Tuesday, April 30, 2013

Busting the India vs China myth!

Comparing India with China, and looking to grab a few brownie points here and there, is a popular obsession with Indians in the past few years. But after Visiting China several times in the past and looking at how the Chinese have developed their economy and built world class brands, the entire debate only appears an exercise in futility

My visit to the Middle Kingdom over a decade back convinced me that New Delhi would not evolve into a Beijing if we worked round the clock for 25 years. When I revisited the capital city last year, I could see the accomplishment of 25 additional years of progress in ten years!

The reality of the unending Chinese miracle hit me harder when I looked at how Guangzhou has developed in just over the past decade. It seems we won’t even reach that level if we work round the clock for another 50 years. When I see how China developed Guangzhou as its industrial hub and how India developed Bangalore at its IT hub (both commenced their ascent at around the same time in the early 1990s) it appears to be a tale of two attitudes, rather than cities. By sheer numbers, the PricewaterhouseCoopers’ Global City Ranking Index for 2010 shows Guangzhou ranked at 44 with a GDP of $143 billion, while Bangalore is ranked much lower at 84 with a GDP of $69 billion.

For over much of the past decade and counting, the ‘India vs China’ debate has persisted across several levels. Both western and Indian media (for their individual reasons) have been particularly boisterous and over-the-top with this comparison on several grounds; and have picked up every possible opportunity to take it up. This was visible, for instance, when US Secretary of State Hillary Clinton came over for a visit and commented on how India should aspire for a parallel role in the region, or when it was being predicted by some economic reports that India’s GDP growth rate would outpace China by 2013-15. From my perspective, all that this debate can realistically provide is a generous daily dose of rollicking entertainment! India may have merited a comparison with China a decade and a half back, but we have crossed that bridge long ago. You may call this assertion unpatriotic, and it is quite obviously unpopular with Indian readers; but this is the plain truth.

Coming back to the two cities I talked about, there are many more surprises in store when you look further into the intricacies of Guangzhou’s numbers. Around 2.5 million women are working in the city, and the employment rate for women has surged three-folds to 70.84% in a decade. Life expectancy for women has risen by 4.5 years to 81.33 years and 49% of graduates are women, who are actively playing their role in sectors like science, technology and education. At around $17.8 billion (2010 figures), the city’s FDI figures are over six times that of Karnataka at around $2 billion (2008-09 data, of which Bangalore would presumably have a major share). The visionary Chinese specifically chose a port city to take advantage of sea trade. Also, the government strategically divided the city into multiple special economic zones to further attract foreign investment. For instance, The Guangzhou Economic & Technological Development Zone caters to technological manufacturing and also serves chemical, electric machinery, food, electronic equipment, metal fabrication and beverage industries. The Guangzhou Nansha Export Processing Zone is meant for automobiles, biotechnology and heavy industries. Easy access has been provided to Shenzhen Port and Baiyun airport to ensure fast movement of goods. The four auto companies in Guangzhou, who are in JVs with 50 major global auto companies, were on target for producing 1000000 cars by 2011. Bangalore, meanwhile, has insensibly avoided division of the city into special manufacturing hubs. Some areas like Inner Ring Road (where we have offices of major multinationals like IBM, Microsoft, Dell and Yahoo!) have become clustered zones for specific industries, but not by design. Also, there are no specialised trade zones in Bangalore, so synergy is hard to achieve.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
Posted by at
Labels: , , , , , , , , , , , , , ,

Saturday, April 27, 2013

Marx, Lenin, Mao, Castro... R.I.P.

It was touted as the grand idea that would secure the future of societies for generations to come.What went wrong?

Che Guevara, in his famous book, The Motorcycle Diaries, wrote, “I knew that when the great guiding spirit cleaves humanity into two antagonistic halves, I will be with the people.” Che surely would have been surprised by how difficult that so-called ‘communist’ choice has become in today’s world! In fact, communist regimes across the world often seem far more anti-communist in nature than the real anti-communists! Karl Marx, the father of communism, who proposed, “From each according to his abilities, to each according to his needs,” would have been loathe to see his ideology so ruthlessly destroyed.

