WRFest 1Mar08(Int' Business): Multi-Polar Problems vs ADD
The prior post carved out a bunch of interesting international economic stories though linking them to a general US perspective. As part of broadening our perspectives we ought to consider how business in the world is changing. We've been saying for several years that the re-emergence of China and India back onto the stage of the world economy is really the biggest structural change we've seen since the early 19th C. Back around 1820 or so did you know that they were the two largest economies ? And further that various indicators of per capita income and general health and welfare put them ahead, particularly China, who up until ~ 1830 could have made a case for being perhaps the most successful socio-political system for the longest period of time. Or at least had a heck of a good argument.
Well various folks are giving lip service and now more to that. For example both Jim Rogers and James Fallows have moved to China as have a lot of ex-pats but it's not entirely clear to me that people appreciate how we're evovling toward a multi-polar world - their attention is deficient if you will. Not that most don't know and acknowledge that the BRICS are important but they still think of it as a bi-polar link. WRONG ! In a multi-polar world the other nodes can link with each other. So after the break you'll find some fascinating stories about major business news from China and India - some among many we'll point out. For example did you know that a major reason Lucent, Nortel, Ericsson, et.al. are still struggling despite being in the midst of a new internet-driven telcom equipment buildout is that Huawei the Chinese manufacturing has been increasingly competitive with cheaper products with approximate quality. BtW - telecomm tech and gear is rocket science if you don't think these guys are moving up the value-ladder quickly !
But check out the first excerpt which provides a general perspective.
A Rising in the East By the year 2030, 361 million Chinese -- more than the entire current population of the U.S. -- will meet the World Bank's classification for middle class: the people who "buy cars, engage in international tourism, demand world-class products, and require international standards for higher education." China may be, in this sense, a bellwether. Analysts at CLSA Asia Pacific Markets estimate that, by 2010, 50% of Southeast Asia's population will live in the region's cities, many having moved there only recently in search of better jobs and better lives. According to Nielsen Co.'s most recent global survey of consumer confidence, the Asia Pacific region generally is the most optimistic in the world. India in particular, after Norway, is home to the world's most upbeat consumers. Such hopefulness tells us something new. Westerners are well aware that China and India -- not to mention Singapore, Taiwan, Hong Kong and South Korea, the so-called Asian Tigers -- have undergone a process of modernization, raising their standards of living by exploiting, to varying degrees, the dynamics of a modern capitalist economy. But there has been a shift, too, in the way that the people of Asia view themselves and their future. Such a shift, Kishore Mahbubani argues in "The New Asian Hemisphere," will have profound effects on Asia's approach to the rest of the world and, just as important, on the world's approach to Asia.
Mr. Mahbubani, dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore and a former senior diplomat, attributes the region's economic growth to a kind of free-market domino effect that began in the 1860s, when Japan began to adopt the economic practices of a modern industrial society. Over time, he says, the "seven pillars of Western wisdom" -- free-market economics, meritocracy, pragmatism, a culture of peace, the rule of law, an emphasis on education, and a willingness to pursue advances in science and technology -- have helped to give many Asian countries a new (and newly competitive) structure. But old habits die hard. Singapore, for instance, may be among the world's least corrupt countries, but its neighbors cannot even begin to make such a claim. Many Asian elites, Mr. Mahbubani concedes, wish to preserve traditional systems of privilege and legal inequality, but they know that "it is impossible to build a modern society and a modern economy without a modern rule of law. This is the pill that all Asians will have to swallow, bitter though it may be in the early years of application."
Developing Countries
China May Unveil Plan to Shake Up Telecoms China may unveil long-awaited plans for a restructuring of its massive telecommunications industry as early as next month, state-run radio reported. If the plan proceeds as outlined in the brief report yesterday, it would consolidate China's six big state-run telecom operators into three, with the surviving entities allowed to offer a full-range of services instead of being divided among fixed-line, mobile and other offerings now.Such a move, which analysts have been predicting in recent months, also could pave the way for the government to issue licenses for advanced, "third-generation" cellular services -- another long-awaited move that could unlock new orders for global equipment vendors. The restructuring plan would affect some of the world's biggest listed telecom carriers, including China Mobile Communications Corp., parent of Hong Kong- and New York-listed China Mobile Ltd., which boasts more users than any other wireless operator. The parents of two other listed companies, wireless carrier China Unicom Ltd. and fixed-lined operator China Netcom Group Corp. (Hong Kong) Ltd., would likely be merged, while the parent of China Telecom Corp. would absorb one of two wireless networks now operated by Unicom, the radio report said.
