia were left in tatters and the effects are still unfolding especially in the Middle East and South Asia (Indo-Pakistan conflict/ Hindu-Muslim communal rivalry).

However is it possible to define a superpower differently? Can India become a superpower of a different kind? There is no answer to this question since the model does not exist for the 21st century of such a superpower (EU is a close alternative but EU is historically unique and cannot be replicated). But the model being pursued by India since the last 20 years or a little more does not lend itself to an interpretation that India, even if it became a superpower, will be different from China or USA. And hence my opinion would be in agreement with Guha that India is better off not being a superpower but taking care of its internal issues as best as possible. This does not mean that we cannot unleash Indian potential. The day we unleash Indian potential by and for Indians will actually be the day India might actually claim “superpower” status. (There you go! a new understanding of what it means to be a superpower!)

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Posted in Global Business

Creating a Positive Global Community

Creating a Positive Global Community

To create a positive global community, we need to meet three key challenges:

  1. Reaching out to humanity and avoiding isolationism. In the global community, it is easier to reach out and easier to become isolated. Superficial communication with everyone can lead to meaningful impact on no one. We need to be inspired and educated in the value of trying to benefit the world, not just ourselves. As the opportunities for huge individual achievement and wealth form, we need to better recognize people who make the transition from success to significance. Community heroes need to be celebrated based upon their skills in giving—not their skills in taking.
  2. Celebrating diversity and avoiding conformity. Our ability to adapt to changing situations is largely a function of our diversity. Language leads us to view the world in different ways and to have different approaches to making decisions and solving problems. We need to encourage diversity in language, culture, and lifestyle to ensure our own survival. Powerful countries must not try to make other countries become like them. Residents of the global community need to celebrate the fact that “different” may be synonymous with “fascinating,” “enhancing,” and even “necessary.”

Building long-term value and avoiding short-term stimulation. Residents of the global community have almost unlimited access to sources of pleasurable, short-term stimulation. Television, movies, interactive games, virtual-reality experiences, chat rooms, and other options are available at a low cost. Yet few of these activities produce any long-term value. We need to inspire and educate people about the value of “investing” for the future. Long-term value is the result of vision, creativity, innovation, and hard work. We now have access to tools with the potential to dramatically increase our productivity, but we also have access to countless pleasurable distractions that lead nowhere.

Challenges and Opportunities for the Global Community

Challenges and Opportunities for the Global Community

The global community has the potential to become a nightmare:

  • A world of conformity: with billions of people wearing the same baseball caps, baggy shirts, jeans, and shoes, speaking the same language, and laughing at the same jokes.
  • A world of short-term stimulation: with countless hours spent on mindless social media, television, video games, and a virtual reality that begins to eliminate the real human experience.
  • A world of isolation: with lives spent in front of a screen, striving for personal excitement and gain with little thought for others and even less effort devoted to helping future generations.

The global community has the potential to be a dream come true:

  • A world of diversity: with billions of people being able to communicate, trade, share cultural experiences, and appreciate each other, with access to a range of products, services, religions, cultures, philosophies, and languages.
  • A world building long-term value: with countless people working together to advance our cultures, building on what has been learned in a manner that is positive, efficient, and productive.
  • A world reaching out to humanity: with people helping each other in ways that could never have been imagined, celebrating each other’s success, and helping less fortunate members of the community become more productive.

Will the global community of the future become a nightmare or a dream come true? No doubt it will be some of both. The increase in global communication, trade, technology, and culture will continue. By inspiring people and educating them in the values of celebrating diversity, building long-term value, and reaching out to humanity, we can build a global community that is more like a dream come true.

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Posted in Business and Strategy Global Business

Meetings, Incentive Conferences, and Exhibitions: Vibrant New Destinations

As the economic scenario improves and business sentiment picks up, there’s a buzz in India’s outbound MICE (Meetings, Incentive Conferences, and Exhibitions) market. While the travel industry gears up to keep pace with the growth in demand, we track the vibrant destinations that are soaring high.

