International exchanges

Just found this site which lists various international exchanges.

Paul Denlinger - speaker for Oct 7

Paul Denlinger, Principal, China Business Strategy

Mr. Denlinger holds an MA degree in linguistics from the University of
St. Andrews in Scotland and has held management positions in marketing,
advertising, TV production, and information technology. He has a
native-language command of both Mandarin Chinese and English and has more
than 20 years of management experience in Greater China, working with key
corporate accounts and partners including:

Shanda Interactive Entertainment
Unilever
Philips Electronics
TSMC (Taiwan Semiconductor Manufacturing Corp.)
Acer Peripherals (now BenQ)
Walt Disney
McDonald's
BMW
Xinhua News Agency
America Online
Sun Microsystems
Intel
China Unicom
Lenovo Computers (formerly Legend)
Microsoft
Asiainfo
Nokia

About the firm:

China Business Strategy is a strategic consulting firm and business
advisory service which focuses exclusively on the China (PRC, Taiwan and
Hong Kong) markets.

Website: www.china-ready.com

Evite for Oct 7 event

We are getting ready for our Oct 7 event. We'd love to have you there. Click for the evite. All the details that you need are in the evite.

Sep Newletter Online

So the Sep Newsletter is now online. For some reason I wanted to try my hand at latex to do typesetting for this newsletter. Well the results are in front of you. For some reason the links are all messed up. So here is a copy of the newsletter in in blogger so you can read it directly.

Event Update
As you might already know we have our event, which is co-hosted by CABC,
scheduled for Oct 7, 2005. See the blog for all details. Don't miss it.

Blog Update
Some new articles on the blog relate to Economic Freedom of countries and
some notes about the China trip that happend as part of SCU's Study Abroad
program in Summer 2005.

If you have interesting ideas, please don't hesitate to post here.

SCU now has a link of student, faculty and alumni blogs at
http://www.scu.edu/business/news/business-school-blogs.cfm

Chinese Yuan
Since the last newsletter the revaluation of the Yuan has been the biggest
news in the world of international business. The official annoucement is available. There is come pretty good reading about it too.

The official name of the new currency management system to be used by the
central bank in China is managed floating exchange-rate regime.

For this with access to the Economist's premium content, the following story
is highly recommended

A paraphrase follows.




Essentially this story discusses ways of calculating a currencies' fair value. The oldest one is Purchacing Power Parity. The idea is that, in the long run, the echange rate should equalize in any two countries, the prices of a basket of commonly traded goods and services. So for example, if a Big Mac costs 59% less in China that in US, PPP would conclude that the Chinese Yuan is 59% undervalued vis-a-vis the US dollar.

[see the Big Mac Index below].


A second approach to valuing currencies is Fundamental Equilibrium Exchange
Rate(FEER). This is a rate consistent with both external
balance(sustainable current account balance) and internal balance(full
employment with low inflation).


There is a third method yet, called Behavioural equilibrium exchange
rate(BEER). To use this economists determine which economic variables have
played into establishing the exchange rate in the past and plug the current
values into the equation to get the current exchange rate. For China,
econometric tests have detemined that China's productivity growth, budget
balance relative to other countries and its net foreign assets.

Big Mac Index

The Economist has a Big Mac Index to try to explain foreign exchange
currency theories. Check it out.


More News about China


Dresdner Bank's Chief Economist editorial Michael Heise proposes one way on how to react to the current trend of Chinese companies' takeover bids: don't. By not reacting, Mr. Heise believes the market's invisible hand will get to work in achieving the following positive effects: 1. Increased global business efficiency as a whole 2. Promote a market-based approach in China's economic decision making which currently is still influenced by China's local political considerations.



It would be interesting to hear different opinions on how to see this trend; voice out your opinions and findings at our blog.


Link to Heise's article. ²

For those who want to predict which industry will experience the next wave
of Chinese takeover bids, look up Steve Rosenbush article: Ready for
Chinese Merger Mania?


