Posts Tagged ‘China’

Facebook May Breach the Great Firewall of China

Tuesday, May 3rd, 2011

Social networking could gain 1.3 billion new users if a deal goes through that will introduce Facebook to ChinaFacebook Inc. has signed an agreement with Baidu, Inc.  a search engine company, to create a social-networking website in China.  “We are currently studying and learning about China, as part of evaluating any possible approaches that could benefit our users, developers and advertisers,” Palo Alto, CA- based Facebook said.

The arrangement follows several recent meetings in China between Facebook CEO Mark Zuckerberg and Baidu CEO Robin Li.  The Baidu website would not be incorporated with Facebook’s international service, and a potential launch date is “not confirmed.”  Facebook said it is “currently studying and learning about China, as part of evaluating any possible approaches that could benefit our users, developers and advertisers.”  By entering the Chinese market, where the world’s most popular social-networking service is currently banned, Facebook would gain access to the nation’s nearly 500 million Internet users.

According to Pascal-Emmanuel Gobry of MSNBC Business Insider, “The deal makes sense for both sides. On Facebook’s side, it needs a big local partner to break into the huge Chinese market. On Baidu’s side, it is threatened by social network juggernaut Tencent, and it might be a safer bet to build a social network with one of the most successful social companies in the world than to try to build its own.”

Baidu, which is China’s largest search engine, wants to provide more social networking opportunities in China.  The impediment has been the Chinese State, which owns the “Great Firewall of China” and has blocked sites like Facebook, Twitter and YouTube.  Google removed its search engine last year.

Writing on the website Digital Trend, Molly McHugh is curious about how Facebook can compete if it enters the Chinese market.  “Facebook has been blocked in China since 2009, when riots in the country’s Xinjiang region led to severe crackdowns on Internet use.  Since then, statements from Chinese officials and Facebook CEO Mark Zuckerberg have hinted at the possibility of cooperation between the two, if a compromise between the nation’s overbearing censorship and Facebook’s ‘openness’ can be reached.  Now it looks as though something is going on.  What exactly that may be is still up in the air, but numerous reports say Facebook is working with China to come up with a solution.

“According to Marbridge Consulting, as well as a few blogs,” according to McHugh, “a post on Sina Weibo from Hu Yan Ping, the founder of a Chinese market research firm claims that Facebook will be collaborating with Baidu to build an entirely new social networking site.  Ping wrote, ‘Facebook really is about to enter China, the agreement is signed.  A domestic website will work with Facebook to create a new site.  This new site is not interlinked with Facebook.com.  The question is, will this live or die in China?'”

United States in Third Place in Developing Clean Energy Sources

Wednesday, April 20th, 2011

The United States has fallen to third place – behind China and Germany – in the development of clean energy sources, according to a new report from the Pew Charitable Trusts. Investment in global clean energy expanded significantly in 2010 to $243 billion, a 30 percent increase over 2009.  China, Germany, Italy and India were among the nations that were most successful at attracting private investments.  China solidified its position as the world’s clean energy leader.  Its 2010 investment record of $54.4 billion in 2010 represents a 39 percent increase over 2009.  Germany ranked second in the

G-20, up from third last year, after experiencing a 100 percent increase in investment to $41.2 billion.  The United States’ 2010 investment totaled just $34 billion, a 51 percent increase over the previous year.

“The United States’ position as a leading destination for clean energy investment is declining because its policy framework is weak and uncertain,” said Phyllis Cuttino, director of Pew’s Clean Energy Program.  She said that the U.S. could lag behind even more as competitors adopt renewable energy standards and incentives for investing in solar, wind and other forms of clean energy.  “We are at risk of losing even more financing to countries like China, Germany and India, which have adopted strong policies such as renewable energy standards, carbon reduction targets and/or incentives for investment and production,” Cuttino said.

“The United States remains the global leader in clean energy innovation, receiving 75 percent of all venture capital investment in the sector, a total of $6 billion in 2010, but the U.S. has not been creating demand for deployment of clean energy.  As a result it is losing out on opportunities to attract investment, create manufacturing capabilities and spur job growth.  For example, worldwide, China is now the leading manufacturer of wind turbines and solar panels,” says Michael Liebreich, CEO of Bloomberg New Energy Finance.