With changing dynamics in the global economic scenario, emerging economies in Asia and the Middle East are fast becoming important business destinations; rapid development and huge investments in infrastructure and manufacturing, IT services, healthcare, hospitality and many other sectors. As a consequence, increase in business activities have led to a boom in the travel sector’s MICE (Meetings, Incentive, Conferences and Exhibitions) segment, which is all set to record good growth. “Despite the economic slowdown over the last few years, cost sensitivities and tightening of budgets by most corporates, our MICE business has seen a superlative performance of over 25-30 per cent growth year-on-year. The bragging rights and strong appeal of “foreign” travel works like magic as a reward and performance incentive. Hence, the growth trajectory of MICE is a real and a strongly viable one,” says Rajeev Kale, President and COO, MICE, Domestic, Sports Holidays, Thomas Cook (India) Ltd.

Karan Anand, Head, Relationships, Cox & Kings Ltd, concurs with him. “The MICE market is dominated by the Incentive business. We see this business growing at approximately 25-30 per cent year-on year. The Meetings and Exhibition business will grow at a steady pace of 20 per cent. Overall, it looks very positive,” he states.

Gardens by the Bay Park in Singapore

Good infrastructure, excellent connectivity, hotels, convention and conference centers to accommodate large crowds are the hallmarks of a good MICE destination, opines travel consultant Munish Talreja. Preferential air fares, special accommodation, transportation rates, custom, immigration facilitation and adequate facilities for all sizes of conventions, meetings, etc. make countries like Malaysia, Singapore, Thailand, Dubai a viable MICE option. These destinations are apt for Indian companies as they offer distinct advantages like short travelling time, world-class infrastructure, good connectivity and numerous tourist attractions at competitive rates.

Per the Union of International Associations’ (UIA) 2012 Global Rankings, Singapore has been ranked as the world’s foremost city and country for international meetings, titles the city-state is holding for the third and seventh consecutive year, respectively. Its popularity as a MICE destination lies in its pro-business environment and strategic location within Asia, which creates a valuable platform for collaboration and exchange, while creating a springboard from which to expand further into the region. Singapore’s strong knowledge economy also sets the stage for many thought leadership events. Added to this is the city’s world-class MICE facilities, easy accessibility to a wide variety of leisure offerings as well as attractive incentive schemes.

“From a business perspective, companies take their employees on MICE events for knowledge-sharing, networking, brainstorming—all of which require a clutter-free, rejuvenating environment. In that sense, Singapore and London fit the bill; Singapore mainly because of the ease and convenience in reaching the destination, the comfort and hygiene it offers,” Ashutosh Labroo, Director (Human Capital), ISS India, points out.

According to sources from Singapore Tourism, in 2013, approximately one quarter of Indian visitors to Singapore went there for business or MICE purposes, with the segment contributing about 54 per cent of the India’s total tourism receipts. With positive sentiments within the Indian market and the increase in opportunities to collaborate between both countries, this number is expected to increase in the long run.

According to Kale, access, budget, duration, climate, MICE infrastructure/facilities and comparative value-driven air and land pricing are factors that influence the selection process of a destination. While short haul destinations are both convenient and hit the value sweet spot, the focus today is more on vibrant new destinations and experiences. “Hence, we’ve seen Australia, New Zealand, South Africa, Spain, Japan, France, Germany, USA & Canada, Philippines emerging strongly. Of course, the evergreen favorites continue to be Switzerland, Singapore, Hong Kong and Thailand,” he cites.

Corporate houses are now seeking new destinations in their budget bands or new locations and experiences in popular destinations. “As India is emerging as the biggest outbound market in the world, many tourism boards and product owners are making a beeline to India. This gives the corporate houses a wider choice and competitive prices,” states Adil Bajirao, Vice President – Tours, Gilpin Tours & Travel Management (India).

Centara Grand & Bangkok Convention Centre at CentralWorld, Bangkok, Thailand

The top destinations in terms of numbers continue to be Thailand, Malaysia, and Dubai, according to Anand.

