economics

January 14, 2011

In Haiti, Corporations Profit While People Suffer 12Share By Jordan Flaherty

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One year after an earthquake devastated Haiti, much of the promised relief and reconstruction aid has not reached those most in need. In fact, the nation’s tragedy has served as an opportunity to further enrich corporate interests.

The details of a recent lawsuit, as reported by Business Week, highlights the ways in which contractors — including some of the same players who profited from Hurricane Katrina-related reconstruction — have continued to use their political connections to gain profits from others’ suffering, receiving contacts worth tens of millions of dollars while the Haitian people receive pennies at best. It also demonstrates ways in which charity and development efforts have mirrored and contributed to corporate abuses.

Lewis Lucke, a 27-year veteran of the US Agency for International Development (USAID) was named US special coordinator for relief and reconstruction after the earthquake. He worked this job for a few months, then immediately moved to the private sector, where he could sell his contacts and connections to the highest bidder. He quickly got a $30,000-a-month (plus bonuses) contract with the Haiti Recovery Group (HRG).

HRG had been founded by AshBritt, Inc., a Florida-based contractor who had received acres of bad press for their post-Katrina contracting. AshBritt’s partner in HRG is Gilbert Bigio, a wealthy Haitian businessman with close ties to the Israeli military. Bigio made a fortune during the corrupt Duvalier regime and was a supporter of the right-wing coup against Haitian president Aristide.

Although Lucke received $60,000 for two months’ work, he is suing because he says he is owed an additional $500,000 for the more than 20-million dollars in contracts he helped HRG obtain during that time.

As CorpWatch has reported, AshBritt “has enjoyed meteoric growth since it won its first big debris removal subcontract from none other than Halliburton, to help clean up after Hurricane Andrew in 1992.” In 1999, the company also faced allegations of double billing for $765,000 from the Broward County, Florida school board for clean-up done in the aftermath of Hurricane Wilma.

AshBritt CEO Randal Perkins is a major donor to Republican causes and hired Mississippi Governor Haley Barbour’s firm, as well as former US Army Corp of Engineers official Mike Parker, as lobbyists. As a reward for his political connections, AshBritt won 900 million dollars in Post-Katrina contracts, helping them to become the poster child for political corruption in the world of disaster profiteering, even triggering a congressional investigation focusing on their buying of influence. MSNBC reported in early 2006 that criticism of AshBritt “can be heard in virtually every coastal community between Alabama and Texas.”

The contracts given to Bush cronies like AshBritt resulted in local and minority-owned companies losing out on reconstruction work. As Multinational Monitor noted shortly after Katrina, “by turning the contracting process over to prime contractors like AshBritt, the Corps and FEMA have effectively privatized the enforcement of Federal Acquisition Regulations and disaster relief laws such as the Stafford Act, which require contracting officials to prioritize local businesses and give 5 percent of contracts to minority-owned businesses. As a result . . . early reports suggest that over 90 percent of the $2 billion in initial contracts was awarded to companies based outside of the three primary affected states, and that minority businesses received just 1.5 percent of the first $1.6 billion.”

Alex Dupuy, writing in the Washington Post, reported a similar pattern in Haiti, noting that “of the more than 1,500 US contracts doled out worth $267 million, only 20, worth $4.3 million, have gone to Haitian firms. The rest have gone to US firms, which almost exclusively use US suppliers. Although these foreign contractors employ Haitians, mostly on a cash-for-work basis, the bulk of the money and profits are reinvested in the United States.” The same article notes that “less than 10 percent of the $9 billion pledged by foreign donors has been delivered, and not all of that money has been spent. Other than rebuilding the international airport and clearing the principal urban arteries of rubble, no major infrastructure rebuilding — roads, ports, housing, communications — has begun.”

The disaster profiteering exemplified by AshBritt is not just the result of quick decision-making in the midst of a crisis. These contracts are awarded as part of a corporate agenda that sees disaster as an opportunity, a tool for furthering policies that would not be possible in other times. Naomi Klein exposed evidence that, within 24 hours of the earthquake, the influential right-wing think tank the Heritage Foundation was already laying plans to use the disaster as an attempt at further privatization of the country’s economy.

