Business Asia Journal - Issue 8


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Business Asia Journal - Issue 8

  1. 1. TensionISSUENO.8,Spring2013In ASIA
  2. 2. 2 Business AsiaTHE BAJ TEAMEXECUTIVE BOARDPresidentEditor-in-ChiefDirector of DesignDirector of MarketingDirector of FinanceStella ZhangZhi-Yen LowYanbin FengLeo DingMadeline CulkinDESIGN ASSOCIATESAn-Chi DaiArthur TengHanyu ZhangEDITORIALYiwei ChenSaloni GuptaKevin HuaChris HuhShuang JiaAjay KailasJihoon LimTimothy LinUniversity of Indonesia Maria MarciaAdvai PathakJingyi WangJiting WangMengtian WuCONTACT US:BusinessAsia.Journal@gmail.comwww.cubusinessasia.comMARKETING ASSOCIATESChloe TaoYuan XiaSpandana Govindgari
  3. 3. Spring 2013 3EDITOR’S LETTERInternational politics in Asia has been a dangerous mix of tensionand conflict this year, with events in Northeast Asia taking centerstage. In our previous issue, we welcomed new leaders into thefray as Xi Jinping took up the reigns of China’s leadership and Obamabegan his second term as President. The eighth issue of the BusinessAsia Journal takes a deeper look into our leaders’ reforms andpolicies as they carefully navigate the fraying threads of internationalcooperation.Our writers tackle the current political climate in Asia amidststrained relationships between China, North Korea, and Japan as wellas its possible global repercussions. Korea’s newly elected PresidentPark Geun-Hye, with her promises to increase national growth,has to strike a balance between stabilizing Korea’s slowed economy,implementing social and political reforms, while diplomaticallyhandling the country’s relations with its neighboring North. Reformsin India are well underway, but rural poverty remains strife as 350million people still live below the poverty line. As the pains ofdwindling growth begin to set in, India opens its doors to foreignretailers to facilitate economic growth. In China, the rural poorexpectantly look to Xi Jinping to overcome the lingering massiveincome disparity that threatens the population. Meanwhile, the moreaffluent Chinese customer remains by far the world’s top spender onluxury goods.This issue would not have come to fruition without the sheerdedication and hard work put in by the Editorial, Design, andMarketing teams. I would like to express my sincere gratitude toeveryone involved in the production of this issue. On behalf of ourpublication, a heartfelt thank you goes to our graduating presidentStella Zhang- our mentor, leader, and dear friend, whose support andutmost dedication to the Business Asia Journal mission have made thispublication what it is today.Finally, thank you to you, dear readers, for your continued support.We value your opinion greatly and would like to hear your thoughts. Ifyou have any comments, suggestions, or interest in joining our team,please contact us at LowEditor-in-ChiefApplied Economics and Management ‘14We would like tothank the followingsponsor for theirgenerous support:
  4. 4. 4 Business AsiaTABLE OF CONTENTSTension in Asia 16The Dictator’s Daughter 13
  5. 5. Spring 2013 5The BAJ TeamEditor’s LetterThe Limited Success of Anti-Poverty PublicPolicy in Indiaby Saloni GuptaEvaluating India’s reforms and policies andtheir impacts on reducing povertyChina’s Great Economic Divide: How Does itImpact its People?by Kevin HuaA study of China’s wide income disparity andthe impact on its peopleThe Dictator’s Daughterby Chris HuhPresident Park Geun-Hye promises economicequality and opportunity for allTension in Asiaby Advai PathakExploring the political forces between China,Japan, and North Korea and strikingparallels with the Balkans in 1914Brain Drain in Modern Chinaby Jihoon LimMigration of skilled professionals hampersChina’s global competitivenessWeChat: The Wakening of ChineseInnovationby Jiting WangWeChat is revolutionizing Chinesecommunication and paving the way fortechnological innovationBurgeoning Senior Living in Chinaby Yiwei ChenExploring the Chinese senior living industry asa viable investment opportunityA Peek into Islamic Bankingby Maria MarciaA brief education on the nuances of Islamicbanking and its revolutionary potentialNew Industries, the “Babies” Born byChina Air Pollutionby Jingyi WangDiscovery and birth of new industries fromChina’s hazy airChina: the Top Spender of Luxury Goodsby Shuang JiaGrowing demand for luxury goods byChinese consumers creates potential forChinese luxury brandsRetail on the Subcontinentby Advai PathakIndia opens its doors to foreign retailers tospur economic growthAsia Drives International Student Growthin United Statesby Mengtian WuAsian countries a significant driver ofthe international student boom in U.S.educationIndia’s Image: From the Taj to Rapeby Ajay KailasA look into India’s dark, grimy side and itsresulting legislative changesThe Asian World of Real Estate Capitalby Timothy LinA conversation on real estate capital flowswith Robert White of Real CapitalAnalyticsTABLE OF CONTENTSLifestyle2934General BusinessPolitical Economy236132023International RelationsInterview916263238404244
  6. 6. 6 Business AsiaThe LimitedSuccess ofAnti-PovertyPublic Policyin India Saloni GuptaCornell University ‘15College of EngineeringIndia’s per capita gross domestic product has doubled over the past decade to USD838yet 350 million people live under 56c a day – the official poverty line. The country ranks65th out of 79 countries on the Global Hunger Index according to a new report by theInternational Food Policy Research Institute. 21% of all adults and 46% of all children underthe age of 5 were malnourished in 2005.The Public Distribution SystemThe Indian government, real-izing the urgent help required, in1965 established the Food Corpo-ration which has since become theworld’s largest public food distri-bution system. Annually, $14 bil-lion - almost 1% of the country’sgross domestic product – is setaside for this initiative which dis-tributes subsidized food and fuelthrough a host of small shops. In2012, the Food Corporation wasrequiredtostockpile32metrictonsof rice and wheat but managed toaccumulate twice that amount dueto bumper crops. Clearly there isno lack of resources in this nationand one may enquire further aboutthe dire statistics presented at thestart of this article. The problemis that the distribution system isseverely inefficient. The WorldBank says that 59% of the grainmeant for the poor never reachesthem. It is sold by middlemen athigh prices for personal benefits orjust sits in warehouses and shedsrotting. In addition, a majority ofthe poor do not have the BelowPoverty Line ration cards requiredfor collection of subsidized goodsand 44% of the ration cards goto the non-poor. Also, it has beenhard to understand the effective-POLITICAL ECONOMY
  7. 7. Spring 2013 7ness of such schemes due to thelack of national surveys collectingdata about malnutrition. The Na-tional Family Health Survey hasnot been published since 2005.The Direct Benefit TransferThe public distribution sys-tem’s lack of transparency andtremendous waste have spurredthe government to take on a new,highly ambitious initiative- theDirect Benefit Transfer (DBT)- which was launched on NewYear’s Day 2013. It began withthe transfer of funds to the bankaccounts of 245,000 people in 20of the poorest districts and is ex-pected to expand to benefit morepeople soon. Unfortunately, sucha grand scheme comes at a greatexpense especially when settingup of millions of bank accounts.Even before the bank accountscan be created, the governmenthas to conduct retinal and finger-print-scans of people and issuethem with unique 12-digit iden-tity numbers. However, DBT isa revolutionary step towards in-creasing transparency in the longopaque Indian food aid system. Itprovides the additional benefit ofcheaper loans which bank accountholders are entitled to. Neverthe-less, critics have labeled the moveas politically motivated to garnerthe opposition’s share of votes.The popular newsmagazine Out-look India recently claimed in anarticle that giving cash to “India’spoor is all about power, politicsand winning elections.” Politi-cally motivated or not, the pilotprogram has been effective in im-proving diet and prompting rationshop owners to improve the qual-ity of their grain to maintain theircustomers.The Mahatma Gandhi NationalRural Employment GuaranteeActRural poverty is especiallydifficult to combat in India. Cashtransfers alone are not strongenough to reduce rural povertyand have to be carried out togetherwith development in village-lev-el infrastructure and changes insocial structures to make a dif-ference. The caste system is stillprevalent in rural communitiesand the Scheduled Castes andScheduled Tribes are often deniedopportunities. In addition, inse-cure employment and low wages
