Thursday, October 23, 2014

Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN




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2point6billion.com discusses business and investment news rising from the geopolitical relations of China and India, and the interactions these two countries have with the rest of emerging Asia.



Business

Investing in an Online Presence in Asia

Asia is fast on its way to becoming the largest e-commerce market in the world. Internet penetration is growing by leaps and bounds, and the region’s youth population increasingly prefers to interact with companies and retailers over the internet rather than with more traditional forms of physical shopping and communication. Alongside these developments, Asia’s fast-growing middle class has fostered the evolution of a strong online consumer culture that cannot be ignored by companies seeking long-term success in the region.

Continue reading

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China-ASEAN Wage Comparisons and the 70 Percent Production Capacity Benchmark

Op-Ed Commentary: Chris Devonshire-Ellis

As wage increases in China continue to rise – along with the comparatively high national welfare costs – increasing comment is being made as to the legitimacy of the “China Plus One” scenario. Coined some years ago, this theory – in reality, more of a shrewd observation – suggests that future manufacturing capacity will be placed both in China and externally in another location by the same manufacturer.

In fact, this has been going on for years, most notably between China and Vietnam. The recent anti-Chinese riots there have even prompted Hong Kong Shippers’ Council chairman Willy Lin Sun-mo to state that Hong Kong manufacturers based in the Pearl River Delta are running out of alternative, low-cost factory locations with ample labour following recent instability in their two preferred destinations, Vietnam and Thailand. I wrote about the Vietnam and Thai issues – along with a risk analysis for doing business in the rest of Asia – and China, earlier this week here, in this article “Anti-China Vietnam Riots a Passing Phase,” and Willy Lin’s comments can also be construed as a mild political point to Beijing that placing oil rigs in disputed waters hurts Hong Kong manufacturers. Continue reading

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Increasing Labor Productivity will be key to China Success

By Renaud Anjoran

The conference organized last week by the European Chamber of Commerce in China was extremely interesting.

I took notes during the other speakers’ presentations, and a theme came back again and again: if China doesn’t increase its labor productivity, times are going to get tough:

  • Tough for China because its potential growth will be seriously capped.
  • And tough for the importers, because costs will have to rise a lot.

The necessity of productivity gains for China’s GDP growth

Ben Simpfendorfer, a strategic consultant with an economic background, set the stage:

  • The working population is contracting and this trend will continue;
  • The debt/GDP ratio has been growing but will have to stabilize sometime in the future, so capital investments will need to decrease.

These two trends mean that the only way for China to keep growing at a rapid rate will be through productivity gains.

How to gain productivity? By making farms, companies, and administrations more efficient. And a big part of this effort will have to take place in factories.

The search of manufacturing efficiencies by importers

I asked the panel of experts for their forecast regarding the rate of price increases over the next 5-10 years. Their responses were pessimistic.

They all agreed that prices of Chinese products would increase faster in the next 5 years than they have over the past 5 years!

The main reasons they invoked were as follow:

  • Supply and demand will dictate higher prices, since there will be less labor supply for the manufacturing sector… and more demand, coming in good part from the domestic market;
  • The central government plans for higher wages and a move to more advanced industries.

Will it be very brutal? Probably not. One speaker suggested it might follow a ”stop & go” pace. His meaning is, Beijing will devalue the currency a little if they see they overshot what foreign companies are willing to pay.

So, what are importers trying to do?

The low-hanging fruits have been reaped. Now, improvements to the bottom line will have to come from reduced waste (in other words, higher efficiency all along the supply chain).

That’s why more and more companies are launching lean programs to reduce costs. And why others are getting their feet wet in other Asian countries.

Renaud Anjoran has been managing his quality assurance agency (Sofeast Ltd) since 2006. In addition, a passion for improving the way people work has pushed him to launch a consultancy to improve factories and a web application to manage the purchasing process. He writes advice for importers on qualityinspection.org.

This article was originally published by Global Sources, March 13, 2014. Global Sources is a leading business-to-business media company that facilitates trade between buyers worldwide and suppliers in China & Asia, via online portals, magazines, research reports and trade fairs.

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Foreign Investors Prepare for Post-Election Revival in India

DELHI – While India’s economy typically slumps in the lead-up to national elections, international companies have begun vocalizing their intention to step up investment after a new government is constituted in May.

At a private meeting yesterday with Reserve Bank of India (RBI) Governor Dr. Raghuram Rahan, top executives from global financial services companies and institutional investors expressed optimism the RBI would enact the reforms necessary to restore investor confidence and stimulate long-term economic growth post-elections. Continue reading

Posted in Business, Culture & History | 1 Comment

Vietnam Rolls Out New Online Visa Processing System

HANOI – March 14th saw the rollout of Vietnam’s new online visa processing system. As a result of the new system, foreigners will now be able to register and fill out visa application forms online. The official website can be found here.

Previously, foreigners looking to apply for a Vietnamese visa had to physically visit the relevant representative government agency in their area in order to get the required forms. Continue reading

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Singapore Announces Initiatives to Encourage Tech Startups

SINGAPORE - Last week, Singapore’s Infocomm Development Authority (IDA) announced it would invest in three new measures to support technology startups: a startup accelerator, an accreditation program and a fabrication lab.

The startup accelerator program marks a strategic partnership between Infocomm Investments Pte Ltd (IIPL, the investment subsidiary of IDA) and Joyful Frog Digital Incubator, a leading startup accelerator. The first accelerator program will take place from 20 March to 1 July. Continue reading

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North American Leaders Champion TPP

By Shawn Greene

At the so-called “Three Amigos Summit” in Toluca, Mexico, celebrating the 20th anniversary of NAFTA this week, the leaders of Canada, Mexico and the United States have vowed to expand free trade agreements between North America and Asia while pushing for the successful conclusion of Trans-Pacific Partnership (TPP) negotiations this year.

Speaking at the summit, President Obama expressed a determination to keep TPP progress on track despite many in the U.S. Congress indicating they will refuse to support a renewal of so-called ‘fast-track’ negotiating authority, or trade promotion authority. Continue reading

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2point6billion.com is a commentary and news forum specifically dedicated to the impact trade, development, investment, politics, and the emerging markets of Asia are having on the global business community.



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