Well, the communist ideology that strives for an equitable State seems pristine on the face of it. Sadly, historically, communists across the world have more or less used the guise of communism to in reality maintain dictatorial rule. Neither would have Karl Marx imagined this morbid metamorphosis of his ideology, nor would he have recommended the shocking usage of force to brutally suppress the so-called anti-communists (in reality, the anti-dictatorship proponents).

If communism in USSR came to be better known for the Stalinistic Great Purge and random executions, the same in Yugoslavia became utterly farcical with Tito adorning himself with the ‘President for Life’ title in 1963. Both these regimes got broken up purely because of this rabid need of the communists to retain power.

Factually, those are communists themselves who, due to their tyrannical and fanatical insecurities to retain power, have forced global masses to choose the less than perfect – and in reality, utterly incompetent, anti-social and unworkable – combination of democracy and capitalism.

Worse is the fact that in case communists had in reality worked for the masses, then they would have retained power even during democratic elections. Clearly, most communist regimes never actually worked towards the equitable quotient. But some did, and creditably.

The Cuban case is classic evidential material on this. One of the main reasons the Castro clan has been able to retain power almost non-violently has been because they’ve stuck to the cause. Cuba beats many Western nations on human life indicators, what to talk about third world countries. With an 18% of GDP investment in education, Cuba attempts to educate almost 100% of its children equitably. That is the reason Cubans in reality appreciate the socio-communist ideology. In one perspective, even the Chinese Communist Party has been true to the ideology – more poor have been lifted above the poverty line in China in the latter part of the last century than ever has been done in the history of mankind in any nation. Unfortunately, the more tyrannical it becomes, the more the Chinese Communist Party is digging its own grave and that of the nation.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 
Posted by at
Labels: , , , , , , , , , , , ,

Thursday, April 25, 2013

“They must establish consensus before a law is made”

N. A. Ansari, Whole time Director and Executive Director, JSPL Raigarh. talks about JSPL’s R&D and environment initiatives as well as policy issues

B&E: What have the most important outcomes of JSPL’s R&D initiatives so far?
N. A. Ansari (NAA): We use our in-house R&D facility as well as licensed technologies. We ensure that the combination of these two brings out quality products for us. For example, we have manufactured the world’s longest rail, which is 121 meters long and can be coupled to form 484 meters in all. But we are still waiting for the orders to come, because the most important consumer of this technology could only be Indian Railways. We have been trying to convince them for the last 4-5 years that our rail can be laid down quickly, is easy to maintain, lighter in weight, et al, but they have stuck to their MOUs, which they have signed with the other companies. Apart from this, we regularly do research to find out ways to improve our quality, reduce wastage, cut down coke consumption in the blast furnace, increase yield, et al.

B&E: What is your perspective on the logistics and transportation related issues that JSPL faces in particular?
NA: Infrastructure is really in a very bad shape. We receive our imported raw material at Paradip port in Orissa, from where it gets to our Raigarh plant by train. This is very time consuming as our ports are not in a position to handle the cargo quickly and efficiently. We have purchased a 60% stake in an SPV to develop Gopalpur port near Berhampur city in Orissa’s Ganjam district. This will help us immensely once our six million tonne steel plant in Angul starts production.

B&E: Policy issues like land acquisition, environmental clearance, et al are gaining a lot of ground these days. How can they be made more business friendly?
NA: I am not against any regulation. All I want to say is that there needs to be a practical approach to law making. Some of the laws regarding environment conservation are very good, but they are difficult to implement due to lack of technology or some other constraints. So, the attempt should be to establish a consensus before a law is made. Also, the mechanism to resolve the issues & attain clearances should not be so slow and time consuming. If you need to give a red signal to a project, say it in one go and then stick to it. Otherwise, let the work go on. By the time the final decision comes about a project, it may not remain feasible for the producer anymore. So, if we really want to see the sector booming, we need to address these issues on a high priority basis.