  8. 8. 8 Business Asiamaintain poverty – there are 132million rural casual laborers. In re-sponse to this, the Indian govern-ment adopted the Mahatma Gand-hi National Rural EmploymentGuarantee Act (MGNREGA).Implemented in 2006, thispolicy involves a universalself-targeting guarantee of100 days of employment toevery household in all ruraldistricts of India. It has beenvery successful - generat-ing 13.48b person-days inwork since 2006. It has alsobrought about an increase inincome from Rs.65 per per-son-day in 2006 to Rs.115in 2011. However, the cre-ation of employment hasbeen falling even though thewages provided through thisprogram are higher than theminimum wage. This hasbeen attributed to corrup-tion and enormous amountsof unspent funds in 2010-11and 2011-12. Furthermore,projects which were meantto be completed using laborfrom this scheme have notbeen properly designed and im-plemented.The Chronic Poverty ResearchCenterA paper by the Chronic Pov-erty Research Center states that130 million Indians live in chron-ic poverty, or poverty that en-dures for five or more years andis passed on from generation togeneration. Casual labor, tack-led by the MGNREGA, is a ma-jor contributor to chronic pover-ty in India. Other factors includethe zamindari or landlord systemand weak infrastructure. In addi-tion, the lower social status givento Scheduled Castes, ScheduledTribes and women makes it evenmore difficult for these groups toexit poverty. Scheduled Castes andScheduled Tribes are recognizedby the Constitution of India to behistorically disadvantaged. Also,ill health and fewer income-earn-ing opportunities form a viciouscycle, trapping people in poverty.The paper suggested that there aresome crucial steps that need to betaken to alleviate poverty, but allrequire long-term political com-mitment. These include allowingthe poor to own land and provid-ing them with finances to managethis land, providing support tothose who migrate to the city sothat they can send money home,and building village infrastruc-ture. Urbanization of rural districtscan also increase opportunities formany people. Other key beneficialpolicies include making dry landagriculture more viable as this isprone to droughts, deforestationand soil erosion and pro-viding the chronically poorreliable access to health-care and food. Finally, theNational Old Age PensionScheme – which has hither-to been unreliable, should bestrengthened to reduce pov-erty among the elderly andmake them less vulnerable.The opacity, waste anddisorganization present inIndia’s public food distri-bution system lead to thedevelopment of the DirectBenefit Transfer. While thelatter is an ambitious andarguably political move withmany preliminary steps, sofar it has been promising.In order to specifically tack-le the most enduring formof poverty – rural poverty,the government implement-ed the Mahatma Gandhi Nation-al Rural Employment GuaranteeAct. While this flourished in thebeginning, myopic organization ofmonetary funds and lack of prop-er follow-through are causing thescheme to fail in the long-term.According to the Chronic PovertyResearch Center, in order to breakfree from poverty, India needslong-term political commitmenttargeting specific contributing fac-tors such as discrimination, casuallabor, the zamindari system andweak infrastructure."A majority of thepoor do not havethe Below PovertyLine ration cardsrequired forcollection of sub-sidized goods and44% of the rationcards go to the non-poor."POLITICAL ECONOMY
  9. 9. Spring 2013 9Income inequality in Chinahas been a growing issue thatstill remains unaddressed. Ac-cording to the Chinese NationalBureau of Statistics, the rural-ur-ban income gap reached its widestpoint in 2009, despite explosivegrowth of the economy since eco-nomic reforms by Deng Xiaop-ing in the late 1970s. To illustrate,the income of urban householdsstands at 17,175 RMB (2,760USD) while that of rural house-holds stands at 5,153 RMB (828USD). The relative improvementsin total income of different socialclasses between China and oth-er second/third world countriesare compared over the course of1990s-2010 in the following chart. Only China has expe-Kevin Hua, Cornell University ‘15, College of EngineeringChina’s GreatEconomic Divide:How Does it Impact its People?An urban villagein ChinaPOLITICAL ECONOMY
  10. 10. 10 Business Asiarienced an extremely unequalgrowth trend between its poor andrich, while in other countries thepoor and rich gain higher incometogether. The main reason has todo with China’s unique culturaland legislative restrictions that willbe discussed. Furthermore, Chi-na’s urban areas also face wage in-equality between migrating work-ers from the poor countryside andmiddle to upper classes. In a 2009survey conducted by the Econo-my and Nation Weekly, a Chinesemagazine, 34 out of 50 leadingeconomists believe that incomeinequality may be the most press-ing issue faced by the CommunistParty in the next few decades. Inequality is reciprocallyrelated to migration, whether ona rural-urban scale or on a largerinternational scale. Low incomesof rural households force menaged from teenage years and high-er to move to cities in search ofwork. These men, in addition tofending for themselves in com-pletely new environments, thensend money back home to supporttheir families. Of China’s 1.3 bil-lion population, an estimated 230million people are rural migrantworkers who work outside theirregistered home areas. In this mi-gration map, a general outflow ofpopulation can be seen in poorerand more rural provinces such asHubei, Shaanxi, and a net inflowof people into metropolitan cit-ies such as Beijing, Shanghai, andGuangDong. However, the Chinese reg-istration system, Hukou, ties resi-dential roots to citizens in China.Hukou outlines their rights to en-titlement in property, social se-curity, retirement planning, andeven public services. For example,in rural areas, hukou entitles farm-ers to farmland, while in urban ar-eas hukou grants workers to jobs,housing, and public care such as“Only China has experienced anextremely unequal growth trendbetween its poor and rich, while inother countries the poor and rich gainhigher income together.”POLITICAL ECONOMY
  11. 11. Spring 2013 11primary and secondary education.The lack of hukou for migrantworkers strips them of rights inownership of government hous-ing, public education, and evenjobs. Despite these disadvantages,there is one major incentive: in-come gain. On average, in 2004 theurban migrant earned 780 RMBper month, which is over threetimes higher than that of a ruralworker. However, this amount isstill less than half of the income ofan urban worker with hukou. Overall, officials estimat-ed that there are still 150 millionpeople under the poverty line inChina, which is 2300 RMB (USD366). China has a yearly govern-ment budget of 360 billion USD inexpenditures, but spends roughly18% on education and health care,and 2% of it on social welfare pro-visions. The United States in com-parison, with a 3.6 trillion yearlyexpenditure, spends over 36% oneducation, health care, and socialwelfare. The lack of hukou stripsmigrant workers that move intolarge metropolitan cities, and theirchildren, from proper educationand necessary tools for their suc-cess. Furthermore, lack of hukoustrips migrant workers in oth-er opportunities such as barriersto employment. Research showsthat children who move with their“The lack of hukou for migrant workersstrips them of rights in ownership ofgovernment housing, public education,and even jobs.”POLITICAL ECONOMY