The following industries seem to be the most logical targets for takeover
bids:


1. Natural Resources (especially oil and lumber): needed to stoke the fire
in China's giant manufacturing foundries.
2. Consumer goods: an effect of the rise of consumerism among the
increasingly affluent Chinese.
3. Manufacturing (especially Autos and Railways): China's next step in
climbing the high-tech manufacturing ladder.
³

Call for links and Ideas

Looking to hearing from all of you about new ideas that we can cover in our
newsletter. If you have any links please send them to me at aseem.asthana
AT gmail DOT com. If you like send a line or two with your thoughts
about the story that you are sending. However, don't have to do that if you
don't want to.
⁴

---

Footnotes

... http://www.iht.com/articles/2005/09/11/opinion/edheise.php)²

submitted by Johan Sulaiman

... ladder.³

submitted by Johan Sulaiman

... to.⁴

Compiled by Aseem Asthana

---

IBN Fall Event Details

Here is the list of the short listed panelists that will be participating in the panel discussion.

China Team:

1. Terilynn Perez
2. Wilson Winner
3. Sanjai
4. Manoj Batra
5. Joe V Kalla

Germany Team:

1. Kerry Washington
2. Melinda Hamilton
3. Steve Ubelhoer
4. Alka Abbi

Here is the tentative agenda:
6:00pm – Welcome address by the IBN President
6:05pm - Kickoff speech by Leanna Christie
6:15pm - Guest speaker invited by CABC speaks on the topic (name of speaker & topic to be confirmed soon)
7:00pm - Panel discussion starts
8:00pm - Q & A Session
8:15pm - Raffle to give away gifts
8:30pm - Event Concludes

Note: Snacks-n-Drinks will be served! We also encourage you to bring in your friends and spouses.

Rules:
The event will be moderated by one of the IBN execs
Each speaker will have 2-3 minutes each. Start off by giving a bit of your background, thoughts on international business,etc. Then share your experience of the country you visited and answer the following questions.
What are some of the business opportunities you saw while on the trip?
How do you think businesses in the US could counter the threat from overseas competitors?
How does culture affect the workplace?

More questions from the IBN members are welcome before 9/30.

Economic freedom of countries

The Fraser Institute has published a study on economic freedom of countries. The top spot is taken by HK (sure HK is not a country but, special enough). Next comes Singapore and the third spot is taken by New Zealand, Switzerland and US. China and India respectively are at 86 and 66 positions. Mexico and Canada are at 59 and 7th positions.

The report is at http://www.fraserinstitute.ca/admin/books/chapterfiles/EFW2005ch1.pdf#

A top level link is http://www.fraserinstitute.ca/shared/readmore.asp?sNav=pb&id=789

The first link has a nice discussion about the concept of economic freedom. They list four corner stones of economic freedom.

• personal choice rather than collective choice,
• voluntary exchange coordinated by markets rather than allocation via the political process
  
• freedom to enter and compete in markets, and
• protection of persons and their property from aggression by others.

Towards the end of the report they show positive corelation of economic freedom with various factors of human development such as unemployment, incore share of the poorest 10%, life expectancy, investment and income per capita.

Interesting read.

Updates from SCU Study Abroad trip 2005 - China

Having recently returned from China, after a wonderful two week trip, I just wanted to share my notes.

The two week program was a part of SCU Global Business program. The two professors who were heading it were Prof. Calkins and Prof. Johnson. Prof. Posner, the dean, was also there for a while in both Beijing and Shanghai. The program was really wonderfully coordinated by Leanna Christie. And there were twenty students in the program.

The first week was in Beijing and the second week was in Shanghai. Apart from the cultural tourism, this trip enabled us to look at some companies in China.

We started the official trip by visiting William Brekke who was the commercial counselor in the US Embassies' commerce department. He gave a brief update on the economy of China and the condition there.

Then we visited ZParkGlobal which is a very nice looking incubator for high tech firms. They provide quite a lot of services to the clients located in their premises. If interested, you can check out their site. On the same site, we had a leadership panel, which was moderated by Prof. Posner. The other attendees were Zhou Fang, General Manger of PeopleSoft's China subsidiary, Jennifer Pan, Vice President of ZSP and Lenny Chang, Chairman of SinoVoice.