China’s goal is to install 20,000 megawatts of solar energy by 2020; the European Union intends to generate 20 percent of its power from renewable sources over the same timeframe.  In the United States, 30 states have policies requiring utilities to buy more electricity from renewable sources.  Although the federal government has incentives in place to cut project costs, there’s no nationwide mandate for clean energy.

The website 247wallstreet.com believes it doesn’t really matter who leads the world in alternative energy creation – as long as global effort continue.  According to Douglas McIntyre, “Most of the data does not matter much.  The fact that China invests such a large amount in clean energy does not mean it will not sell products based on that technology to U.S. firms.  China will export manufactured wind and solar infrastructure just as it does everything else.  Green technology is hardly a strategic asset.  The Chinese are as anxious to make money from their investment as U.S. companies.  If any proof is needed, many Chinese and US alternative energy firms are listed on stock exchanges.  Green is a business as much as it is a movement.”

Unfortunately, McIntyre says, solar and wind energy are not as powerful a source as many believe.  Solar energy doesn’t work at night unless the user has a storage device such as a battery; cloudy weather can make the technology unreliable.  Solar technologies are also quite costly and need significant land to collect the sun’s energy at useful rates.  Wind energy is intermittent in most areas.  Additionally, wind turbines typically are not connected to the American power grid, making the energy it produces difficult to deliver effectively to places where it could replace coal-powered electricity.

McIntyre notes that “America has a nearly inexhaustible supply of coal.  Nuclear energy projects may be delayed by the effects of the Japan earthquake, but its growth in the U.S. is inevitable because the country needs to produce more energy within its borders.  Investment in solar and wind energy may be up, particularly in China.  That does not matter much if the two sources do not work as well as others that are currently available.”

Click here to read a discussion about nuclear power by Amy Goodman of Democracy Now.

“The Terminator” Wants to Create Green Solutions

Tuesday, March 15th, 2011

Former California Governor Arnold Schwarzenegger recently called for the end of false debate over climate science, saying that we should not assume that China will create green technologies that Americans can adopt and to admit that global warming will impact the globe in coming years. In a speech at the APRA-E Energy Innovation Summit in Washington, D.C.,  Schwarzenegger said that changing to a green economy, fixing the environment and ending the political stalemate over carbon legislation are well within the power of today’s technology.

“We want a new era of energy independence, a new era of green technology and green jobs, a new era of better health from a cleaner environment, and a new era of American inventiveness,” Schwarzenegger said.

Schwarzenegger connected the green economy of the future to the current unrest in the Mideast. He said that the overthrow of foreign dictators seemed impossible a month ago but now seems inevitable.  At the same time, he believes that defeatism about the ability of a green revolution to transform America will soon look incongruous.  The former California governor also pointed to the recent volatility in oil prices resulting from upheaval in the Middle Eastern as a clear example of why the United States needs to wean itself off foreign oil.  “Why should a dried-up desert country with a crazy dictator like Libya play havoc with America’s energy future?” Schwarzenegger asked.

Schwarzenegger pointed out that California offers a model for tech companies that can help vitalize the economy and cut greenhouse gases, while helping the country reduce its imports of oil. As governor, he signed a global-warming law that mandates reductions in greenhouse gases; California also has a renewable-energy mandate that has resulted in almost 20 percent of electricity coming from renewable sources.

He lamented the national discussion on clean energy, saying too much of it is stuck in the debate over the science of global warming.  Instead, people should focus on immediate benefits from investing in green technologies, including improved health, economic growth, consumer savings from efficiency, and reduced dependence on foreign oil.

“Think about what it means that in the Central Valley of California, one in six children has to walk around with an inhaler.  I know we can change the debate and win the debate,” he said.  “We can’t talk about global warming, because people can’t relate to that.”  Instead of creating “forward-looking policies” for energy use, elected officials are debating the science of global warming.  “There is a disconnect between what is happening and what is being debated,” Schwarzenegger concluded.