  12. 12. 12 Business Asiaparents tend not to do as well asothers in terms of academics, andmay pay additional fees to enrollin merely mediocre schools. Thenumber of migrant children fromages 8 to 14 who lack primary edu-cationandhavedifficultyaccessingjunior-senior high schools is esti-mated to be 14-20 million, mostlyresiding with one or two parent(s)in metropolitan cities. Migrantworkers and their children with-out hukou are unfortunately tiedto a poverty cycle because careerprogression is difficult to achievewithout adequate education orthe necessary documentation, andtheir children have a large barrierin accessing higher education. The Chinese governmenthas slowly but steadily been chang-ing the hukou system; in 1997, mi-grants who held stable jobs in cit-ies were allowed to have a hukou,and in 2008, the Ministry of Hu-man Resources and Social Secu-rity allowed portable pension formigrant workers. The governmenthas also worked to raise minimumwages for migrant workers and im-prove the rural economy throughtax cuts and labor contract laws.President Hu made an ambitiousgoal to double per capita incomeof 2010 levels for urban and ruralresidents by 2020 through a planthat would reform income distri-bution. Hu has passed policies thatsupport investment infrastructureand emphasize social welfare,such as distributing governmentrelated employment to more mi-grant workers in 2006, as wellas increasing urban rural wages.These efforts, however, have beencriticized as central planning andsupply-side command of the econ-omy. Critics point out that thebenefits of explosive overall GDPgrowth has not trickled down tothe poorest in society. Furthermore, though Chi-na tackles income inequality littleby little, it remains largely silenton state corruption. A majority ofopposition to changing the hukousystem comprises of state officialsand wealthy groups that have pri-vate-vested interests. For example,land reforms that will consequen-tially follow hukou reform stripaway power and land-taxes con-trolled by wealthy groups in ruralareas. Fiscal expenditure and gov-ernment are largely decentralizedin China, meaning that land salesand unsustainable revenues haveample room for local corruption,which also fuels much of the re-sistance to hukou reform. Preju-dice towards these officials existslargely among the working middleclass, who believe that govern-ment official positions are sold tothe highest bidder, rather than be-ing a meritocratic process. Thereis truth to that belief in that manycorrupt practices in political cir-cles exist, such as spending exces-sive amounts on dinners and giftsto be invited for a bureau director’sposition. Li Chengyan, a professorat Beijing University, explainedthat selling and buying of officialpositions is simply a business ex-change in the powerful politicalcircle, mainly trading money forpower. Fortunately, China’s fifthgeneration leader, Xi Jinping, hasa tough stance on corruption andis very open towards economic re-forms. Xi Jinping, who is groomedto become the president after Hu,grew up in a poor village wherehe labored in the fields for yearswhen his father was purged. Thelower income and working class-es hope that Xi’s rugged years asa laborer have shaped him to becapable of tackling China’s largeincome disparity. Since becominghead of China’s military, Xi hascracked down on internal cor-ruption and senior officials, whileopenly accepting criticism of thegovernment. Influenced by hiscommunist revolutionary father,Xi aims to become China’s newleader, and in a rousing rhetoricin 2012, proclaimed his vision ofa “China dream”. Xi’s main goalis to strengthen the communistparty, whether it is weeding outcorruption or stabilizing the largeeconomic gap between classes.Though his main goal of reformis to keep the party in power, hisactions in the future are stronglyexpected by analysts to narrow in-come inequality.“A majority of opposition to changingthe hukou system comprises of stateofficials and wealthy groups that haveprivate-vested interests.”POLITICAL ECONOMY
  13. 13. Spring 2013 13The Dictator’sDaughterChris HuhCornell University ‘15College of Arts and Sciences“Park Geun-hye’s decisionsin office will reveal whethershe will choose to addressthe social and economicproblems plaguing her nationor accede to the demands ofbig businesses in the form ofSouth Korea’s reigning chae-bols instead.”international relations
  14. 14. 14 Business Asia“Park vowed to handle diplo-matic affairs with the NorthKorean government cautious-ly, while promoting recon-ciliatory effects by issuinghumanitarian aid. Park’sfuture handling of diplomaticengagements with the highlybelligerent country will re-quire both prudence and tactto avoid a compromise ofSouth Korea’s security. ”On February 25th, Saenuricandidate Park Geun-hyewas sworn in as SouthKorea’s first female president.As the candidate for South Ko-rea’s major conservative politicalparty, Park won the election heldin December 2012 after runningon a campaign promising nation-al growth through economic de-mocratization and job creation.At a time when the South Korea’sgovernment is receiving muchcriticism for its lack of supportfor small businesses and welfare,Park Geun-hye’s decisions in of-fice will reveal whether she willchoose to address the social andeconomic problems plaguing hernation or accede to the demandsof big businesses in the form ofSouth Korea’s reigning chaebolsinstead.Backed by the majority of theconservative party, Park seems tohave generated more discoursedue to her family’s history in pol-itics as opposed to her own apti-tude. Her late father, Park Chung-hee, is largely credited with thetransformation of South Koreafrom an impoverished nation intoa global powerhouse. Spanningfrom 1962 to 1979, Park Chung-hee’s dictatorship resulted inthe rapid growth of Korea’s ex-port-oriented economy and theformation of government-backedconglomerates. Park Chung-hee’sreputation is far from perfect,however, as his leadership of thecountry is tarnished by memoriesof the brutal repression and abuseof human rights which occurredunder his military rule.Park Geun-hye’s father wasinstrumental in the developmentof the business conglomerates,also known as chaebols, in Korea.Composed of household namessuch as Samsung, Hyundai, andLG, the chaebol structure is wide-ly responsible for the technologi-cal and commercial successes ofSouth Korea. These conglomer-ates dominate the manufacturingindustries in Korea, attracting thebest and brightest of talent whileproducing the majority of the na-tion’s gross domestic product. Inmany cases, the control and own-ership of a chaebol is retainedwithin the family. This nepotistictradition of transferring powerdown from generation to genera-tion within families could provefatal for the Korean economy ifa particular generation were to beincompetent in its managementfunctions. The future of the Ko-rean economy is threatened by thelack of a dynamic entrepreneur-ial system and weak small firms,both consequences of the chaebolsystem. Smaller businesses andstartups simply cannot competewith the monopolistic power heldby these massive conglomerates.Park has demonstrated support forthe existing chaebol-dominatedstructure, but has also assured the
