US's struggles to recover their domestic manufaturing

I read an article about the movement of labor force from US to China. It seems like an old story, but just a decade ago, US produced their core products in US. Then, why they had to move to China? First, it's because of the rises in oil prices. If oil price is rising, the shipping costs and also the wage rates will rise. Accordingly, US manufacturers realized that they will bankrupt if they keep producing in US. Now, most of US's labor concentrated industry had moved to China. As a result, the value of US dollar is fall relative to Euro. Also, there are constant threats from rising oil price.
Some of US companies now try to make manufactures in US. Because there are fewer producers in US since they moved to China. Accordingly, American citizens' demands are not satisfied. If they can initiate production in US, they can earn considerable profit. But the cost of infrastructure is very high. US manufacturers destroyed their original production base when they moved into China. Then, is China a eternal labor advantage nation? It's not. Because already the productivity of China's workers are rising, also the oil price is rising in a very fast pace. If US manufacturers sustain China, eventually, there businesses will lose their cost advantage. But still China has labor cost advantage about 40~50% compared to the US labor market.
Then, what's the best strategies for the manufacturers who already made huge production base in China? The author suggested that they should continue production in China. Because still China has huge cost advantages. If they are concerned with the future and go out of the industry, their huge investment that is a fixed cost will go away. Yet the costs are not sunk costs. Also, Chinese government keep controlling the rising of labor costs. Accordingly, in the short run, it will be a good choice. But they must find other alternatives. Actually, many of regions remain undeveloped. For example, the Africa and south-east asia regions have great potentials.
If US government will not support their domestic industry, ultimately, their industried will be controlled by China. I think it's the worst situation for US. US has been always a top position of world economy. But now their dollar value are dropped by 50% and their industries are strongly dependent on low cost nations. Additionally, US is a huge consumer of Oil. Accordingly, if oil price is rising, it will more impact on US than China. I think the high efficient and low labor cost products can activate the US's domestic production. If they can invent products like eco-friendly vehicles, cell phones, and home appliances, they can re-emerge their influences to the world. Now, Korean company also move their production base to China. Maybe, Korea's situation has many commons with US. We can analyze our future alternatives through US's solutions.

Author: Pete Engardio
Title: Can the U.S. Bring Jobs Back from China?
Date: June 19, 2008, 5:00PM EST
Page: 2

reference: http://www.businessweek.com/magazine/content/08_26/b4090038429655.htm
entry#15 20700067

Accepting and learning from defeat

How to Lose with Grace and Dignity
　
1. Be Angry, But Not for Too Long. It's understandable to be upset when you lose, but dwelling on the loss, obsessing over it, or making it the focus of your life is more hurtful than helpful. In an earlier column, I offered five steps for dealing effectively with anger (BusinessWeek.com, 4/8/08), and as difficult as it may be to do so in every upsetting situation, it is in your own interest not to let anger get the best of you.
　　
2. Accept Reality. We often tell ourselves, "Where there's a will, there's a way." Unfortunately, we have less control over our lives than we'd like to believe, and there is nothing we can do to alter this. All the determination in the world cannot make other people do, say, or vote for something if they don't want to. It should lessen the blow to realize that there is only so much we can do to affect the change we seek.
　　
3. Look for the Lesson. Yes, we learn by winning. (Think about how you surprised yourself the last time you accomplished something you thought would be too difficult to achieve.) But we also learn by losing, if we have the courage to pay attention. In looking honestly at a failed attempt to get a job (BusinessWeek.com, 5/8/08), for example, or develop a romantic relationship, the lesson could be that we need to rethink our approach, or we need to change something about ourselves. The best way to succeed next time, or to learn how to handle defeat better, is to find the lesson from our loss and take it to heart.
　　
4. Cut Yourself Some Slack. I've said this before, but it bears repeating: The ethical responsibilities to be fair and compassionate apply to how we treat ourselves, not just others. Berating yourself for losing isn't a kind or decent way to treat yourself, and doing so prevents you from getting back into action, which can lead to further losses.
　　
5. Keep on the Sunny Side of Life. How many successful people do you know who are burdened by the weight of their past failures? If you let losing get the best of you, it will be all but impossible to go forward. Allow yourself to feel angry, but accept reality, learn from the experience, don't be too hard on yourself, and move on.
　
These guidelines are intended to help you make the best of a losing situation. Let's not forget, though, that the first order of business after losing is to congratulate the winner. Anyone can win. It takes a person of courage and grace to accept defeat and honor the victor. Such a person will move beyond loss and emerge a stronger and better person—and a true winner.
　
20700110
14th entry
author : Bruce Weinstein, PhD
title : The Art of Losing Well
date : May 20, 2008
reference : http://www.businessweek.com/managing/content/may2008/ca20080520_180718.htm?chan=careers_managing+index+page_managing+your+career

US Beef Boycott in Making

          Despite of Korean government's efforts to make a deal with the U.S. for the beef trade, marketing in many businesses in Korea has changed dramatically to show how safe their foods are and free from the the problem concerned with the U.S. imported beef - the Mad Cow disease.

