Future of asia. rit. nov16,2004


Published on

Presented to undergrad students at the Rochester Institute of Technology. November 16, 2004

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Future of asia. rit. nov16,2004

  1. 1. Asia – Today and Future Presented by Nat Yogachandra KEY-Zen International
  2. 2. Book TitlesSoon to be included: Globalization and Cultural Competency
  3. 3. AMECO Petroleum
  4. 4. Partial list ofcompanies/ brands owned by foreigncompanies
  5. 5. What is the Nationality  Headquartered in Japan  Controlled by Renault (partly owned by the French government  In Mississippi, it’s a domestic car  Symbol of British Empire  Built by Germans - BMW  Swedish brand  Owned by Americans  Symbol of British Empire Swedish brand  Owned by Americans Subsidiary of General motors
  6. 6. PT Cruiser – More German or Mexico than AmericanManufacturedin MexicoOwned by theGermans Hondas are built in Ohio Toyotas are built in Kentucky Hyundais are built in Alabama
  7. 7. A WORLDLY PLANE One- half of McDonnell Douglas Corp,’s MD-95 was built overseas Allied Signal Halla Heavy Fischer (Austria) Industries Alenia (Italy) (U.S.) Interior Environmental (Korea) Fuselage Controls WingHoneywell (U.S.)Avionics Israel Aircraft ShinMaywaKorean (Israel) IndustriesAerospace Landing gear (Japan)(Korea) Horizontal Tail Allied Signal (U.S.) BMW/RollsroyceNose APIC (France) (Britain) Customer Avionics Engines Auxiliary power 1997 – McDonnell merged with Boeing and renamed to 717
  8. 8. Foreign Companies Have Control of Nearly all the U.S. electronics industry Nearly all of the photo imaging industry Majority of the U.S. book/magazine publishing Almost half of the U.S. major motion picture studios One of the Big 3 auto manufacturers Majority of the U.S. tire manufacturers Large segment s of the U.S. food distribution
  9. 9. American Brands – Retail Wal Mart in China  Microsoft (34 stores), Korea  HP and Japan  DELL McDonalds  Coke KFC  Pepsi TGIF  Intel Hard Rock Café  Marlboro Burger King  Nike Planet Hollywood  Eddie Bauers Starbucks  Apple Pizza Hut
  10. 10. How American BrandsAre Expanding in Asia Software giant Microsoft enters Malaysia Offered a shiny new PC, running Microsoft Windows XP and other programs Cost around $300. Monitor included Thailand, Vietnam, Indonesia
  11. 11. The Big THREE factors China has drove down the cost of manufacturing Wal*Mart is driving down the cost of retailing and now ……. India is driving down cost in services
  12. 12. Impact - Asia Outsourcing of jobs Social changes  Women are postponing their marriages  Birth rates are falling  Aging Population China’s dominant role India’s Economy Challenges ahead
  13. 13. Customer Services moving overseas Customer services are moving to India, Philippines, China. Mexico, and Ireland. GE customer services calls - answered by Indians from a small village closer to Mumbai in India (also Nike, AMEX, BA) GE Capital saves up to $340 million a year by moving tasks to India Toshiba – call center is in Istanbul
  14. 14. Jobs - Going, Going, Gone 2003 2007Custom software 20% 47%developmentSoftware 18% 47%maintenanceIT Documentation 13% 47%IT telephone support 9% 40%Remote network 3% 39%monitoringSoftware 8% 36%reengineeringSystems 5% 25%managementIT administration and 3% 24%operations
  15. 15. Salary Structure India Vs the world IT employee cost per yearCountry Cost per yearIndia $8,000Canada $36,000Ireland $28,000China $9,600Israel $25,000Philippines $7,000Ea. Europe $7,000Russia $7,000Mexico $7,000South Africa $18,000
  16. 16. Some of the Biggest U.S. companies in IndiaCompany Purpose INDIA staffGE capital Services Back-office work 16,000GE’s John Welch Product R&D 1,800Tech. CenterIBM Global Services IT Services, software 10,000Oracle Software, services 6,000Hewlett-Packard R&D, Services 11,000American Express Back-office work 4,000DELL Tech. support 3,800Texas Instruments Chip design 900Intel Chip design, 1,700 SoftwareJ.P. Morgan Chase Back-office, analysis 1,200
  17. 17. Work - fraction of the price Hourly Cost to operate a Call Center Kansas City, Missouri = $12.47 Mumbai, India = $4.12 Kansas City, Mumbai, Mo IndiaEquipment $0.39 $0.56Labor $10.00 $1.50Profit (mark up) $2.08 $2.06Total cost $12.47 $4.12