  15. 15. Spring 2013 15public that she will fully supportthe development of smaller firms.If South Korea’s chaebols wereto fail, the lack of any other sub-stantial source of business wouldresult in total devastation for theeconomy.During the election process,Korean voters were strongly di-vided in their attitudes towardsPark’s political experience andpersonal background. The oldergeneration seemed to look favor-ably upon her father’s legacy andthe level of economic and socialadvancement he brought to thenation. In contrast, the youngermostly liberal base denouncedPark Chung-hee’s dictatorship andcalled for both greater politicaltransparency and progressive ac-tion towards improved standardsof welfare and economic equality.Ironically, the decisions of manyelderly voters to elect Park Geun-hye could backfire and lead to thedisappointment of senior citizensas the Saenuri Party appears tohave already lost its interest infunding the proposed social wel-fare projects it promised through-out the election. Park Geun-hyeand the Saenuri party appear tohave chosen the process of revi-talizing the sluggish growth rateof the economy as their foremostpriority.Park’s many responsibilitiesas president also include her stra-tegic role in the tense relation-ship between South Korea and itsnorthern counterpart. A few daysbefore she took office, a NorthKorean underground nuclear testwas reported to have been detect-ed, raising alarms regarding thesafety of the South Korean publicand causing further aggravationfor the already turbulent conditionof inter-Korean relations. In hercampaign, Park vowed to handlediplomatic affairs with the NorthKorean government cautiously,while promoting reconciliatory ef-fects by issuing humanitarian aid.Park’s future handling of diplo-matic engagements with the high-ly belligerent country will requireboth prudence and tact to avoid acompromise of South Korea’s se-curity.Having been inaugurated,Park now faces a hefty workloadcomprised of stabilizing a slowedeconomy, solving issues of socialand economic inequality, and re-sponding to growing threats fromNorth Korea. Her decisions willdetermine if South Korea will re-main on its course as a structurallyinstable country dominated by thepowerful few or if it will transforminto a more robust entity with eco-nomic equality and opportunityfor all of its relations
  16. 16. 16 Business AsiaTensionIn Asia“The ambitions ofChina, Japan, andNorth Korea arecoming into conflictand leading toincreasingly strainedrelations betweenthe three.Advai PathakCornell University ‘15School of Industrial and Labor Relations
  17. 17. Spring 2013 17International politics is aGordian knot – a dangerousand swirling intermingling ofpolicy, emotion, and chance. Overthe past year, the events transpir-ing in Northeast Asia have servedto underline this. China’s indus-trial machine has powered forth,for the most part unperturbed byglobal stagnation, on its upwardtrajectory. However, its neigh-bours are undergoing changethat will have repercussions ona global scale. The ambitions ofChina, Japan, and North Korea arecoming into conflict and leadingto increasingly strained relationsbetween the three.Thrust back into the forefrontof global security concerns afterits recent nuclear tests, NorthKorea continues to willfully dis-obey the conditions of the SixNation Talks, which are increas-ingly regarded as entirely ineffec-tual. Kim-Jong Un has thus farproven himself a maverick on parwith his father, an inscrutable andunpredictable young man withenormous power in his hands. Ifanything, North Korea can rea-sonably be considered a greaterthreat under the new leadership asthe nation’s economic plight wors-ens and its nuclear research pro-gresses. Increasingly combativerhetoric has only worsened rela-tions with the international com-munity. This past month, DeputyDefense Minister, Kang Pyo-yongclaimed “our international bal-listic missiles are on standby…if we push the button, they willblast off and their barrage willturn Washington, the strongholdof American imperialists and thenest of evil…into a sea of fire”.Under its founding lead-er, Kim-Il Sung, North Koreaembarked on a project to attainnuclear weapons and it hasworked steadfastly towards thatgoal. President Bush’s infamous2002 ‘Axis of Evil’ speech and theUnited States’ ruthless manage-ment of regimes that fall out of itsfavor have further isolated Kim’sgovernment. Nuclear deterrenceis perceived as the only feasibledefense of North Korea’s sover-eignty. Additionally, the threatit entails would offer Kim anenormous degree of bargainingpower with which to extract eco-nomic and political concessions.A successful satellite launch inDecember surprised the worldand demonstrated a mastery oftechnology that can be used tocreate inter-continental ballisticmissiles. With its current capa-bilities, America is clearly withinNorth Korea’s strike zone.South Korea has been onits guard amid this new roundof Northern belligerence. It hasreceived American assurances ofmilitary support in the face ofa Northern attack and the twocontinue to carry out joint exercis-es. Newly elected President Parkof South Korea has sought bet-ter ties with the North althoughher patience will be sorely tested.Since Kim’s ascendance, the Northhas become even more explicit inits threats and demonstrations ofpower. Kim severed negotiationswith the South after February’snuclear test. On her side, Park hasscrapped the ‘Sunshine Policies’of previous administrations andhas promised less conciliation andmore strength in diplomacy.Meanwhile, across the Seaof Japan, an old imperial powerseems to be rising from a pro-longed slumber. Under new PrimeMinister, Shinzo Abe, Japan’s gov-... our international ballistic missiles are on stand-by…if we push the button, they will blast off andtheir barrage will turn Washington, the strongholdof American imperialists and the nest of evil…intoa sea of fire.”international relations
  18. 18. 18 Business Asiaernment is adopting a more proac-tive and bold stance. Since reelec-tion, Abe has publicly declaredhis goal to relaunch Japan’s inerteconomy and his ‘Abenomics’ areslowly beginning to show tangibleeconomic results as markets andinvestors buy into his rhetoric.However, aside from his ambi-tious economic goals, there areseveral other areas of concern toChina. One is Abe’s firm beliefthat Japan must remain the keyregional power. He is is a vocalproponent of the proposed Trans-Pacific Trade Partnership and hisrecent visit to the United Statesprovided ample evidence of hisdesire to deepen ties. Additionally,however, Abe is a passionatenationalist and he has adoptedseveral controversial positions –from denying the Japanese army’suse of Korean sex-slaves duringthe Second World War to reject-ing a perceived post-war “apologydiplomacy”.Retracing the First WorldWar’s origins and reviewing thestate of events in both the Balkansand Central Europe in 1914 canbe instructive in assessing thethreat of these multiple conflict-ing variables. Then, as now, a ris-ing regional power, Germany, feltthreatened by established nationsthat sought to blot its rise. Wouldnationalists in the Chinese gov-ernment be willing to risk warover their insecurities? It’s entire-ly plausible that politicians mightnot decide the course of action. In1914, war broke out in responseto the actions of six Serbian menassociated in a relatively minorterrorist group. A 2010 crisis wasinstigated by a drunken Chinesetrawler captain who provokedJapanese patrol ships.The Senkaku Islands dis-pute could bring many of thesetensions with China to a head.Seemingly a minor diplomaticissue, it has led to fierce sabre-rat-tling on both sides and hasreopened old, historical wounds.It also threatens to embroil theUnited States through its post-war military alliance with Japan– hence China’s apprehension attheir closer relationship.Added to the power strugglebetween powerful nations in theearly 20th century was the restless-ness of smaller ones. Today, NorthKorea complicates the equationenormously. It has survived thepast two decades since the fam-ine of the 1990’s largely throughChinese aid, much of it secret andin direct violation of internationalsanctions. However, a crossroadhas clearly been reached in theChinese-North Korean relation-ship. Korea is no longer neces-sary as a buffer against Americaand its allies. Equally, its provoc-ative actions are increasingly seen... Abe is a passionate nationalist and hehas adopted several controversial positions– from denying the Japanese army’s use ofKorean sex-slaves during the Second WorldWar to rejecting a perceived post-war “apol-ogy diplomacy.”international relations