B&E: How are you meeting various environment-related norms?
NA: Through our R&D, We are able to manage our fly-ash emission in a very systematic manner, which has brought down the risk to the environment significantly. We are using a lot of our fly ash waste to manufacture bricks. This way, we are not just disposing our waste, but also creating value out of it. We have also planted over 3 million trees in and around our Raigarh plant. This is our way to use natural resources sustainably.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 
Posted by at
Labels: , , , , , , , , , , , ,

Wednesday, April 24, 2013

How Volkswagen is leveraging its India plans to become the global #1!

Last September, Volkswagen edged past Toyota to become the second largest auto selling company in the world. It’s next target – grab the gold by 2018. It is already the largest in the #1 automarket, China. To further propel the company’s growth globally, Martin Winterkorn, the global CEO of VW Group, has set his eyes on the fastest growing automart amongst the BRIC nations. India. The work has begun. But Indian conditions won’t allow Winterkorn to have his way easily. And then of course, there is competition.

Digital media networks covering the Frankfurt Motorshow, a few months back, were abuzz about Martin Winterkorn, CEO, Volkswagen AG, visiting the Hyundai Motor Company pavilion. It was a pleasant surprise for the Korean giant as the CEO of the world’s second-largest automobile company started examining the new i30, which was meant to give serious competition to VW’s Golf. Winterkorn started by measuring the thickness of paint used on the lift-gate, then walked around the i30 grazing his knuckles across the hood-to-bumper shut lines to check for evenness. He then took a careful note of the interiors of the car. Hard to imagine what was going on in his mind, but his expressions indicated that he had some gaps in his thought-process which needed closing. Someone ought to give him answers. Winterkorn called for VW’s design head Klaus Bischoff, and demanded, “The lever for the steering wheel release makes no sound while moving. BMW can’t do it. We can’t do it. Why can they?” The chief wanted to know how Hyundai managed to make an adjustment mechanism to the steering that didn’t make any noise. Bischoff had no answer.



Winterkorn’s visit to the Hyundai camp clearly indicated the regard he held for the fifth-largest automaker in the world – a worthy opponent. The company wouldn’t want to give up its silver crown which it snatched from Toyota last September, not to even a respected, fast-growing automaker like Hyundai.

Volkswagen’s march-without-stumble in the global market has wowed onlookers. From being a lesser-known European brand to becoming the second-largest car-seller in the world (market share of 12.2% in terms of sales volume), the past four years – with increased focus on the BRIC markets – for the group have been least to say, career-defining! Five years back, new launches from VW were unheard of in most parts of the world. Today, every move of the company is discussed upon. Winterkorn knows that.

Two years back, VW’s claim of reaching an annual production mark of 10 million units by 2018 sounded like wishful thinking, Today, it appears that the milestone will be surpassed well before the set deadline. The automaker sold 8.16 million cars worldwide in 2011, a 14.3% increase y-o-y. Experts do claim that the company may fail to mirror its previous year’s performance in 2012. However, growing its annual sales by 1.84 million over a period of 9 years means growing sales at a CAGR of 2.29% starting FY2012. Selling 186,864 cars more every year – not difficult for VW. Not if we go by the work VW has been doing in the BRIC markets post-2009.

Winterkorn is serious about the BRICs. During the previous Christmas holidays, he summoned the bosses of the company’s operations in BRIC markets to the global headquarters at Wolfsburg, Germany. With its sight set on the #1 spot in the global automotive circuit by 2018, the CEO of the $162 billion-worth VW Group wanted to reiterate on and announce his gameplan of reaching the #1 position by digging gold in the BRIC nations. Needless to mention therefore, its performance in the bloc’s second largest (after China) and the fastest growing auto market – India – is crucial.

