Factors to consider before going Global

I came across this today while looking to see what is going on in the world.  I thought it was fairly appropriate as a preparatory guide to going overseas.

It gives good examples of things to consider, things such as lead time, or my favorite Factor 12: Hire a good lawyer, a savvy banker, a knowledgeable accountant and a seasoned transport specialist.  These are such a great concept that it is a good read and reminder to touch bases and make sure you have a good footing before you attempt to deliver product. 

This kind of goes though a whole lot of the prep work we have done though the class.  

20 Factors to Consider Before Going Global

North Korea and Black Market Exports

This week’s discussion on exports was very focused on how developed economies conduct international business. This had me curious of what an underdeveloped country does for export. More so, I was curious what a country under heavy trade sanctions with few allies does for export. That country is North Korea, and as it turns out, itrelies very heavily on black market trade to support their economy. The only legitimate export they have, counting for 75% of all export, is coal exported into China. The other exports out of North Korea are: slave labor, weapons, drugs, and cybercrime.

Five ways North Korea gets money to build nuclear weapons

Vacation to Cape Town Anyone?

As discussed in this week’s reading there is a great deal of planning that goes into entering a new market. This article illustrates great examples of market screening, market indicators, and market factors that business use when looking at emerging markets to move into. In this case, it is for the projected increase in travel to sub-Saharan Africa. Luxury travel spending is anticipated to grow in Europe, Asia, and the Middle East due to the increasing size of the upper-middle class. They are expecting that sub-Saharan Africa will be one of the markets to see the largest growth in the tourism sector. 

Strong potential for luxury travel in sub-Saharan Africa

Toshiba Nuclear?

Toshiba Nuclear is a product I have never heard of in the past.  This is ironic since I did work in the Nuclear industry in the past.  Toshiba purchased a portion of Westinghouse which was doing various nuclear work types.

At issue is that Toshiba Nuclear is looking to file for bankruptcy in the US.  They state that they will not affect the European portion of the company.  There is issue that Toshiba may have to sell off their lucrative chip manufacturing to pay off the debt.  There is concern that the debit will cause problems across the board for the rest of the company.  This would be a huge hit to the Electronics Industry as well as several others to lose such a large competitor.

This is a tie in to the Global side because of how much effect the loss of the US portion could actually take down the rest of the company due to the debt problem.

BBC News Toshiba Nuclear

Hyperinflation a Major Concern in Venezeula

There is major cause for concern about the inflation that is occurring in Venezuela. There is no end in sight to this growing inflation due to poor economic planning, high unemployment, and ever increasing public spending. Venezuela's economy depends almost entirely on their large oil reserves, with global oil prices down there is no turn around expected in the short term. Socialist President Nicolas Maduro has made no changes to correct the economic downturn. Inflation in Venezuela is expected to rise a staggering 1,642% in the year 2017.

Venezuela: the land of 500% inflation

Work Cited:

Gillespie, P. (2016, April 12). Venezuela: the land of 500% inflation. Retrieved March 21, 2017, from http://money.cnn.com/2016/04/12/news/economy/venezuela-imf-economy/

India Times is watching the Federal Reserve Closely

The speech that Donald Trump gave to Congress was overshadowed by the Federal Reserve last night.  The federal reserve has stated that it will increase interest rates three times over the next year.  This is the first time the FED has adjusted the rates up since 2015.  The FED believes it is a good time to raise the rate that it is going to loan out money.

The fact that the India Times is looking at the FED and what they do is important.  They consider how the US and the rates they loan at important to their own ecconomy.  This is important in the International Business world because the US Dollar is a good indicator on how other economies will be based.

http://timesofindia.indiatimes.com/business/international-business/fed-tees-up-march-rate-hike-as-key-policymaker-shifts-tone/articleshow/57421159.cms

Stock prices in the US also hit record highs as a result of the speech the results of the FED results.

"White Gold": Savior or Scourge?

With sustainability increasingly becoming a topic on many people’s minds, we all ask ourselves how can we do our part. One answer that has become popular is purchasing or leasing an electric or hybrid vehicle. It would appear you are doing your part to reduce the consumption of a non-renewable resource, petroleum. However, have you ever taken the time to ask yourself, where does the Lithium used to make that rechargeable battery come from? How about the batteries in your mobile phones, laptop computer, or digital camera?

The burgeoning industry of Lithium Carbonate mining is booming in Argentina. Lithium Carbonate, nicknamed White Gold, has had its price increase 250% over the last 5 years and currently is selling at $20,000 USD per ton. There is a growing debate on who is getting rich of this “gold rush”, is it international businesses or the locals where lithium is being mined? There is also increasing debate on how environmentally friendly the mining is due to the large amounts of water required in isolating the lithium.

Please enjoy this article found in the Washington Post analyzing the true sustainability of Lithium production and its effect on the local economy within Argentina.

Tossed Aside in the ‘White Gold’ Rush

Work Cited:

Frankel, T. C., & Whoriskey, P. (n.d.). Tossed Aside in the ‘White Gold’ Rush. Retrieved February 21, 2017, from https://www.washingtonpost.com/graphics/business/batteries/tossed-aside-in-the-lithium-rush/

Black-Market Exchange Rates

In North Korea, you will find the one the most serious cases of hyperinflation in the world. As a tourist, you would never know this because North Korea has a government controlled exchange rate enforced in markets available to tourists. The government enforced exchange rate is typically around 108 Korean won to one US dollar. What you would be surprised by is the black-market exchange rate that is used in the markets where locals shop. These market controlled rates are astounding, rates are typically greater than 8,000 won to the US dollar.