Other destinations that have found favor with corporates are Abu Dhabi, Macau and Hong Kong. In terms of upmarket incentive destinations, Canada, USA and New Zealand are preferred, he says. Thailand has been surging ahead as a favorite tourist spot for some time now. Sources from the Thailand Convention and Exhibition Bureau say they expect to see at least 10 per cent growth in the outbound MICE market from India to Thailand and more importantly, are expecting a rise in high-end groups from India.

  • Thailand has world-class infrastructure and excellent connectivity by air from across India including all the major cities. It offers high-end options to corporates at great value for money. Plans are underway to develop several cities as MICE cities. Currently, Bangkok, Pattaya, Phuket, Chiang Mai and Khon Kaen have been classified as MICE cities.
  • Malaysia, another key destination, is increasingly becoming the first choice for business events being staged in Asia because it is a microcosm of Asian cultures and business practices. Moreover, it offers competitively-priced facilities, accommodation, transportation and affordable food. “A rich fusion of Asian cultures and culinary delights, spectacular natural attractions and idyllic island resorts continue to inspire and motivate business event visitors in Malaysia. Understanding the importance of the MICE industry to the economy, the Malaysian government through the Malaysia Convention & Exhibition Bureau offers various assistance and incentives to organizers of MICE,” Mazlan Harun, Trade Commissioner at MATRADE, the Malaysian government’s National Trade Promotion Agency.
  • The MICE industry has been growing in leaps and bounds in the Middle East too and it has not been affected by recent political disturbances in this area of the world. “Dubai is a well-established market for MICE events, with top-notch infrastructure facilities, superb connectivity and short distance from India. It is facing strong competition from other destinations but has excelled because of its ability to sustain itself with new attractions to woo even repeat travelers to the destination. Abu Dhabi has also been faring very well with full support from the state. Qatar is another promising destination, where good connectivity offered by Qatar Airways and the short distance from India make it a viable option for MICE events,” notes Shaikh Rahmatullah, Director, NAFA Tourism Consultancy.

With changing demographics and stiff competition, motivation requirements are at an all-time high. New unexplored destinations and unique and engaging experiences today are the predominant factors for corporates undertaking MICE travel. “While MICE offers the opportunity to discover new destinations, the added advantage of interest-based activity, team bonding outdoors/soft adventure add up to the unique quotient offering a truly “wow experience”. In order to cater to this demand, many destinations are promoting activities that travelers can engage in. Travelers are lured by destinations such as New Zealand for adventure sports and outdoor fun like white/black water rafting; South Africa for canopy walks and shark dives, Red Sea port city of Eilat in the South of Israel for snorkeling and desert safaris, Morocco for Berber treks and Australia for surfing sand dunes and so on,” explains Kale.

“A few emerging new outbound destinations in the budget category are Vietnam, Cambodia, Abu Dhabi, Philippines, Oman and new locations in existing destinations like Hua Hin or Krabi or Koh Samui or Chiang Mei in Thailand and Penang or Kota Kinabalu or Langkawi in Malaysia to name a few. In the above $875 per person category, Poland, Czech Republic, South Korea, Jordan, Israel are few emerging new destinations. Then, there are new locations in popular destinations like Zermatt or Geneva in Switzerland, Garden route in South Africa, Zanzibar in Tanzania to name a few,” states Bajirao.

Some Popular Meetings, Incentive Conferences, and Exhibitions (MICE) Destinations

Putrajaya International Convention Centre, Malaysia

Malaysia: Malaysia is strategically located in the world’s largest and fastest growing economic region, with English-speaking yet multilingual population, one of the best value—for money destinations, economically and politically stable environment, excellent accessibility and first-class infrastructure. Some of its renowned convention and exhibition centers are the award-winning Kuala Lumpur Convention Centre and the Borneo Convention Centre Kuching (BCCK). Next to the iconic PETRONAS Twin Towers, the Kuala Lumpur Convention Centre is at the heart of over 12,000 hotel rooms, extensive shopping and entertainment facilities, and convenient transport connections. Only an hour-and-a-half’s flight away is the Borneo Convention Centre, which is located in the ecofriendly state of Sarawak, East Malaysia. MATRADE organizes various buying missions in-conjunction with major trade exhibitions in Malaysia. Buyers/ Importers/ Distributors for the following products are welcome to pre-register for the buying missions:

  • Electrical & Electronic Products
  • Fashion, Apparel and Accessories
  • Footwear
  • Furniture
  • Food and beverages
  • Gifts, Souvenirs and Jewelry
  • Household products
  • Machinery and Equipment
  • Oil & Gas
  • Palm Oil Based Products
  • Pharmaceuticals, Toiletries and Cosmetics
  • Plastic Products
  • Rubber Based Products
  • Wood Based Products

Thailand: From budget hotels to the stately Grand Palace, Thailand has something on offer for everyone. It has an array of destinations ranging from the bustling city life in Bangkok, sun -and-sand options like Pattaya, Phuket, Koh Samui, Krabi along with hill stations like Chiang Mai – all of these cities offer world-class, state-of – the -art convention venues. Visitors can soak in the mesmerizing beauty of the Emerald Buddha Temple in Bangkok or board a flight to Thailand’s northern capital, Chiang Mai, to experience indigenous Thailand, with luxury award-winning retreats set amongst beautiful lush green paddy fields, jungle experiences and night markets.

Hong Kong: Hong Kong is another favorite destination for MICE events. Its excellent business support infrastructure, good airports, perfect accommodation, and other entertainment and recreation options make it a strong contender. Hong Kong’s proximity to mainland China and is an added advantage. As an international business and trading hub, Hong Kong is home to top-notch hotels and infrastructure. Easy accessibility makes it an ideal destination for MICE events.

Songdo Convensia Convention Center in Incheon, South Korea

Seoul: Apart from excellent meeting facilities and a world-class infrastructure, Seoul offers a rich history, scenic locations and an array of unique recreational attractions to the discerning MICE traveler. Sources from Korean Air, which operates three direct flights a week from Mumbai to Seoul, agree that there has been an increase in the MICE movement from India to Korea. COEX, Kintex and Songdo Convensia are three of its main exhibition/conference areas.

Singapore: Singapore offers an excellent range of state-of-the-art convention centers, exhibition halls, and meeting venues for MICE that suit a variety of needs and budgets. The Marina Bay Sands Expo & Convention Centre, newly renovated Suntec Singapore Convention & Exhibition Centre and the Singapore Expo with its MAX Atria wing, are suitable for large-scale international exhibitions and conferences. Some attractions that integrate MICE facilities together with unique leisure offerings include the S.E.A. Aquarium, The Singapore Zoo, Gardens by the Bay, and Singapore Turf Club to name a few.

Dubai: In just two decades, Dubai has risen from the desert sands to become one of the world’s most recognized destinations. It boasts of Burj Khalifa, the world’s tallest tower, Palm Jumeirah – the iconic marvel and many malls. Dubai International Convention and Exhibition Centre (DICEC) has more than 90,000 square meters of exhibition and meeting space, while four other hotel properties can accommodate conferences for up to 2,000 delegates. Dubai was home to 603 hotel establishments in the first half of 2013 and a total of 81,492 hotel rooms. With recent openings including the JW Marriott Marquis Dubai, The Oberoi Dubai, and JA Ocean View Hotel.

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Posted in Global Business Travels and Journeys

The Way Ahead: How to Get Ready for What’s Next?

How to Get Ready for What is Next

We can already see the future taking shape. But I believe that the future will turn in unexpected ways. The greatest changes are still ahead of us. The society of 2030 will be very different from today’s society and bear little resemblance to that predicted by today’s futurists.

