Posts filed under ‘Business Environment’
Behind Firm’s Default: Vietnam’s Growth Mania
HANOI—State-owned shipbuilder Vinashin’s default on a $600 million loan late last week is just the latest crisis challenging Communist-run Vietnam’s ability to get its economy under control after years of pell-mell growth and spiraling inflation.
The company, officially named Vietnam Shipbuilding Industry Group, failed to make a $60 million initial repayment on the syndicated loan to international lenders, saying it will make only interest payments, says a person familiar with the matter. The company has agreed to meet with creditors in mid-January to discuss repaying the loan, although some lenders privately have said they are uncertain whether Vinashin has sufficient resources to do so.
In defaulting on the debt, Vinashin has added to a catalog of problems afflicting Vietnam, once one of the world’s hottest emerging markets.
Over the past decade, the country’s economy has expanded from crater-pocked rice paddies to erect gleaming new factories and towering skyscrapers, prompting development economists to extol the country as a model for other frontier markets. On the narrow streets of Hanoi, Rolls-Royce and Bentley cars now compete for space with rickshaws and motor-scooters.
In the past few weeks, the cost of Vietnam’s poorly policed transformation has become alarmingly clear, offering food for thought for investors seeking rising returns elsewhere on the frontier-markets map. Economists say the country’s worsening problems, and the impact they could have on its dwindling currency, might also worry textile and agricultural producers in countries like Thailand and Indonesia which compete with Vietnam in those sectors. Read More
SOURCE: J. HOOKWAY And A. TUDOR, Wall Street Journal, December 25, 2010
Should Your Business Axe Overseas Assignments?
As businesses continue to navigate their way through—and out of—the global economic crisis, almost every multinational organization is looking to tighten purse strings as we head into another year of what promises to be cautious spending. Unfortunately, expensive international assignment programs are often one of the first areas of focus for wary managers, who could pare down or even temporarily oust these assignments from the budget. Link
Source: S. Cummins & E. Hannibal
Recovery and Globality: The Commodities Chase
The U.S. economy slowly appears to be regaining its footing. The unemployment rate declined for the first time since the recession began, sliding from 10.2% in October to 10% in November and holding steady in December. Although the fourth-quarter 2009 statistics weren’t yet in as I wrote this, some predict that the U.S. economy may have expanded in the second half of last year by more than 3%. Europe appears to be lagging, but the economies of China, India, Singapore, Indonesia, and South Korea, among others, are growing robustly again. The Great Recession of 2008 and 2009 may be over in most of the world. Link
Source: H. Sirkin
China’s longs market continues to fluctuate
SteelOrbis – Over the past week China’s domestic long products market has retained its fluctuating trend,with a minor slide observed in market prices in most regions and a small climb in some individual markets.
Affected by poor market demand,longs prices in the eastern China market posted an overall declining trend in the past week,which was also caused by the decrease in the steel futures market in the first half of the week. Nevertheless,given the support of high cost levels,the market has not fallen sharply. By the end of December 10,rebar inventory in Shanghai reached 460,000 mt,neutral week on week; meanwhile,wire rod inventory in Shanghai stood at 98,000 mt,up by 5,000 mt week on week.
Driven by the Shanghai market as well as by the decrease in the steel futures market,long product prices in the south registered a minor decline on the whole during the first half of the week; subsequently,however,the market began to see a certain improvement following the recovery of the steel futures market. (Alibaba Group,6 Dec 2009 02:53:24 PST)
Global Technology Companies Protest Chinese Procurement Law
Global technology, service and manufacturing companies are raising concerns to the Chinese government over new rules they fear could restrict or block foreign vendors from selling high-tech gear to China’s government agencies. More than two dozen major industry groups from North America, Europe and Asia — representing most of the world’s major technology companies — sent a letter Thursday to Chinese ministries saying they were “deeply troubled” by the Chinese requirement.