Read more.....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
Posted by at
Labels: , , , , , , , , , , , ,

Friday, April 19, 2013

Creating an impact that achieves goals of equity as well as economic growth

As a new field of investing, impact investing uniquely gives the best of two worlds to the investor – financial returns as well as social equity. Linda L. Darragh, Director of Entrepreneurship Programs & Clinical Associate Professor of Entrepreneurship and Nurkholisoh Aman (Research Assistant) of the Booth School of Business analyse the developments and stumbling blocks for impact investing in India

Impact investing is an emerging investment field that is gaining increasing popularity as people look for ways to grow sustainable businesses. The recent global financial crisis is often cited as an example of how the capitalist model has failed to generate equitable and sustainable economic growth. On the other hand, philantropic activities alone cannot provide long-term solutions to what are the world’s most pressing challenges such as poverty, renewable energy, and the lack of basic health care.

Impact investing occupies a unique position between the extremes of pure for-profit businesses and charity/grantmaking. Through the promise of getting the “best of the two worlds”, impact investing presents a new alternative in the world of investing. In a 2010 study, JP Morgan defined impact investment as “investment intended to create a positive impact beyond financial return.”

Generally, impact investments target the population at “the base of the pyramid” (BoP). They aim to improve the lives of the poor by providing products or services that are otherwise unavailable or unaffordable. Another point of view of impact investments places the focus on respecting the environmental impact of business activities.

At Chicago Booth, we recently conducted a study to understand the landscape of impact investment in six emerging economies. In India, we found that there is an increasing interest in investing in entrepreneurs who pursue both social and financial objectives. A few years ago, micro finance lenders represented the breadth of social entrepreneurs in India. Now, impact investors have significantly broadened their definition of social investing due to the emergence of potentially scalable ideas in other sectors.

Given the sheer size of the Indian population at the base of the pyramid, there are almost unlimited opportunities for impact investing. Additionally, India now faces big challenges to protect its fragile environment – air, water, forests, and bio-diversity – from the rising pressures created by economic success.

Interviews with impact investors and agencies that work with social ventures identified the sectors that are most popular amongst social entrepreneurs in India. These are:
A. Water & Sanitation – There is a huge need for companies that offer customers safe, affordable drinking water through community water systems. Approximately 170 million people in India currently lack access to safe, clean drinking water. Water-borne diseases are estimated to cost US$600 million annually in lost production & medical treatment.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 
Posted by at
Labels: , , , , , , , , , ,

Tuesday, April 16, 2013

An important question for leaders: How ethical can we be?

Prof. James l. Heskett, Baker Foundation Professor, Emeritus, at Harvard Business School, writes an hbs working knowledge paper on how managers like to think they act ethically, but at the end of the day, their ethical action is subjective.
 
Umpires and referees favour the home team. That’s the conclusion of research by Tobias J. Moskowitz and L. Jon Werthheim that appeared in their recent book, Scorecasting: The Hidden Influences Behind How Sports Are Played and Games Are Won. It was a biased judgment on the part of supposedly unbiased referees and umpires.

They hypothesise that the cause is a natural tendency to avoid excessive booing by the home team crowd, particularly in the later stages of a contest in which unbiased behavior is most necessary. Of course one could ask, “Are they cheating, especially when they are probably unaware of what they are doing?”

In a new book Blind Spots: Why We Fail to Do What’s Right and What to Do about It, authors Max H. Bazerman, a professor at Harvard Business School, and Ann E. Tenbrunsel, a professor of business ethics at the University of Notre Dame, argue that something they call bounded ethicality leads “even good people to engage in ethically questionable behavior that contradicts their own preferred ethics.”

We do it when it is easy to do, when it is hard to verify, when we have insufficient time or information. We may do it in ways that allow us to preserve our perception of ourselves as an ethical person. Doctors experience it when they make diagnoses and prescriptions biased by their special training while maintaining their belief that they are putting their patients first.

