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April 30, 2007
Quote of the Day for Monday, April 30, 2007
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April 29, 2007
An "Ugly Correction" for Condos
Against ongoing uncertainty about deepening problems with subprime mortgages and what speculators who jumped into the housing market too late for a quick profit will decide to do, multifamily developers and analysts at the NAHB Pillars of the Industry multifamily conference in Hollywood, Fla. earlier this month agreed that condominiums in some of the formerly most overheated markets will be "in the doldrums" well into 2008.
"We’re in for a fairly ugly correction," said Ron Terwilliger, president of Atlanta-based multifamily developer Trammel Crow Residential. "It’s not that condominiums are just bad," he said, "for-sale housing is bad."
"Am I allowed to use negative numbers?" quipped Ara Hovnanian, president and CEO of New Jersey-based Hovnanian Enterprises, when asked to rate the housing market on a scale of one to 10.
As subprime and high-risk mortgage market lenders tighten their requirements, the condominium market will contract because fewer people will qualify and the specter of foreclosures, at least in the near term, will loom, said Ronald Ratner, president of the multifamily development, management and investment firm, Forest City Residential Group, based in Cleveland.
In most markets, foreclosures will register only as "a blip," said Ratner. But he added that the psychological effects from the subprime fallout could run much deeper, giving many prospective home buyers second thoughts. . . .
It will be interesting to see how the cycle plays out here in Atlanta, which seems only to be a little late in the condo boom cycle relative to Miami and southeast Florida, for example. The business press, seemingly every day, trumpets some new high-rise condo, mixed-use development, or condo/hotel project.
Atlanta's growth right now is phenomenal. At the same time, Miami's economic performance has been terrific as well, and condo demand simply could not keep up with the speed of developers. "Ugly correction" seem like an apt description of what could be brewing here.
Posted by John at 10:27 AM | Comments (0) | TrackBackQuote of the Day for Sunday, April 29, 2007
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April 28, 2007
China Becomes Japan's Top Trading Partner
China, for the first time, is now Japan's largest trading partner, supplanting the United States. Including Hong Kong, Japan-China trade has exceeded Japan-U.S. trade since 2004, but last year's figures put the mainland itself in the top spot. [Source: Financial Times]
Posted by John at 9:04 AM | Comments (0) | TrackBackQuote of the Day for Saturday, April 28, 2007
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April 27, 2007
America Likes Small Business
Americans like business, especially small business:
Posted by John at 10:00 PM | Comments (0) | TrackBackPew [Research Center] has polled Americans nineteen times on this topic over two decades. In that period, the late 2005 sample was the only time where Americans had even come close to holding a negative view of business. Business has averaged a favorability rating of 61 percent in Pew’s polling. In the latest asking, 57 percent of respondents, including majorities of Republicans and Democrats, characterized their overall opinion of business corporations as "very" or "mostly" favorable—only one point lower than when Pew first asked in 1985. In short, business quickly bounced back.
Small business fares even better with the public. According to Harris Interactive’s March 2007 survey, small business was the mostly favorably-viewed institution in the country. It beat out every other institution named including the military, universities, and religion. Why do Americans hold such favorable opinions of business, especially when compared to politicians? The answer is simple. By overwhelming majorities (72 percent in Pew’s latest asking) Americans say that the strength of this country is mostly based on the success of American business. This is a vote of confidence most politicians and political parties could only dream of. . . .
Economics Incents Immigrants to Learn English
Simple economics drives immigrants to learn English, as laborers who speak English earn more money, reports the El Paso Times:
. . . Economists, looking for links between language and wages along the Texas-Mexico border, found that laborers who speak English tend to earn at least 5 percent more than those who speak only Spanish. . .
Posted by John at 9:23 PM | Comments (0) | TrackBack"We tend to hear that living along the border, there is no need for an immigrant to ever speak English to get by," said Marie Mora, an economics professor at the University of Texas Pan American in Edinburg. "But the reality is that there is a penalty for not speaking English if you are a worker in the United States."
Mora and her husband, Alberto Dávila, also a professor at University of Texas Pan American, studied how English fluency affected the earnings of immigrants.
They found that even when factors such as self-employment are taken into consideration, English proficiency became an important determinant for earnings among foreign-born workers -- especially those from Spanish-speaking countries.
