By Christian Losche, Research Associate for GLOBAL ID, LLC
Vietnam, in past years, has been posting economic growth rates consistently around eight percent. With inflation above 25 percent, the stock market taking a hit, and labor strikes, people are wondering if it was too much to fast. These are unusual events seeing as how a year ago Vietnam was predicted to be one of the top economies in the world. It would make sense with their population, low labor costs, and available resources. The inflation is not only due to imports, however; it would seem other elements contributing to the incredibly high rate are increased lending and government spending. This inflation rate has created problems for factory workers on minimal salaries, contributing to the labor strikes. With the inflation rate, labor strikes, and the stock market at a two-year low, people are seeing the true volatility of the economy. Considered to be the next emerging and extraordinarily successful market, Vietnam must now ride the wave of uncertainty and hope the economy reaches a balancing point.
Monday, June 30, 2008
Saturday, June 28, 2008
Why Consider Countertrade?
By Christian Losche, Research Associate for GLOBAL ID, LLC
Countertrade refers to the trading of goods for goods between countries, rather than currency. This is an excellent way to trade if a company is looking to break into the international market, but lacks the currency at the time. It will also help in building customer relationships in different markets as long as the goods provided in the trade are of promised quality. The question may arise, how does one make money during the process of a countertrade? Take PepsiCo, who entered into a countertrade with Russia. In exchange for syrup provided by PepsiCo, Stolichnaya trades vodka. PepsiCo makes money off of this trade by obtaining the rights to sell the vodka in the U.S. With the partnership, PepsiCo adds additional sales and an addition of a new market to its list of endeavors. There are numerous other examples of countertrades, but once again the point must be stressed, when entering into a countertrade, the products exchanged must meet the standard of quality promised.
Countertrade refers to the trading of goods for goods between countries, rather than currency. This is an excellent way to trade if a company is looking to break into the international market, but lacks the currency at the time. It will also help in building customer relationships in different markets as long as the goods provided in the trade are of promised quality. The question may arise, how does one make money during the process of a countertrade? Take PepsiCo, who entered into a countertrade with Russia. In exchange for syrup provided by PepsiCo, Stolichnaya trades vodka. PepsiCo makes money off of this trade by obtaining the rights to sell the vodka in the U.S. With the partnership, PepsiCo adds additional sales and an addition of a new market to its list of endeavors. There are numerous other examples of countertrades, but once again the point must be stressed, when entering into a countertrade, the products exchanged must meet the standard of quality promised.
Tuesday, June 24, 2008
Trade Adjustment Assistance
By Christian Losche, Research Associate for GLOBAL ID, LLC
The Trade Adjustment Assistance program is for workers affected by an increase in international trade. With the numerous benefits of foreign trade, it is difficult to not pursue that avenue from an economic standpoint. When employees are either laid off, or hours are severely cut due to trade, the Trade Adjustment Assistance program helps these workers in different ways. The program provides for training to acquire a new job, if the reason for the lay-off can be linked to increased trade. The program also provides income support and job search and relocation allowances, among other benefits. Although this program is a step in the right direction for trade-affected workers, it still is being criticized for inaccurate methods of allocating funds and inaccurate data. The focus must remain on the fact that the program, although not perfect, is in place to help trade affected workers find re-employment in a short period of time, which is an extremely positive program.
The Trade Adjustment Assistance program is for workers affected by an increase in international trade. With the numerous benefits of foreign trade, it is difficult to not pursue that avenue from an economic standpoint. When employees are either laid off, or hours are severely cut due to trade, the Trade Adjustment Assistance program helps these workers in different ways. The program provides for training to acquire a new job, if the reason for the lay-off can be linked to increased trade. The program also provides income support and job search and relocation allowances, among other benefits. Although this program is a step in the right direction for trade-affected workers, it still is being criticized for inaccurate methods of allocating funds and inaccurate data. The focus must remain on the fact that the program, although not perfect, is in place to help trade affected workers find re-employment in a short period of time, which is an extremely positive program.
Friday, June 20, 2008
A Reason to Outsource, how about Five
By Christian Losche, Research Associate for GLOBAL ID, LLC
In the business world today, outsourcing is proving to have numerous benefits for companies of any size. Several tasks and processes can be outsourced saving, and even improving, companies. Below are five common, but solid reasons for outsourcing:
1) Reduction of Operating Costs
Saving money is the most common reason for outsourcing. It costs less to outsource rather than create an in-house addition and accrue the costs that accompany it.