It helps explain why people systematically regard themselves as being much more ethical than they really are. And it supports a conclusion that, unless ways can be found to reduce bounded ethicality, most ethics-based “education” is missing a large part of the problem. In fact, one study found that ethicists who teach the subject are less likely to return library books associated with their research than the general public is to return books that it borrows.

Why should this matter to us? Employees tell us in one way or another that the single most important characteristic of their job is “a boss who’s fair,” who hires, promotes, and recognises the right people. Nearly all bosses think they’re fair, a much larger proportion than is perceived by their employees.

As antidotes to blind spots, Bazerman and Tenbrunsel argue that we can change ourselves, in part through awareness of the phenomenon itself, putting in place “precommitment devices” that seal you to a desired course of action – imagining your eulogy, or reviewing decisions with a friend. For organisations, greater transparency and fewer silos, among other things, can help (as opposed to such things as signing codes of conduct et al).

How do we address these problems? Do we just hire more ethical people? Or do we help people see how they act in ways that are inconsistent with their more reasoned ethical preferences? What can organisations do to increase the likelihood of employees acting ethically? And, what can society do to change the institutions that guide individual and organisational behavior? Or is the problem beyond us? After all, how ethical can we be?


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
Posted by at
Labels: , , , , , , , ,

Monday, April 15, 2013

Why their marriage hit the rocks

Marriages between carmakers are not made in automotive heaven – the latest alliance to have soured is between Suzuki and Volkswagen. A formal divorce is awaited but Suzuki has already embarked on a new relationship with Fiat.

As Osamu Suzuki, Chairman & CEO, Suzuki Motor Corporation and Martin Winterkorn, CEO, Volkswagen AG, took the stage on December 9, 2009, industry watchers were all agog as they waited with bated breath for some game-changing announcement to be made. But nobody had a clue about what was to follow. Minutes later came the news that the German auto giant Volkswagen (VW) had bought a 20% stake in Japan’s Suzuki Motor Corporation, in a deal worth $2.5 billion. On the face of it the deal looked convincing and a winner for both the parties – Suzuki could get its hands on diesel technology from Volkswagen and in turn the German auto major could employ Suzuki’s small-car expertise to expand its presence in the Asian markets.

Cut to 2011 and both Suzuki and Volkswagen seem to have already given up on the deal. Much to the disappointment of both partners, nothing has moved over the past two years. Worse, relations between Suzuki and Volkswagen have begun fraying and trust between the parties has become the obvious casualty. In fact, in recent months the two players have even taken potshots at each other with Volkswagen claiming that Suzuki had breached a pact by agreeing to a diesel engine deal with Italy’s Fiat on September 11, 2011. That charge seems to have ruffled quite a few feathers in the Suzuki camp which, despite its conservative style, decided to hit back. Osamu Suzuki called a press conference on the next day itself to demand a “divorce” from VW. And the elderly chairman minced no words in giving vent to Suzuki’s concerns about becoming just another sub-brand in VW’s global empire. “I thought they understood that being a partnership of equals was important,” Suzuki remarked at the press conference, not without a hint of irony.

Industry sources believe that the alliance suffered a setback after Volkswagen referred to Suzuki to as an “associate” in its 2010 annual report released earlier this year. The report went on to add that Suzuki was an ‘associate over which Volkswagen has significant influence on financial and operating policy decisions.’ That definitely did not go down well with the Japanese automaker, which took it as an insult to its independent working culture. Recently, Suzuki sent a letter to Volkswagen setting September 30 as the deadline for the German automaker to revoke its statement about the breach of contract.

