Example for my service

1. Quartz
Editorial
October, 2013
SPECIAL EDITION FOR www.elance.com
Eugene Koban
GOD—MEET MAMMON
The Vatican Bank more than quadrupled its profit last year
page2
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ENNUI
The French are getting tired of their own films
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VOWS
Why I’m never
flying again
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With more smokers than the population of
the US, China tries to cut down
SMOKE SIGNAL
China has one of the world’s highest rates of smoking, with about 320 million people—a fourth of the world’s population of smokers, and more than the US population— lighting up daily. But officials may be getting more serious about helping the country kick its nicotine habit. Increasing concerns over public health and a change in leadership could go a long way in overturning the deeply entrenched role cigarettes play in Chinese business and politics, according to a recent analysis.
While other countries are forcing cigarette makers to remove their logos or increase the size of health warnings, tobacco companies in China have have been able to market to Chinese consumers largely as they please. That’s because China’s regulator of the tobacco industry is also the owner of the country’s, as well as the world’s, largest cigarette producer. The state-owned China National Tobacco works to block anti-smoking campaigns and ensures that companies always sell a certain amount of cheap cigarettes—for as little as 5 renminbi ($0.80) a pack.
But there are signs that some things are changing. Cheng Li, a scholar at the Brookings Institution said in an update this month on a previous report on the Chinese tobacco industry that China’s newest generation of leaders appear more motivated than their predecessors to build a positive image with the public—a desire that should make them more sensitive to public health issues. Public health has become a priority especially in light of anger over air and water pollution and China’s rising rates of cancer. One million Chinese are estimated to die every year from tobacco-related illnesses, according to the International Union Against Tuberculosis and Lung Disease. Chinese researchers argue that if current rates of tobacco consumption continue, it will cause a third of all deaths of middle-aged Chinese men within the next decade.
No wonder the government is ramping up anti-smoking efforts. Last year, the government released, for the first time, a report detailing the health hazards of smoking. Officials recently pledged to eliminate smoking in all public places across the country by 2015.
There’s no guarantee that anti-smoking measures will work. A 2011 ban on smoking in all indoor public spaces has been poorly observed, according to the health ministry. China has banned cigarette ads on television, print media, movies or in stadiums and any waiting rooms, but not in advertising online or outdoors.
Marketing is still so pervasive that nearly nine in 10 Chinese children (paywall) surveyed could identify at least one cigarette brand by its logo, according to a study published Sept. 30.
More boadly, the Chinese government depends heavily on the tobacco industry. Li observes that revenues from tobacco companies made up between 7% to 10% of the government’s tax revenues, and almost half of tax revenues in some provinces like Yunnan, one of the country’s biggest tobacco producing regions.
Thus, the most important change to be made may not be government policy but a shift in the cultural significance of smoking. High- end cigarettes are social currency, exchanged as a gesture of respect between business partners and officials. For men, who account for the bulk of China’s smokers, smoking evokes an image of power—Mao Zedong and Deng Xiaoping were both chain smokers.
This too might be changing. In 1996, up to 60% of male doctors in China smoked and saw cigarettes as a sign of professional success but that rate has fallen to about 40% today, comparable to rates among doctors the US in the 1940s and 1950s. Moreover, Li and others point out, in contrast to past party leadership, the new administration is light on smokers. Within the powerful Politburo Standing Committee, only three of the incumbent and thus most senior members smoke, and even then never do so in public, according to Li. Xi Jinping is also rarely seen smoking in public.
Ivy Chen contributed reporting.

2. 02
Quartz
Editorial
03
Quartz
Editorial
GOD—MEET MAMMON
The Vatican Bank more than quadrupled its profit last year
The Vatican’s first step towards financial transparency was rather eye-catching.
The Vatican Bank—officially the Institute for Religious Works, or IOR—published its first annual report this morning, an exhaustive 100-page document (pdf) which lays bare the extent of the Catholic institution’s vast holdings. The numbers are indeed large—the bank’s balance sheet, for example, includes €5 billion ($6.8 billion) with some €769 million in equity alone. But the bank’s profit last year is perhaps what’s most impressive. The IOR raked in a net €86.6 million in 2012, more than four times its €20.3 profit from 2011.
How? Interest rates.
The jump in profits came largely due to the institution’s “favorable trading results and higher bond values, resulting from the general decrease of interest rates in the financial markets throughout the years,” the report said.
The Vatican holds nearly €3 billion in trading securities, the bulk of which is tied to government and index bonds. Its Italian, German and Euribor bonds, specifically, have appreciated quite a bit on the heels of falling interest rates across the euro zone. (Yields and prices move in opposite directions, so falling yields in the chart below mean the bonds are getting more valuable.)
In this case, the value of Vatican’s fixed income holdings is up by over €50 million.