  18. 18. Help Wanted – not in this country Medical  Processing insurance claims and hospital bills  10 percent of U.S. jobs in medical transcripts have moved to India, Pakistan, Canada and other countries Animation  3-D animation special effects  Linear and nonlinear editing Insurance  Benefits administration  Between 10,000 to 20,000 jobs – claims-adjudications jobs have moved overseas Architects:  Major firms are exporting drafting work. It is estimated a quarter of major firms are currently exporting jobs. (source: The Wall Street Journal)
  19. 19. Help Wanted – not in this country Digitizing  Converting text, engineering drawings, architectural designs and maps from paper to digital format Desktop Publishing  Page layout  Advertising campaigns  Typesetting and color separation Telemarketing  Customer-service management for international banks, software companies and credit-card companies Financial  27% Planned foreign outsourcing  61% already engaged in the activity planned to expand outsourcing
  20. 20. Future -Outsourcing $1.5 billion- India’s IT enabled services exports in 2002 $17 billion – Forecast - India’s IT enabled services in 2008 By 2010  277,000 jobs in computer science  162,000 in business operations  83,000 in architecture would have moved to India and China By 2015  Will generate loss of 3.3 million jobs in service sector ($130 billion in wages) 120,000 engineers in Silicon Valley 150,000 engineers in Bangalore, India
  21. 21. In Favor of Outsourcing and Manufacturing Saved U.S. consumers (mostly middle-class)$100 billion dollars on shoes, textiles and households, since 1978 Between 1978-2003, cheaper baby clothes helped families $400 million Boeing, Ford, GM, IBM, Motorola, saved billions of dollars by outsourcing to China  Global competitiveness  Focus on high technology  Save millions For every dollar off-shored, U.S. economy accrues $1.12 and $1.14 while receiving country captures just 33 cents  The U.S. benefits comes from reduced costs(58 cents), purchases from U.S. providers (5 cents) and repatriated earnings (4 cents) and rest come from redeployment of labor into higher value added jobs
  22. 22. Birth Rates Fall Japanese Women Choose Work Over babies Japanese birth rate dropped to a record low last year- an average of 1.34 per women They compete with Sweden for having the oldest median age for first time marriages. - 27 for women, 30 for men Women are no more called Christmas Cake, a corruption of English language. A woman is no good after 25 th birthday - December 25. The ideal age was 24. Government is offering incentives to reverse the declining birthrate  $47/month for the first and second child  $94/month for each subsequent child  Law requires private companies to
  23. 23. Love Boat Cruise – Speed Dating and IncentivesLove Boat cruises and weekend barbecuesfor bachelorsOnly state-run dating agency in the world-cupidCampaign promotes families to have threechildren – offering incentivesTax breaks and a bonus of up to $5,100 for asecond child - Twice that for a third child
  24. 24. Divorce Asian Style Divorce in increasingly losing its stigma Divorce rate in Asia has been steadily climbing for the past two decades Common practice “Chi Le Ma” (Have you eaten?) now had turned into “Li Le Ma” (Have you Divorced ?) in Beijing Nearly 70% initiated by women in China In Korea, a TV soap opera- “Ajumma” – a story of a women leaving her husband is a national hit (challenging traditional values) NO divorce laws in the Philippines – discouraged by the government
  25. 25. Narita Rikon - Japan Japan’s divorce rate is up nearly 50 % since 1970 Women are initiating divorces. One break up for every 2 minutes and 42 seconds ‘Narita Rikon’ (Narita Divorce) is reference to crash land of marriages after the honey moon at the airport Divorce among couples who have been married for 20 years or more has been increasing - 2/3rd initiated by wife - More job opportunities -
  26. 26. Korea Confucius:A woman must obey herfather before marriageObey her husband duringher married lifeObey her eldest son afterthe death of her husband