Increased Consumer Spending Lifts U.S. 2010 GDP

Monday, February 7th, 2011

road-sign-blogThe United States’ 2010 GDP soared at an annualized rate of 3.2 percent, as consumer spending rose by the greatest levels in four years.   “The consumer really drove the economy in the 4th quarter,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia.  “The economy has moved beyond recovery to a stable state of growth.”  For all of 2010, the economy expanded 2.9 percent — the biggest one-year jump in five years — after contracting 2.6 percent in 2009.  The volume of all goods and services produced climbed to $13.38 trillion, for the first time surpassing the pre-recession peak reached in the 4th quarter of 2007.  Tiffany & Co. saw a significant increase in the sale of fine jewelry.  Apple reported record 4th quarter sales as consumers bought 7.73 million iPads as holiday gifts.  Ford Motor Company’s sales have been so good that the automaker plans to add an additional 7,000 manufacturing jobs over the next two years.  The automaker, which did not undergo bankruptcy, did lay off some salaried employees in 2008 as part of a restructuring in the face of slumping sales.

Exports also helped boost the American economy which should boost job creation over the next several years.  “The U.S. is expected to be one of the fastest growing developed countries in 2011, largely reflecting the contrast of the ongoing stimulus with other countries, such as the U.K. and other heavily indebted European nations, where austerity measures designed to reduce deficits are stifling domestic demand,” said Chris Williamson, chief economist at Markit, a London-based research firm.  “The acceleration of the U.S. GDP in the 4th quarter, and the changing composition of growth, raises hope that the economic recovery will move into a more self-sustaining phase in 2011 and generate sufficient jobs to reduce unemployment.”

Even the Federal Reserve, which renewed its commitment earlier this week to buying $600 billion in government bonds, agrees that the report shows the economy ended 2010 with moderate strength and breadth, but not enough to bring down the 9.4 percent unemployment rate anytime soon.  Personal consumption spending contributed slightly more than three percent to 4th quarter growth.  That is in line with retailers’ reports showing a respectable holiday shopping season.   Whether that level of spending holds up remains to be seen.  Many retailers remain cautious in their forecasts and report that consumers are still bargain-hunting.  As gasoline prices rise, disposable income may be limited.

Alter Now does see it as important to note the correlation with an overall increase in consumer credit debt in December, the first spike since 2008.  According to the Fed, overall consumer credit debt rose by 6.1 billion, or 3.0%, to $2.41 trillion while revolving credit debt (primarily from credit cards) rose by $2.3 billion (3.5%) to $800.5 billion. No revolving credit rose by $3.8 billion, or 2.8%, to $1.61 trillion.  While the spike in GDP is good news, let us remember that it is still being driven by deficit spending.

Compare the U.S. GDP with that of other nations last year and it’s clear who is winning.  China, for example, is expected to report an 8.5 percent jump in its GDP, not unexpected in the world’s fastest growing economy.  Japan’s real GDP was 3.9 percent higher in annualized terms for the 3rd quarter, beating estimates for a 2.5 percent rise for the year.

In the U.K., the economy shrank by 0.5 percent in the 4th quarter, compared with a 0.7 percent increase in the 3rd quarter.   By contrast, the nation with Europe’s largest economy – Germany – recorded a 3.6 percent growth rate in its GDP in 2010. 

Caterpillar, Boeing Defy the Odds With Strong Sales

Monday, August 16th, 2010

Some companies are posting 90 percent growth.  One company that is holding its own despite the shaky economy is Peoria, IL-based Caterpillar, Inc., which reported an enviable quarterly profit thanks to growth in emerging markets.  The world’s largest manufacturer of construction and mining equipment is benefiting from growing mining and energy operations with orders outpacing shipments to dealers.  Additionally, Caterpillar plans to increase production during the second half of 2010 and has hired 3,650 new employees this year — 1,250 in the United States and 2,400 overseas.

Caterpillar, which laid off 30,000 employees globally from late 2008 through 2009, is being cautious, saying it still has “significant economic concerns.”  Eli Lustgarten, an economist with Longbow Research, notes that “Construction in developed countries is not doing well, particularly in the United States.”  Caterpillar is well aware that its second-quarter profit of $707 million was derived from sales which rose 116 percent in Latin America and 62 percent in the Asia/Pacific region.

