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Best Buy Purchases Majority Stake in Chinese Retailer

Filed under: — 10:16 pm

Best Buy Co. agreed to purchase a majority stake in China’s fourth-biggest appliance and electronics retailer, Jiangsu Five Star Appliance Co., for $180 million, securing a foothold in China’s booming consumer-goods landscape.

Best Buy, the largest consumer-electronics retailer by revenue in North America, will use Five Star as part of a broader expansion into China. The Richfield, Minn., company expects consumer-electronics sales in China to reach nearly $100 billion in 2010. In April Best Buy announced a plan to build a store in Shanghai, to open next year, that, at 86,000 square feet, will be about twice the size of its U.S. stores.

Best Buy is hoping that teaming up with Five Star will help it to compete against the country’s dominant electronics retailers, such as GOME Electrical Appliances Holding Ltd. and China Paradise Electronics Retail Ltd.

Source: WSJ

EU Will Cancel Tariff Plan If U.S. Scraps Tax Rule

Filed under: — 6:13 pm

Europe will cancel plans for punitive tariffs on U.S. imports, if Congress repeals legislation that grants tax breaks to U.S. companies such as Boeing Co.

The European Union’s decision could end one of the most contentious and costly trans-Atlantic trade disputes. It also could warm relations strained by stalled global trade talks.

If signed into law, the measure would end a U.S. tax break that the World Trade Organization ruled illegal despite numerous revisions. It also would cut short a lengthy phase-out plan that the WTO also ruled illegal. Sometimes called the foreign sales corporation export subsidy, the rule has been in dispute for decades in various guises.

Source: WSJ

Trade Deficit Narrowed in March

Filed under: — 3:50 pm

The U.S. trade deficit narrowed sharply by surprise during March, but analysts predict mounting oil prices will widen the gap going forward.

The U.S. deficit in international trade of goods and services shrank by 5.6% to $62 billion from $65.64 billion in February, the Commerce Department said Friday. Exports rose, but the value of imports fell as oil prices dipped, Commerce data showed.

The $62 billion gap was the smallest since $58.46 billion in August 2005. A separate report Friday, though, showed petroleum import prices surged last month. That could cause the trade deficit to resume rising.

Friday’s trade report showed U.S. exports increased by 1.9% to a record $114.66 billion in March from $112.52 billion in February.

Exports increased by $510 million for capital goods, including industrial machines and computer accessories. Exports rose by $181 million for consumer goods, like diamonds and toys. Sales of industrial materials like fuel oil were up $1.25 billion. Exports of foods and beverages increased by $213 million. Foreign sales of autos and parts fell $377 million.

Imports fell by 0.8% to $176.66 billion.

Source: WSJ


US-China Textile Deal Fails to Build Relationship

Filed under: — 1:37 pm

In business, as life, it can be said that the most important skills to have are people skills. Here’s a textbook example of how U.S. Trade Representative Rob Portman fails to understand that. Reuters reports that “U.S. and Chinese negotiators failed to reach an agreement in a fourth round of talks on Wednesday and Thursday in Beijing”. After those talks Portman has this to say:

“We had a very generous proposal for the Chinese but it was not generous enough for them,” Portman told reporters. “Frankly, I’m disappointed. I was ready and willing to fly the 22 hours to Beijing, and the 22 hours back, in order to finalize” a deal.

Classic. Portman assumes that by talking to China a mere four times they’re ready to do anything with you? Where is the trust? Where’s the relationship? His only concern is jumping into China and closing a deal… I’m sorry Mr. Portman but traveling seems to come with the job.

…I swear we had a case study identical to this in an Introduction to Management course.

Source: Reuters


Update: Everything AOL-related is a Rumor Says Exec

Filed under: — 9:52 am

Richard Parsons, Time Warner’s chief executive, said that news of a possible Google and/or Comcast stake in AOL is all “market rumor.” He also mentioned that there are no plans to partner with Microsoft. The two companies had talked in the past but negotiations broke off due to control issues. Time Warner is interested in expanding operations in China and India, says Parsons. Somewhat self explanatory given the fact that he’s visiting Hong Kong…

…oh, and the fact that everyone else is doing it.

Source: Reuters


Disney Opens Park in Hong Kong

Filed under: — 11:50 pm

From the BBC:

Disney has opened a new $1.8bn (£1bn) theme park in Hong Kong, the firm’s biggest foray into the Chinese market.

We all know how interesting China is… in this case the park is 57% owned by the HK government. In addition, there have been some issues with local health inspectors. Disney had told the officals to dress less conspiculously but China reminded Disney that they’re not above the law.

The two officers complied when they were asked to dress less conspicuously - but the request has been widely criticised by government officials.

…certainly the last group you want to be criticized by.


Maybe the World is Spiky too?

Filed under: — 12:29 pm

A reader passed on an interesting article: Flat or spiky?

By almost any measure the international economic landscape is not at all flat. On the contrary, our world is amazingly “spiky.” In terms of both sheer economic horsepower and cutting-edge innovation, surprisingly few regions truly matter in today’s global economy. What’s more, the tallest peaks- the cities and regions that drive the world economy - are growing ever higher, while the valleys mostly languish.

I think the world can be described in both ways. The PDF is worth checking out though…

..besides, the spiky landscape is still flat compared to a globe. ;-)

Thanks, Phil.


