By Daniel Fleishman
Oct. 31 – On October 19, India’s first Starbucks coffeehouse opened in downtown Mumbai, making the world’s second most-populous state the 61st country to play host to the U.S.-based coffee giant. Within days of the first opening, two more branches popped up, one of them inside the world-famous Taj Mahal Palace Hotel.
While certainly not the first foreign-owned coffee outlet to set up shop in India, Starbucks’ entry into the market signals a landmark demographic, cultural, and socioeconomic shift in Indian society. Continue reading
Op-Ed Commentary: Christoph Unrast
Oct. 18 – Recent statistics suggest that China’s economy has not been negatively affected by the current spat with Japan over the disputed Senkaku/Diaoyu Islands. The trade surplus has grown from US$22.4 billion in August to US$26.67 billion in September, while inflation has been kept in-check and did not surpass the threshold of 2 percent, as reported by the Wall Street Journal.
The biggest loser seems to be the Japanese automobile industry. Although Beijing denies any involvement in the customer boycott, anti-Japanese resentment in China has led to a drop in sales by nearly 50 percent, leading companies such as Toyota, Suzuki, and Nissan to reduce their production in China, or even close whole facilities. While China is the biggest importer of Japanese products, Beijing is able to rely on its recovered exports to the United States and its declining, yet still strong, trade with the European Union. But the numbers do not tell the whole story – China’s willingness to engage in diplomatic battles in the economic realm may backfire and cause unnecessary trouble during the upcoming leadership transition. Continue reading
China exporters to Japan project revenue losses of up to 10 percent this year, while importers foresee a 5 percent decline in sales.
Oct. 11 – Anti-Japan protests in cities across China appear over for now, but executives at companies with business ties to Japan foresee mid- to long-term effects of the island dispute on their revenue. Almost half of the 482 respondents in a survey conducted by Chief Executive China Online expect a negative impact on their business this year. Sixty-eight percent predict a loss of 10 percent or less to their annual sales.
With 2011 bilateral trade amounting to $342.8 billion, the implications for the already-slowing China economy may be unfavorable. Continue reading
By Nicholas Clement
Sept. 22 – During the outbreak of anti-Japanese sentiment throughout China, it has become increasingly clear that the costs for regional business and Sino-Japanese economic ties are rapidly rising. In the aftermath of Japan’s ‘purchase’ of the Diaoyu Islands, protests and demonstrations have broken out across China, often resulting in destruction and defamation of Japanese products and businesses.
While the political and nationalistic consequences of this situation remain central to regional harmony, the impact on China and Japan’s economic relationship should not be forgotten. Last year, two-way trade between China and Japan generated approximately US$345 billion. According to statistics from Japanese custom authorities, in the first half of this year Japanese exports to China amounted to US$73.54 billion, while imports from China were US$91.29 billion. As China is Japan’s largest trade partner, the severity of soured relations cannot go understated. Continue reading
Sept. 7 – China aside, the smart money in Asia right now is on India as the emergence of the nation as a destination for foreign investment becomes more understood. India’s main problem, however, remains one of perception – it has a noisy, democratic media that loves to blow up scandals and bad news. By comparison, China pushes its troubles under the carpet through extensive media censorship. That has worked for China to a large degree, and has served to underplay inherent financial and political problems in the country, but that’s not to say they don’t exist. In India, everything is aired publicly, creating a disparity of news information when the two are compared – China good, India dirty. Continue reading
Op-Ed Commentary: Christoph Unrast
Aug. 17 – Recent developments on the Korean Peninsula indicate that the Peoples Republic of China may be further consolidating their control of the global supply of rare earth elements. Already China has a monopoly in the production of rare earth elements, and could now it could get a hand on North Korea’s resources, which are estimated to be the second largest in the world.
Rare earth elements have been a perennial topic for quite a while. Although the metals are not as rare as the name suggests, China was able to develop a production monopoly since the 90s, replacing the once leading nation of the United States. This issue received its first major attention when Beijing used its monopoly in a diplomatic stand-off with Japan in 2010, cutting of Japans industry from several of the most essential elements used in high-technology products. Continue reading
Aug. 15 – It is expected that the state-owned Aluminium Corp of China Ltd, or Chalco, will drop its takeover bid for Mongolia’s coal-producer SouthGobi Resources Ltd due to fierce resistance from the Mongolian government.
In April of this year, Chalco offered $926 million for a 60 percent stake in SouthGobi. Almost immediately, however, the Mongolian government reacted by introducing a new investment law that limits foreign companies from owning more than 49 percent of companies involved in mining, finance, media and telecommunications sectors. In an even more aggressive stance, the Mongolian government has delayed the renewing of some of SouthGobi’s license, scaring away customers and squashing production. Continue reading
2point6billion.com provides news and analysis on foreign trade in south east Asia, with a particular focus on China and India. The stories are contributed by the foreign direct investment experts at Dezan Shira & Associates, who have offices throughout China, India and Vietnam.