  19. 19. Spring 2013 19as an embarrassment to China.However, the collapse of Kim’sregime could lead to chaos onChina’s northeast border. Stabilityis a priority for the Chinese gov-ernment as they seek to increasetheir regional influence. Althoughrelations with South Korea haveimproved considerably, Japan isstill considered a powerful rivaland all plays are made after gaug-ing the Japanese position.The current political climatein northeast Asia is complex witha variety of futures possible andplausible. Some current Chineseand Japanese rhetoric has in factbeen on par with the less sur-prising quotations spewing fromNorth Korea, suggesting a will-ingness to confront that hasn’tbeen seen anywhere in decades.North Korea’s persistence inattaining nuclear capabilities cre-ates concern across the globe. Theentanglement of the United Statesthrough its complex relationshipwith all three states as well as itswariness of Iran makes this explo-sive situation a global issue. HowAmerica balances its relation-ship between a rival superpower,China, and a potentially resurgentally, Japan, while also assuring theKorean Republic’s safety againsta Northern attack will be enor-mously difficult. China’s supportof North Korea already createsfriction in its relationship with theUnited States. A resurgent Japanseeking to temper China’s rise withAmerican support would furthercomplicate the Sino-Americandynamic. President Obama’s deci-siontostationMarinesinAustraliais evidence of the American pivotto the east in thinking, strategy,and policy-making. Avoiding a1914 is central to the interests ofall players but simply maintainingbalance and stability with a multi-plicity of conflicting interests willbe challenging.The Senkaku Islands(also known as the DiaoyuIslands in Mainland China)
  20. 20. 20 Business AsiaEvery year, millions of people migrate to places with better jobprospects or where their skills are appreciated. With globaliza-tion came ease of travel, and many skilled workers from variousdeveloping countries have taken advantage of this, thereby creating aphenomenon called ‘brain drain.’ A large number of developing coun-tries experience this condition when their skilled workers immigrateto richer countries in search of better standards of living. China hasbeen one of the hardest struck countries from this phenomenon, withtens of thousands of its educated individuals immigrating to developedcountries every year.Brain Drain in Modern China“Only about a quarterof the students havereturned upon comple-tion of their academicprograms”Jihoon LimCornell University ‘16College of Arts and Sciences
  21. 21. Spring 2013 21China opened its doors inthe late 1970s to allow studentsto pursue advanced degrees inWestern Europe, North America,and Australia, among other plac-es. As of 2007, the number ofChinese students who have stud-ied abroad since 1978 has reached1.21 million, but only about aquarter of the students havereturned upon completion of theiracademic programs. The num-bers reflect the scope of difficul-ty that the Chinese governmentfaces in attracting highly-skilledforeign-educated laborers. Thegovernment took measures toprovide financial privileges andincentives to help re-integratehighly-educated Chinese workersfrom abroad. It is also currentlypushing for the implementationof an ideological test, which onlyallows individuals with a suffi-cient degree of patriotism to studyabroad, as an attempt to minimizebrain drain and increase “personalties” to China.Despite the incentives, manyskilled professionals and Western-educated individuals point outthe problems rampant in China.In an interview conducted byIan Johnson of The New YorkTimes, Chen Kuo stated that sheworked “128 hours a week,” andthat the future remained uncer-tain because of corruption andthe fast-changing political wind,in a comment that echoed thesentiments of millions of Chineseprofessionals and émigrés. Othershave noted social issues such aspollution, religious freedom, andfood safety as reasons to leaveChina, but most importantly, theskilled laborers worry about theirstandard of living as well as stabil-ity of their wealth and properties.Sim Chi Yin of The StraitTimes reported that with braindrain, wealth drain in China hasfollowed. Since 1976, China hasexperienced an economic growthrate faster than any other country.Constant growth has put millionsof people out of poverty, but manyseek to leave China, therefore rais-ing concerns about the shrink-ing middle and upper-middleincome classes as well as wealthloss. Each year, more membersof the Chinese middle class withsufficient financial means applyfor an investment visa to avoidthe hyper-competitive environ-ment for education and jobs in theurban areas. These decisions ulti-mately create advantages for othercountries by way of creating jobsand spurring economic growth.Xin Haiguang of CNN report-ed that a majority of Chinese whohave more than 10 million Yuan($1.53 million) have consideredapplying for an investment visain different countries, and 27 %of those who have more than 100million Yuan “have already emi-grated” while 47% have consid-ered leaving China. These num-bers add up to hundreds of mil-“the future remaineduncertain because ofcorruption and thefast-changing politicalwind”international relations
  22. 22. 22 Business Asialions of dollars in loss every yearfor China.The Chinese governmentdesires constant economic growth,but it faces a dilemma. If it con-tinues to send students abroad,many will not return, but at thesame time, if it places a quota onthe number of students who canstudy abroad, it may risk losingout in the global competition invarious fast-changing industries.With China’s economic growthrate slightly below 8 percent, thewealth drain may cause slowereconomic growth due to a lackof human resources and capital.Chinese industries will be able toreplace skilled labor, but it mayface a decrease in input capital.That is, because of the growingeconomy and the size of its popu-lation, China may not immediatelyface the same consequences of theshortage of skilled labor as manyother developing countries witha brain drain problem, but it willcontinue to face the consequencesof wealth drain because of its wideeconomic inequality. The root ofthe problem of economic inequal-ity is that the most skilled are thewealthiest, and wealth drain inev-itably follows brain drain.China has made extensiveefforts to reverse the brain drainand promote global competitive-ness. The government incen-tives include cash compensations,housing, and decent educationfor the children of foreign-edu-cated intellectuals. The Chinesegovernment has shown moderatesuccess in curbing the exodus ofits skilled workers. Accordingto the Ministry of Education, in2011, 186,000 foreign-educatedstudents and scholars returnedto China, a 40 percent increasefrom the number of returnees in2010. China’s consistent econom-ic growth and bright job prospectshave become the primary reasonsfor an increase in the number ofChinese returnees.The Chinese government’seffort to bring back its talent hasnot yet shown full signs of success,as a large portion of its intellectu-als and wealthy still feel frustratedwith corruption and the unstable,or even arbitrary, property laws,in which one can lose his proper-ty overnight. Given the currentsituation, China will continue toexperience economic growth, butonly at a limited scale, because ofits loss of professionals and theirconsiderable sum of wealth.Chart 2. Returnees: Factors Contributing to Decision to Migrate to U.S. (Average rankings)(1 = not important, 5 = extremely important)international relations