After Volkswagen bought out a debt-ridden Porsche in late 2009, many had expected the German automaker to go slow on M&As. But with its stated ambition to reach the No. 1 spot globally by 2018, Volkswagen wants to plug all the possible gaps in its strategy. But in the case of Suzuki, perhaps it could have done wth a bit more due diligence before pulling out the cheque book. “Co-operation never really got off the ground. Why? Not clear. Cultural issues, but probably also both partners want different things from each other. Clearly, VW saw itself in the leadership position which Suzuki did not want,” says Christian Breitsprecher, Equity Analyst, Macquarie Securities.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

Posted by at
Labels: , , , , , , , , , , , ,

Saturday, April 13, 2013

B&E This Fortnight

INTERNATIONAL
BUSINESS, ECONOMY & FINANCE
Us debt deal done

After months of political wrangling and partisan posturing by both Republicans and Democrats in the Republican-led House of Representatives, President Barack Obama and his team were finally able to cut a deal that allows the US to trim its bulging deficit and raise the $14.3 trillion debt ceiling by more than $2 trillion in extra borrowing power, which will last till 2013. The agreement reached paves the way for $2.1 trillion in spending cuts spread over 10 years and creates a congressional committee to recommend a deficit-reduction package by late November. But the deal does not include any tax increases that Obama had pressed hard to include. Had this last-minute deal not come about, it would have led to a historic US default on payments to investors in Treasury bonds, recipients of social security pension checks, those relying on military veterans benefits and businesses that work for the government. Now that an agreement has been sealed, though after much fractious debate, the US and the world can breathe easy. It will help preserve America’s top notch credit rating, reassure investors in financial markets across the globe and possibly reverse the losses that spread across Wall Street in recent days as the threat of a default grew. However rating agencies may still downgrade America’s current AAA debt rating on concerns about the struggling US economy.

Sprint-lightsquared
The US’s first integrated 4G-LTE wireless broadband and satellite network, LightSquared, has announced a $9-billion network hosting deal with Sprint Nextel. The deal covers spectrum hosting and network services, 4G wholesale, and 3G roaming. LightSquared will pay the deal amount in cash within 11 years even though the time frame for the deal spans 15 years. Moreover, this agreement brings home the opportunity for Sprint to purchase 50% of LightSquared’s expected L-Band 4G capacity. On the other hand, the deal is beneficial for LightSquared for it expects to save $13 billion on network capital & operating expenses. The deal is expected to be a win-win for both, and will enable setting up a separate platform for Sprint Nextel’s hosting opportunities.

ExxonMobil profits
Riding on the high prices of oil and gasoline, the largest oil company in the US - ExxonMobil reported a 53% increase in its fourth quarter profits. ExxonMobil earned $10.7 billion for the quarter, up from $7.56 billion in the same quarter a year earlier. In the second quarter of the current year, ExxonMobil had increased its production by 10% leading to a 41% increase in its quarterly earnings. Earnings were $2.18 per diluted common share, falling short of analysts’ consensus forecast of $2.33, but still much better than last year. ExxonMobil in 2009 had bought natural gas explorer XTO Energy for $25 billion and has recently purchased two companies in the gas rich Marcellus Shale area across Pennsylvania. The acquisition has boosted its production to an equivalent of 4.9 million barrels of oil a day.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
Posted by at
Labels: , , , , , , , , , , , ,

Friday, April 12, 2013

Oops, They Did it Again!

North India, The Country’s Biggest auto belt, has seen Spurts of Labour unrest over The Last Few Years to The Extent that Automakers are now Shying Away from Investing in The Region. Can The Stretch retain its No.1 Position?