Relief and recovery efforts, led by the US military, have also brought a further militarization of relief and criminalization of survivors. Haiti and Katrina also served as staging grounds for increased involvement of mercenaries in reconstruction efforts. As one Blackwater mercenary told Jeremy Scahill when he visited New Orleans in the days after Katrina, “This is a trend. You’re going to see a lot more guys like us in these situations.”

And it’s not just corporations who have been guilty of profiting from Haitian suffering. A recent report from the Disaster Accountability Project (DAP) describes a “significant lack of transparency in the disaster-relief/aid community,” and finds that many relief organizations have left donations for Haiti in their bank accounts, earning interest rather than helping the people of Haiti. DAP director Ben Smilowitz notes that “the fact that nearly half of the donated dollars still sit in the bank accounts of relief and aid groups does not match the urgency of their own fundraising and marketing efforts and donors’ intentions, nor does it covey the urgency of the situation on the ground.”

Haitian poet and human rights lawyer Ezili Dantò has written,

Haiti’s poverty began with a US/Euro trade embargo after its independence, continued with the Independence Debt to France and ecclesiastical and financial colonialism. Moreover, in more recent times, the uses of US foreign aid, as administered through USAID in Haiti, basically serves to fuel conflicts and covertly promote US corporate interests to the detriment of democracy and Haitian health, liberty, sovereignty, social justice and political freedoms. USAID projects have been at the frontlines of orchestrating undemocratic behavior, bringing underdevelopment, coup d’etat, impunity of the Haitian Oligarchy, indefinite incarceration of dissenters, and destroying Haiti’s food sovereignty essentially promoting famine.

Since before the earthquake, Haiti has been a victim of many of those who have claimed they are there to help. Until we address this fundamental issue of corporate profiteering masquerading as aid and development, the nation will remain mired in poverty. And future disasters, wherever they occur, will lead to similar injustices

March 23, 2010

Tapping the World’s Innovation Hot Spots

Filed under: Uncategorized — ktetaichinh @ 11:07 pm
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DURING THE TWENTIETH CENTURY, the world watched as the United States churned out innovation aft er innovation. Now, however, the tables are turning. Many other countries are placing innovation at the top of their national agendas. From Singapore to Finland, from Chile to China, countries around the world are designing novel approaches to innovation strategy. They are creating forward-looking education and talent-development policies, pouring money into large-scale initiatives, and snapping up new assets in the form of intellectual capital and infrastructure. What does this new “innovation world” mean for companies, and what are the implications for the people who lead them? Executives can now weigh diff erent national approaches to innovation in terms of their fi rms’ strategic requirements. The models described in this article off er companies both range and richness in developing their  plans. Some of the models exist in a “pure” form in a given country, as the centerpiece of a national innovation system; others are but one component of a nation’s overall strategy. By partnering directly with various countries and setting up a lab or a marketing offi ce in a yeasty environment where talent is concentrated and resources are readily available, companies can select from a menu of benefi ts. For example, hightech start-ups can be “born global” by availing themselves of talent, capital, R&D tax credits, regulatory relief, and specialized facilities in such innovation hot spots as Helsinki, Singapore, and Shanghai. Companies can also position themselves as “systems integrators,” which incorporate the elements of the models that are most appropriate for their strategies. Indeed, corporate strategists have more opportunity than ever to pick and choose from best practices and resources across the globe and combine them in new and unpredictable ways. In doing so, they can practice what I call innovation arbitrage, taking advantage of diff erences in regulatory environments as well as in the cost of talent, specialized services, and other inputs to the innovation process.

