Posted by: Moon Ihlwan on May 15
At first blush, a delay in South Korea’s resumption of U.S. beef imports in the face of vociferous public protests may appear yet another instance of emotional nationalism in the way of a deal, which makes business sense. But although it certainly displays Korean interest groups’ tendency to take to the streets to push for their demands, President Lee Myung Bak’s administration is not free from blame for the mess it created.
Controversies and protests have raged in Korea since last month when Seoul struck a deal with Washington to lift restrictions on U.S. beef imports, shortly before Lee was scheduled to have his first summit with President George W. Bush. Surely, Lee was under pressure to conclude a beef deal as U.S. lawmakers had made it clear that Congress would not approve a sweeping free trade deal with Korea unless Seoul fully opened its market to U.S. beef. It’s also understandable that the pro-U.S. Korean leader wanted to have some tangible results from his talks with Bush. (Click here for some facts about the Korean beef market prepared by Reuters)
The problem was the lack of efforts on Lee’s part to communicate with his own people. His negotiating team left an impression among many Koreans that the issue of the safety of the product was not properly addressed although U.S. had a record of an outbreak of mad cow disease in 2003. One Korean official says the probability of a human being catching a mad cow disease by eating U.S. beef is like the one of a golf player scoring a hole-in-one and then being killed by lightning.
Maybe. But Lee’s government didn’t try to convince Koreans about the safety of U.S. beef. The mad cow disease is particularly sensitive in Korea as dishes using cow bones and intestines—potentially more hazardous parts -- are regarded as delicacies. Now Lee, nicknamed the “bulldozer”, may be wise to reconsider his style of railroading through his agenda. Lee’s popularity rate has fallen to mid-20s in May from almost 60% early March. His hurried approach to better ties with the U.S. is backfiring, particularly among Korean teenagers, who are actively taking part in street protests these days.
Posted by: Manjeet Kripalani on May 14
Seven explosions, six locations, 80 dead, at least 150 injured in terrorist attacks in Jaipur yesterdy. All for what? The people who died weren't high profile, weren't Western tourists, weren't any of India's pampered cricketers. They were ordinary folk going to the temple on a sacred Tuesday evening after work.
No purpose was served by the bombings, except perhaps to remind the world that the terrorist machine is intact, active and in good working condition. They've chosen a soft target like Jaipur city, with its emerging back office workforce, and not New Delhi or Bombay, which are always on high alert. Jaipur is also the capital of the opposition, Hindu-hardline Bharatiya Janata Party-ruled state of Rajasthan, so the political impact of this is likely to be limited. Sonia Gandhi did not rush to the site of the blast to commiserate; instead, her own security was beefed up, post-blast.
Counter terrorism sources in India say its the same old, same old thing. It's a volley fired in an old war. Terrorist organizations need regular demonstrations of capacity. For them, violence is an end in itself. The groups are also surely getting support from the Pakistani military - but mostly because the military wants to discredit the fledgling, struggling civilian government in Islamabad. They say the old infiltration by militants into Kashmir has begun again - just as Kashmir is readying for state elections in June. Jaipur, they say, is just the beginning. Expect more blasts across India.
How to defeat this cycle of violence? Not by calling out the army, but by strengthening the state police force. Increase its capacity, develop the intelligence function to a fine art. A successful example is at hand: the police in Andhra Pradesh. That southern state rasied the Greyhounds, an elite commando force, to deal with its internal Naxalite problem. And it fortified its police stations, and trained every policeman in counter-insurgency skills. Naxalism has been driven out of the state to a large extent - and it's being kept out.
It's hard work, but necessary. Ordinary people, and India's growth story, need protection.
Posted by: Kenji Hall on May 14
The prospect of a global economic downturn should make Sony nervous. After all, you can’t expect consumers to be out shopping for giant flat-screen TVs and other pricey consumer electronics if they’re paranoid about losing their jobs. A drop-off in TV sales, particularly in the U.S. and Europe, would do more than dent Sony’s earnings outlook. It would also dash Chief Executive Howard Stringer’s hopes of ending the losses that have plagued the company’s TV business for several years.
But on May 14, the Japanese electronics and entertainment company predicted a big jump in unit sales of flat TVs. The company, which reported full-year earnings, forecast sales of 17 million of its Bravia liquid-crystal-display sets this fiscal year, which ends in March 2009. That’s 70% more than the 10.6 million it sold globally in the just-ended year through March 31, and nearly three times what the company sold two years ago.