"The reality is that there aren't a lot of jobs for people who can speak Spanish only here in the United States," Mora said. "And those jobs that require no English do not pay well and have no real chance for advancement professionally or financially."
It is the need to bring more money home that drives people such as Maria Flores to take English as a second language classes for adults. The classes are offered at churches and other places, such as the Ysleta Community Learning Center.
Flores, a mother of three who earns less than $8 an hour working at an electrical manufacturing company on the East Side, is taking English classes in hope of moving into middle management.
"Supervisors make more money, but you need to speak English. I speak a little bit, but not good enough to be a supervisor," she said. "Being a supervisor would allow me to give my children a better life." . . .
Quote of the Day for Friday, April 27, 2007
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April 26, 2007
A "Pandemic of Cancer" in Asia by 2020
Cancer death rates in Asia are likely to spike by 2020, affected as many as 7 million people a year by 2020. News-Medical.net reports:
Parkin who was speaking at the. . . Asia accounted for about half the 7 million cancer deaths worldwide in 2002, with 23 percent in China alone. . . .
According to Donald Maxwell Parkin, a senior research fellow at Oxford University in Britain, Asia already has most of the world's stomach and liver cancer cases but could well have as many as 58 percent of all cancer cases in the world by 2020, and about 65 percent of all cases by 2050.
The WHO is also warning that Asia's annual death toll from cancer, currently at about 4 million, could reach 6.4 million by 2030 if current trends continue. . . .
Once a disease more common in wealthy nations, experts now say cancer is increasingly afflicting developing countries due to tobacco and alcohol abuse, unhealthy diets and the lack of exercise; limited access to key cancer treatment technology in developing countries will worsen the situation.
Richard Horton, editor of the British medical journal Lancet has forecast a pandemic of cancer, the like of which has never been seen before. . . .
Researchers say cancer already kills more people worldwide than AIDS, tuberculosis and malaria combined. . . .
Posted by John at 8:23 AM | Comments (0) | TrackBackIndia Poised to Become World's Second Largest Steel Producer in a Decade
Based on the planned increases in steel making capacity in coming years, India may become the world's second largest steelmaker in less than a decade. Industry capacity is set to rise three-fold to 120 million tons by 2016 from today's 44 million ton capacity.
Japan, the world's number two steel producer, has 116 tons of capacity, while the U.S. is third with 98 million tons. China is the number one producer by far, with about 418 million tons of capacity.
See this article for further information.
Posted by John at 4:06 AM | Comments (0) | TrackBackQuote of the Day for Thursday, April 26, 2007
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April 25, 2007
China Mobile: Fifth Highest Brand Value in the World
In the Millward Brown Optimor report on brand value I referenced earlier, China Mobile is deemed to have the fifth highest brand value in the world. At $41.2 billion, China Mobile ranks ahead of Citi (8th at $33.7 billion), IBM (9th at 33.5 billion) and Toyota (10th at $33.4 billion).
In terms of age as an independent company, China Mobile is younger even than Google, having been spun out from China Telecom in 2000.
Other Chinese companies on the top 100 list include Industrial and Commercial Bank (ICBC) (33rd at $16.5 billion), Bank of China (38th at $13.6 billion), China Construction Bank (61st at $10.8 billion). All three of these banks individually are judged to have greater global brand value than Wachovia, Goldman Sachs, State Farm, Royal Bank of Scotland, Barclays, and AIG, just to name a few financial service behemoths near the end of the top 100 list.
Posted by John at 12:59 PM | Comments (0) | TrackBackThe Young Shall Inherit Brand Value
Just slightly younger than my nine year old daughter, Google has build the highest brand value, $66.4 billion, of any company in the world, according to a study (pdf) by Millward Brown Optimor. General Electric, which celebrates its 115th birthday this year, is second with a brand value of just under $62 billion.
If you accept Millward Brown's results--and I have no reason to refute them, based on my own personal usage and awareness of each company's products--then Google's brand value is 45% of its market capitalization, while GE's brand is only 17% of its market value.
Posted by John at 12:38 PM | Comments (0) | TrackBackQuote of the Day for Wednesday, April 25, 2007
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April 24, 2007
Is Bigger Better for a Chinese Company to Be Successful Globally?
Mary Ma, Senior Vice President and CFO of Lenovo, gave an interview ($) to the McKinsey Quarterly and offered her thoughts on Chinese companies making acquisitions abroad, the challenges of cultural integration between the “East” and “West” sides of a global enterprise, and how private equity ownership in Lenovo has helped the company in more ways than just financial backing.
