Posted by: Dexter Roberts on November 13
As north China shakes off its worst snow storms in more than five decades, leaving flights grounded, highways closed, and stranding tens of thousands, some tough questions are being asked. On blogs, in newspapers, and in conversation, Chinese are wondering why their national weather authorities didn’t warn them in advance, and why the government transportation officials weren’t better prepared for the latest storm Nov. 12, nor two earlier ones including the snow dump that pounded Beijing on Halloween night and into the early hours of Nov. 1. (Although particularly severe, China has experienced bad snow storms before too, including one that racked southern China almost two years ago.) “Our government should put major effort into disaster prevention and reduction. It needs to do its work in advance instead of waiting for the incident to happen and only then take passive measures to remedy [the situation],” wrote one netizen from Shandong province on website 163.com on Nov. 12.
The first storm paralyzed Beijing Capital Airport, with hundreds of flights cancelled, leaving thousands of upset passengers milling throughout the airport, trying to rebook flights, find their checked baggage, or get their fares refunded. I was there for over six hours before giving up on finding a free seat on a flight to Shanghai and returned home. (I ended up flying out the next morning at 8:00 am.) The same scenario was repeated Nov. 12 with the Beijing airport once more in chaos, while others in Shijiazhuang, Hebei, Taiyuan, Shanxi, and Zhengzhou, Henan, were shut outright. Highways again were closed down. “We ordinary people can come with only ordinary suggestions,” wrote one commentator in the China Daily Nov. 13. “It's for the government officials to think and plan about the more intricate and complicated issue. And that is not a tough ask, given the advancement we have made in technology and communications,” the writer continued suggesting that television, Internet and mobile phone messaging, all could have been used to alert people about flight cancellations and warn them from taking to the highways. .
Also controversial: the widespread belief in Beijing that the government bears some responsibility for at least one of the big storms. And this is not just a crazy conspiracy theory either. The capital has a bureau actually called the Beijing Weather Modification Office. This organization gained a fame of sorts for their efforts to control precipitation during the 2008 Beijing Olympics. And the weather modification office “played a helping hand and "enhanced" the natural snowfall to ease drought conditions in the city, after it had gone more than 100 days without rain,” a spokesman said, according to the China Daily. Reportedly, 84 packages of silver iodide were fired into the clouds helping bring down the snow during Beijing’s first storm. “I believe it is not a question of improving government efficiency and cooperation among different departments, but a question of respecting the rights of the people. That should always be the basis of any government decision,” the China Daily piece editorialized Nov. 4.
Posted by: Mehul Srivastava on November 13
India's second largest IT company by revenues, Infosys Technologies, says it has agreed to pay upto $58 million for Atlanta-based McCamish systems, adding some 300 U.S. staffers to its payroll, and increasing its presence in what is commonly known as back-office operations, or business process outsourcing.
The deal, which includes $38 million in cash, and another $20 million if the privately held, unprofitable McCamish is able to achieve pre-set targets in the next three years, is an acknowledgement that Infosys needs to ramp up its game in the BPO business, which currently contributes less than 1% to its revenues.
Infosys executives have said in the past that they hope to have that contribution reach as much as a fourth of the $5 billion outsourcing giants revenues.
But business process outsourcing requires a different skill set than the nearly 100,000 engineers that Infosys has, who spend most of their days developing software that allows companies in the U.S. to run their billing, inventory and manage systems like data from cell phone networks.
McCamish, for instance, handles some operations for U.S. insurance companies like the Nolan Financial Group and Heritage Union. Infosys will retain the employees at McCamish, but one can expect to see a lot of work-sharing between U.S. and Indian workers at Infosys.
Interestingly, even though Infosys has consistently said it is looking for acquisitions overseas, this is the first move it has made in the past two years to buy anything, despite the fact that it is sitting on around $2 billion of cash, all thrown off by the highly profitable tech service work it does for western clients.
When I met with Infosys executives in June, they had already been thinking about ways to diversify their revenues. Most of its customers had cut back on discretionary spending in 2008, during the recession, and the slowdown in its revenue growth - much of which is from short-term, piecemeal projects - had reminded Infosys leaders that it must step up its hunt for what the industry calls mega-deals, which are signed for 5 or ten year operations and measure in the hundreds of millions of dependable revenue, recession or not.