Model 1: The Focused Factory The production and operations expert Wick Skinner used the term “focused factory” in a 1974 HBR article to describe the benefits of concentrating manufacturing eff ort on just a couple of tasks. The focused-factory innovation model combines a clear strategic intent with a concentration of infrastructure and high-octane talent in an eff ort to discover and deploy new solutions to big challenges. Countries such as Singapore and Denmark, for instance, focus their innovation investments on a handful of industries or research fi elds. Singapore has made an impressive commitment to scientifi c research, illustrated by its plan to increase funding for R&D projects in life sciences, clean technology, and digital media from 2.6% to 3% of GDP by 2010, despite the economic downturn. If a company conducts research in any of those areas and sets up a facility in Singapore, the government will consider providing tax relief, state-of-the-art infrastructure, training for technical staff , and research grants covering up to 40% of expenses. So far, the Singaporean government has devoted more resources to the life sciences than to any other fi eld. Witness the creation in 2003 of Biopolis, a 2-millionsquare- foot biomedical research center. Singapore scours the world for both established scientifi c leaders and top postdoctoral students to work at the center, which is on track to employ 4,000 researchers on-site by 2015. Located close by will be another 6,000 scientists in fi elds such as materials science, clean technology, and digital media, which is housed in its own facility, called Fusionopolis. (The U.S. National Institutes of Health, which currently employs approximately 10,000 scientists, serves as a useful benchmark.) Biopolis has become a globally recognized center for stem cell research, and although it’s too soon to tell whether Nobel Prize–winning breakthroughs will emerge from Biopolis, articles from researchers based there have been published in major peer-reviewed journals such as Cell and Nature. Scientists are attracted to the center by the facilities and the amenities (the neighborhood boasts gourmet restaurants, world-class retail, an extremesports facility, and a variety of cultural venues); their companies appreciate the welcoming regulatory environment. GlaxoSmithKline (GSK), for example, founded its Centre for Research in Cognitive and Neurodegenerative Disorders at Biopolis. For GSK, the center feels like a Skunk Works. With a relatively small team of 50 scientists located there, it’s possible to “break out of business as usual and be open to other infl uences and participate in the buzz and vitality,” says center director Paul Chapman. “The advantage in being part of a compact community is that we can get to know and trust colleagues in a setting that doesn’t relate to work. Suddenly you get ideas and fermentation.” Novartis, likewise, based its Institute for Tropical Diseases at Biopolis, and other international pharmaceutical companies, such as Japan’s Takeda and U.S.-based Valeant and CombinatoRx, also have a foothold at the center. Organizations that set up shop at Biopolis participate in relationships with government agencies, venture capital fi rms, global pharmaceutical companies, academic research labs, and other institutions. They also partake of shared resources. For example, Biopolis’s colony of research-ready nude mice provides a welcome relief for scientists concerned about duplicating animal research; scientists from all kinds of fi rms can share the use of the colony. Singapore is just one of several countries hosting focused factories; companies that want to leverage their existing patents and intellectual property – say, in wireless technology, precision manufacturing, or clean technology – might also look to Finland and Denmark. Emerging economies such as Chile and Vietnam have focused factories as well. (For a map of global innovation hot spots, see the exhibit “Innovation World.”)