Another company that is prospering is Boeing, which has delivered 191 Next Generation 737s so far this year, including 95 in the second quarter.  Chicago-based Boeing has delivered 222 airplanes in 2010.  Demand for single aisle planes comes not only from growth markets, but also for replacing older aircraft such as the 737 Classics, A320s, and McDonnell Douglas MD-80/90s.  The demand for single-aisle airplanes remained strong even during 2009, according to Boeing.  The growth of low-cost carriers, emerging intra-China demand, and a large need for replacement airplanes will keep the demand for single-aisle airplanes strong into the future.

“The world market is doing much better than last year, but there are still challenges,” said Randy Tinseth, vice president of marketing, Boeing Commercial Airplanes.  “Looking at 2010, we see a world economy that continues to recover.  We expect the world economy to grow above the long-term trend this year.  As a result, both passenger and cargo travel will grow this year.”

Despite Great Recession, the Rich Grew Richer

Thursday, July 29th, 2010

Even with the recession, the world’s millionaires grew to 10 million and their wealth 19 percent to $39 trillion.  It’s ironic that — even in the depths of the Great Recession — the number of millionaires around the world grew by 17 percent to 10 million.  Their collective wealth surged 19 percent to $39 trillion, according to the latest world wealth report from Merrill Lynch-Capgemini.We are already seeing distinct signs of recovery and, in some areas, a complete return to 2007 levels of wealth and growth,” said Bank of America Corporation wealth management chief Sallie Krawcheck.

India, China and Brazil are home to the majority of the world’s newest millionaires, despite the fact that they were some of the hardest hit markets in 2008.  Asia now has three million millionaires – meaning it has caught up with Europe – thanks to a 4.5 percent economic expansion rate.  Their combined wealth soared 31 percent to $9.7 trillion, outstripping Europe’s $9.5 trillion.

North America’s wealth grew by 18 percent, while the number of individuals considered rich climbed 17 percent; their wealth totals $10.7 trillion.  Last year, the United States boasted the most millionaires – 2.87 million.  Japan was next with 1.65 million; Germany had 861,000; and China 477,000.  Switzerland boasts the highest concentration of millionaires, with approximately 35 for every 1,000 adults.

According to Lyle LaMothe, Merrill Lynch’s U.S. wealth management chief, “The wealthy allocated, as opposed to concentrated, their investments.”  In other words, they put their money into fixed-income investments that provided predictable cash flow.  The trick now is to convince the wealthy to return to higher risk investments that have a higher income potential.  “There is still a hesitancy,” LaMothe notes.  “Liquidity is incredibly important and people need cash flow to preserve their lifestyle – but they want to replace that cash flow in a way that does not increase their risk profile.  Investors are open to areas they hadn’t thought about before as they try to preserve their ability to be philanthropic, to preserve their lifestyle.  To me, the report underscored that clients are involved and they’re not inclined to stay in one percent savings accounts.”

Australia Rules In Market Transparency

Tuesday, July 13th, 2010

Australia’s office market is the most transparent, according to report.  Jones Lang LaSalle and LaSalle Investment Management have noted reasonable improvement in global market transparency, according to their recently released 2010 Commercial Real Estate Transparency Index.

According to the Index, Australia ranks as 2010’s most transparent market.  Canada is next in line, and improving markets include China, India, Poland, Portugal, Romania, Greece and Hungary.  Market transparency had fallen in Pakistan, Venezuela, Dubai and Bahrain.

“The 2010 Global Real Estate Transparency Index reveals a notable slowdown in the progress of real estate transparency over the past two years,” said Jacques Gordon, LaSalle Investment Management’s global head of strategy.  “It suggests that the recent turmoil in global financial, economic and real estate markets has impacted on market behavior, with real estate players focusing on survival rather than market advancement.”