The forecast also beats those of its most formidable domestic rivals. This year, Sharp is expecting to sell 10 million LCD TVs, while Matsushita Electric Industrial is betting on 11 million flat-panel sets. LCD TVs are expected to top 100 million units this year and to come within reach of 125 million in 2009, according to iSuppli.
But on closer inspection Sony’s gains aren’t as significant for the bottom line as they might have seemed at first glance. One telltale sign: Despite rising unit sales, LCD-related revenues this year are expected to stay flat at $1.25 billion. The figure is also 7% less than sales two years ago. Sony execs say they are working to make the division profitable.
The combination of higher volumes and lower revenues reflects a harsh reality in the TV business. Until now, companies like Sony, Samsung Electronics, Philips, Sharp and Matsushita have been mainly concerned with producing bigger TVs more efficiently. To do so, they have been investing billions of dollars every few years to build more sophisticated plants that could pump out the giant sheets of specialized glass that are cut to make TVs. Theoretically, bigger glass sheets make more TVs.
They haven’t only been competing with each other; they have also been trying to stay a step ahead of low-cost manufacturers in China and other parts of Asia. That meant discounting their TVs so the low-cost brands didn’t lure away all but the wealthiest of buyers. It also meant finding small ways of continuously lowering costs so that profits didn’t get decimated by rising materials and energy costs and falling TV prices, which have been sinking at roughly 25% every year. Not many companies have been successful at doing that.
Continue reading "In TVs, Sony is Attuned to Market Shift"
Posted by: Manjeet Kripalani on May 14
So EDS finally gave itself over to the best suitor. Congratulations, Maseltov, Mubarak. On May 13 Hewlett Packard, the large and thriving tech global major, bought EDS for $12.6 billion. It's a smart move for both EDS and HP. For HP, it's huge: the company is no longer a distance behind IBM - it's a close second to Big Blue in the business.
Alas, what a lost opportunity for Indian companies. If only one of India's top four IT services majors had bought EDS. It would have created an international services major out of India, and perhaps changed the business in an even more creative way. But it was not to be.
It wasn't always that way. For years, rumours swirled that Infosys, or TCS or Wipro would buy EDS, which was struggling until recently. But the rumours always eventually died. Why?
Because Indian services players are too unambitious, too content to be the big fish in a small pond. They've all made acquisitions, sure, but tiny ones. Nothing that will really put them to the test, show the world their mettle, put their business model under some pressure - perhaps to emerge stronger and better. Buying EDS would have catapulted them into the global big league.
But clearly, Indian services firms are too conservative. They're too focused on quarterly profits (customers have been complaining), they don't want their 25% profits to shrink to the global adult's 10%, they don't want Wall Street to fall out of love with them.
They also won't want to give up control from the corner office in Bangalore, and let another CEO run the show from California or London or Paris. They lack the inner confidence to grow larger than their founders.
Hopefully the EDS-HP deal will be a wake-up call for them.
Posted by: Bruce Einhorn on May 14
The Wall Street Journal’s editorial page is not the place you usually find praise for the Chinese government. But the paper’s Asian edition today has kind words about Beijing’s handling of the devastating earthquake in Sichuan. Comparing the Chinese government’s response to that of the Burmese junta’s handling of the aftermath of the cyclone, the Journal writes “Beijing has learned from its mistakes. In 2003, it took two months for Beijing to allow foreign experts into Guangdong province to help with the SARS outbreak. Yesterday, China welcomed outside help as well as deployed 20,000 soldiers to the region. This not only assists the millions of earthquake victims, but it helps bolster the Chinese leadership’s image to its people – no small thing when you’re not popularly elected.”
Also in the Journal, Costas Synolakis, a professor of civil engineering at USC, says the earthquake would not have been so deadly if Chinese authorities had done a better job enforcing building codes. “From initial reports, the geographical distribution of destruction suggests that near the center of the industrial city of Chengdu, where the damage has been limited, building codes had been enforced. But in the rural areas – which were hit hardest – these codes weren’t followed.”
That’s not surprising. Synolakis points out that it’s common in developing countries for the damage to be worst in the countryside, where enforcement of building codes is typically weak. It’s also true in China that the central government has difficulty enforcing all sorts of rules and regulations in the provinces. In the U.S., people often assume that the government in Beijing must have a tight grip on the country. It’s a Communist country, after all. But whether the government is cracking down on copyright piracy, limiting spending on wasteful projects, or getting builders in rural areas to follow codes designed to limit damage from earthquakes, there’s a limit to its ability to enforce its will in areas far from Beijing. If there’s anything positive that comes out of today’s tragedy in Sichuan, it’s the likelihood that the government will have an easier time enforcing building codes that might make the next big earthquake to hit China less deadly.