               For one Egyptian company, the dueling exchange rates have caused a major crisis. Orascom, an Egyptian telecommunications and media company, decided to tap into the increase demand for cellular technology in North Korea. By late 2015, Orascom was claiming to have generated an eye-popping $450 million in profit. However, upon attempting to exchange their profit in won to dollars for export out of the country they would only be granted an exchange under the government controlled exchange rate. This resulted in their reported $450 million in profits being barely more than $8 million. At the time of this article, Orascom is still waiting to get their meager profit out of North Korea.

               It is issues like this that make investing internationally a risky venture. To read about the North Korean black-market exchange rate, please read the article from the Washington Post in its entirety.

North Korean economics 101: How much is a dollar worth?

Work Cited:

Talmadge | AP, E. (2017, February 06). North Korean economics 101: How much is a dollar worth? Retrieved February 14, 2017, from https://www.washingtonpost.com/world/asia_pacific/north-korean-economics-101-how-much-is-a-dollar-worth/2017/02/05/45b751aa-ec1e-11e6-a100-fdaaf400369a_story.html?utm_term=.2aa22a7dfca8

A Single Phone Call

China is looking to make some major changes in the very near future.  China has a trade balance that is very positive in their favor.  They are looking at changing a great many things.  China is looking to create new corridors of commerce that will bypass the issues they have at their borders.  “In the coming five years, China will import US$8 trillion of goods, attract US$600 billion of foreign investment, make US$750 billion of outbound investment, and Chinese tourists will make 700 million outbound visits.”

China is already working with Putin and the Russian government on upgrading their shipping abilities. Inbuilt in the New Silk Roads, aka One Belt, One Road, is a new transpolitical concept; territoriality is extrapolated from national borders towards belts and roads – in fact, supply chains. This goes way beyond mere technicalities: supply-chain management; inter-modality; inter-operability; a new approach to logistics; you name it. It’s posing the foundation of a transnational new geoeconomic model, and, if successful in the long run, a new geopolitical model. This corridor of commerce will allow China to export even more goods to other nations than was possible before the upgrade.  

At issue is our relations with China.  Donald Trump has made little effort to consult with the chinese and according to the article has little knowledge of what is on the line.  He has made one phone call to the chinese and it was to agree with china's One China policy.  China is looking to rely less on United States exports and to diversify that to many other nations.  The route across Siberia and other to the Russian areas is a big part of this move.

Works Cited

Jolly), (Vasundhara, (Liu Hsiu Wen and Benny Kung), (Alberto Sperindio Xi'an Jiaotong University), (Asia Times Staff), (Tomohiro Osaki Japan Times), (Kyodo News), (Live Science), (Lin Wanxia), (Ya Leung and Asia Times Staff), (Jenny Denton), (Xuan Loc Doan), (Pepe Escobar), (Salman Rafi), (Ayako Mie Japan Times), (Agence France-Presse), (Jesse Johnson Japan Times), (Richard Javad Heydarian, Asia Maritime Transparency Initiative), (Richard Javad Heydarian), (M.K. Bhadrakumar), (Harry J. Kazianis), (Doug Tsuruoka), (Reuters), (Emanuele Scimia), (AFP), (Gary Kleiman), (BBC News), Pepe Escobar, Peter J. Brown, and Reuters. "Decoding Trump's Pivot to China." Decoding Trump's Pivot to China | Asia Times. Web. 11 Feb. 2017.

New Iranian Sanctions are felt across more than just their borders

On January 31, 2017 Iran performed a successful ballistic missile test.  This test was in violation of a treaty signed just two years prior to the launch.  A similar test was performed in July of 2016.  The Iranian government states that they do not believe this violates the nuclear ballistic test ban they signed since it did not contain any kind of nuclear ordnance.  The result of these test is a call to put further trade restrictions.

Iran's continued support for terrorism and development of its ballistic missile programme poses a threat to the region, to our partners worldwide, and to the United States, said John Smith, acting director of the Treasury's Office of Foreign Assets Control. (Sanctions) The United States response to this testing is to place additional sanctions on Iran.  The sanctions were imposed against 13 Iranian people and 12 companies.  Of the 12 companies some are headquartered in Lebanon, United Arab Emirates, and China.  The companies were sanctioned because of specific ties and how they supported various portions of the Iranian government.

Iran’s rebuttal was "In retaliation for the US sanctions, Iran will impose legal restrictions on some American individuals and entities that were involved in helping and founding regional terrorist groups," state TV quoted a ministry statement as saying. ( Sanctions ) What this reads to me is that they are promising to prevent subversive groups from funding terrorist activities, though this is what I believe the sanctions were intended to do.  

This ties into International Business via the Sanctions against companies with foreign headquarters.  Lebanon and the UAE are not surprising to have a tie to Iran and be sanctioned but China was a surprise for me.  I can see how China might allow it to happen but it is a bit of a surprise they have not disavowed the company.

Works Cited

Jazeera, Al. "US Slaps New Sanctions on Iran over Missile Test." News | Al Jazeera. Al Jazeera, 04 Feb. 2017. Web. 04 Feb. 2017.

Jazeera, Al. "US Slaps New Sanctions on Iran over Missile Test." News | Al Jazeera. Al