The management of Maruti Suzuki, India’s largest passenger car manufacturer, heaved a sigh of relief as the company reported 2% sales growth in May 2011, selling 104,073 units against 102,175 units in May 2010. No doubt, the growth was negligible considering Maruti’s sales trend over the last 12 months, but in a month when car sales grew by only 7% (the slowest pace of growth in two years) and players like Tata Motors saw a fall of 8.3% in passenger vehicle sales (due to a massive 35% decline in both Indica & Indigo sales), the 2% growth gave management enough reasons to cheer. However, the party didn’t last long. Just three days after, on June 4, 2011, the New Delhi-based company was grappling with labour unrest as 800 workers at its Manesar plant (the plant produces about 1,200 vehicles a day, including the popular Swift and A-Star hatchbacks, and the DZiRE and SX4 sedans) went on strike demanding recognition of a new union specific to the plant. The days that followed saw the company sacking 11 workers accusing them of instigating the strike at the facility, which only added fuel to the fire. Although the strike was called off in just 13 days, on June 17, 2011, it had already made a Rs.4.2 billion dent in the company’s topline by then. And not just Maruti, even its vendors reportedly made losses to the tune of Rs.300 million per day taking the total revenue loss to over Rs.8.1 billion.

It’s not the first time that the northern auto belt has been affected by labour unrest. Companies like Hero Honda, Honda Motorcycle & Scooter India (HMSI), Rico Auto, Sunbeam Auto, Hyundai, et al, have reported similar problems over the last few years. For instance, in 2009, while workers at HMSI’s Gurgaon plant were on strike to protest wages and other issues, Hyundai Motor’s India plant saw a three-day labour unrest. Almost half the workers at the Indian unit of Sweden’s Volvo Bus Corp. too went on strike in 2010, protesting wages. All this has certainly dented the image of India’s leading motown and automobile manufacturers are now shying away from investing in the region.

For instance, when Nissan decided to set up its new unit in India, in alliance with its global partner Renault, it chose Chennai as its home and not NCR. The company now plans to invest Rs.45 billion in this unit by 2015. Similar has been the case with Volkswagen and Tata Motors that chose to set up their base in Chakan (near Pune) and Gujarat (as the home for Nano) respectively. In fact, Maruti Suzuki too is setting up its third facility (its first outside Haryana) in Gujarat with a production capacity of 10 lakh units per annum (expandable up to 20 lakh units). On the contrary, except HMSI (which is planning to invest Rs.8.6 billion in production capacity expansion), no other big name is willing to set up its base in the region, at least not in the near future. This certainly raises questions over how North India will preserve its auto hub status amidst rising labour unrests. For the less informed, auto majors like Maruti Suzuki, Hero Honda, Honda Siel, Hyundai, Yamaha, and Suzuki Motorcycles are operating from the northern region, which accounts for over 50% of the country’s automobile production.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
Posted by at
Labels: , , , , , , , , , , ,

Sunday, April 7, 2013

Can renminbi rival the US dollar?

No doubt, the Chinese renminbi has strengthened more than 3% vis-à-vis the greenback this year, bringing its total gains over the past six years to 30%. But it still has a long way to go before it actually starts to rival dollar in its use as an international currency.

There has been much negative news recently surrounding the US. From a downgrade of the US government debt by rating agency Standard & Poor’s (S&P, on August 5, 2011, had lowered its rating of US sovereign debt one notch to AA+ from AAA, stripping Uncle Sam of the highest rating for the first time in 70 years) to a large public debt that stands at a whopping $14.618 trillion (about 103% of US GDP, and more than $1,30,000 per US tax payer), Washington seems to have had it all. But, as if this was not enough, some observers have now started questioning how long the US dollar can sustain its status as a major international currency. And adding to the sense of gloom surrounding the greenback, the trade weighted-average value of the dollar, as measured by the Federal Reserve’s Major Currency index, continues to plumb new lows (see chart).

Meanwhile, China’s currency, the renminbi (RMB) or yuan (as it’s better known), continues to rise. While the currency gained 0.9% against the dollar in August in the face of significant global financial market volatility, the 12-month RMB futures, as per experts, imply a 1.5% appreciation over the coming year. In fact, RMB has strengthened more than 3% vis-à-vis the greenback this year, bringing its total gains over the past six years to 30%. Even, the issuance of so-called dim sum bonds, which are yuan-denominated bonds issued in Hong Kong, has jumped sharply this year. From just RMB12 billion ($1.7 billion) in 2008, the issuance of dim sum bonds has already surpassed RMB108 billion ($17 billion) so far in 2011. In fact, if a recent research by Standard Chartered is to be believed, the total pool of dim sum bonds could well hit the $1 trillion mark by 2015. Does that mean the dollar’s days are numbered and renminbi is well on its way to replace it as a global currency?