She offers some curious comments about the prospects of success for Chinese companies “going global”:
. . . Probably the biggest reason for the failure of international growth is that companies lack a certain critical mass at home. Without that, they will lack the level of strategic thinking needed to manage an international organization, and they will lack managers with the necessary breadth and depth of experience.
And this is purely about size; a smaller company’s management wouldn’t have the capability even to think about operating at a global scale, nor the capacity to absorb hundreds more people and managers. The depth of Lenovo’s management meant that we could sustain our success in China and still have managers available to go anywhere we needed them, as long as there wasn’t a language barrier.
China is the place to build that experience; this is where a company will have the biggest advantage. Even if competition is severe, managers know the market very well and they have everything in their favor. . . .
I’m not sure that a company’s size and the ability of its managers to think strategically on an international basis are as correlated as Ma suggests. Moreover, this view doesn’t seem too consistent with the notion of a “flat world”. Convenient travel and broadband networks tighten distance and help unleash more global information for companies, even the smallest ones, than ever before, and increase the ability to think globally.
I’m amazed, as I visit with small to mid-sized Chinese companies, how much many of them do know about global market opportunities. Additionally, the best managed medium-sized companies take advantage of outside expertise to leverage their abilities and augment weaknesses. In fact, such companies often have much more flexibility than their largest counterparts.
A company whose biggest competitive advantage is size may not have much as a jump on the competition as they believe. They could be behind and not even know it. I understand the advantages scale seemingly brings to a company like Lenovo, which operates in a very competitive industry with thin margins.
Smaller to mid-size companies, including those coming from China, can compete on speed and flexibility, even globally. I suspect we’ll be seeing quite a number of these enterprises making their appearance internationally in coming years.
Posted by John at 9:35 PM | Comments (0) | TrackBackLabor Shortages in Macau
Given the huge boom of casino building going on in Macau, casinos there estimate they will need 50,000 croupiers by 2009. Macau's population is just over 500,000. For more see this story.
Posted by John at 8:35 PM | Comments (0) | TrackBackQuote of the Day for Tuesday, April 24, 2007
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April 23, 2007
Emerging Multinationals from Developing Countries
A rising group of companies from China, India, and other emerging economies are seeking to go global because of ease of communications and travel, as well as the availability of talent for hire from consulting and other corporate advisory firms. The result is likely to be a phenomenon more complex than when Japanese or Korean companies started going multinational:
. . . [Boston Consulting Group's Harold] Sirkin says that over the long run, the entry of the new multinationals into the U.S. market will be a "bigger deal" than the previous arrival of Japanese or Korean businesses, if only because countries as big as China and India are likely to spawn many important companies. "We'll see the next Toyota coming from China and the next Samsung coming from India," he said.
Posted by John at 8:42 PM | Comments (0) | TrackBackThe new multinationals represent a far more complex phenomenon than a surge of imported products, which can be blocked or reduced by tariffs and quotas, experts say. These companies will be buying assets, and while political disputes may block some deals, as in the case of a Dubai group aiming to buy American ports or of Haier trying to buy Maytag, there does not seem to be any stopping of the broader trend.
The emerging multinationals will also be building new plants in the United States and offering services and products that are in great demand, like the IBM computers now sold by Lenovo.
But Sirkin is optimistic that the U.S. economy will continue to flourish. "There are a lot of imports coming in from China today, but what's our unemployment rate?" he said. "It isn't 43 percent. We've responded." [Source: International Herald Tribune]
China's Sandstorms
A large swath of northern China has been hit by fierce sandstorms lately; deforestation has made these sandstorms more severe in recent years. Take a look at this video on the problem:
Quote of the Day for Monday, April 23, 2007
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April 22, 2007
In Praise of the Ganas of the Hispanic Entrepreneur
Victor Landa, in a San Antonio Express commentary, praises the ganas of the vibrant and rapidly growing Hispanic entrepreneurial class:
. . . we should all stand and hail the heroes of the American economy. We should stand in praise of the sacrifice and risk of American businessmen and businesswomen; they are the ones who stick out their proverbial necks, the ones who put their dreams on the line and wager on their vision and energy. In Spanish we call that "ganas."