The China Syndrome

Tuesday, July 6th, 2010

The unwinding of global imbalances signals the end of China's unfair advantage.  As global financial disparities start to wind down, China is likely to end up a winner because emerging-market economies have a definite advantage rooted in the way the global economy functions. Writing in the McKinsey Quarterly, Lowell Bryan, a director with McKinsey & Company, notes that “Saber-rattling Western trade negotiators frequently focus their attention on the ‘unnaturally’ depressed exchange rate of countries such as China, and this is a component of the structural advantage to which I refer.  But its roots run far deeper – all the way down to the fundamental issue that labor can’t be freely traded on a single global market, while capital and commodities can.  Any company sourcing its production or service operations in a lower-wage emerging market-country therefore can save enormously on labor costs.”

China’s recent decision to relax the informal peg of its currency, the yuan, to the U.S. dollar proves that the world must come to grips with a set of economic relationships that are currently unsustainable.  According to Lowell, “Their unwinding will have serious long-term implications for those executives’ strategic priorities, including where they locate operations and what customers they serve in which markets.  Equally important is the need for preparedness in case the unwinding process is sudden and abrupt.  While we surely seem to be headed toward a new global equilibrium, the transition to that future may not be smooth and gradual.”

The cost of labor in China and India is less than one-third of what it is in developed nations.  Additionally, Chinese and Indian productivity are at extremely high levels and tend to be in highly specialized fields – high-tech assembly in China and software development in India.  To take advantage of the cost savings, many multinational firms are locating production facilities in emerging markets.

Where Do You Look for Innovation? Not the U.S. Anymore

Monday, June 21st, 2010

Where do you find innovation?  Try the developing world.  Breakthrough ideas that change industries are increasingly coming from the developing world rather than the United States or Western Europe.  Part of this is due to the fact that the West is outsourcing more research and development to emerging markets.  Currently, Fortune 500 firms have 98 research-and-development facilities in China and an additional 63 in India.  IBM’s staff in emerging nations is larger than its U.S.-based workforce.

According to The Economist, “But it is also because emerging-market firms and consumers are both moving upmarket.  Huawei, a Chinese telecoms giant, applied for more international patents than any other firm did in 2008.  Chinese 20-somethings spend even more time on the internet than do their American peers.  Even more striking is the emerging world’s growing ability to make established products for dramatically lower costs:  no-frills $3,000 cars and $300 laptops may not seem as exciting as a new iPad but they promise to change far more people’s lives.”

Dubbed “frugal innovation”, this trend redesigns products and processes to eliminate unnecessary costs.  For example, Indian telecom provider Bharti Airtel has dramatically cut the cost of providing mobile phone services by creating unique partnerships with its competitors and suppliers.  The firm shares radio towers with competing firms and outsources network construction, operations and support to companies such as Ericsson and IBM.

Investors Are Choosing London

Thursday, January 28th, 2010

London beats Washington, D.C., as preferred destination for commercial real estate investment.London has overtaken Washington, D.C., as the preferred city for commercial real estate investment,  primarily because investors believe that prices have bottomed out and the time to get into that market is now. The British capital has overtaken the previous favorites of Washington, D.C., and New York, according to a survey conducted by the Association of Foreign Investors in Real Estate (AFIRE).

“London currently offers investors the advantage of a ‘re-priced’ market,” says James Fetgatter, AFIRE’s CEO.  “The re-pricing began sooner than it did in other cities.”  London’s score is 31 points higher than the perennial favorite Washington, D.C., and 40 points ahead of New York City.  A year ago, London occupied second place, ranking four points behind Washington.  The survey of the association’s approximately 200 members was taken in the fourth quarter of 2009 and represents ownership of more than $842 billion of commercial real estate.  Of that, $304 billion is invested in the United States.

London, along with the rest of the United Kingdom, has rebounded with investment rising 56 percent from the first to the second half of 2009.  Property values rose 2.4 percent in November, the largest monthly increase in 15 years.  Savills, the real estate advisory firm, is predicting London will eclipse New York as the fastest growing global financial center.

Despite London’s success, the United States is still preferred as the “most stable and secure real estate investment environment,” according to 44 percent of survey respondents.  This is the first time the United States ranked below 50 percent in the survey.  It ranked 53 percent in 2008 and 57 percent in 2007.  Germany occupies second place with 21 percent.  In terms of price appreciation, the United States ranks first, followed by the United Kingdom and China.

The preferred property for investment is multifamily residential, followed by office, industrial, retail and hotel.