  27. 27. Korea About 30% of Korean marriages end up in divorce. Women are initiating divorces Teenagers are challenging age-old customs and traditions based on Confucius values In 1989, the Family Rights Law ended most of discrimination for divorced women, but still a struggle Men get a better deal For every two marriages registered in 2002 there was one divorce Office Ladies - Tea girls still serve male workers at the office
  28. 28. Divorce in Islamic Countries Divorces in most Islamic countries are initiated by men Men must make a simple declaration “I divorce you” three times, before he takes the case to “shariah” court In United Arab Emirates, a wife missed a curfew and received a message on her mobile phone, “Why are you late ? You are divorced,”.  16 cases in April-June 2001 Some countries have changed the divorce procedures, requesting men to file divorce in court The divorce laws are not in favor for women in Pakistan and many Arab nations
  29. 29. Gender Imbalance – Bride Shortage China has 118 boys per 100 girls under the age of 5 In Hainan & Guangdong – 130 to 100  Govt. providing Insurance to HH with daughters. 100K girls exempt from school fees  One child policy  Age-old custom – female infanticide in rural areas  Sex selection clinics Nearly 30 million Chinese bachelor destined to marry by 2020  Need to look elsewhere  Kidnapping brides from Mongolia, Tibet, Nepal reported  Bachelors need to be socially accepted
  30. 30. Gender Imbalance – India 929 women for every 1,000 men.  Northern States of India: Girl-to-boy ratio is 8-to-10,  Haryana State in India has 6-to10  In 2001 census count of children 6 or younger, there were 927 girls for every 1,000 boys – down from 945 girls in 1991 and 962 in 1981 “Pay 5,000 rupees now and save 500,000 rupees in future on dowries” Raising a girl is like watering the neighbor’s garden• The statistics mean there are anywhere from 20 million to 40 million “missing “women in India.
  31. 31. Gender Selection
  32. 32. Korea - Bride Shortage 116 boys for every 100 girls By 2010, will face a cumulative shortage of brides – One million women Match Making services- all over the country Only 3/5th of ethnic Koreans live in S.Korea Looking to “Yanbian Brides” in N/E China May look into North Korea – inter marriages may be a good solution for
  33. 33. Surfing Internet andwatching - Satellite TV – Increasing number of By its very nature - e-mail women using Internet is gender neutral  45% in Korea Women can express  42% in Singapore themselves better  41% in Taiwan Express their opinion better  40% in Japan Satellite TV is dominating their daily life Vietnamese cable watchers enjoy NYPD Blue and Seinfeld Bay Watch and Dallas - very popular in most Asian countries in India and China
  34. 34. Aging Population By 2015 There will be more grand parents in Asia (esp. in Japan, Hong Kong, Singapore) than grand children For every person 65 or older, there will be 2.5 people of working age (15-64) China alone will have 120 million – 65 or older (growing at 9million persons each year)  Implications on Pension plans  Business opportunities (nursing homes, living facilities)  Japan – automatic tubs in nursing home
  35. 35. Aging Population  Declining Man power  Between now and 2015:  N/E Asia – absolute size of the working populations will decline  Taiwan and Korea will be negligible  Japan will be shrinking significantly  China’s man power growth will have just turned negative  All man power growth will come from three countriesImpact: Flow of immigration5% of workforce in Singapore and Malaysia are non-citizensJapan still refuse to accept flow of immigration (lower than ratio of 17European nations). Throughout the 90s, fewer foreigners naturalized Vs tinySwitzerland
  36. 36. Challenges Ahead United Nations defines an aging society asone in which 7% or more of the population is 65 or older By 2015  8-9 % in Thailand and China  10 % in South Korea  11% in Taiwan  15 % in Hong Kong  24 % in Japan
  37. 37. Graying of Asia - opportunity Property developers for retirement communities Developers of hospital-equipped retirement condominiums Insurance agents for life insurance (developing custom-made programs) Beauty parlors (specialized in offering new young look for older women) Health care professionals (catering to medical needs) Travel agencies (specialized in senior citizens luxury tours or cruises) Fund managers (handling retirement or pension funds) Cosmetic surgeons (who can help smooth wrinkles)