          Food industries in Korea including both major and minor restaurants are promoting "no U.S. beef" policy in order to assure their customers that they are providing safe food that the customers do not have to worry a single thing about consuming the food at their stores.

          The reason why these food manufacturers are simply they do not want to take a chane when the public is clearly against consuming the U.S. imported beef; "...it's important to win over consumer trust from the start" (BusinessWeek).

          The beef that are used in most of the food chains are from Australia, and food manufacturers are guaranteering they will only use the Australian beef. For example, the Korea-based fast-food chain Lotteria, which has more than 740 outlets nationwide, issued a statement that they have "no plans to use U.S. beef even in the distant future." Also the most well-known burger maker in the world, McDonald's, has been stressing out its corporate policy that is against of making patties with beef from America.

          All the other family restaurants including Outback Steakhouse, VIPS, Sizzler, T.G.I. Fridays and Bennigan's are also emphasizing their plans not to use beef from America and making sure that they will not do so in the future as well. However, there decisions are not helping the local beef importing companies since the public perception has critically ruined the business already; even though they don't import American beef, just doing the business with other countries is interrupting its brand image.

          As we have seen on the media and from many other sources, the problem concerning beef imports from the U.S. is getting deeper and deeper everyday. It seems like the flame of the candle-demonstration is becoming a new way of expressing our thoughts and beliefs. I hope the president Lee would regard and hear from the public what we are trying to say and have reconsider the deal with the U.S.

Reference;

Han, Jane. "US Beef Boycott in Making" KoreaTimes. June 13, 2008.

http://www.koreatimes.co.kr/www/news/biz/2008/06/123_25853.html

20601008 - 14th Entry

Sony

The prospect of a global economic downturn should make Sony (SNE) nervous. After all, you can't expect consumers to shop for giant flat-screen TVs and other pricey consumer electronics if they're worried about losing their jobs. A drop-off in TV sales would do more than dent Sony's earnings outlook.

It would also dash Chief Executive Howard Stringer's hopes of ending the losses from TVs that have plagued the company's electronics business for several years. But on May 14, the Japanese electronics and entertainment company predicted a big jump in unit sales of flat-screen TVs. The company, which reported full-year earnings, forecast sales of 17 million Bravia liquid-crystal-display sets this fiscal year, which ends in March, 2009.

That would be 70% more (BusinessWeek.com, 5/14/08) than the 10.6 million it sold globally in the year just ended 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 (6753.T) is expecting to sell 10 million LCD TVs, while Matsushita Electric Industrial (MC) is betting on 11 million Panasonic-brand flat-panel sets (BusinessWeek.com, 4/29/08). LCD TV sales are expected to top 100 million units this year and come within reach of 125 million in 2009, according to iSuppli.

A day after Sony reported earnings, its shares rose 8.7% in Tokyo, vs. an 0.9% rise for the benchmark Nikkei 225 stock average. Since the beginning of the year Sony's shares have lost 16%, compared to the Nikkei index's 3.9% decline. On closer inspection, Sony's TV gains aren't as significant for the bottom line as they might seem 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 executives say they are working to make the division profitable. "The main risk is profitability in LCD TVs near term," Goldman Sachs (GS) analyst Yuji Fujimori wrote in a May 15 report. The combination of higher volumes and lower revenues reflects a harsh reality in the TV business. Until now, companies like Sony, Samsung Electronics, Philips (PHG), Sharp, and Matsushita have been at the cutting edge of producing bigger TVs more efficiently. To do so, they have invested billions of dollars in sophisticated plants that can pump out the giant sheets of specialized glass that are cut to make TVs.

Theoretically, a bigger glass sheet makes more TVs. But they haven't only been competing with each other; they have also had low-cost manufacturers in Asia nipping at their heels (BusinessWeek, 2/26/07). That meant offering discounts so the low-cost brands didn't lure away all but the wealthiest of buyers. It also meant finding new ways of lowering costs so that profits didn't get decimated by rising materials and energy costs and falling TV prices, which have been sinking at a rate of roughly 25% every year. Not many companies have been successful at doing that.

Author:Kenji Hall
date: December 11 2007
site:http://www.businessweek.com/globalbiz/content/dec2007/gb20071211_409881.htm?chan=search

20300780 entry 14

India's big pharma deal

I read an article about India's big acquisition deal. The main players are Ranbaxy Laboratories and Daiichi Sankyo. Ranbaxy is the largest drugmaker in India. Also, Ranbaxy is a pure domestic company. Daiichi Sankyo is a Japanese drug company that has 3rd largest drug market share in Japan. Daiichi Sankyo wants to acquire 50.1% stake in Ranbaxy for nearly $4.6 billion. It's a 31% premium over Ranbaxy's current share price. Through this deal, Daiichi Sankyo can jump to the world No.15 drugmaker. But Ranbaxy is very successful company in India and they had received respects from Indian. Because they are a pure domestic company and Indian was proud of this fact. Additionally, until recently, Ranbaxy has been at the forefront of Indian efforts to expand beyond the country's traditional strength in generic drugs by focusing on research and development for new drugs of its own. For instance, Ranbaxy has formed research alliances with Big Pharma giants like GlaxoSmithKline.