The discussion in the leadership panel mostly centered around leadership differences in China and US. Its hard to summarize a one hour(or was it longer) discussion in a short space, but its safe to say that the outcome, to my mind, was that while there are similarities, one would do well to be aware of cultural nuances.

We then visited Blue Focus. Blue Focus is a mid size Chinese company focusing on public relations in China. While they have international clients, they only focus on the Chinese market. They have relations with the government department dealing with media. That helps them in their business since media is still quite heavily regulated by the government. They also advice their clients against certain campaigns, if those are determined to be culturally insensitive.

One anecdote which they shared, and which I found quite interesting was that one of their clients, Nippon Paints wanted to do an ad show featuring a couple of dragons climbing up some temple pillars. While one of the dragons was successful, the other one kept slipping. The point that Nippon Paints was trying to make was that the pillar, on which the dragon kept slipping, was painted by their paint, and it was very smooth. Considering that dragon is almost considered a national icon in China, and the present, or even past relations between China and Japan, this campaign was quickly nixed, for the imperialistic overtones that might be read into it.

HP was another stop. They kept referring themselves to CHP and it took me a while to figure out that they were not talking about California Highway Patrol but China HP.

HP has a presence in China since the last 20 years. In fact, Mike Hurd recently visited HP for their 20 year celebrations. One of the first things I was struck with was how fancy the building was. While the Palo Alto office campus is nice, this office was in a high rise and chrome almost seemed a commodity in the lavishness in which it was used.

We were met with two senior manager there. Both of them had worked with the government of China earlier and have transitioned to the private sector. They mentioned how fast HP was growing and how they keep hiring. One of us asked how is it that they managed to keep the HP Way spirit alive with this rate of incoming employees. They gave a stock answer about training and brining their employees from smaller cities for training programs etc.

Next stop was Tsinghua University. This is a very prestigious university in China. We met with some students from their business program and had some interesting conversations. We had a presentation by their incubation services director. This was comparable with the zParkGlobal incubator.

In Shanghai we met with a lawyer from Morrison & Forrester Law Firm. Their office was in of the many high rises looking over the river. Nice view. He gave a brief presentation about their practice in Shanghai. They currently only have 8 lawyers. It struck me as a quite small number.

Another Chinese company we visited was Ctrip. Actually most of our trip was booked via ctrip. They are also listed on NASDAQ(CTRP). Quite a nicely run business.

We were supposed to have another leadership panel in Shanghai, but unfortunately two of the three participants could not make it.

Another set of companies was LinkTone and 51Jobs. But are Chinese firms’ servicing the Chinese market. LinkTone is a service provider for Value Added Services for Chinese Mobile services. They seem to be doing quite nicely. And 51jobs is somewhat akin to moster.com. However, they also have their own print publication which they distribute along with local newspapers. Their offices were quite nicely appointed, giving the impression of the days of the Boom.

Finally we visited Intel and SMIC. Intel of course is quite well known. And SMIC is a contract fabricator and has grown tremendously in the last 4-5 years and seems set of more growth. Intel does not have a fab plant in China yet. While they did not officially cite IPR issues as the reason, it was felt that that was the real reason. They have mostly what they referred to as A/T plants, which stand for Assembly and Test plants. SMIC does have many fabrication plants in China and seem to be doing business for the world's who' who of chip manufacturers.

Some common themes came up during the trip and in the questions I have been asked about the trip after it. One of the biggest, during the trip was Intellectual Property Rights(IPR). Much can be found out about the issues surrounding it on the web. Suffice to say that it featured quite animatedly a number of times in our discussions.

Secondly pollution. That was another big one while in China. Pollution was not so bad in Beijing as in Shanghai, at least from an anecdotal standpoint.

And of course English. It seems people in China are making efforts to learn English. We actually met with a gentleman in Beijing(at zpark) who spoke no English earlier, but had started learning it quite late in life. And he seemed quite conversant.

Finally, what I think many of us had not realized before going to China was the lack of middle managers. We heard this complaint from a number of people who commented on how difficult it was to find middle managers in China. Maybe the situation will be changing with the popularity of MBA in China rising.

All in all it was quite a memorable trip. If there are any questions please comment on this blog, or come to the IBN sponsored event!!