  23. 23. Spring 2013 23If WeChat was invented by agroup of young tech-geniusesin the Silicon Valley, it musthave become one of the hottestmobile multimedia communica-tion tools touted by the VCs. Butthis mobile web communicationtool was designed, developed andmarketed all in China—a coun-try that has been on the margin ofthe world’s technological innova-tions. However, based on its cur-rent popularity in China, WeChatis developing in a speedy fashionthat is even comparable to Face-book and Twitter. The advent ofWeChat could be a promising startfor China’s turn-around in the in-novation front.China’s technological devel-opment has long been lagging be-hind other countries in R&D andinnovative inventions. Most well-known and profitable technologi-cal firms were initially developedthrough copying western ideas.For example, Renren is the Chi-nese version of Facebook, WeiBois that of Twitter, and YouKu ofYouTube, etc. These companies areeven more successful than theirwestern counterparts in China.On the one hand, they are morefamiliar with the local preferenc-es so that modifications have beenmade in the process of imitation tothe Wakening of Chinese InnovationJiting WangCornell University ’16College of Engineering
  24. 24. 24 Business Asiacater to the needs of local custom-ers. On the other hand, the Chi-nese government has set up high-er bars for foreign technologicalcompanies to enter the market inorder to protect its own firms andproducts.But the birth of WeChat turnedall these around. With the supportfrom Tencent – China’s biggestand most influential technolog-ical firm, WeChat had achievedgreat success since its release inJanuary 2011. In terms of number,WeChat’s registered users reached100 millions in 14 months, 200millions in 20 months and morethan 300 millions in 24 months.Similar to Facebook and Twit-ter, WeChat gained its popularitythrough quick public spread. If Idownloaded WeChat, I would tellall my friends to use it, and theywould tell their friends. There-fore, the number of users growsgeometrically. Now if you sawsomeone in China talking to theirphone by themselves, they must beusing WeChat.But if WeChat is successful inChina, why haven’t the Americanscome up with similar innovationsfirst?I think the reason lies in thedifferences between China and theU.S., in their social habits as wellas in their communication indus-tries.Chinese and Americans havevery distinctive social commu-nication styles. Therefore theirneeds for social networking sitesare different. According to a sur-vey done in the U.S., more than60% of Americans use Facebookand Twitter to keep up with familyand friends. Such contact does notrefer to instant communicationbut messages on each other’s walland comments under each oth-er’s posts. But the chatty Chineseprefer instant communications. Adecade ago, Tencent borrowed theidea of Israeli ICQ (the first instantmessaging computer program) ininventing QQ, which is now farmore recognized than ICQ. TodayWeChat has overtaken QQ in sat-isfying the need for instant com-munication.WeChat is an intermediatecommunication choice betweenphone talks and SMSs. Like textmessages, WeChat does not de-mand others’ immediate availabil-ity so it is more convenient and lessintrusive. It is also like phone callsas vocal communication substi-tutes typing. This is why WeChatis so popular in China—it caters tothe Chinese’s need to talk!The second difference betweenChina and America is the devel-It took both Facebook (2004 – 2009) and Twitter (2006 – 2011)six years to cross the 300 million user mark, yet Tencent’s WeChatmessaging app amassed the same amount in less than two years.“Most importantly, we now seea wave of buzzy Chinese techstartups competing in new ideasand innovations.”“It signals the start of a newera of technological innovationswith labels ‘Made in China’.”GENERAL BUSINESS
  25. 25. Spring 2013 25opment of the communicationindustries. The leading commu-nication firms in the U.S. includeAT&T, Verizon, Sprint, T-Mobileand Alltel, and many other small-er service providers. All serviceproviders have promotions anddiscounts, like free calling with-in the same provider, unlimitedtext messages, no long distancecharges, etc. to gain a competitiveedge in the market. But in China,two companies—ChinaMobileand CUQ China, have long dom-inated the communication indus-try. The monopoly leads to expen-sive rate-plans and low-qualityservices. Therefore, the advent ofWeChat brings in a new andcheaper option. WeChat is freeanywhere with Wi-Fi. Even with-out Wi-Fi, the data usage will notexceed 3M monthly. Compared tothe expensive calling and messag-ing charges, WeChat is much moreeconomic.WeChat is slowly revolutioniz-ing the way Chinese communicate.On this year’s Lunar New Year’sEve, text messages and phonescalls are no longer the major toolsfor sending best wishes. They havebeen substituted by new innova-tive social networking tools likeWeChat, WeiBo etc. According tothe two communication serviceproviders, the number of calls andmessages has fallen by more than20% in the past year.As China’s very own inno-vation, WeChat will continuerevolutionizing Chinese’s com-munication styles. It is constant-ly improving and upgrading.WeChat definitely sets a successfulexample for Chinese technologyfirms to follow. It is a legendaryinvention. It signals the start of anew era of technological innova-tions with labels “Made in China”.WeChat’s featuresWeChat and its competitors“On this year’s LunarNew Year’s Eve, textmessages and phonescalls are no longerthe major tools forsending best wishes.They have been sub-stituted by new inno-vative social network-ing tools like WeChat,WeiBo etc.”GENERAL BUSINESS
  26. 26. 26 Business AsiaBurgeoningsenior living industryin ChinaThe current Demand and SupplyThe senior living industry inChina has huge potential due to itshuge consumer base. To start off,the Chinese population is rapidlyageing. As shown in Figure 1, thepopulation aged 65+ is projectedto reach 188.3 million by 2017.In addition, despite skyrock-eting demand, there is still limitedsupply of adequate senior livingcommunities. In 2011, the ratioof the population aged 65 andabove to the number of nursinghome beds available was 39.68.This means that roughly 40 elder-ly people compete for a single bedin the senior living community.Hence, the exponential growth indemand coupled with a stagnantdevelopment in supply gives largeroom for investment.Besides an imbalance betweendemand and supply, the senior liv-ing sector in China is made evenmore attractive due strong supportfrom the government. Specifically,the Chinese government has notonly eased foreign investments inthe senior living industry, but hasalso put in place incentives to at-tract international investments.According to a news report fromReuters, the Chinese governmenthas reclassified the senior livingsector as “permitted” rather than“restricted,” meanings foreigncompanies can now own 100 per-cent of an operation.Yiwei Chen, Cornell University ‘16, School of Hotel Administration“... theexponentialgrowth indemand coupledwith a stagnantdevelopmentin supply giveslarge room forinvestment.”Let’s face it. A country with1.3 billion people would jus-tify itself as a huge marketfor almost any product or service.Naturally, everyone is talking ex-citedly about expanding into theChinese market, as if adding a Bei-jing or Shanghai division to theirlist of global offices immediatelygives them more ‘internation-al flair’. While the zeal is not un-grounded, it is essential for com-panies to tap on trends that mighthave gone unnoticed by the moremainstream thought and ideas.And the growing senior livingsector is definitely something USinvestors should look forward to.The senior living communities in-clude retirement homes, daycarecenters, assisted living and so on.GENERAL BUSINESS