  38. 38. IF YOU WANT IT, you can have it.DOUBLE EYELIDS:By cutting open the upper eyelidand restitching it to create a crease,surgeons can give eyes moredefinition and a more Westernizedlook. $2,300EYEBAGS:The lower eyelid is cut open and thesmall sack of fat inside is removed. Alaser is often used. $4,630NOSE JOB The nose bridge is raisedby adding a prosthesis or a piece ofbone normally taken from thepatients rib or thigh-bone. $3,240
  39. 39. IF YOU WANT IT, you can have it. BIGGER BREASTS: Despite the cancer warnings, breast implants remain popular in Asia. Saline-filled envelopes are inserted between the breast tissue and the chest wall. $11,100 FULLER LIPS: Tiny amounts of collagen are injected into the lips to plump them up and make them look more sensual. $2,780 per lip
  40. 40. IF YOU WANT IT, you can have it BALD NO MORE: Hair-grafting involves removing strips of hair-bearing skin from the dense growth at the back of the head. Tiny incisions are then made into the bald section of scalp. The follicle strips are woven into the head, where they eventually take root and grow. From $4,630 TUMMY TUCK:
  41. 41. Asian Governments attract senior citizens The Philippine Retirement Authority:  Each settler pays $50,000 deposit, plus $15,000 per dependent child. Right to live in the Philippines with the deposit returned if they leave the country Silver Haired Program:  Malaysian government initiated the “Silver-Haired Program” to attract Japanese and Europeans over the age of 55.
  42. 42. CHINA will be the dominant power in Asia BIG BROTHER Signed a free-trade agreement ASEAN (10 countries) – 500 million people Free trade area with 6 countries in 2010• Free trade area with 4 countries in 2015 Worlds biggest trading area: 1.7 billion consumers $1.2 trillion two-way trade
  43. 43. China - Today In 2003 it accounted for one fifth of the growth in world trade China is the factory floor of choice for the world’s low-coast manufacturing It assembles more toys, stitches more shoes, sews more garment than any other nation in the world It has become the world’s largest consumer for electronics Military spending: spends $2billion annually to buy hardware from Russia China will continue to emerge as a strong player in the world economy By 2015, nearly half of all China’s people will live in rural areas
  44. 44. CHINA Huge market for automobilesIn 2004, about 5 million cars will be sold2004 - In volume, China is bigger than Germany2007 – Could beat Japan ( becomes second toAmerica)2010 – 10-20% of total volume – General MotorsNine top international manufacturers plan to spend$9.7 billion between 2004 and 2007
  45. 45. Big Three Imports from China GM and Ford – now accepts Chinese supplier now serves as global “benchmark” prices for quality and price on certain components During past 4 years, 133,000 jobs disappeared By 2010, same study predicts a further 127,000 jobs will disappear to China and Mexico
  46. 46. Look I am rich Luxury goods More women are buying luxury goods Armani plans to open 20-30 new stores by 2008 Prada will invest $40 million in the next two years - 15 stores Louis Vuitton will have 13 stores by Y/E Drive BMW, eat at Hard Rock café, children wear GAP clothes, Levi jeans, digital cameras – sign of wealth Each month 5 million new subscribers sign up for mobile phone service 300 million subscribers – largest in the world  Nokia, Samsung, Motorola  Motorola plans to invest more than $10billion by 2006
  47. 47. Chinese traveling  Chinese are trading places with Japanese  Australia: 3.7% of overseas visitors from China in 2003 but in 2013, expected to reach11.1%
  48. 48. China- Changing Life Style As late as 1989, six out seven newly married couples would not have had sex before the paper work is completed Now, as many as 70% of young adults in urban areas have indulged Divorce rate 3% in the 1970 to 14% today China formally eliminated the need for employers to sanction weddings Only last year the court laid out procedures – divorced couples should split their property (includes joint assets, stocks and bonds) Now Chinese women are demanding pre-nuptial agreement and public notaries (NP) are making roaring trade.