Model 2: Brute Force The brute force model is an innovation version of the law of large numbers. By applying massive amounts of low-cost labor and capital to a portfolio of innovation opportunities, countries (most obviously China and India, but also Brazil) hope that a huge quantity of ideas from a substantial number of talented people will eventually yield valuable discoveries. China, currently the world’s center of outsourced manufacturing, will be the next hub of brute force innovation. The Chinese Politburo has set itself the concrete goal of turning China into an innovation-driven country by 2020. To that end, China has chosen 10 of its leading universities to receive extra funding in order to achieve world-class status. It is noteworthy that Chinese institutions of higher education doubled in number, from 2,000 to 4,000, between 2002 and 2005. The goal is to churn out welledu cated specialists in every area of science and technology. The Chinese automobile industry offers a glimpse of the brute force model in action. Thanks to an outpouring of educated innovators from Chinese universities, there are now an estimated 50 car companies in China, producing a Precambrian explosion of new business models and automobile designs. Many of these companies will fail, but some may prove to be world-beaters. Warren Buffett’s recent $230 million investment in BYD Company, a Chinese maker of batteries for electric cars, signals his awareness of the potential for Chinese R&D. China off ers innovation advantages to other kinds of companies, as well. Microsoft , for instance, recently celebrated the 10th anniversary of its Beijing research center. The company has found that the center allows it to tap expert and junior Chinese talent at a comparatively low price. Microsoft supports the work of top Chinese academics (some of its scientists are also part-time faculty members at Chinese universities such as Tsinghua, Fudan, Beida, and Jiao Tong) and encourages researchers to publish their work and participate in academic conferences. It also funds projects selected by the National Research Fund of China. In return for all this, Microsoft can gain access to a trove of IP and build invaluable collaborative relationships. Firms considering the brute force model will need to establish long-term relationships with local universities, venture incubators, trade associations, and other potential partners. Service providers that target the entrepreneurial community – such as specialty consultants, professional-services fi rms, and venture capitalists – may also wish to fi nd ways to set up research operations in countries off ering plenty of brute force.

Model 3: Hollyworld The Hollyworld model is all about providing opportunities to build what author Richard Florida has described as a “global creative class.” It leverages what I call “the increasing returns law of cool community”: As more and more smart entrepreneurs gather in one place, the more attractive that place becomes to other like-minded people. In the 1990s, Silicon Valley pioneered this law to excellent eff ect. Today, urban centers as diverse as Bangalore, Helsinki, and To ronto have adopted a Hollyworld model. Entire countries are also moving in this direction. India, for example, is shift ing its role as the world’s back offi ce to that of innovation epicenter. The country is doing this by partnering the best graduates of its Indian Institutes of Technology with Indians who have trained at such universities as Stanford, MIT, and Cambridge and are now thriving in Western economies. Indian entrepreneurs who have already made their mark in Silicon Valley are now cementing commercial ties to their homeland in globalized technology enterprises. As this occurs, India’s resident creative class is becoming more infl uential, cosmopolitan, and skilled. Moreover, India is now managing the talent pools of other countries as part of its global strategy. As the country moves up the innovation chain, some of the early-stage work originally done there is migrating elsewhere. Tata, for example, now outsources some of its IT development assignments to Chile and Ecuador and in 2005 acquired a Chilean fi nancial-services back-offi ce outsourcing fi rm. By exporting its own back- offi ce work, Tata has been able to move up the value chain. Another country that is adopting this model successfully is Singapore, where Hollyworld and the focused factory meet. Singapore is willing to generously fund life-sciences graduate students – regardless of nationality – providing that they maintain a suitable grade point average and return to Singapore for the equivalent of national service. In this way, the country will enlarge its overall population of the creative class. Indeed, Philip Yeo, the former head of Singapore’s Biopolis, referred to himself in a Time interview as a “people snatcher.”