Historically, Chinese trade transactions were invoiced in currencies other than the renminbi. It was only in 2009 when the Chinese government started allowing exports and imports to be invoiced in yuan. Although less than 1% of Chinese trade transactions were invoiced in yuan in Q1 2010, invoicing in yuan has started moving north in recent quarters. In fact, in Q2 2011, trade transactions worth about RMB600 billion, representing about 10% of total Chinese exports and imports during the quarter, were invoiced in yuan.

Still, the use of the renminbi as a means of payment and as a unit of account remains limited on a global scale. For instance, every three years, the Bank for International Settlements (BIS) conducts a survey on the size and composition of the foreign exchange market and in its most recent survey, conducted between April 2010 and June 2010, BIS found that the renminbi constituted just 0.9% of all the foreign exchange transactions that occurred during that period (up from 0.1% in 2004). On the other hand, the dollar was involved in 85% of all foreign exchange transactions between April & June 2010.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles

Posted by at
Labels: , , , , , , , , , , ,

Monday, April 1, 2013

The Truth behind America’s Population Growth Agenda

Started by The US Administration and Promoted by Economists The World over, Population growth Programs became one of The Most Vital aspects of Developments in The 21st Century. Much to The Dismay of Governments, The Plans have actually backfired...

I have spent more than forty years of my professional life telling economists, business people, academics, politicians, government officials and the public at large that population growth can be one of the most positive factor in the attainment of long-term sustainable human development. My advocacy of a culture of life was actually prompted by the scientific studies of one of my professors in the doctoral program in economics at Harvard in the early 1960s, the famous Nobel laureate Simon Kuznets. As the father of national income accounting and a notable economic historian, he showed through empirical research that population growth was a major stimulus in the industrial revolution and economic growth that happened in the more advanced economies during the 19th century and the first half of the 20th century. With data pertaining to almost a century of economic development, he convinced us (his students) and many of his colleagues in the economics department of Harvard that there was no truth to the Malthusian theory of development and that population growth was a very positive contributor to long-term economic growth.

This experience at Harvard greatly influenced the way I taught my first course on Economic Development in the LIA-COM program of De Salle University. During the second half of the 1960s, I had some of the most brilliant undergraduate students at DLSU then. I presented the empirical evidences of Simon Kuznets and other economists and economic historians about the positive dimensions of population growth. I think I was able to convince a good number of them that birth control – an issue already being discussed in countries like India and China then was not a solution to the problem of mass poverty. I presented the same case in favor of population growth to my students in the Economics 11 course at the University of the Philippines in the late 1960s and early 1970s.

Not too long after that, the debate on population control started to heat up. First, there was the best-seller of Paul Ehrlich and his wife who were both resource economists in the US, entitled “The Population Bomb”. It resuscitated the much-discredited Malthusian theory that the world will run out of resources if the population continues to grow and that there could be widespread famine. A good number of leaders in the developing world believed the Ehrlichs. In India and China, there were government-sponsored programs of population control, many of them extremely coercive. Forced sterilizations were common in India. In fact, such programs were responsible for the eventual downfall of Indira Gandhi and her clan. Under the communist regime of Mao Zedong, the Chinese citizens had no alternative but to kowtow to the one-child policy. In the first years of his Presidency, Ferdinand Marcos had a very pro-life attitude. After reading the Humanae Vitae, he used to quote in public speeches a phrase lifted from the Encyclical, “we will not limit the number of participants in the banquet of life.”


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist). For More IIPM Info, Visit below mentioned IIPM articles
Posted by at
Labels: , , , , , , , , , ,
Subscribe to: Posts (Atom)