Then Why they sell their stake to the Japanese company? It's just because Daiichi Sankyo suggested the most attractive deal to them. Ranbaxy also is facing challenges as it tries to join the drugmaking big leagues. It has had to contend with ongoing legal battles brought by rivals such as Pfizer, which has challenged Ranbaxy's right to make generic versions of Lipitor since 2005. Also, recently, they failed to develop new drug. In the market, R&D is the core of a company's survival. Accordingly, Ranbaxy struggled with the development and they thought if they will receive good proposal, they will sell the company. Additionally, they have some problem with management. They were the first India company which employed professional manager. But now, they lost their managers: Managing Director A.S. Brar in 2004 and then-CEO Brian Tempest in 2005.

Actually, Ranbaxy had tried to find partners that will buy their stakes. They requested the deal even to their rival, Pfizer. Finally, Daiichi Sankyo suggested very attractive deal, and the deal will be accomplished within a few days.

Then why this Japanese company wants to acquire India company? Because now the Japanese drug market is saturated. Accordingly, Daiichi Sankyo decided to expand their market to the several countries that didn't develop. I think the case is a good model to our drug company. For example, Yuhan, korea's largest drug company, now needs to expand their business to the world. Japanese is an advanced country that Korea, so we can learn many things for our future from Japanese companies.

Author: Nandini Lakshman

Title: Inside India's Shocker Pharma Deal

Date: June 11, 2008, 7:16AM EST

Page: 1

reference: http://www.businessweek.com/globalbiz/content/jun2008/gb20080611_987609.htm?chan=technology_technology+index+page_top+stories

entry # 14 20700067

Fedex office

Fedex acquired printing chain Kinko’s in 2004 for $2.4 billion. The goal was a digitally linked network for customers to print, pack and ship anything.
A new name and logo merged the two identities and added multicolored icon as you see in the picture. Kinko has a nostalgic brand image but it also limited. Kinko cannot catch up recent trend like the quick-print business, direct mail and more creative jobs.
The process of changing the name does not cheap. It costs $891 million in its fiscal fourth quarter. This means that Fedex will serve as the office for traveling professionals, a medium and large size business and the small businesses.
They give up keeping Kinko’s because of the consumer research result that showed customers now know more about the wide range of services Fedex offers.
Kinko’s was named after its founder Paul orfalea whose nickname was Kinko because of his curly hair. After the years, Kinko’s reputation was going bad. It was a place where you would invariably find big, noisy copy machines, piles of paper boxes, and sometimes sleepy employees. Furthermore, the cheap printers and PDF files make the concept of the copy shop very irrelevant. Kinko’s brand did not survive in technological advances.
Many people said that the Kinko’s brand was not elastic and evocative enough to move into the Thrid econmy. The name of office will transfer Kinko’s image to more modern and utilitarian. Moreover, this has more various meaning such as a place where work, a laboratory to invent something, a place to go create.
Changing the name or logo is really important to brand image. I think that it can make totally different image and even companies’ culture. For example, Hanhwa is look very boring and little simple but after changing the logo It looks more humane and human central culture.

http://www.businessweek.com/
June 9,2008 - Inovation

20600171 14th entry

Europe mobile-telecoms market

The world is getting smaller for the phone. France Telecome begun to discussion about a long-anticipated takeover offer for the Swedish firm. They trade it for $42 billion. This is unusual deal comparing America’s largest mobile company named Verizon Wireless which normally deal with $27 billion. The growth of mobile phone market is poor. In many countries there are more mobile phones than people. Therefore, bulking up is a good idea to expand the market and for achieving an economies of scale.

In Europe mobile-telecoms markets are taking more consolidation. France Telecome cannot yet create Europe’s biggest mobile-phone company which will be dealing with 237million customers in 30 countries. They try to entice the customers with its more mature mobile and fixed-line operations in the Nordic region where the businesses in Eastern Europe and Central Asia come faster growing now.

And also there are plenty of other possible targets to tie-ups such as smaller firms in Belgium, the Netherlands, Portugal, Switzerland. Vodafone may bid to extend its stake in Vodacom, a South African operator.

Mobile market is limited like an energy market. I think that mobile or other wireless communication systems finally will be used in common share. If the hardware system is to be a public assets, companies should compete in the software market. Still governments in each countries prevent their own countries mobile market from hunting by other countries. However, I think that the bulking up with mobile companies is only a matter of time.

http://www.economics.com/
20600171 13th entry