The BPO world in India is actually pretty scattered, compared to the tech industry, where the majority of work is shared between the three top players - Tata Consultancy, Infosys and Wipro - and a handful of smaller players like HCL. The BPO industry in India has few clear leaders, and none with the size and pull of the IT leaders. So for IT companies, already seeped in the culture of outsourcing technical work, it makes sense to grab a bit of BPO business, especially since foreign companies like CapGemini have done a great job of cornering the high-value deals in back-office work that flows to India.
Perhaps more importantly for Infosys, this acquisition helps show Americans that it is serious about investing in the U.S. and creating jobs there, considering the amount of flak that outsourcing companies have drawn in the past two years as U.S. employment numbers started to plunge.
Posted by: Mehul Srivastava on November 09
After a long hibernation from the lecture circuit, India's soft-spoken and carefully scripted Prime Minister, Manmohan Singh, stepped onto a dais and promised more of the same.
Well, not exactly, but pretty much.
At the India Economic Summit Nov. 8, one of the many speak-a-thons that mushroom in New Delhi once the weather improves, Singh came out for a little bit of applause, a little bit of politics and little bit of wishful thinking.
The state of the Indian economy? "The worst is behind us."
The future of the Indian economy? "With a normal monsoon next year, we hope to achieve a growth rate of over 7 percent...Our medium term objective continues to achieve a growth rate of 9 per cent per annum."
Eradication of poverty, hunger and disease? " I am happy to say that we have delivered substantially on that promise. But the task is by no means (sic) unfinished." (I think he meant finished )
But there is news in between the platitudes. For instance, India's fiscal stimulus package, which measured anywhere between $50 and $80 billion, depending on how you count it, will be rolled back starting early next year. By most measures though, it was money well spent - government spending kept India's economy afloat when the private sector all but retreated last year. The effort almost broke the bank, though, and as the deficit climbed to 12% of India's $1.2. trillion GDP, it was clear there was no more where that came from.
Speaking of billions of dollars, Singh had just had a tete-a-tete with the Chairman of Wal-Mart's board, S. Robson Walton, and India's Commerce Minister, Anand Sharma, brought up Walton's enthusiasm for India as he totaled up foreign investment (some $35 billion for the twelve months ending March 2010, he estimated). Wal-Mart runs one store in India in a tie-up with Bharti, where it is allowed to sell only to shop-owners, not to customers. But when I visited that store earlier this year, in Amritsar in North India, not far from the Pakistan border, the lines ran out the door, the shoppers ooh-ed and aaah-ed at the prices, and the cash registers, literally, jingled. And even though organized retail is a puny little part of India's $450 billion retail industry, Wal-Mart has been lobbying India's government to open up foreign investment rules so that it can sell directly to customers.
Sharma is the shyer and less boisterous heir to Kamal Nath, who was India's last Commerce Minister, and is now relegated to drumming up foreign and state investment to build roads. It's an interesting study in contrasts - Nath made his name by holding up the last set of the Doha round of talks for a WTO-led global free trade pact, questioning the true intent of western investors. Now he flies around the world asking the same investors, if they will, please, help build a road in rural India.
Sharma, meanwhile, is the new face of Indian trade politics - reticent to speak his mind, even when egged on by reporters - and his appearance this week on the coat-tails of the Prime Minister underscores how closely Singh is monitoring the informal talks that continue non-stop. India's already signed a free trade agreement with South Korea, and with it's neighbors in the ASEAN region. By 2010, it might sign one with the European Union. That's a lot of ink in just a few months on the job.
But Singh speaks so rarely in public (the three public appearances in the last week notwithstanding) that any sense of direction from India's perpetually smiling economist-in-chief is helpful guidance for the over-eager markets, at least. The benchmark 30-stock sensex was up 300 points for the day, almost 2%. Bonds fell, and given the headlines in Monday's newspapers, Singh's stock rose.
Posted by: Ian Rowley on November 09
There are some interesting comments by Nissan and Renault chief Carlos Ghosn today in an article in India's Economic Times. In the piece, Ghosn reaffirms Nissan and Renault's commitment to a partnership with Bajaj Auto, an Indian two-wheeler maker. The three said last year that they would introduce a rival to the $2,500 Tata Nano low-cost car, but after an initial blaze of publicity, news on the car's progress has been scant. The Economic Times reports that Ghosn reckons the project is still relevant and on track for a 2011 launch. "We have to bring in the car with basic features [and] basic functionality at a very affordable price," the CEO, in New Delhi for the India Economic Summit, is reported as saying.