The Vatican has long insisted that the IOR isn’t like other traditional banks, and focuses its efforts on managing assets of religious and charitable foundations and projects. But the report shows that it functions much like any other bank. In the past year, the IOR has offered asset management services to its 20,000+ clients, collecting over €12 million in fees and commissions. It even enjoyed nearly €26 million in profit made from loans in 2012.
The IOR’s €5 billion balance sheet also includes over €41 million in gold, metals and precious coins, a real-estate company, and two investment properties worth just under €2 million.
The Vatican’s decision to share the IOR’s financial details with the public comes after the bank’s former heads, Paolo Cirpiani and Massimo Tully, were investigated for violating Italy’s anti-money laundering norms, before both resigning in July. Pope Francis has since tasked a commission with investigating every inch of the IOR.
Despite the Vatican’s investment wins in 2012, it would be unwise to expect a similar return in 2013. “Overall, we expect 2013 to be marked by the extraordinary expenses for the ongoing reform and remediation process, and the effects of rising interest rates,” the bank admitted in the report.
By Roberto A. Ferdman | @robferdman
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This article was produced on behalf of VMware by the Quartz marketing team and not by the Quartz editorial staff.
SHELL SHOCK
Thailand uses slaves from Myanmar to peel its shrimp
In some ways, Thailand is a fairytale of economic development. Thanks in large part to exports, its GDP per capita is now eight times what it was in 1980. Its people live 15 years longer than they did in 1970. They’re now better educated, so they are doing more high-value jobs. It’s also an exemplar of family planning; 80% of the reproducing population uses birth control, compared with just 15% in 1970.
Which helps explain why Thailand’s unemployment rate is just 0.9%—the lowest among the world’s major economies.
The solution? Migrants. And the cheapest of all are undocumented, trafficked and often forced laborers from Myanmar, and, to a lesser extent, Cambodia and Laos.
Thailand’s shrimp-peeling business is a classic example, as the Environmental Justice Foundation, a non-governmental organization, highlighted in a recent report (pdf). It’s a critical industry for Thailand, which typically produces one quarter of the 2.6 million or so tonnes (2.9 million tons) of the planet’s annual shrimp output. Some 90% of that goes abroad, making Thailand the world’s biggest exporter of shrimp. That brought in $3.5 billion in 2011, just shy of 1% of GDP.
Most of that shrimp enters importing markets already peeled, beheaded, deveined and gutted. But dismantling tiny crustaceans is laborious. The conditions in “peeling sheds,” reports the EJF, are noxious, the hours long, and the pay dreadful.
Unsurprisingly, Thais long since stopped taking those jobs. Migrants, mostly from Myanmar, can earn more there than they would at home, and thus send money to support their families. Though Thailand’s estimated 3 million migrants make up 10% of its workforce, in seafood processing, they compose 90%.
But protecting workers and punishing abuses is expensive. It also risks making Thailand’s exports pricier. Maybe that’s why the government does neither. The litany of abuses in peeling sheds includes trafficking, forced and child labor, debt bondage and sexual harassment, to name a few, reports the EJF. In Samut Sakhon, a major seafood processing center, 57% of workers surveyed had been subject to forced labor practices, while one- third had been trafficked.
It’s not just shrimp, though. Export competitiveness in fishing, construction, agriculture and manufacturing depends on migrants, says Human Rights Watch (pdf, p.25), an NGO.
This might be expedient now. But Thailand’s labor productivity has stalled (pdf, p.3) because companies grown used to cheap labor aren’t bothering to upgrade their technology. The consequences of this easy fix will become more glaring as 2017, the year Thailand’s working population starts shrinking, approaches.
At that point, as the local population falls, demand for migrants should intensify. That will up their wages, crimping margins, or exacerbate trafficking, which could invite sanctions against Thai exports. And that’s assuming this captive labor pool doesn’t dry up first, as Myanmar’s rapidly liberalizing economy starts to pick up.
IT’S TOASTED
Hyundai is killing off the stubbornly
persistent cigarette lighter socket
Hyundai Motor has made an “unprecedented decision” among global automotive makers, the Korea Herald reported today—it is eliminating the “cigarette lighter jack” from all its vehicles sold in Korea and replacing it with a USB power point.
The next step, the paper reported, may be to make this replacement in all the cars it sells globally. Charging a smartphone with the newly-attached USB charger would take one hour, Hyundai said, “seven times faster than when using a separate portable charger.”
Tobacco accessories have been slow to disappear from autos; back in 1994, Chrysler “made a splash” by introducing the first cars without ashtrays since the 1930s. Now, if Hyundai’s substitution catches on (and tech writers like David Pogue have been begging for it for years) it may be the beginning of the end for the ubiquitous car cigarette lighter socket.