  27. 27. Spring 2013 27Undoubtedly, U.S.-based se-nior living companies must haveconsidered the possibility of ex-panding into the Chinese market.What has deterred them? Manyare worried that the demand forsenior living might be limiteddespite the ageing population be-cause of the social stigma associat-ed with senior living communities.On the one hand, the tradition-al teachings of filial piety dictatethat children should support theirelder parents on a daily basis.On the other hand, currently themajority of senior living commu-nities are run by the governmentin order to support elderly fromlower-income families, giving thisindustry a bad reputation. Hence,perhaps from the perspective ofthe elderly, moving into a seniorliving community means they arebeing abandoned by their childrenor their children are financiallyincapable of providing them witha better living condition. Conse-quently, very few elderly mightwant to put the ‘face’ of the fam-ily in jeopardy, leading to muchsmaller demand for senior livingcommunities. In fact, according toresearch conducted by the Shang-hai municipal government, only3 percent of the elderly would bewilling to pay for private seniorhomes.However, with the substantialamount of pressure on the singlechild, senior living communitiesmight become the only option.Due to the one child policy im-plemented in 1978, the averagenumber of children per householdis decreasing rapidly. As shown inFigure 2, the number will decreaseto 0.5 by 2017. Subsequently, thereis only going to be even more pres-sure on children to support theirparents and even their grandpar-ents, which naturally points to se-nior living communities as a via-ble alternative.More importantly, even if thesocial stigma attached to seniorliving communities is here to stay,this same stigma would actuallygive US-based senior living op-erating companies a unique com-parative advantage. In fact, whena senior living community (orany product) is associated withan American company, it imme-diately gains a prestige that lo-cal firms simply could not have.Ever since its opening in Shang-hai, the luxurious senior retire-ment home Cascade Healthcarehas been completely filled despite“... when a seniorliving community(or any product)is associatedwith an Americancompany, itimmediately gainsa prestige thatlocal firms simplycould not have.”Figure 1Challenge 1:Social resistance to senior living communitiesTurning challengesinto opportunitiesGENERAL BUSINESS
  28. 28. 28 Business Asiaa jaw-dropping monthly fee of$1,926.And in the words of Romi-ly Sinclair, Creative Director of theAnnual Retirement Living WorldChina Conference , ‘the Chineseconsumer market has a preferencefor international brands’. Hence,the demand for senior living andthe demand for luxurious seniorliving communities run by Amer-ican firms in particular are boundto rise. And at the end of day, 3percent of a population of 1.3 bil-lion people is still a huge market.Challenge 2:Limited resources for international expansionDespite the rising demand,some senior living companiesmight worry that it is simply notthe right time to consider inter-national expansion. Since the do-mestic demand for senior livinghas just started to recover, it mighttake years for the senior living op-erators to reach the same profitand occupancy level as before therecession. Naturally, they mightprefer to focus their effort on thedomestic market. At the sametime, most senior living operatorsdo not have the capital to under-take international expansion with-out the help from healthcare RE-ITs.While the major players in thesenior living industry here in theUS have every reason to consoli-date their business in the domes-tic market, senior living operatorsof a comparatively smaller scaleshould tap into opportunities of-fered by the senior living sectorin China, especially when theycan secure financing from Chi-nese investors. According to BillPettit, president and COO of theSeattle-based assisted living com-pany Merrill Gardens Well, Chinadoes not lack the capital to buildsenior living communities; whatis missing in China right now isthe relevant expertise to run thesecommunities—the expertise thatAmerican senior living operatorshave honed and refined for years.Yes, the senior living industryin China is an untested marketand the Chinese government isstill in the process of ironing outthe relevant regulations. But thisalso means, whoever is coura-geous enough to seize the oppor-tunity right now would help setthe standard and gain the upperhand as the market leader.Warren Buffett says, ‘We sim-ply attempt to be fearful whenothers are greedy and to be greedyonly when others are fearful.’When everyone is again talkingabout the immense opportunitiesin the senior living industry inChina, you know it is too late toexpect something more than just‘international flair’.Why US-basedsenior livingcompanies shouldgive it a shotGENERAL BUSINESS
  29. 29. Spring 2013 29Taking a Peek atIslamic Banks Maria MarciaUniversity of IndonesiaIslamic banks have been gain-ing popularity in recent years.It was thought to have be-gun around the same time as thebirth of Islam, but it was not untilthe 1960s that it became a com-plete banking system. At the endof 2012, the total asset of Islamicbanks in the world is $1.55 trillion.That is not a bad number at all,considering the banking system isonly slightly above 50 years old.According to a report by Ernst& Young, global Islamic bankingassets are expected to grow by 17%annually by 2013. It is continuingto grow 50% more than conven-tional banks in several core mar-kets, such as Saudi Arabia, Malay-sia, and United Arab Emirates. Bythe end of 2012, the market shareof Islamic banking assets in SaudiArabia was over 50%.Due the growing prevalenceof the Islamic banking system, it isimportant to gain an understand-ing of its basic principles. Islam-ic banks are fundamentally dif-ferent from conventional banks.Conventional banks are operatedbased on manmade principles. Onthe other hand, Islamic banks op-erate based on the laws governingQuran pagesGENERAL BUSINESS
  30. 30. 30 Business Asiathe Islam religion, one of which isSyariah.The basic function of a con-ventional bank is to lend moneyand make money on its interest.Since riba (interest) is consideredharam (sinful) by Syariah law, thebasic function of an Islamic bankis to participate in partnershipbusinesses with its customers.An Islamic bank is like an in-vestor in a joint venture - it sharesthe risk and profit of businesses,which is why project viability istheir main concern. A conven-tional bank would be more con-cerned with the credit-worthinessof the creditor.A notable difference betweenIslamic banks and conventionalbanks is how they guarantee cus-tomers’ deposits. Conventionalbanks guarantee all customers’ de-posits. Meanwhile, Islamic banksguarantee customers’ deposits ifthe deposit account is based onwadiah principle. If the depositaccount is based on mudharabahprinciple, the depositor wouldshare a loss position.There are a lot of principlesused in Islamic banking system.To be able to understand and ben-efit from the system, we need tounderstand the meaning of thoseprinciples. Here are three that aremore commonly used.The first one is mudharabah,also known as qirad or muqa-radah. This principle basicallymeans those with capital wouldassign their money to anotherparty to carry out a venture orbusiness. The investor would notbe involved with the business andthe entrepreneur would return thecapital to the investor with pro-portion of profits made at the endof the contract. If the business re-sults in a loss, the investor wouldalso share the loss.Qard hassan is the only formof loan permitted by Syariah. Itobliges the borrower to repay thelender the amount borrowed. Theborrower also uses his/her owndiscretion whether or not to re-ward the lender.Wadiah refers to an agreementbetween the owner of assets andanother party. The owner of as-sets gives consent to a custodianto make use of the assets, as longas the assets remain in the custo-dian’s hands. In other words, theowner of assets trusts the custo-dian to manage the owner’s assetsethically. Ethically means withoutmixing the assets with personalassets and not running away withthe assets – those actions are con-sidered illegal.The next question would be:when and how are those principlesused?Conventional banks offer de-posit facilities for those who wantto hold or keep their money. Thekind of deposit facilities chosendepends on the person’s motive ofholding their money.For transaction purposes, con-ventional