2) Use of Resources not Available Within a Company
Whether it’s a lack of staff or the specialized skills required, outsourcing is an efficient way of getting the job done.
3) Use of Skilled Specialists
When outsourcing, specialists are attained to quickly complete a task with no mistakes.
4) Time
With outsourcing, the process of training and monitoring is sidestepped.
5) Improved Company Focus
With the time being saved by outsourcing, it allows a company to focus and improve other aspects of the business.
In the business world today, outsourcing is proving to have numerous benefits for companies of any size. Several tasks and processes can be outsourced saving, and even improving, companies. Below are five common, but solid reasons for outsourcing:
1) Reduction of Operating Costs
Saving money is the most common reason for outsourcing. It costs less to outsource rather than create an in-house addition and accrue the costs that accompany it.
2) Use of Resources not Available Within a Company
Whether it’s a lack of staff or the specialized skills required, outsourcing is an efficient way of getting the job done.
3) Use of Skilled Specialists
When outsourcing, specialists are attained to quickly complete a task with no mistakes.
4) Time
With outsourcing, the process of training and monitoring is sidestepped.
5) Improved Company Focus
With the time being saved by outsourcing, it allows a company to focus and improve other aspects of the business.
Wednesday, June 18, 2008
Maximizing International Trade with South Korea
By: Kelly Kasic, president of GLOBAL ID LLC
South Korea is strategically located in the heart of Northeast Asia and is the 13th largest economy in the world. The U.S. has had a long history of successful trade with Korea and opportunities are continuing to increase due to this country’s sophisticated consumer markets and high-tech industry focus. According to the U.S. Department of Commerce, the U.S. and Korea exchange nearly US$83 billion worth of goods and more than US$15 billion in services annually -- that is more than 70 percent of the total bilateral trade that the U.S. enjoys with all 10 trading partners with whom we have implemented Foreign Trade Agreements since 2000.
Due to their favorable business climate, there are numerous reasons to expand your Asian presence to South Korea. The country houses several Free Economic Zones (FEZs), which are self-contained living and business districts that provide numerous advantages to a variety of industries. These districts are located in Incheon, Busan-Jinhae, Gwangyang, Hwanghae, Daegu/Gyeongbuk, and Saemangeum/Gunsan; and feature air and sea transportation, logistics complexes, international business centers, financial services, residences, schools, hospitals, shopping, and entertainment.
The main industries in which South Korea ranks high in global competitiveness include: Semiconductors, Shipbuilding, Automobiles, and Displays. According to the Korean Trade-Investment Promotion Agency (KOTRA), this country has captured 11.3% of the global semiconductor market, with US$39 billion in exports (2007). Additionally, KOTRA states that South Korea is ranked number one globally in terms of new ship building orders; capturing 40% of all worldwide orders.
With US$981.9 billion GDP in 2007 (a 4.9% real growth rate) along with low unemployment, South Korea is a viable market that should be considered; particularly in the industries of Information Technology, Biotechnology and Life Sciences, Nanotechnology, Aerospace and Defense, as well as the Entertainment industry.
When conducting business with South Korean companies it is important to building strong relationships with the best agents and distributors. Koreans tend to be more straightforward and individualistic in comparison with other Asian neighbors. When making business deals it is important to be sincere and honest; conduct meetings in person whenever possible. Sales and marketing techniques will need to be adapted to fit the Korean market. Companies should also consider joint venture partnerships. Whichever market entry method is chosen, ensure that you obtain legal consultation. Last, Korea is a collective culture where decisions tend to be made by group consensus; be patient as the process is often slower than in Western cultures.
GLOBAL ID LLC is a management consulting and international market research company that specializes in assisting small- to medium-sized businesses with international market expansion. If your company falls into one of the emerging industries in South Korea, contact us for a free 1 hour consultation: be sure to mention that you read this article in our blog. We can be reached at 720-334-6982 or Kelly@globalidllc.com.