Ganas is everything I've mentioned, and more. Ganas is the increasing number of Latino entrepreneurs who have gone toe-to-toe with the market and survived, who meet payroll, who churn the engines of commerce, who carry the torch of the American can-do spirit. . . .
Latinos also have an uncanny ability to improvise. They take what's at hand and make it work; they take whatever may be at their disposal and turn it into a tangible return. If you could bottle ganas and sell it at some business motivational seminar, you'd make a killing.
And the person behind the ganas counter in the lobby would more than likely be a Latina. Half the Hispanic businesses in the country are owned by women; so much for stereotypes. . .
[Thanks to Hispanic Trending for the pointer.]
Posted by John at 8:33 AM
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Remembering Soviet History Should Encourage Move to Freer Trade
Creating barriers to foreign goods will create barriers to foreign buyers of our goods as well, writes John Tamny in The American; a look back at the Soviet Union helps illustrate the point:
Wealth in the former Soviet Union didn’t mean savings, but "blat," which was a Russian word for access to goods (including those from the west) only available in shops accessible to a small elite. True "blat" was the ability to travel abroad. According to an account from British diplomat Nigel Broomfield in [Hedrick] Smith’s book [The Russians], when Soviets reached Western cities they "were like coiled springs, leaping at the department store cornucopias of the West." Rather than touring, "Russians came back incredibly laden with new dresses, slacks, shoes, shirts, radios, the whole kit." Soviets clamored for trips abroad not just to breathe relatively freely, but to shop. When they returned, the goods they brought with them were sold at large markups to less privileged Soviet citizens.
Posted by John at 8:06 AM | Comments (0) | TrackBackThe Soviet experience should be remembered in discussions of a free trade agreement with South Korea, new tariffs announced against China, and the troubled Doha round of trade talks. Rather than concentrate on what the U.S. will win or lose in the short term, U.S. negotiators will do best if they focus on the long haul, in which free trade is its own reward. If we open our markets, foreign buyers of our goods will ultimately materialize in droves. . . .
Quote of the Day for Sunday, April 22, 2007
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April 21, 2007
China Does the Backstroke in Global Liquidity
In the first quarter, 41 Chinese companies went public, raising $14 billion. Much more is coming: CITIC's public offering alone is expected to raise just under $6 billion.
Posted by John at 9:33 AM | Comments (0) | TrackBackNeeded Perspective on the Aftermath of the Virginia Tech Tragedy
I admire Peggy Noonan's writing abilities immensely, and I've pointed to her work previously. Ms. Noonan, as I would expect, put eloquence to some of the thoughts I know many of us have had on the senseless tragedy at Virginia Tech and its aftermath; please read her commentary in full:
The anxiety of our politicians that there may be an issue that goes unexploited was almost -- almost -- comic. They mean to seem sensitive, and yet wind up only stroking their supporters. I believe Rep. Jim Moran was first out of the gate with the charge that what Cho did was President Bush's fault. I believe Sen. Barack Obama was second, equating the literal killing of humans with verbal coarseness. Wednesday there was Sen. Barbara Boxer equating the violence of the shootings with the "global warming challenge" and "today's Supreme Court decision" upholding a ban on partial-birth abortion.
One watches all of this and wonders: Where are the grown-ups? . . .
Posted by John at 9:09 AM | Comments (0) | TrackBackThe last testament Cho sent to NBC seemed more clear evidence of mental illness -- posing with his pistols, big tough gangsta gonna take you out. What is it evidence of when NBC News, a great pillar of the mainstream media, runs the videos and pictures on the nightly news? Brian Williams introduced the Cho collection as "what can only be described as a multi-media manifesto." But it can be described in other ways. "The self-serving meanderings of a crazy, self-indulgent narcissist" is one. But if you called it that, you couldn't lead with it. You couldn't rationalize the decision.
Such pictures are inspiring to the unstable. The minute you saw them, you probably thought what I did: We'll be seeing more of that. . . .
The World is Flat, Heritage Version, Part II
I forgot to mention in my post on our website redesign that this project is being run by a Georgia Tech graduate student working for us as an intern. He's from China, has just earned his PhD, and is finishing his MBA.
As I watch him and see his work I often think of how wonderful it is that Atlanta, because of its universities, is able to attract such talent from around the world. At the same time, it's a shame that students from other countries see more value in our educational institutions than U.S. students do. At Georgia Tech, for example, the graduate level engineering student body is comprised of large numbers of Indian and Chinese students.