The next society is close enough for action to be considered in five areas:

  1. The future corporation. Enterprises—including many non-businesses, such as universities—should start experimenting with new corporate forms and conducting a few pilot studies, especially in working with alliances, partners, and joint ventures, and in defining new structures and new tasks for top management. New models are also needed for geographical and product diversification for multinational companies, and for balancing concentration and diversification.
  2. People policies. The way people are managed assumes that the workforce is still largely made up of people who are employed by the enterprise and work full-time for it until they are fired, quit, retire, or die. Yet, two-fifths of the people who work in many organizations are not employees and do not work full-time. Today’s HR managers also still assume that the most desirable and least costly employees are young ones. Older managers and professionals are often pushed into early retirement to make room for younger people who are believed to cost less or to have more up-to-date skills. The results are not encouraging. After two years, wage costs per employee for the younger recruits tend to be back where they were before the “oldies” were pushed out. The number of salaried employees seems to be going up at least as fast as production or sales, meaning that the new young hires are no more productive than the old ones. Demography will make the present policy increasingly self-defeating and expensive. The first need is for a “people policy” that covers all those who work for an enterprise, whether they are employed by it or not. After all, the performance of every one of them matters. So far, no one seems to have devised a satisfactory solution to this problem. Second, enterprises must attract, hold, and make productive people who reach official retirement age, become independent outside contractors, or are not available as full-time permanent employees. For example, highly skilled and educated older people, instead of being retired, might be offered a choice of continuing relationships that convert them into long-term “inside outsiders,” preserving their skill and knowledge for the enterprise, yet giving them the flexibility and freedom they expect and can afford. The model for this comes from academia: the professor emeritus. He remains free to teach as much as he wants, but gets paid only for what he does. Many emeriti do retire altogether, but about half continue to teach part-time, and many continue to do full-time research. A similar arrangement might well suit senior professionals in a business. But for people in operating work-sales or manufacturing-something different needs to be developed.
  3. Outside information. Surprisingly, the information revolution has caused managements to be less well informed. They have more data, to be sure, but most of the information so readily made available by IT is about internal matters. The most important changes affecting an institution today are likely to be outside ones, about which present information systems offer few clues. One reason is that information about the outside world is not usually available in computer-useable form. It is not codified, nor quantified. This is why IT people, and their executive customers, tend to scorn information about the outside world as “anecdotal.” Moreover, many managers assume, wrongly, that the society they have known all their lives will remain the same. Outside information is now available on the Internet. Managers must ask what outside information they need, as a first step toward devising a proper information system for collecting relevant information about the outside world.
  4. Change agents. To survive and succeed, organizations will have to become change agents. The most effective way to manage change successfully is to create it. Grafting innovation onto traditional enterprises does not work. Becoming a change agent requires the organized abandonment of things shown to be unsuccessful, and the continuous improvement of every product, service, and process. It requires the exploitation of success, especially unexpected and unplanned-for success, and it requires systematic innovation. It also requires seeing change as an opportunity, not as a threat.
  5. Big ideas. Once again we see the emergence of new institutions and theories. The new economic regions—the European Union, NAFTA, and the proposed Free-Trade Area of the Americas—are neither traditionally free-trade nor traditionally protectionist. They attempt a new balance between the two, and between the economic sovereignty of the national state and supranational economic decision-making.

And then there is the upsurge in interest in Joseph Schumpeter’s postulates of “dynamic disequilibrium” as the economy’s only stable state; of the innovator’s “creative destruction” as the economy’s driving force; and of new technology as the main, if not the only, economic change agent-the antithesis of earlier economic theories.

The central feature of the next society will be new institutions, theories, ideologies, and problems.

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Posted in Global Business Management and Leadership

How Thailand and its Neighbors are Courting Foreign Investments

Thailand and its Neighbors are Courting Newcomers

Forty years ago, Thailand was known among foreigners as an idyllic beachfront tourist destination, rather than a lucrative investment destination. Fast-forward almost four decades, and Thailand’s Board of Investment is attracting foreign businesses looking for opportunities to tap into a growing list of manufacturing and service industries. Sectors including automotive, alternative energy, biotech, petrochemicals, food processing, and electronics are growing and attracting foreign attention. Investment applications have reached an all-time high in the last few years, with $33.5 billion invested in 2012 alone.