China Power-Grid Suppliers Glow The freakish storms that ravaged much of China late last month had a silver lining for at least one group of companies: those that make power-transmission equipment. These companies are likely to get a short-term boost as China repairs hefty damage to its electricity grid. And longer term, analysts say, the business should benefit from tens of billions of dollars in planned government spending to upgrade the grid to handle the booming Chinese economy. Some of the sector's biggest companies are multinationals, though two Chinese suppliers are gaining market share. Tebian Electric Apparatus, based in the western territory of Xinjiang, was already the world's third-largest producer by output of electric transformers after ABB of Switzerland and Siemens of Germany in 2005, the latest year for which data could be obtained. Baoding Tianwei Baobian Electric, based in Hebei province, is also a big producer of transformers -- critical parts of a power grid that perform tasks such as adjusting voltage.
Tata's global alliance At India’s DefExpo defense show this week, Tata announced a string of tie-ups with foreign manufacturers from the United States, Israel and Europe that set it apart from other emerging Indian defense manufacturers like Larsen & Toubro (L&T) and Mahindra & Mahindra. Tata group is becoming well known around the world for its low cost car, its bids for the Jaguar and Land-Rover brands, and for taking over Europe’s Corus steel company. Now it is emerging as the Indian market leader in a new area – defense equipment. The company is transferring India’s proven ability to produce low-cost software and international-quality auto components and cars to the defense and aviation industries, persuading companies like Boeing (BA), European Aeronautic Defense & Space Company and Israel Aerospace Industries that they can benefit by buying from India.
Resources Shine in India In many economies, investors pursue growth plays in technology, retail and telecommunications shares. In India, there is a new growth sector, and it is one that may not readily come to mind: shares linked to mineral resources and agricultural commodities. As India's once-hot stock market has rapidly cooled, many bellwether stocks -- such as Bharti Airtel, India's largest wireless operator, and information-technology titan Infosys Technologies -- are languishing. India's benchmark Sensitive Index, having risen 47% last year, closed Friday at 17349.07, down 15% since the start of the year. That could help other, lower-profile stocks come into fashion, some analysts contend, especially as iron-ore and food prices are rising globally. Many resources-related and agricultural-commodities companies are at an earlier stage in their development than India's bigger and better-known industries, analysts say. The sector has also been more affected by unpredictable short-term government policies, such as export restrictions or import duties, meant to control prices in the domestic market. Moreover, not many mining and commodities concerns are listed. India's resources sector "remains highly untapped considering its huge potential," says Ketan Karani, vice president for research at Kotak Securities in Mumbai. India has substantial reserves of minerals such as bauxite, iron ore, copper and zinc, but the commercial exploitation of these riches remains at a relatively low level. Much of the sector is still state-controlled, and political, social and environmental opposition often stymies efforts to develop new mines, given that many prospects are in tribal or forested areas. But with a surge in the demand for steel -- for which iron ore is a key ingredient -- and other metals from China and India itself, India's mineral production and exports have been increasing significantly in recent years.




CR that lays out the strategic BigPicture so you can get a better idea of what it all means. The first part shows the relationship between New Home Sales and recession. It also makes very clear Shiller's comment about the length of the boom and the abberational size of the boom. The 2nd part shows ResInvest as a % of GDP with CR filling in an extrapolation. Now IOHO that's conversative since it doesn't capture the need to work off all the excess inventories that have been built up. In other words the downturn here could be as unique and large as the bubble;in fact shouldn't it be ? The 3rd part shows how long after downturns bottom it takes for prices to reach their floors and start creeping up again. Given that we're really just seeing the pscyhological adjustments begin that suggests we've got a very long way to go.