This country needs to have a policy of encouraging more natives to continue in graduate-level engineering studies, as well as bringing in talent from abroad and encourage them to stay after they've earned their degrees. For more on this subject see this post.
Posted by John at 8:48 AM | Comments (0) | TrackBackQuote of the Day for Saturday, April 21, 2007
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April 20, 2007
The World is Flat, Heritage Version
In The World is Flat, Thomas Friedman discussed at length how the Internet and broadband connections allows graphic designers, writers, artists, programmers and software developers, and other independent contractors to offer their services on a global basis. Sites such as eLance.com and guru.com allow you to view portfolios of completed work, sort by location, price, customer rating, or other factors, and put your project out for bid.
We're in the middle of redesigning our website, and we decided to post our project on guru.com. Within 24 hours, we received 15 bids on our project. Only four bids were from the United States, while eight were from India, one came from Argentina, and one came from Australia. The quality of the portfolios these professionals have advertised ranges from average to excellent, but we've received enough bids from designers with very good portfolios that we'll have no problem finding someone who can get our job done at a fraction of what we paid for websites past.
The world is indeed flat.
Posted by John at 4:38 AM | Comments (0) | TrackBackSoutheastern Cities Continue to Draw African-Americans
Black Enterprise magazine has unveiled its most recent list of top cities for African-Americans in its May 2007 issue, and Washington is first, followed by Atlanta. In the last survey in 2004, Atlanta and Washington were first and second.
Atlanta, "home to 64,000 black-owned businesses", "continues to offer extensive entrepreneurial opportunities", according to Black Enterprise.
As with the last survey, eight of the top ten cities in the survey are in the South. (Birmingham and Memphis fell out, but were replaced by Raleigh-Durham and Jacksonville.)
Posted by John at 4:15 AM | Comments (0) | TrackBackWhere Did the Unemployed Professionals Go?
BusinessWeek's Michael Mandel observes that the unemployment rate for professionals (which includes categories like software engineers, architects, engineers, scientists, lawyers, doctors, registered nurses, and social workers) is only 1.7%, according to the latest jobs report. That's the lowest rate since 2001.
Further, the employment rate for workers with a bachelor's degree or higher was 1.8%.
Posted by John at 4:00 AM | Comments (0) | TrackBackQuote of the Day for Friday, April 20, 2007
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April 19, 2007
A New Category: Georgia and the Southeast
Since we post so often on development, demographic, and other trends in our home state of Georgia and the Southeast generally, we've created a new category on Georgia and the Southeast. To see posts for this new category follow this link.
Posted by John at 8:47 PM | Comments (0) | TrackBack
Banning Japanese Language Business Cards in Nashville
Nashville Mayor Phil Purcell explains the problem with English-only laws, and how they hinder economic development efforts for his city; Purcell just vetoed an English-only bill passed by the Nashville City Council:
"We are the friendliest city in America," said Mayor Bill Purcell, who's spending the last of eight years in office. "It is a part of who and what we are. We encourage people to come for the weekend, a week or the rest of their lives. And this law was directly contrary to that." . . .
Purcell is clear with his disdain that Hispanic immigration is the real catalyst [for the bill], mentioning Wal-Mart's recent decision to add Spanish signs to its stores. The school system recently launched a TV spot in Spanish that describes school programs and last year added a Hispanic family outreach coordinator.
"There have been laws like this attempted and passed in lots of different places, and none of them go to the issue that's bothering them," he said.
Purcell, a careful politician who's chosen to make this his first major veto, flips his business card onto his desk in exasperation. On the front his name and number are in English; on the back, in Japanese.
"My business card would have been illegal," he said. "Why is my card in English and Japanese? It's not because I speak Japanese. It's because we are the most successful recruiter of Japanese business and investment of any city off the West Coast of America. We greet Japanese visitors in Japanese at the airport. This law would have said that was illegal. And that's wrong in every way." [Source: Houston Chronicle]
Purcell is in China right now; presumably the Chinese business cards Purcell is passing out there would also be illegal in his hometown as well.
As we mentioned in another post, local and state legislators seem to have little clue how much these laws hinder economic development.