The Thailand Board of Investment (BoI), a government agency started in 1966, has helped spur innovation by decreasing the time of back-and-forth it takes for foreign businesses to operate in Thailand. Companies promoted by the BOI can obtain work permits or visa approval or renewals within three hours, in addition to tax and other incentives offered by the BOI, such as waived restrictions on foreign ownership and exemptions on import duties. For investors, including multinationals such as Dow Chemical Co., part of the draw is the tax incentives and a home base for expanding operations in a still-booming Southeast Asia. This year, Thailand was rated 18th on the World Bank’s Ease of Doing Business Index—out of 189 economies. The country has become the world’s largest producer of hard disk drives and the world’s 12th-largest exporter of food, and world’s 10th-largest automotive manufacturer, according to 2013 figures.

Thailand’s growing connectedness is becoming a draw. Infrastructure investment has helped connect Thailand to its neighbors via highways, making it a well-located home base for doing business in neighboring China, Laos, Cambodia, Vietnam, Myanmar and Malaysia. A high-speed rail network that reaches as far as southern China is due to open by 2022, and Bangkok’s Suvarnabhumi Airport, already Asia’s sixth-busiest, is in the midst of a $2 billion facelift to handle 60 million annual fliers by 2017.

Bangkok Thailand Skyline

The next two years will result in a major economic makeover for all of Southeast Asia. By late 2015, the Association of Southeast Asian Nations (ASEAN), which has 10 member countries, will form the ASEAN Economic Community (AEC). The AEC, a regional integration initiative similar to the EU, will encourage the flow of skilled labor, services, investment, capital and goods between member countries including Myanmar, Brunei, Cambodia, Indonesia, Laos, Thailand, Vietnam, Malaysia, Singapore and the Philippines.

For AEC nations, the hope is that unified economic goals can strengthen the region on an international scale. In the next two years, 14 million high-skilled jobs, 38 million medium-skilled jobs and 12 million low-skilled jobs are estimated to be added, according to a study from the International Labour Organization and the Asian Development Bank. When combined, ASEAN’s GDP tops $2.3 trillion and beats out the economies of Brazil, Russia and India, according to data from the IMF’s World Economic Outlook database.

With instability in parts of the Middle East and continuing conflict in Eastern Europe, emerging Southeast Asian economies are becoming even more important to investors, which is one reason why ASEAN 1s the top destination in Asia for U.S. foreign direct investment (FDI).

Southeast Asia is fast becoming a key location for the crossroads of global trade. Indeed, ASEAN’s many trade agreements give it access to India, China, Japan, South Korea and Australia. As the AEC deadline approaches, many multinational firms are crafting strategies to take advantage of the new opportunities. With varying stages of economic development and available workforce among these countries and their 620 million people, knowing how to tap into the region’s growing middle class can be especially difficult for companies looking to enter the region. And while there’s no one-size-fits-all approach, it’s a welcome challenge for companies taking advantage of Southeast Asia’s increasing integration.

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Posted in Business and Strategy Global Business

Western Companies Face Food Adulteration Problem in China

China Bans Fonterra Milk-Powder Imports

Fonterra Co-operative Group faced protein adulteration in 2008

Controversy: New Zealand’s Fonterra owned 43 percent of China’s Sanlu Group when the mainland company was among many implicated in a scandal involving the addition of melamine to milk, making watered- down products appear to contain more protein. Six children died and 300,000 others became ill.

Outcome: Fonterra wrote down the $113 million value of its stake in Sanlu, which went bankrupt.

KFC Restaurants (Yum! Brands) supplied chicken supplied with excessive antibiotics in 2012

Controversy: A Chinese state television investigation found chicken suppliers had fed birds—including some sold at Yum’s KFC restaurants in China— large amounts of antibiotics and hormones to boost their weight.

Outcome: Yum in January 2013 apologized for lapses in its supply chain. Sales at KFC’s restaurants in China fell 20 percent in the first quarter of 2013.

Yum! Brands’s restaurants served adulterated lamb meat in 2013

Controversy: Yum’s Little Sheep Mongolian Hot Pot restaurants, the largest chain of Mongolian hot pot eateries in China, lost business after rival chains were found to be serving chicken, fox, and rat meat masquerading as lamb.