The cigarette lighter itself, once used to light actual tobacco with hot coils, is no longer offered as standard in the United States and Europe, but the 12-volt power supply that comes from the thing the lighter goes into (no can agree what to call it—”cigarette lighter jack,” “accessory socket,” “receptacle,” and “car power socket” are some favorites) is in high demand, where it is used for a stupendous array of accessories like cell phone chargers and GPS locators.
Hyundai’s move, if it spreads to other car makers, could make things much simpler for drivers, but eliminate a niche middleman industry: the makers of “USB car chargers,” which turns the socket into a USB port, and the accessories companies that make 12-volt chargers for phones and other gadgets that fit into the socket.
It would also decimate the “things that plug into cars” industry—a whole host of manufacturers around the world make everything from kettles to hairdryers to neon car lights that plug directly into your car’s cigarette lighter.
Before it disappears for good, let’s take a moment to appreciate the the lowly car cigarette lighter socket. After all, for decades it was the most standardized, portable source of electricity after batteries. No matter where you went in the world, you could carry a charger made for a car cigarette lighter socket and it would fit in the socket, and deliver a reliable 12 volts of electricity.
And for smokers, all is not lost—you can always buy a USB-powered cigarette lighter. And Hyundai has promised that “the in-car ashtray will remain the same.”
By Heather Timmons
The «Safe-T-Lite» introduced in 1950, allowed drivers to light a cigarette without taking their eyes off the road.
ENNUI
The French are getting tired
of their own films
The film world may still fawn over French cinema, but that doesn’t mean the French do.
France, in fact, appears to be growing pretty tired of its own films. According to a report (French link) released by French news outlet BFMTV this past Sunday (Sept. 29), the French are watching fewer and fewer movies made by their fellow countrymen. And the fallout is actually somewhat dramatic.
Back in the 1980s France was producing about half the number of films annually that it does now, and yet more people ventured out to support the country’s on-screen craft back then. Today, domestic films in France draw movie theater audiences that are about 35% smaller than they were three decades ago. The average french film in the 1980s was seen by some 443,746 cinema goers on average; today the number is less than 300,000.
The trend, however, isn’t afflicting the theater industry in France as the whole. For American-made films, viewership has increased by roughly 22% over the past 30 years; US films now draw more theater goers on average (595,918 people) than French ones.
The problem has something to do with the proliferation of French films. Although France currently produces some 300 films every year, they’re not getting much bang for their buck. Between 2001 and 2010, the proportion of domestic films seen by less than 50,000 people in France jumped from 51% to 60%.
French films seem to lose that foreign allure when viewed in France.

3. 04
Quartz
Editorial
SLIM PICKINGS
Private equity funds aren’t nearly as attractive as they think they are
Private equity firms are delusional. A record number—nearly 2,000 of them—are currently out on the road seeking more than $700 billion in fresh funds, according to new statistics from data provider Preqin.
Considering that PE firms haven’t raised anywhere near their targets since the financial crisis, this is a triumph of hope over experience. Although fundraising year-to-date is up 20% versus the same period in 2012, the industry is still a long way from its glory days in the mid-2000s, when credit was cheap and plentiful.
The size of the average buyout fund that closed a fundraising round in the third quarter was $996 million, down sharply from $1.8 billion in the previous quarter. So although the industry as a whole is growing again, the size of the average player is shrinking. And raising funds takes more time than ever before, despite the more modest sums involved. In the first nine months of this year, it took the average private equity firm 18.5 months, a record high, to close its latest fundraising round.
See the lengthening time frame in the next chart:
What gives? Private equity firms are sitting on some $1 trillion in “dry powder,” or uninvested capital from previous fundraising rounds. Like cash-heavy companies in the corporate world, the firms are hoarding more cash, partly because they’re having trouble finding worthy investments amid economic uncertainty and a dearth of cheap debt that helped juice returns in the pre-crisis days. It’s also taking longer for PE firms to exit their investments, as M&A and IPO activity remains choppy. Thus, many PE investors are locked into funds that sit on a large share of their cash and charge them a hefty management fee—usually 2% of assets per year—for the privilege.
PE firms typically lock up investor funds for at least five years to allow time to spot good investments. After this period, they’re required to give remaining funds back or ask for more time (generally in exchange for lower fees or other concessions). Especially desperate firms succumb to the pressure and spawn “zombie” funds, giving up on fundraising altogether and subsisting on management fees while investors await the end of their lock-up periods. Nearly $120 billion (pdf) in assets is trapped in these doomed funds. No wonder investors are making PE firms sweat before they part with more cash.
By Jason Karaian | @jkaraian
This article was produced on behalf of CITI by the Quartz marketing team and not by the Quartz editorial staff.
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