Model 4: Large-Scale Ecosystems Several countries have developed endto- end innovation systems combining stewardship mechanisms, funding bodies, research institutions, and structures for business and academic collaboration, all in support of an overall national strategy. Finland’s innovation system was designed, in part, as a response to the cataclysmic economic change in 1991, occasioned by the collapse of the Soviet Union. In one stroke, a signifi cant percentage of Finland’s foreign trade vanished, plunging the country into recession. Faced with an economic near-death experience, the country decided to focus on education, science, and technology and to improve its innovation capability. Today, Finland enjoys a well-run innovation system benefi ting from strong governmental stewardship. For example, Prime Minister Matti Vanhanen chairs the Science and Technology Policy Council, which is responsible for the country’s overall innovation eff orts. Finnish investment in public education has resulted in a number one worldwide ranking by the Organisation for Economic Cooperation and Development (OECD) and the World Economic Forum. The government allocates funding fl exibly and across a range of public and private players, most notably via Tekes and Sitra – the national industrial R&D fund and the national innovation fund, respectively. Sitra subsidizes a variety of initiatives that have included usercen tered design, new kinds of health care services, food and nutrition, and energy conservation. One of the best examples of Finland’s large-scale, holistic approach to innovation is Aalto University, which is scheduled to open its doors in the autumn of 2009. Named for the legendary Finnish architect and designer but referred to locally as Innovation University, the new institution will be the result of the merger of three established universities: Helsinki’s School of Economics, University of Art and Design, and University of Technology. Established with close to $1 billion in new funds, Aalto will develop curricula and stimulate research to explore novel, commercially signifi – cant ideas. One planned “design factory” at the university will focus on humancentered, or “universal,” design for products that can be used by any adult, regardless of age or physical ability. The university also has ambitious plans to foster research in specifi c areas, such as technology that promotes health, wellness, and quality of life for the elderly. In bringing together experts from disparate arenas including design, media, and technology to develop new approaches to common problems, the university manifests the Finnish government’s conviction that innovation will come from cross-disciplinary eff orts. Small countries like Finland are selfcontained environments. The moment you land there, you meet relevant players and have the opportunity to set up important alliances. In a way, such an ecosystem is akin to the Japanese keiretsu, with its shared purpose, common managerial culture, and intricate web of fi nancial connections. But the fast pace of networking can trip you up if you aren’t fully prepared or don’t have the requisite alliance-management skills. Word can quickly spread about your defi ciencies as a potential partner. The tight interweaving of elements in an innovation ecosystem and the many informal connections among the players also mean that an incorrect approach can lock you out, perhaps for good.

Systems Integration: The Mix-and-Match Approach The advent of a global marketplace for innovation means that the astute company – whether a start-up or an incumbent – can choose from among the foregoing models and blend country and corporate strategies into a “systems integration” approach. Consider the case of Nile Therapeutics, a San Francisco – based biopharmaceutical fi rm. Nile is developing a compound licensed from an Italian university and conducts comparatively rapid, cost-eff ective clinical tests in Eastern Europe. CEO Peter Strumph reckons his company would have employed close to 100 people a decade ago; the current head count is eight. “I like to think of us as a fi lm production company,” he says. “We don’t write the scripts; we buy them. We don’t own the production facilities; we rent them.” By mobilizing a global network of resources, Nile can employ the right number of people for the right amount of time and capture the lion’s share of value. As more countries start providing innovation services, companies can take advantage of the best resources available worldwide. Pharmaceutical fi rms, for example, can tap India, which excels in drug testing for diabetes and infectious diseases as well as in medicinal chemistry. China provides manufacturing and market access, plus an army of scientists and engineers. Even off-the-beatentrack Vietnam off ers services that can help fi rms interested in the treatment of tropical diseases. In playing the role of a systems integrator, a company might ask the following questions: What are the best new fi elds to consider? How do we combine various ingredients? How can we best create risk capital for novel ideas? What are the most supportive environments for us? What kind of strategic foresight and planning processes do we need? The United States is especially wellpositioned to serve as a base for innovation systems integration. The country has the cultural diversity, global reach, reputation for innovation, talent base, infrastructure, educational institutions, and scientifi c resources to transform the global innovation landscape. By increasing its eff orts in areas such as green energy and health care, the United States could reposition itself as a global innovation leader. Silicon Valley, an area with a rich mix of skills, ethnicities, and resources, as well as abundant educational, institutional, and even familial connections, could serve as a model for a U.S. approach.