Outcome: Yum, whose restaurants were never accused of selling mislabeled meat, took a $258 million write-down of the value of the Little Sheep chain in 2013.

A Tesco Store in Guangzhou, China

Tesco was accused of selling adulterated mutton in 2013

Controversy: An undercover investigation by a Shanghai television station claimed the big British retailer’s stores in China were selling meat labeled as mutton that was actually 95 percent duck.

Outcome: Tesco quickly removed the meat from store shelves and said it was investigating the suspect product’s provenance with its supplier.

Carrefour was accused of selling adulterated beef balls in 2013

Controversy: The French supermarket operator took heat last year when state-controlled China National Radio reported that the “Juicy beef balls” sold in its Lishuiqiao store in Beijing contained no beef.

Outcome: The retailer, which has more than 200 outlets in Chinese cities, quickly pulled the products from stores and promised to investigate suppliers.

Wal-Mart was accused of selling contaminated meat in 2014

Controversy: Wal-Mart in January recalled its Five Spice donkey meat sold in some of its Chinese stores after the meat was found to contain the DNA of other animals, including fox.

Outcome: The U.S.-based retail giant, which recalled the products and is reimbursing customers, apologized and said it’s working with safety officials in Shandong to investigate suppliers.

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Posted in Business and Strategy Global Business

World Economic Forum 2015: 10 Global Challenges and Expert Views

World Economic Forum: Annual Meeting 2015

From climate change to gender parity, the World Economic Forum 2015 held in Davos, Switzerland, identified ten significant global challenges that require collaboration across different sectors to solve.

These ten can be summed up as: ignorance, greed, religions, regionalism, rituals, poverty, education, health, leadership, and gender.

Here are expert opinions on the ten global challenges.

  1. Agriculture and food security: How to help smallholder farmers feed the world. “To sustain a population of 9 billion people by 2050, we’ll need to produce 60% more food. We can only do this if small farms flourish,” writes Gerda Verburg, Chair of the Committee on World Food Security.
  2. Economic growth and social inclusion: Why 2015 is a make-or-break year for the economy. “The global recovery remains weak and uneven. Accepting stagnation is not an option,” writes Christine Lagarde, Managing Director of the International Monetary Fund.
  3. Employment, skills and human capital: Three forces shaping the university of the future. “Technology is changing the nature of higher education—but not its underlying value,” writes Drew Faust, President of Harvard.
  4. Environment and resource security: “From all corners I heard increased commitment to action on climate change.” The UN’s Christiana Figueres draws four conclusions from Davos.
  5. Future of the global financial system: Why we need institutions to solve the world’s problems. “Monetary policy alone cannot provide stability and avert crises,” writes Professor Klaus Schwab, Executive Chairman of the World Economic Forum.
  6. Future of the internet: There are two types of companies. Those who have been hacked, and those who don’t yet know they have been hacked. “The internet of everything has changed security forever,” writes John Chambers, CEO of Cisco.
  7. Gender parity: Empowering girls in the worst countries for gender equality. “Invest in a woman and she will invest in her community,” writes Lebogang Keolebogile Maruapula, a Global Shaper.
  8. Global crime and anti-corruption: Want to end poverty? Start with corruption. “Graft has thwarted four out of the eight Millennium Development Goals. We cannot allow it to blight our future,” writes Cobus de Swardt, Managing Director of Transparency International.
  9. Infrastructure, long-term investing and development: Are we too slow to innovate in infrastructure? “Our industry finds change too difficult. We should be experimenting with 3D-printed homes and super materials,” writes James Stewart, KPMG’s Chairman of Global Infrastructure.
  10. International trade and investment: How will China’s next steps affect Brazil? “The Asian giant’s economic rebalancing will play out in the market for steel and soybeans,” the economist Ilan Goldfajn.
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Posted in Global Business

China’s Relexed One-Child Policy: Baby Boom in China?

China's Relexed One-Child Policy: Baby Boom in China?

China’s implemented a much-criticized state-mandated family planning policy in 1979 to control the swelling population of a then-poor nation. The stipulated that every couple may have just one child. Ethnic minorities were allowed to have two children. Couples in rural areas were allowed have a second child if their first child was a girl.