Some Telling Statistics

Filed under: — 12:05 am

It’s cheaper for us to import oranges from Brazil and impose a 20% tariff, than to buy the oranges straight from Florida!

Sun Microsystems (in Broomfield, CO) outsourced its helpdesk functions to Bangalore. In the process, the average support ticket response time went from 11 minutes to over 14 hours! Resolution went from 2.6 hours to nearly 35! Don’t ask about satisfication levels. From an astounding 91% it plummeted to 41%…

It’s obvious the positive and negative effects our ’smaller’ world can pose upon the United States.

…we’re really gonna get hosed one of these days.


How China Will Change Your Business

Filed under: — 3:05 pm

Barry points to an awesome article from INC on China. I read the recent Fortune on America vs China. This has become an increasingly interesting topic for me (I am going to learn Chinese). China is going to drastically change things and the United States is not prepared. In my humble opinion, the Space Race is to the 50’s as China is to today. There will be a wake-up call and there will be a need for educational reform… our systems are hardly prepared…


Simon Property, Morgan Stanley to build Chinese Malls

Filed under: — 11:19 am

The New York Times is reporting a $700 million real estate venture in China:

The Simon Property Group, one of the biggest real estate and shopping mall developers in the United States, has formed a partnership with Morgan Stanley and a state-owned Chinese company to develop about a dozen shopping centers in China

The two companies are just a couple of the many trying to capitalize on China’s booming growth right now. This deal would be one of the largest foreign real estate investments ever made in China. Here’s some (barely) surprising news: Wal-Mart will be the anchor store for the malls.


Learning Chinese

Filed under: — 10:00 am

I’ve debated whether or not another language would be a good idea. I learned a great deal of spanish throughout high school (not just 4+ years, but 4 full years of IB spanish). Colorado has a decent spanish-speaking population and there are plenty of opportunities to practice… but Chinese? Why would I want to do a silly thing like that?

There are billions of reasons! Literally! China is on the cover of Fortune. Chinese companies are buying up American companies. China is now making cars. Put simply: China is about to change the way we live. It’s not like I’m going to “give in” and figure “if you can’t beat ‘em, join em”. Again, it’s pretty simple: the world does business with us and they do it very well. Therefore, they learn english. If you want to do business (well) with China, you guessed it, you learn Chinese.

…and then I looked at the 5-day a week CHIN 1010 offered at school. Ha. I have class on Tuesday and Thursday next semester and I won’t change that. But I still want to learn… I know I can get started somewhere else.

So far Google has introduced me to some decent introductory sites (the BBC has a nice one). I just wish there were some more structured beginner websites…

My questions to you: do you have any suggestions on starting out with Chinese? Is there one or two books that I should really look into? Maybe even some decently-priced software or online courses? Has anyone else even thought/looked into this?

PS: To illustrate my earlier point, Tom Peters has highly recommended this book: Three Billion New Capitalists: The Shift of Wealth and Power to the East.


Group of Eight (G8) Summit Gathering

Filed under: — 9:39 am

AP - World leaders scaled back goals for relieving African poverty and combatting global warming under U.S. opposition to British Prime Minister Tony Blair’s ambitious objectives.

Blair is in charge this year and is looking primarily at aid for Africa. He’d like the nations to double their support by 2010 and increase foreign aid to 0.7-percent of each nation’s income by 2015. Bush is in favor of doubling the aid to $8.6 billion in Africa (which activists suggest is about $6 billion too little) but is opposed to the 0.7-percent aid. He doesn’t want to give money to “countries that are corrupt”. This is all in addition to the plan that would eliminate the debt of 18 countries ($40 billion).

Also on the agenda is global warming negotiations. Bush is ready to push the alternative-fuel approach.


Oil Above $55 A Barrel

Filed under: — 10:58 am

Retuers: Oil prices sat tight above $55 a barrel on Tuesday on concerns over the world’s ability to make enough diesel and heating oil ahead of the winter and as OPEC appeared powerless to turn back the rally.

Interestingly enough this announcement comes before the summer season is even over. The world’s supply is already being stretched that thin.

…and since you guys (and gals) are faithful readers, you’re the first to know. Now quick, go fill up your gas tanks and thank me later.


Foreign Issues: MSN, China and Freedom

Filed under: — 9:25 pm

A number of places have the story covered but I thought I could address it. First off, I honestly respect some of the students around me who are working on international business as their degree emphasis. I’m sure it’s a great experience but it definitely isn’t always easy…

From my experience with other cultures I can safely say Americans can never really understand much of what other people think, feel, or do in some instances. We can say ‘thats odd, why do they do that?’ or ‘why is that something that goes on?’. It’s easy to fake it and say we “understand” or we can “relate” but really, you can’t if you’re brought up as many of us have been. For us, we’re ingrained with the concept of freedom and equality and this and that. Personally, I was involved in a relationship with a Indian (second-generation American) and sometimes differences like this are… just differences.

Morality is always fun, isn’t it? ..and besides, as far as business is concerned, you can’t really question Asia, can you?


Mexican Economy Becoming Stronger

Filed under: — 3:21 pm

According to the Kiplinger Letter (Feb. 11) the number of mexicans migrating into the country will decrease over the next five years. The economy in Mexico has become stronger and the job market is growing faster than the population. Thus, less desire to cross the border. Perhaps an increase in agricultural wages is in the future then?

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