Are You Ready for Innovation World? These are early days for global innovation. Although a few nations have pioneered the models discussed here, the map is still developing. As new centers of excellence are built and hot spots emerge, so will new models. Patterns of competition will also evolve as models collide. Regional dynamics will shift as countries grow into their roles as innovation leaders. To make the most of the global market for innovation services, executives must understand the emerging models when considering where to make their direct investments. In deciding where to place a new factory, research lab, or customer insight center, it is important to weigh both national and corporate strategies. Tapping the world’s innovation resources involves more than deciding where to establish facilities and how much to invest in the eff ort. It’s also about knitting together diff erent strengths within and outside the fi rm’s walls. Companies building their innovation strategies must also think longterm – in a sense, they are working to acquire membership in a club with very particular codes and cultural norms, which can carry evolving benefi ts. They must cultivate the skills of relationship building and alliance management in order to become trusted members of the local community. Once they establish roots in Singapore, Finland, Brazil, and other innovation hot spots, the y stand to benefi t in unimagined ways. John Kao (kao@jamming.com) is the chairman of the Institute for Large Scale Innovation and an innovation strategy consultant in San Francisco. He is the author of Innovation Nation: How America Is Losing Its Innovation Edge, Why It Matters, and What We Can Do to Get It Back (Free Press, 2007) and Jamming: The Art and Discipline of Business Creativity (Collins Business, 1997). His last article for HBR, “The Worldwide Web of Chinese Business,” appeared in the March–April 1993 issue.

The Driving Forces of Global Innovation

Traditionally, we have thought of innovation as the output of a particularly hot team or company, or the result of a specifi c geographic or industrial concentration of the kind that made Silicon Valley great. But today, four trends are reversing U.S. dominance in innovation and ushering in an era of global innovation: The rise of innovation as a currency of global competition. After World War II, the United States pioneered business models that were fundamental to a general understanding of innovation. Today, the American dream has become the global dream. An international style of business – heavily infl uenced by values of openness, exploration, and risk taking – has emerged, and it speaks English. Moreover, American culture has been increasingly in-sourced by non-U.S. fi rms such as Toyota, which established a key design studio in Newport Beach, California. The global war for talent. Talented young scientists, designers, and entrepreneurs can be attracted anywhere by the right incentives, professional opportunities, and creative ambiance. Consider a small country with few natural resources that wants to invest in cutting-edge research in synthetic biology. If the country pays 10 leading scientists $1 million each annually and spends another $100 million to build a world-class research institute, it becomes a player in a strategic industry, yielding incalculable fi nancial and social returns over time. Innovation as a national agenda. Several dozen nations now explicitly embrace innovation as a national pri ority and systematically develop innovation strategies, infrastructure, mini– Manhattan projects, and human capital initiatives. Various approaches are coalescing into distinct innovation models. Sweden’s governmental agency Vinnova, for example, manages state funding for R&D and employs some 300 professionals. China has listed innovation as a priority in its 11th fi ve-year economic development plan. Specifi cally, the country focuses on what it calls “indigenous innovation,” the encouragement of locally generated intellectual capital. At the other end of the size spectrum is a Singapore Economic Development Board initiative that invites the world to innovate in Singapore and Singapore to innovate for the world. The power of networks. As innovation capability continues to globalize, networks are becoming increasingly important. An entrepreneur can now access resources on a worldwide basis – and thus realize competitive advantage well beyond her weight class. Networks accord an important role to so-called brokers: individuals and companies that are able to link talents and assets separated by geographic location, time zone, language, culture, and business practice in ways that generate value. Countries such as Denmark are now actively pursuing a broker role in such emerging areas as sustainability.

IDEA IN BRIEF ■ There’s a whole new world of innovation opportunities opening up for your company – if you know where to look. Dozens of countries sponsor programs to lure innovative enterprises to their home territories. Singapore offers tax relief, employee training, and R&D grants to life sciences fi rms that locate there. India provides talent management for some of the world’s most sophisticated technology development work. Finland is becoming a global center for innovative design. To capitalize on these and other innovation hot spots, identify which countries’ offerings best fi t your company’s innovation strategy. Be prepared to mix and match. For example, Nile Therapeutics, a biopharmaceutical fi rm, uses intellectual property from Italy and conducts clinical tests in Eastern Europe. The company employs eight people rather than the 100 that similar fi rms require.