The new rule requires vendors to gain accreditation for their products before they can be included in a government procurement catalog of products containing “indigenous innovation.” Companies that aren’t listed in the catalog will theoretically be allowed to bid for government contracts. But those that are listed will apparently be given preference.
At stake are billions of dollars of Chinese government spending on personal computers and application devices, communication products, office equipment, software and energy-efficient products. (By LORETTA CHAO, The Wall Street Journal, DECEMBER 11, 2009)
Payment Options for International Transactions
You and your customer will assess many factors as you negotiate the payment term that will be used for your international transaction. They include, but are not limited to:
Value of the transaction;
Your relationship with your customer, new or long-standing;
The country where the goods are destined;
The buyer’s country’s rules about how money will be released to you, the seller; and
Whether the product being shipped is customized, built to specification, or off the shelf.
The global economy is fluid; firms will benefit from regularly examining its own customer base and assessing political, credit and foreign-exchange risks to determine which payment term best suits the situation. There are several sources that provide background information on the buyer’s country and their economy. Options that are available on the internet include:
European Commission Welcomes the Entry into Force of the Treaty of Lisbon
Today – December 1, 2009 – sees the entry into force of the Treaty of Lisbon, which provides the European Union with the legal framework and the institutional tools necessary to meet the challenges of the future.
The European Commission believes that the new treaty provides significant new benefits for its citizens. “The Treaty of Lisbon puts its citizens at the center of the European project,” said European Commission President Barroso. “We now have the right institutions to act and a period of stability so that we can focus all our energy on delivering what matters to our citizens.”
The EU will now be better equipped to meet expectations in the fields of energy, climate change, cross-border crime and immigration. And with greater coherence given to the different strands of its external policy, and with the appointment of Herman Van Rompuy and Catherine Ashton to the new posts of EU President and of High Representative of the Union for Foreign Affairs and Security Policy/Vice President of the European Commission, it will also be able to speak with a stronger and clearer voice internationally.
EU Delegation Marks Historic Name Change
With the entry into force of the Lisbon Treaty, the Delegation of the European Commission to the United States today became the Delegation of the European Union to the United States. To mark the occasion, European diplomats were joined by representatives from Congress, the State Department and the District of Columbia when a new name plate was unveiled for the Delegation’s offices in Washington, DC.
“This marks an important moment in the history of the European Union,” said Angelos Pangratis, Acting Head of the Delegation of the European Union to the United States. “The Lisbon Treaty allows the European Union to be more democratic, more open, more accountable and effective. And externally we become more coherent – we will speak with one voice. Our name change today is a direct manifestation of this.”
The Lisbon Treaty provides for the creation of a new European External Action Service (EEAS) – effectively a diplomatic corps for Europe.
Before Heading to China… Make sure you know what you’re trying to do there
If you’re an executive under pressure to move business to China, think carefully before committing to a strategy.
Considering that China has undergone rapid and sustained economic growth over the past 30 years and today is the largest recipient of foreign direct investment in the world, it isn’t surprising that many companies feel the need not only to respond to competition from Chinese-made products but also to enter and compete in the Chinese market itself.
The problem is, some businesses are rushing in without a realistic understanding of the opportunities presented by China and the trade-offs inherent in pursuing them.(By GARRY D. BRUTON , DAVID AHLSTROM and LU YUAN, The Wall Street Journal, NOVEMBER 30, 2009)
U.S. Power Companies Seek Out Chinese Allies
Duke Chief Executive Jim Rogers said these deals are just the beginning, and that he may solicit Chinese financing for the $25 billion in capital Duke needs to raise in the next five years to build new plants and upgrade other facilities.
As President Barack Obama meets with Chinese officials this week, tamping down carbon-dioxide emissions is on the agenda. The U.S. and China together account for 40% of the world’s output of the gas, the leading culprit in global warming. The two nations’ talks are expected to explore ways they can cooperate to solve common problems, such as making coal a cleaner-burning fuel.
Northern Kentucky International Trade Association (or NKITA) Blog 