South Korea is strategically located in the heart of Northeast Asia and is the 13th largest economy in the world. The U.S. has had a long history of successful trade with Korea and opportunities are continuing to increase due to this country’s sophisticated consumer markets and high-tech industry focus. According to the U.S. Department of Commerce, the U.S. and Korea exchange nearly US$83 billion worth of goods and more than US$15 billion in services annually -- that is more than 70 percent of the total bilateral trade that the U.S. enjoys with all 10 trading partners with whom we have implemented Foreign Trade Agreements since 2000.
Due to their favorable business climate, there are numerous reasons to expand your Asian presence to South Korea. The country houses several Free Economic Zones (FEZs), which are self-contained living and business districts that provide numerous advantages to a variety of industries. These districts are located in Incheon, Busan-Jinhae, Gwangyang, Hwanghae, Daegu/Gyeongbuk, and Saemangeum/Gunsan; and feature air and sea transportation, logistics complexes, international business centers, financial services, residences, schools, hospitals, shopping, and entertainment.
The main industries in which South Korea ranks high in global competitiveness include: Semiconductors, Shipbuilding, Automobiles, and Displays. According to the Korean Trade-Investment Promotion Agency (KOTRA), this country has captured 11.3% of the global semiconductor market, with US$39 billion in exports (2007). Additionally, KOTRA states that South Korea is ranked number one globally in terms of new ship building orders; capturing 40% of all worldwide orders.
With US$981.9 billion GDP in 2007 (a 4.9% real growth rate) along with low unemployment, South Korea is a viable market that should be considered; particularly in the industries of Information Technology, Biotechnology and Life Sciences, Nanotechnology, Aerospace and Defense, as well as the Entertainment industry.
When conducting business with South Korean companies it is important to building strong relationships with the best agents and distributors. Koreans tend to be more straightforward and individualistic in comparison with other Asian neighbors. When making business deals it is important to be sincere and honest; conduct meetings in person whenever possible. Sales and marketing techniques will need to be adapted to fit the Korean market. Companies should also consider joint venture partnerships. Whichever market entry method is chosen, ensure that you obtain legal consultation. Last, Korea is a collective culture where decisions tend to be made by group consensus; be patient as the process is often slower than in Western cultures.
GLOBAL ID LLC is a management consulting and international market research company that specializes in assisting small- to medium-sized businesses with international market expansion. If your company falls into one of the emerging industries in South Korea, contact us for a free 1 hour consultation: be sure to mention that you read this article in our blog. We can be reached at 720-334-6982 or Kelly@globalidllc.com.
Thursday, May 29, 2008
Product Alterations in Foreign Markets
By: Carl Phelps, Research Associate with GLOBAL ID LLC.
There are three main reasons for making product alterations when introducing your product into a foreign market. Legal requirements may cause you to alter your product, usually related to product safety. All countries have different product safety requirements. For example, the United States has stricter pollution standards than many other countries, which causes foreign automobile manufacturers to alter their products. Additionally, foods and pharmaceuticals are often subjected to different testing and labeling requirements when exported to foreign markets.
There are also cultural reasons for the alteration of products. Religious differences can cause problems with the introduction of products. For example, food companies shouldn’t expect to sell as much pork in Islamic countries or as much of any meat in India. Other cultural differences are difficult to detect, and it often takes trial and error to correct the product. For example, Toyota was fairly unsuccessful at selling pickup trucks in the United States until they altered the trucks to have enough headroom for drivers to wear large cowboy hats.
A third reason for product alterations comes from economic differences. To accommodate countries with lower average incomes a company may have to design a cheaper model. It is sometimes more beneficial for companies to sell their products in smaller package sizes, as people with lower incomes tend to buy products as they need them, instead of planning ahead. Also, countries with lower average incomes tend to have poorer infrastructure, which cause alterations in products such as automobiles. For additional information on foreign production email: carlphelps@globalidllc.com
There are three main reasons for making product alterations when introducing your product into a foreign market. Legal requirements may cause you to alter your product, usually related to product safety. All countries have different product safety requirements. For example, the United States has stricter pollution standards than many other countries, which causes foreign automobile manufacturers to alter their products. Additionally, foods and pharmaceuticals are often subjected to different testing and labeling requirements when exported to foreign markets.