January 29, 2010

Analysts Expect iPad to Give lift to Asian Suppliers

Filed under: Uncategorized — ktetaichinh @ 3:27 am
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By AARON BACK, JUNG-AH LEE And CHARMIAN KOK

Apple Inc.’s iPad device may significantly increase demand for components such as touch screens and memory chips, especially if it succeeds in creating a new product category and spawning competitors, according to industry analysts.

[IPADASIA]

Analysts say that would be a boon to Asian suppliers, including display makers such as LG Display Co.; chip makers such as Samsung Electronics Co. and Toshiba Corp.; touch-screen makers Wintek Corp. and Sintek Photronic Corp.; and assemblers such as Hon Hai Precision Industry Co., which uses the trade name Foxconn. Shares of these companies all rose Thursday in Asia.

Apple hasn’t identified its iPad suppliers and an Apple spokeswoman declined to comment.

Like many technology brands, Apple doesn’t actually manufacture most of its products. It hires manufacturing specialists—mainly Taiwanese companies that have extensive operations in China—to assemble its gadgets based on Apple’s designs. They, in turn, use parts from large and small manufacturers many in Taiwan, Japan and Korea.

The iPod and iPhone devices have already been a boon to component manufacturers in Asia, and many are hoping for a repeat performance.

The true component mix won’t be known until Apple begins shipping the device and third-party analysts can disassemble it to see what’s inside. However, analysts keep their own list of likely suppliers.

“NAND flash memory chip makers such as Samsung, Toshiba, and Intel Corp. and Micron Corp.’s joint venture will likely see more demand since the device carries up to 64 gigabytes of storage,” said Nam Hyung Kim, director of equity research at Arete. “This will be a good year for the memory-chip suppliers thanks to Apple and the rush by competitors to match Apple-like products.”

Wanli Wang, an analyst at HSBC Securities, expects iPad shipments to be between 3 million and 10 million this year. “But given iPad’s competitive pricing, we expect Apple to be able to ship up to the higher end of that range,” the analyst said.

The iPad will be sold in various models that cost between US$499 and US$829, Apple said Wednesday.

According to a person familiar with the matter, LG Display has received a large volume order for displays used in the iPad. Shares in LG Display rose 4.7% to 40,300 won (US$34.44), outperforming the broader Kospi index, which rose 1%.

It is common practice for a company like Apple to buy the same component from multiple suppliers, but the person, who declined to be named, said LG is the main supplier of displays for the iPad and Apple “may not have many other vendors.”

LG Display has already seen a sharp increase in its earnings in the fourth quarter and analysts say its earnings outlook for this year remains bright.

Analysts say a possible secondary source for the display panels is Taiwan-based manufacturer Innolux Display Corp., an affiliate of Hon Hai. Innolux officials couldn’t immediately be reached for comment. The company’s shares rose 6.3% to 53.70 New Taiwan dollars (US$1.68).

The touch-screen technology on the phones will likely be supplied by Taiwanese companies Wintek and Sintek, analysts said. Wintek spokesman James Chen declined to comment on the company’s customers, but said the company would begin shipping midsize panels of the kind used in the iPad this year. Sintek officials couldn’t be reached.

Charlie Lu, an analyst at Macquarie Securities, said he expects tablet computers to account for 10% of Wintek’s revenue this year, the vast majority of that from iPad sales, assuming shipments of five million iPads this year. Wintek also makes touch screens for the iPhone, and Apple products make up about 30% of its revenue, Mr. Lu added.

The effect on Sintek will likely be less dramatic since touch-screens make up less of its business, Mr. Lu said. Shares of Wintek and Sintek rose 1.1% and 1.2%, respectively.

One attention-grabbing aspect of the iPad is the fact that it is made with an internally designed microprocessor, a departure from Apple’s usual use of external semiconductor designs.

The iPad’s memory chips will be NAND flash memory, a type of chip widely used in phones, including the iPhone, and digital cameras. Samsung and Toshiba are the world’s two biggest NAND flash suppliers by revenue, and are likely to be iPad suppliers.