Posted by John at 9:51 AM | Comments (0) | TrackBackCan't Get Enough Stocks in China
The total number of accounts opened by retail investors in China over the past four months exceeds the total opened over the past four years combined. [Source: Financial Times]
Posted by John at 4:43 AM | Comments (0) | TrackBackAiming High at UAW
IndustryWeek reports on UAW President Ron Gettelfinger's recent remarks that Chrysler needs to remain a part of DaimlerChrysler:
Gettelfinger described the equity firms hovering around Chrysler as "strip and flip artists" and said he had "some concerns about these equity companies coming into the industry." . . .
"There is a lot of support on the supervisory board for keeping Chrysler," he added. Gettelfinger said frustrated shareholders ought to remember that Chrysler is still doing much better than General Motors and Ford and that Chrysler has made significant contributions to the broader DaimlerChrysler group.
What does it say about the UAW that its President's standard for Chrysler is just bettering the records of General Motors and Ford?
Posted by John at 4:00 AM | Comments (0) | TrackBackQuote of the Day for Thursday, April 19, 2007
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April 18, 2007
Hispanic Small Businesses Proliferate in Spite of Limited Outside Funding
Of all minorities in the United States, Hispanics own the greatest number of businesses, approximately 1.6 million. This number represents about 39% of the roughly 4.1 minority-owned businesses in the U.S., and 6.6% of all U.S. firms.
This data, compiled by the Small Business Administration using Census Bureau data, is as of 2002. As slow as these agencies are, it's an extremely safe bet that the number of Hispanic-owned businesses revealed in the next survey will be substantially larger than "current" numbers.
Not surprisingly (to us, anyway), Hispanic firms, according to survey data, are less likely have received outside financing in the form of either a direct government loan, a government guaranteed loan, a business loan from a bank, or a loan or equity from an outside investor. Only 6.3% of Hispanic businesses reported at least one of these sources of outside financing, compared to 7.6% for Black-owned businesses and 9.6% for Asian-owned firms.
Hispanic-owned firms grew by 5.5 times in the two decades ended in 2002, and by 31% in just the five years from 1997 to 2002, according to the study. This segment of the entrepreneurial market is clearly prospering and rapidly growing, yet is still less likely to receive or even have access to outside financing. It's not much better for businesses owned by other minorities, but Hispanic-owned small businesses operate at an even greater financing disadvantage, yet find a way to proper overall.
You can find the complete study here (pdf), and a summary here.
Posted by John at 4:34 AM | Comments (0) | TrackBackWater Party in Phoenix
What do you have when Phoenix, surrounded by desert and in the midst of a multi-year drought, is paying among the nation's lowest water rates, and constantly moist Seattle's water is the nation's most expensive?
You've got a screwed-up situation caused by government invention in Arizona and other Western states which prevents a natural lower of demand which would be achieved through market-based pricing.
Thanks to the Coyote Blog for a terrific example of how poorly the public, its government, and particularly its media understand basic economic theory:
[Local media] articles blame global warming and lack of conservation and development and too many lawns and not enough low-flow faucets and talk about the need for government rationing, but never once mention PRICE. We have the scarcest water in the country and one of the lowest prices for water. Talk about ignoring the elephant in the room. I should have just labeled this post "Duh!"
Read the entire illuminating post, including Coyote's "five minute solution" to the problem.
Posted by John at 3:57 AM | Comments (0) | TrackBackQuote of the Day for Wednesday, April 18, 2007
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April 17, 2007
Nixon and Deng: Globalization's Greatest Architects
Richard Nixon and Deng Xiaoping are the world's two most decisive figures in forging the beginnings of today's globalized world, writes Thomas P.M. Barnett, but neither get the credit they deserve. Nixon opened both the Soviet Union and China to the West as never had been done before, and Deng turned China away from Maoism and engineered arguably the most successful economic restructuring in history. Both men, says Barnett, "should ultimately be appreciated for what they were: lead architects of our globalized world, one marked by more peace and poverty reduction than ever before witnessed in human history." Read Barnett's compete commentary here.
Outsourcing Morphs Into Collaborative Networks
Oren Harari offers a very insightful commentary on the future of outsourcing, a piece I encourage you to read in its entirety:
. . . Increasingly, cutting-edge companies are defining themselves as global webs of best-of-breed relationships, as seamless networks of talent and resources not limited by geography. In that context, the value and health of the company is based in large part on the value and health of its partners, and thus the traditional stereotype of internal vs. outsourced, or domestic vs. offshored, becomes less and less germane. Thats why companies as diverse as GE and Proctor and Gamble have numerous ventures and research labs outside the U.S., and view much of their future growth and competitive advantage as coming from new products and systems developed by partners outside the U.S. . .