That should go some way to assuage concerns that companies planning rivals to the Tata car are wavering. Two Bajaj executives, speaking on the condition of anonymity, told BusinessWeek recently that the company is finding it difficult to persuade suppliers to do the kind of aggressive research and development required to push down prices without a clear guarantee that it would produce a sizable number of cars, especially without an approved final design. Meanwhile, Nissan's executive vice-president for Africa, the Middle East, and Europe, Colin Dodge, told me at last month's Tokyo Motor Show that Nissan's input in the car is now minimal. "The project itself is very difficult," Dodge said. "Doing this car for around $2,500 and getting motorbike drivers to jump into four-wheel vehicles [is] very challenging…[but] the car is coming along."
Ghosn's comments suggest that, despite his leadership in the global push for electric vehicles, there is plenty of life in the project with Bajaj. Still, a few important questions remain. One is how many of the cheap vehicles will be built. In the original press release, Nissan said the car would be built at a plant in Chakan, Maharashtra, with an initial capacity of 400,000. As of October, Tata had only delivered 7,500 Nanos. Another is the price, especially if the Nissan-Renault-Bajaj car is sold outside of India. The Economic Times reports that Ghosn isn't sure if it will retail for $2,500 or $2,800 or $3,000. And, just as important for all involved, can they make any money selling such a cheap car?
Posted by: Frederik Balfour on November 05
It’s been a crummy 24 hours for the Hong Kong tourism industry. The first piece of bad news: China has given the green light to Disney to build a theme park in Shanghai. The $3.5 billion Chinese facility will sprawl across about 1,000 acres which will dwarf Hong Kong Disneyland’s 296 acre lot. Mainland Chinese account for more than one third of the visitors to Hong Kong Disneyland, and once the Magic Kingdom sets up in the Middle Kingdom much of that business will get cannibalized. Hong Kong legislator Emily Lau, a long-time critic of Hong Kong Disneyland in which the government has invested billions, called the news a “devastating blow.”
The second piece of bad news is really just more of the same: another day of extremely high roadside pollution reported by RTHK radio this morning. A Hong Kong tourism official interviewed on the radio tried to put a brave face on things saying the problem—which he presumably thinks is only temporary-will go away soon. That’s little consolation for anyone visiting Hong Kong at the moment, where the average stay is just a few days. “The blight of air pollution is a tax on the whole tourism industry as it affects tourists during their visit and leaves a negative impression of the city that will affect their desire to return,” says Joanne Ooi, CEO of Clean Air Network, an environmental advocacy group focusing exclusively on air pollution in Hong Kong. “Reduced visibility leads to strong association with less developed cities like Mumbai that leaves a black mark on Hong Kong’s image.”
Equally important perhaps is that Hong Kong’s air quality leads to unfavorable comparisons with its regional rival Singapore which has has long benefited from its reputation as the cleanest and safest metropolis in Southeast Asia. More recently the Singapore government has made a big push to improve the city’s tourism attractions by hosting the Formula One race and allowing casinos to open their doors next year. Another selling point for Singapore: a Universal Studios theme park is also set to open in early 2010. Though smaller than Hong Kong Disneyland, its proximity to Indonesia, Malaysia and Thailand will give it an advantage over Hong Kong.
But Shanghai is clearly the bigger threat to Hong Kong. Here’s what Parita Chitakasem, research manager at Euromonitor International in Singapore, who specializes in theme parks, had to say to me in an email. “Disneyland Shanghai will have two big features which will make it more attractive than its Hong Kong counterpart: although it is still early days, Disneyland in Shanghai will probably offer a much better experience for your money than Disneyland in Hong Kong – initial plans show that Shanghai’s Disneyland will be six times bigger compared to the current size of Hong Kong Disneyland, which is very small (only 16 attractions). Also, for visitors from mainland China, it will be much easier to travel to Disneyland in Shanghai, as there are no visa/cross border concerns to take care of.”
Still, the Shanghai project is still some years off. Indeed, the press release from Disney was short on details, saying it was in negotiations with the Shanghai government. The Burbank, California-based company will have a 40% stake in the Shanghai resort while the Chinese partners are as yet unnamed. But ff the experience of other U.S. corporations with joint ventures in China is anything to go by, Disney CEO Robert A. Iger is going to need a lot of pixy dust around to make things go smoothly.
Addendum:
Zhongnan University professor Sun Xiliang says on his blog on China.org says Disney needs Shanghai a lot more than Shanghai needs Disney.