There are also cultural reasons for the alteration of products. Religious differences can cause problems with the introduction of products. For example, food companies shouldn’t expect to sell as much pork in Islamic countries or as much of any meat in India. Other cultural differences are difficult to detect, and it often takes trial and error to correct the product. For example, Toyota was fairly unsuccessful at selling pickup trucks in the United States until they altered the trucks to have enough headroom for drivers to wear large cowboy hats.
A third reason for product alterations comes from economic differences. To accommodate countries with lower average incomes a company may have to design a cheaper model. It is sometimes more beneficial for companies to sell their products in smaller package sizes, as people with lower incomes tend to buy products as they need them, instead of planning ahead. Also, countries with lower average incomes tend to have poorer infrastructure, which cause alterations in products such as automobiles. For additional information on foreign production email: carlphelps@globalidllc.com
Tuesday, May 20, 2008
Mercantilism
The first form of international trade theory was the concept of Mercantilism. This theory began around 1500 AD and lasted through the colonial era. The theory behind Mercantilism was that measurement of a country’s wealth was based on the amount of gold it was holding. Therefore, it was important to export more than the country imported in order to gain gold from other countries. This gold was then used to fund armies and solidify a central government. Under this theory, countries would restrict their imports and heavily subsidize domestic industries in order to increase exports.
Mercantilism also encouraged countries to use their colonies in order to support their trade objectives. The colonies would supply raw materials and low value goods to the colonizing country. Colonies were also forced to import the high value goods from the mother country. Mercantilism weakened around 1800 AD as other trade theories were established and governments stopped limiting the development of industry within their colonies. Today, the term Neomercantilism is used to indicate that a country is trying to run a favorable trade balance in order to achieve some political objective.
Written by Carl Phelps, Research Associate for GLOBAL ID LLC.
For additional information, please visit our website: http://www.globalidllc.com/
Mercantilism also encouraged countries to use their colonies in order to support their trade objectives. The colonies would supply raw materials and low value goods to the colonizing country. Colonies were also forced to import the high value goods from the mother country. Mercantilism weakened around 1800 AD as other trade theories were established and governments stopped limiting the development of industry within their colonies. Today, the term Neomercantilism is used to indicate that a country is trying to run a favorable trade balance in order to achieve some political objective.
Written by Carl Phelps, Research Associate for GLOBAL ID LLC.
For additional information, please visit our website: http://www.globalidllc.com/
Tuesday, May 13, 2008
The Foreign Corrupt Practices Act
In international business, bribery often takes place to influence government decisions. In 1977, The Foreign Corrupt Practices Act (FCPA) was passed by the United States in order to combat the growing problem of bribery. The act made it illegal for U.S. companies to pay bribes to any foreign government officials or political parties. Today, the act also applies to any foreign firms operating in U.S. territory or quoted on any U.S. stock exchange.
One motive for bribery is to facilitate government services such as registrations, permits, and import clearances. The FCPA allows payments to officials in order to expedite services that are legal, but does not allow payments to officials who are not directly involved in a process. The reason for this is that some foreign governments will stall imports at customs indefinitely until they receive a bribe. The FCPA allows for the U.S. companies to bribe the customs officials in order to obtain import clearance. There are many critics of the FCPA who claim that U.S. companies lose business in foreign markets because competitors from other countries are allowed and even encouraged to make bribery payments. Recently, the FCPA has appeared to be an effective deterrent of bribery as many executives of large companies have either resigned or been fined by the U.S. government.
Written by Carl Phelps, Research Associate for GLOBAL ID LLC
For additional information, visit our website: http://www.globalidllc.com/
One motive for bribery is to facilitate government services such as registrations, permits, and import clearances. The FCPA allows payments to officials in order to expedite services that are legal, but does not allow payments to officials who are not directly involved in a process. The reason for this is that some foreign governments will stall imports at customs indefinitely until they receive a bribe. The FCPA allows for the U.S. companies to bribe the customs officials in order to obtain import clearance. There are many critics of the FCPA who claim that U.S. companies lose business in foreign markets because competitors from other countries are allowed and even encouraged to make bribery payments. Recently, the FCPA has appeared to be an effective deterrent of bribery as many executives of large companies have either resigned or been fined by the U.S. government.