Large Indian outsourcing firms such as Tata are morphing into something a little more complex than the Lou Dobbs stereotype, and it's good for the global economy, including the U.S.:
Posted by John at 4:05 AM | Comments (0) | TrackBack. . . Once a simple source of offshoring for American firms, Tata has become so successful that it is now expanding into countries like China, Brazil, Chile, Hungary, and the U.S.and hiring the locals (like 10,000 U.S. employees). One could legitimately argue that Tata is outsourcing the outsourcing business, but that's the wrong paradigm. Increasingly, in all businesses, the new strategic conversations will be about borderless collaborations. The new organizations will be hubs of best-in-class capabilities and contributions from anywhere around the world. And Tata, like GE and Ericsson, will be part of that paradigm. . . The net result will be more corporate growth and more jobs everywhere. American companies that outsource their IT functions to Tata grow and hire more Americans. As Tata grows, it hires more Americans. Meanwhile, as American and non-American companies grow, they hire more non-Americans elsewhere. . .
Living Large in Venezuela . . .
. . . on oil profits, of course. Our 1999 technology bubble looks tame by comparison, as Alexandra Starr, writing in The American Scholar, reports:
. . . My aunt, a Caracas radio personality, told me that a surgeon who advertises on her show had expanded his office twice in the previous five months and still could not accommodate all of the women who poured into his office demanding that their breasts be enlarged to C-cup size.
The booming economy may make elective surgery and luxury vehicles affordable for the upper-middle class, but the Venezuelans who are amassing the immense fortunes are the Boliburguesa, or the members of President Chávez’s inner circle. (The name refers to the president’s leftist Bolivarian revolution and the bourgeoisie.) Boliburgueses had constructed mega-mansions in the most storied Caracas neighborhoods and bought spanking new jets. A journalist friend who shadowed one of Chávez’s closest allies was chauffeured around in a bulletproof BMW, flanked by Korean bodyguards who can allegedly brain a would-be assailant with a butter knife at a distance of 20 meters. "It was like something out of Goldfinger," my colleague said, still somewhat incredulous. Just as bizarre was his description of a Caracas sushi restaurant that had been enthusiastically recommended: rare tuna could be served—for an exorbitant fee—on the belly of a woman in the buff. . . .
[Thanks to FP Passport for the pointer.]
Posted by John at 4:00 AM | Comments (0) | TrackBackQuote of the Day for Tuesday, April 17, 2007
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April 16, 2007
Firms Owned by Private Equity Firms are Job Creators, Not Destroyers
U.K. companies owned by private equity firms not only do well for their shareholders, but they create jobs as well, says corporate governance expert Mervyn E. King in a Financial Times commentary:
. . . In the UK, the statistics indicate that one in five employees in the private sector are employed by companies owned by private equity funds. The growth in jobs at these companies has been 9 per cent a year over the past few years, compared with 1 per cent at FTSE 100 companies. Not only has job creation been superior, but the returns to investors in private equity funds have also been superior to returns from listed equities.
Not the study results much of the mainstream media suggests, which portrays private equity owners as creating value primarily through layoffs and asset stripping.
Posted by John at 4:36 AM | Comments (0) | TrackBackHighly Charged Future for Battery Technology
FuturePundit examines the future of battery technology, advances in which will be quite disruptive to the fossil fuels industry:
. . . Consider the benefits of battery advances. Sufficiently advanced battery technologies will some day enable cars to run 100 and more miles between recharges. This capability will end the use of liquid fuels for most local travel. Liquid fuels will continue to get used in longer road trips, air flights, and in ships. But for most commutes and trips to stores batteries will displace gasoline, diesel, and ethanol.
The ability to use batteries for transportation will, in turn, enable the use of nuclear, solar, geothermal, and wind power for transportation. . . .
See the full post here.
Posted by John at 4:05 AM | Comments (0) | TrackBackQuote of the Day for Monday, April 16, 2007
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April 15, 2007
Huge Headaches for Southeastern Economic Development Officials
Sometimes state and local officials do not understand how their actions are being watched internationally, and how those actions can affect a state's economic development efforts globally. Matt Kisber, Tennessee's Commissioner of Economic and Community Development, can offer just one particular example:
. . . Kisber recounted a visit to Ottawa, Canada, in November to meet with what he described as Canadians that were equivalent to U.S. State Department officials.