A Samsung spokeswoman declined to comment, while a Toshiba representative couldn’t immediately be reached. Samsung shares rose 1% to 808,000 won, while Toshiba shares rose 3% to 512 yen ($5.69).

Analysts said the iPad’s casing is likely to be made by Taiwan’s AVY Precision Technology Inc., which manufactures aluminum alloy and plastic die casting products. The company declined to comment.

Hon Hai, known to be secretive about its customers, declined to comment, but it is known in the industry to be a longtime assembler of Apple products. Hon Hai shares rose 2.3% to NT$136.

Ting-I Tsai
contributed to this article.

January 3, 2010

Paris, Milan, Tokyo. Tokyo?

Filed under: Uncategorized — ktetaichinh @ 12:09 am
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Experts say that the nation’s fashion industry is too fragmented and too focused on the domestic market to make it overseas.

“For much of this decade, fashion trends have started in Japan and gone global. But Japanese brands don’t even realize that,” said Loic Bizel, a French-born fashion consultant based in Tokyo. Japan “generates trends and ideas, but it stops there,” he said. “Many brands are not even interested in going overseas.”

So each season, Mr. Bizel takes fashion industry buyers from America and Europe — mass clothiers like Hennes & Mauritz of Sweden and Topshop of Britain — to buy up bagfuls of the latest hits. The designs are then whisked overseas to be reworked, resized, stitched together and sold under Western labels.

In that business model, there is little financial gain for Japan. In 2008, Japan’s clothing and apparel-related exports came to a mere $416 million, dwarfed by the $3.68 billion exported by American apparel companies, and a tiny fraction of China’s $113 billion.

Meanwhile, Japan’s domestic apparel industry is on the decline. It shrank 1.3 percent, to 4.37 trillion yen ($48 billion), in 2008, and is expected to post a steeper decline for 2009 as recession-weary consumers and an aging population cut back sharply on spending.

“Japanese fashion might be considered cutting-edge, but overseas markets have been largely elusive,” said Atsushi Izu, an analyst at the Nomura Research Institute in Tokyo. “Japan’s fashion industry is very fragmented, and most companies lack the resources and know-how to bring their brands to foreign markets.”

The government is trying to help. Earlier this year, the Foreign Ministry dispatched a group of suit-clad officials to Tokyo’s hip Harajuku neighborhood to survey the latest trends, part of an effort to promote Japanese fashion overseas. After interviews with shoppers and sales clerks, the ministry came up with a battle plan: to appoint three young trendsetters as “ambassadors” of Japanese chic, charged with extending the industry’s reach overseas and piquing interest in Japanese brands.

The trade ministry has also helped revamp the twice-yearly Tokyo Collection and started inviting foreign journalists to come on the government’s dime. For the first time this year, the collection, renamed Japan Fashion Week, sponsored a splinter fashion event in New York to showcase Japanese designers, and it has planned another runway show in New York in mid-February.

“Japanese fashion has so much global potential,” says Kenjiro Monji, director general of the Foreign Ministry’s Public Diplomacy Department, who oversees Japan’s cultural push overseas.

But the government’s efforts have won it few fans in the fashion industry. Besides Ms. Aoki, the two other fashion ambassadors chosen by the government are a woman who likes to dress up in cute high school uniforms and another who mixes and matches secondhand clothes. Promoting such niche tastes does little to help the wider fashion industry, many say.

What Japan’s fashion industry needs is more concrete help in marketing and setting up shop overseas, experts say. The government could also play a larger role helping Japanese labels protect their intellectual property rights, they say.

There are some promising signs. With government support, the start-up Xavel, which runs fashion shows that let women order outfits in real time using their cellphones, has opened shows in Paris and Beijing.

December 29, 2009

Global Imbalances: In Midstream?- Olivier Blanchard and Gian Maria Milesi-Ferretti

Filed under: Uncategorized — ktetaichinh @ 10:44 pm
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http://www.imf.org/external/pubs/ft/spn/2009/spn0929.pdf

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