The decline of Indian's outsourcing industry

The decline of India's position as a leading desitation for outsourcing is evident in this BusinessWeek article. High turnover, taxes, infrastructure and the difference in time between the East and the West, are a few reasons why some companies are now looking elsewhere as the savings from outsourcing to India are now becoming scarce.

Tata buys Jaguar and Land Rover

Tata Motors, a subsidiary of the Tata Group, has confirmed that it will aquire Jaguar and Land Rover from Ford Motor Company. The deal, valued at 2.3 billion, is less than half of what Ford paid for the two brands. [via CNN.com]

I've been reading about this off and on. In particular, I read that there were concerns that Tata would not be able to maintain the luxury image and appeal of these two British icons. After all, what did Tata (a mere Indian company) know about the luxury car market, and how would consumers react when their very British and very posh brands were now in the hands of an Indian company? As it turns out, this is not the first time that Tata has taken over a popular British brand. In 2000, Tetley, a manufacturer and ditributor of tea, was aquired by Tata.

As for the fates of Jaguar and Land Rover, reading tea leaves alone will not reveal what is to come. Tata will have its hands full as it proves to the World (and Ford in particular) that as an Indian company, it can maintain and enhance the value of the two established brands where Ford (apparently) failed to do so. The creation of the Tata Nano, billed as the world's cheapest car, is a clear sign that Tata can do great things and is ready to thumb their nose at the establishment by showing them that they quickly achieved what many large automakers could not.

To some large automakers, this purchase must feel a bit like having salt rubbed into a wound, or being kicked while down. Take your pick. First the Nano, now Jaguar and Land Rover. Despite the feelings of doom and gloom, I'm sure that somewhere in Tata, someone must be quietly thinking about how the tables have turned with these mighty British brands now in the hands of a former colony.

Maybe there's a lesson in all of this. No longer are we from this country, or that country. We are citizens of the World. No matter what size you are, or where you are from, once you know what you want and what you must do to get it, you will succeed sooner or later.

Olympics threaten China's water supply

Olympics 'threat to water supply'

"The diversion of water for the Beijing Olympics threatens the livelihoods of millions of people, a senior Chinese government official has said." [via BBC NEWS]

China outlines hypothetical U.S. attack

From the AirForceTimes, a look at how China may launch a hypothetical attack against U.S. air force bases located in surrounding Japan and South Korea. This clash, as the article mentions, is likely to be over Taiwan (a.k.a Republic of China), as a result of their calls for greater independence from China.

Even in the Caribbean, far, far away from these 'big boys', their actions can still be felt. During the recent elections in Barbados, the BLP Governmnet (in power at the time), ran political ads that said the DLP (the opposition at the time) had received campaign contributions from Taiwan. Additionally, the 2007 budget debates in St. Lucia involved some talk about that Government's China/Taiwan diplomatic relationship.

Israel launches space satellite

Israel launches commercial intelligence satellite [via Ynetnews]. Good for Israel, better for India because it was an Indian rocket launched from east India. While the ISRO (Indian Space Research Organisation) may not be anywhere near NASA or the former Soviet space program (now known as RSA/RKA and the NSAU), in terms of capabilities, budgets and technology it looks like, IMHO, they're doing pretty good.

Makes me wonder how many years it will be before you see an Indian 'space shuttle', flying manned missions. As far as China goes, according to Wikipedia, they launched their first manned mission in October, 2003.

The new or emergent MNCs

MNCs are not a music band. 'MNC' is an abbreviation for 'Multinational corporation'. A simple definition of an MNC is a company that operates in several countries. So, IBM is one example of an MNC. MNCs are found in a wide range of industries including, but not limited to:L banking, retail, automotive and technology.

When I hear the expression 'emerging market', I think of places like Brazil, Russia, India and China (the BRIC countries). These are countries that typically have large populations, a cheap (in comparison to the US), and skilled (highly skilled in the case of India), labour force, and are seen by larger, more developed countries like the USA, as the new or emergent, market for goods and services.

However, these countries are also major providers of goods and services for the rest of the world. For example, look at the IT offshoring issues between the US and India. Also, few would argue that China is now the 'world's factory'.

If you're interested in some of these 'new kids on the block', the The Economist has an article about them.

IMHO, an emergent market MNC sounds a bit like an oxymoron, because an 'emergent market' country, like India, is still developing and still has many social and economic problems (India is one of the poorest, if not the poorest country in the World), yet still manages to have MNCs like Mittal Steel, Mahindra and Tata Consultancy Services.

China tries to cool economy

DISCLAIMER: IANAE (I Am Not An Economist). This is clearly the case because in the past, I used to think that economic growth was a good thing. To me, it meant that people had money to spend, that money would be spent on goods and services provided by businesses. These businesses in turn would prosper, resulting in decent levels of employment for the country's population, and a reasonably comfortable standard of living.

How's that for a simpleton's point of view? Well as it turns out, things aren't that simple. While economic growth is generally a good thing, rapid economic growth can cause problems for a country.

Imagine, if you will, an engine in a car. While driving the car, the engine generates heat. If the engine gets to hot, it will fail in some form or fashion. To prevent this from happening, engine coolant, fan(s) and assorted bits help keep the engine operating at a safe and normal temperature.

"Overheating economies 101
An overheating economy is one that has too much domestic demand for its own good. To grow, an economy needs investment. Growth achieved is a function of savings and the capital output ratio. Savings are invested and output produced for each unit of investment is the growth in the economy's output. This investment creates jobs and puts more money into the hands of more people.

An economy rapidly growing over a period of time tends to run short of workers. In such a situation, employers tend to bid up wages, which leads to even more money in the hands of the people, which happened at the peak of the US information-technology boom in the late 1990s (Asia Times Online)."

Now back to China's economy (or if we use the car analogy, China's economic engine). China's economy is growing (the economic engine is generating heat). According to this WSJ.com article, the threat of economic overheating is present. If China's economy overheats, inflation and the impact on the environment (e.g., CO2 emissions) are two important issues (among others) that will require urgent attention (tutor2u).

As I said earlier, if a car engine overheats it may fail, or breakdown. But an engine has a cooling system to protect it. So, what acts as the 'cooling system' for China's economy? IANAE, but the Chinese central bank plays an important role in regulating the 'temperature' of the economy. In order to do so, the bank said it would 'raise the share of deposits that banks must keep on reserve for the 10th time this year to help cool the economy' (WSJ.com).

The Economist (July 2007, print edition) had this to say: 'Fears that China's economy is overheating are exaggerated'. However, their September 2007 edition said: 'So what immediate threats does China face? The biggest worry is that the economy is overheating and inflation surging out of control.'

Economic growth can be a double-edged sword. As a result, sound economic policies that consider the pros and cons of economic growth, should be carefully developed and implemented by all countries, not just China.