  49. 49. China’s Little Emperors Will Emerge As Driving Force in 2010 Beijing Intelligence and Capability Kindergarten -Violin is optional - Golf is mandatory - Tuition is $6,000/year - At least 100 million - under the age of 25 – have been raised in one-child households
  50. 50. Growing Pains In China’s 11 big cities 50,000 people die prematurely and 400,000 people are infected by chronic bronchitis each year because of air pollution If no changes, 380,000 people will die prematurely each year by 2010, and will rise to 550,000 people annually by 2010 Government is planning to reduce its reliance on coal Unemployment: In 2004, China had 2.8 million graduates from all colleges combined – double the number two years ago China will produce 325,000 engineers in 2004  Five times as many as in the U.S (decreasing since 1980) Salaries are falling
  51. 51. More Foreign Investment in India Indian government has raised ceiling on foreign equity in Indian Banks, from 49 to 74 percent, which was unthinkable 10 years ago Recently when New Delhi computerized its tax and revenue departments, the first contract was won by HP and Microsoft Coke is bottled in plants in many parts of India with the formula protected IBM is planning to buy a large call centre operations India has become a major trade partner for the U.S. - $7.2billion in goods and services in 2002 double the level five years ago
  52. 52. India Today To set up business In Singapore – to start a business is 8 days Hong Kong – 11 days In India – 88 days If you want to get out of it:  Hong Kong take one year  Singapore – less than 7 months  India – 11 years
  53. 53. Future Growth of India  By 2020 The size of its population — 1.2 billion by 2020 47% of Indians will be between 15 and 59, compared to 35% now. Technologically driven economic growth virtually dictate that India will be a rising regional power. Goldman, Sachs & Co projects India will be able to sustain 7.5% annual growth after 2005
  54. 54. Watch for Vietnam Asia’s best performing economy Grew average 7.4% per year for the past ten years It raked foreign investment worth more than 8 percent of GDP in 2003 1993 – World Bank estimated 58% population poor – By 2002, it had fallen to 29% Nearly 55 percent of population is under 25 and 85% under 45 years old
  55. 55. Nearly 50 percent of the world’s population lives in AsiaEast Asia TodayChina – 1.25 billionIndonesia – 200 mill Southeast Asia TodayJapan – 125 mill 520 millionOther countries – 40 millOne of the World’s largest developing South central Asia Todaycountry regions (includes India, Pakistan)1/3rd of world’s population 1,486 billionIn 2000 – 261 million living on less than $1a dayDrop to 80 million in 2015
  56. 56. Asian Brands to Watch in the next ten years LG refrigerator from Korea – (with flat panel TV screen) niche market (changed from Lucky gold star)- compete with GE, Whirlpool, Maytag HAIER – already sells at Wal-Mart, SEARS and Best Buy (2003 revenue $9.75 billion) Bajaj scooters – link with Kawasaki- Japan- now sells for $2,700 in America TCL Mobile Phone/TV – linked up with RCA in the America Samsung Legend computer in China and Asia Hyundai
  57. 57. Asia in 2015 FIVE Asian countries (China, Japan, India, a unified Korea and Indonesia) will grow substantially relative to the rest of the world. They will account for more than 45 percent of the global product, the U.S. about 25 percent and the European Union only 15 percent The GDP and military capital of China will become relatively large (GDP will be about $11-12 trillion, same as that of U.S.) Chinese economy will account quarter of the global product, twice as that of Japan. A unified RAND school of Policy Studies
  58. 58. Thank You