Over three decades, the one-child policy worked too well and has produced a gender imbalance and a shrinking work force. Sex ratio in China is now 117 males for every 100 females. The policy has also resulted in an elderly population that rivals Japan’s in percentages and costs for caring for the elderly.

Under the latest change to the policy, urban couples will also be allowed to have two children, if at least one spouse is an only child. This change is estimated to produce ten million additional babies over the next five years.

'China, Inc.: How the Rise of the Next Superpower Challenges America and the World' by Ted Fishman (ISBN 0743257359) The trend of more babies, however, doesn’t look enduring. Most forecasts only account for an increase in births over the next five years. After that, as China gets richer, birth rates are likely to continue dwindling.

Wealthier countries simply have fewer kids. This trend has been corroborated with similar demographic developments in Hong Kong, Singapore, Thailand, and Malaysia. Consider South Korea, where fertility rates continued its four-decade downward trend after the government abolished the family planning program in 1996.

The United Nations estimates China’s population aged 64 and under will fall dramatically over the next 20 years because of lower birth rates.

Some estimate that there’s even an actual upside if China’s birth rate continues falling. Ted Fishman, author of ‘China, Inc.: How the Rise of the Next Superpower Challenges America and the World’, estimates that China will, nonetheless, remains competitive: “you get more and more resources pushed into children and education, and productivity will go up enormously as a result”

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Posted in Global Business

The Economic Impact of Aging Japan

The Economic Impact of Aging Japan

The saving rates in Japan will fall dramatically by 2024 and make Japan’s financial wealth decline. There are two direct reasons for this fall: one is that by 2024, more than a third of Japan’s population will be over the age of 65, which will lead the retired household to outnumber households in their prime saving years. Another reason is that the younger generation is saving far less than older generations have, and this truth will amplify the effects of a decline in the number of savers.

This trend will decrease the accumulation of wealth and erode Japanese living standards. What’s more, since Japan has played an important role in financing the massive US current-account deficit, as Japanese funding dries up, this damage may extend to other countries and bring negative impact for economic system of America. For example, if other rapidly industrializing countries could not step up to fill the gap in savings as Japan’s savings rate declines, the United States will probably be forced to trim its trade deficit and this could have enormous repercussion for the global economy.

There are only two ways to mitigate the coming demographic pressure in a meaningful way: increasing household savings and boosting the returns earned on them.

  • Increasing savings: Given the significant increase in average life spans during the past 50 years, rising the retirement age is a way to extent the period when households are most prone to save. In addition, encouraging younger Japanese households to save more is also a helpful step to increase household savings.
  • Raise the rates of return: The most effective change for Japan would be to raise the rates of return on its financial assets. To do so, Japan will have to raise productivity throughout the economy and increase the efficiency of the financial system in allocating capital.

On one hand, basic structural reform, such as elimination of market regulations that would increase competition and spark innovation, tax policies protecting inefficient companies, and ease zoning and land regulations that reduce large companies’ expanding and creating jobs to protect start-ups to do business, could increase the economic-wide productivity.

On the other hand, increasing the financial system’s efficiency ensures the savings are channeled to the most productive investments and improves legal protection for investors and creditors. The diversification of Japan’s household financial assets is also an important means of increasing the efficiency of capital allocation.

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Yale’s Steven Novella on Skepticism of Anthropomorphic Global Warming (AGW)

Anthropomorphic Global Warming

Steve Novella, clinical neurologist at Yale University School of Medicine, writes:

On many issues, however, there is a nuanced opinion somewhere in between the two extremes. I have no reason to doubt the scientific consensus on AGW, but we have to remember the current consensus is that AGW is 95% probable, meaning (if accurate) that one in 20 such statements will turn out to be wrong. Also, it is reasonable to question the efficacy of individual proposed solutions to AGW. I am still solidly in the “AGW is probably real and if we are going to do something about it we better start acting now,” camp, but I also don’t think we should white wash over current uncertainties in order to present a clean and united front. Science is messy and we have to deal with it.

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