Written by Carl Phelps, Research Associate for GLOBAL ID LLC
For additional information, visit our website: http://www.globalidllc.com/
Friday, May 9, 2008
EU-US Relations
The European Union (EU) and the United States (US) are two of the largest economies in the world. The two markets trade heavily with each other, as the US is the EU’s largest trading partner. Relations between the two, however, have always been strained. In 2001, the US passed steel tariffs and farm subsidies that worsened the relationship between the two powerhouses. The tensions eased, however, when the World Trade Organization (WTO) pressured the US into dropping the steel tariffs.
In 2004, a new dispute between the US and EU, arose regarding the aircraft industry. The US accused the EU of providing launch aid to Airbus, which are illegal according to the WTO. These soft loans would not have to be completely repaid unless Airbus performs well in the market. In retaliation, the EU accused the US government of giving Boeing illegal tax breaks and funneling Research & Development money to Boeing through NASA and the Pentagon. Both sides filed complaints with the WTO, and agreed to enter into bilateral negotiations in order to avoid harsh penalties from the WTO.
Today, the relationship between the US and the EU remains somewhat strained due to these disruptive disputes. Ironically, the largest union in the US, the AFL-CIO, will be lobbying the US government to purchase Boeing planes rather than Airbuses for an upcoming procurement. Union representatives will be in Washington DC on May 19, 2008.
Written by Kelly Kasic and Carl Phelps
For additional information, visit our website: www.globalidllc.com
In 2004, a new dispute between the US and EU, arose regarding the aircraft industry. The US accused the EU of providing launch aid to Airbus, which are illegal according to the WTO. These soft loans would not have to be completely repaid unless Airbus performs well in the market. In retaliation, the EU accused the US government of giving Boeing illegal tax breaks and funneling Research & Development money to Boeing through NASA and the Pentagon. Both sides filed complaints with the WTO, and agreed to enter into bilateral negotiations in order to avoid harsh penalties from the WTO.
Today, the relationship between the US and the EU remains somewhat strained due to these disruptive disputes. Ironically, the largest union in the US, the AFL-CIO, will be lobbying the US government to purchase Boeing planes rather than Airbuses for an upcoming procurement. Union representatives will be in Washington DC on May 19, 2008.
Written by Kelly Kasic and Carl Phelps
For additional information, visit our website: www.globalidllc.com
Friday, May 2, 2008
Ethical Dilemmas in the Pharmaceutical Industry
Tiered pricing is the pharmaceutical industry’s answer to providing low-income developing nations with the drugs that they need. In order for pharmaceutical companies to cover their large Research and Development (R&D) expenses, they must charge a high price for their drugs while they are patented. Once a patent expires (usually about 17 years), the drugs are produced by several generic drug manufacturers that can charge lower prices because they don’t have the large R&D budget. Many low-income developing nations have the largest number of people who are in need of these innovative drugs (yet cannot afford them). As a solution, pharmaceutical companies employ a tiered pricing system in which they charge much higher prices in industrial countries, and a much lower price for developing countries.
One major problem with the tiered pricing system is that some deadly diseases don’t exist in industrial nations. This means that the pharmaceutical companies can’t use tiered pricing to cover their high R&D costs. As a result, there is no development by pharmaceutical companies of vaccines and drugs against some of the world’s deadliest diseases, such as malaria. This is where governments and companies fall short of expectations to be socially responsible and solve the problem of disease in developing countries. In the case of Malaria, not-for-profit organizations such as the Bill and Melinda Gates Foundation have stepped in to help fund the development and distribution of a vaccine that could help stop this deadly disease.
Written by Carl Phelps, Research Associate with GLOBAL ID LLC.
For more information, contact us: carlphelps@globalidllc.com
One major problem with the tiered pricing system is that some deadly diseases don’t exist in industrial nations. This means that the pharmaceutical companies can’t use tiered pricing to cover their high R&D costs. As a result, there is no development by pharmaceutical companies of vaccines and drugs against some of the world’s deadliest diseases, such as malaria. This is where governments and companies fall short of expectations to be socially responsible and solve the problem of disease in developing countries. In the case of Malaria, not-for-profit organizations such as the Bill and Melinda Gates Foundation have stepped in to help fund the development and distribution of a vaccine that could help stop this deadly disease.
Written by Carl Phelps, Research Associate with GLOBAL ID LLC.
For more information, contact us: carlphelps@globalidllc.com
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