At the meeting, Kisber was "taken aback" because the "first thing" the officials said was "what do Tennesseans have against Canadians?"
According to Kisber, the Canadians referenced the now-notorious political advertisement, paid for by the Republican National Committee, that criticized Democratic U.S. Senate candidate Harold Ford Jr. through a number of different people, including a scantily clad blonde woman who said she had met "Harold at the Playboy party."
But what the Canadians were concerned about was another character in the commercial that specifically referenced Canada, suggesting that the country could "take care of North Korea" because "they’re not busy."
"They took that very personally," Kisber said. "And I spent the better part of half of my meeting convincing them of why we like Canada." [Source: Nashville CityPaper]
Kisber's comments were made in the context of a current effort in Tennessee to require that driver's license tests be given in English only. I don't know the genesis of this particular bill, but it's not a stretch to assume that it is, like many language and immigration-related bills in state houses around the country, aimed primarily at Spanish-speaking Hispanic immigrants.
Kisber's problem, as the state's chief global salesman, is that the Tennessee test is given not just in English and Spanish currently, but in Japanese and Korean. It's not an insignificant issue, as Tennessee is now home to over 150 different Japanese firms employing more than 40,000 Tennesseans and representing almost $10 billion of investment.
Further, Tennessee is trying to get Japan to relocate its New Orleans consulate to Nashville, and Kisber notes that the Japanese Consul General has expressed concerns about the English-only driver's license bill on "a number of occasions".
Foreign governments, as they offer counsel their home companies on expansion locations, assess the overall receptivity of a state or region to foreign investment generally. They understand that some language- and immigration-oriented laws being passed at the state and local level are explicitly aimed at Hispanics. Georgia's SB 529, passed in last year's legislative session, clearly and unabashedly targeted Georgia's Spanish-speaking immigrant population.
At the same time, these foreign governments and their home companies also know that such laws know no boundaries. They are enforced on all foreigners, sometimes capriciously and cruelly.
Just ask Cheryl Kuehn, a 23 year old Canadian, who was recently arrested near Brunswick, Georgia for speeding and running a stop sign. Upon determining that Ms. Kuehn was a Canadian, she was taken to a detention facility. According to this report, it took Glynn County officials eleven minutes to contact U.S. Immigration and Customs Enforcement and determine there was no reason to hold her, yet she was stripped, searched, fingerprinted, given a prison uniform, and held for 11 hours, thanks to the zealous efforts of Glynn County officials to enforce its own interpretation of S.B. 529:
Mrs. Kuehn's detention seems to be partially the result of confusion over a controversial new Georgia state immigration law.
The law, scheduled to come into effect July 1, was designed to prevent illegal immigrants from collecting social services, but also requires immigration checks for people charged with felonies or drunk driving.
Although Mrs. Kuehn was charged with neither, Sheriff Bennett said it is the Glynn County policy for every "foreign national" to undergo the immigration check, no matter how minor the offence.
"We will bring some of these immigrants in and they will post cash bonds and be released and then some time later find out they were wanted for felony charges or could be known criminals from their own country," said Sheriff Bennett, adding seven months ago the "strict" immigration law wouldn't have been in effect.
"I don't consider a Canadian to be an illegal immigrant, but according to this immigration policy, if they are a foreign national then they go through this process," he said. "We do not want to discriminate against anyone so we have to do everyone. It has to be systematic." [Source: Ottawa Citizen]
This impression of Georgia, splashed across newspapers and blogs not just in Canada but around the world thanks to the Internet, creates damage to the state's global reputation and its economic development efforts which are impossible to calculate, but real nonetheless. You can bet that our state officials, similar to Tennessee's Kisber, will be spending most of their upcoming meetings with Canadian officials talking not about the advantages of a Georgia location for Canadian companies, but trying to convince them that what happened to Ms. Kuehn was just an aberration caused by zealous locals.
That will take one heck of a sales job, particularly when state law is viewed by local officials as condoning such procedures and behavior.
Posted by John at 11:30 AM | Comments (0) | TrackBackQuote of the Day for Sunday, April 15, 2007
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April 14, 2007
"Go Hogs!" Becomes Bilingual
The University of Arkansas will be the first school in the Southeastern Conference to provide broadcasts of its football games in Spanish,