banks offer a currentaccount facility. In this facility,account holders can convenientlywithdraw funds through checks.These people do not place impor-tance on the interest rates. Conve-nience is their number one priori-ty. Since this kind of account is notrequired to provide interest, Islam-ic banks can offer similar facilities.Islamic banks use qard hassan orwadiah principles in providingthis facility. The qard hassan prin-ciple is useful if the bank offerssome kind of reward in place ofinterests conventional banks offer.However, in light of fierce compe-tition nowadays, banks often offerinterests in the current account fa-cility. Islamic banks can offer dis-crete rewards to stay on top of thecompetition. The wadiah principlecomes because the account hold-ers, or the asset owners, trust thebank to keep their money and thebank guarantees it will return thefull amount when requested. Eventhough the depositor may not re-ceive any profit, the Islamic bankscan offer gifts or hibah as a tokenof appreciation.The second deposit facility issavings account. They are meantfor people who have precaution-ary motives in holding their mon-“An Islamic bank is like an investor in ajoint venture - it shares the risk and profit ofbusinesses”“A notabledifference betweenIslamic banks andconventional banks ishow they guaranteecustomers’ deposits.”GENERAL BUSINESS
  31. 31. Spring 2013 31ey. They want to keep their moneyfor the rainy days, but also consid-er the investment they can makewith their money. Islamic banksprovide this facility using wadi-ah, mudharabah, and qard hassanprinciples. The wadiah principlecomes with the trust account hold-ers have for the bank. If the mud-harabah principle is used, the ac-count holders can only withdrawtheir money at a stipulated timebecause the bank uses their moneyfor investment purposes. The bankwould then reward the depositorswith profit made from the invest-ment. The qard hassan principle isused when the bank gives the de-positors discreet reward.For people who hold moneyfor speculative motives, banks of-fer a fixed deposit facility. Islamicbanks offer this facility using themudharabah principle. As a cus-tomer, I would be free to choosethe deposit period, but the bankdoes not provide a guarantee orfixed return on the amount I de-posited. Under the principle ofmudharabah, I get a share of theprofit made by the bank based ona pre-agreed ratio. It is like buyingthe bank’s stock – if the bank gets aprofit I get a share, but if it suffers aloss, I also share the loss.Islamic banks may also raisefunds by issuing unique invest-ment certificates that do not carryfixed returns. They use the mud-harabah and qard hassan princi-ples for the certificates. When themudharabah principle is used, thereward for the investor is basedon the bank’s annual profit. If theqard hassan principle is used, thereward is entirely up to the bank’sdiscretion.Islamic banks’ growth since itscomeback in the 1960s has beenexponential. It is possible becauseof the growth of Muslim popula-tion in the world and the fact thatyou don’t need to be Muslim toopen an account (current account,savings, or fixed deposit facility,your choice) in an Islamic bank.Islamic banks offer a uniquesystem that may provide the ail-ments of today’s financial markets.And based on the growth trend ofthe past few years, it may just betrue.Jama Masjid in IndiaGENERAL BUSINESS
  32. 32. 32 Business AsiaNew Industries,the “Babies” born byChina Air PollutionAbig haze lay over Beijingon Mar. 1. Amidst grimenvironmental moni-toring and surveillance reports,along with a strong sand stormapproaching from the northernarea, Beijing encountered its worstweather of the year. The densityof PM2.5 reached to 400ug/M3,indicating air quality as the mostserious pollution. A heavy hazecovered the dark gray sky and vis-ibility was at a mere 30 feet. Peo-ple on the street donned masks orhelmets to minimize breathing indirty air. The serious air pollutioncaused a lot of suffering and incon-venience to the Beijing populace,but there have been some benefitscreated from this situation—thatis the development and creation ofnew industries.One of the industries thatbenefitted from the advent of airpollution is the electric-vehicleindustry. Since scientific researchhas shown that car exhaust is themain cause of city air pollution,the purely electric- car is muchmore environment-friendly. How-ever, the price of an electric car isalmost double compared to that ofa normal gasoline motor car of thesame kind. However, local govern-ments have implemented policiesencouraging people to buy elec-tric cars. As a result, an increasingnumber of people are consideringthe idea of replacing their gasolineguzzling cars with this new cleanenergy vehicle. In Shanghai, Gen-eral Motors and Shanghai Motorseach introduced an economicelectric car to the market, Springoand Rowe E50. The price of bothmodels is around USD40,000.However, the government willgive buyers rebates amounting tohalf of the price when a purchaseis made. What’s even more attrac-tive is that buyers will receive afree car license plate, which usu-ally costs around USD14,000 fora normal gasoline car. With suchincentives in place, it’s no wonderSharon WangCornell University ‘16,College of Arts & Sciences“This is when thecruel and twistednature of humanitybegan to unveilitself in which theatrocities of six menshook a nation of onebillion.”GENERAL BUSINESS
  33. 33. Spring 2013 33that nowadays people are open tobuying more electric cars. Withsuch governmental support, thepotential for growth in this indus-try is considerable.Also, another main factorcausing car exhaust pollution is theinferior quality of gas. Currentlythe GAS Standard IV is being usednationwide. However, this stan-dard shall be amended to Stan-dard V which allows less sulfurcontent (<=10mg/kg) and will bepublished by end of 2013. The newstandard mandates the use clean-er gas which reduces hazardouscar exhaust. This policy benefitsmore oil refineries by increasingtheir profit potential from refiningcrude petroleum. With increasingattention of the Government oncleaner energy to protect the envi-ronment, more capital will be in-vested in such greener industries.In addition, as Chinese peoplebecome wealthier, they pay moreattention to their health. Indoorair quality then becomes a criticalissue for consideration. Accord-ing to a news report by ShanghaiCommerce, almost all branded airpurifiers are currently out of stockin Beijing. This demonstratesthe rapid growth in demand forair purifying or sterilizing ma-chines. According to Departmentof Commerce of Chinese CentralGovernment, the sales of air pu-rifiers increased each year in thefirst three quarters between 2010and 2012, with the growth ratingfrom 11.4% to 14.7%.The marketing potential forthis product is huge, since themarketing popularity rate of airpurifier is less than 1% in China,while in western countries, it is upto 34%. According to a sales reportby Sharp, its sales volume of airpurifier in January this year wasalmost three times than that ofthe same period of last year. Thisis why now more and more capitalhas been introduced into this fieldof industry, which will becomean outstanding industry in futureChina.Moreover, firecrackers are apart of Chinese tradition in cele-brating important holidays, suchas Chinese New Year, LanternFestival, or even wedding cere-monies. From the data publishedby Beijing Environmental Sur-veillance Bureau, at Chinese NewYear’s Eve, the density of chemicalmaterials and particles in the airwas detected to be increasing sorapidly. Some people appealed fora ban on these firecrackers. How-ever, this will not be easily accept-ed as firecrackers have come to bean important part of Chinese tra-dition. So, an innovative industrycame into existence- electroniccrackers. It applies acousto-optictechnology to simulate the soundand light from a firecracker’s ex-plosion. Unlike a real firecracker,this electronic firecracker couldbe repeatedly used, which is alsomore economical. The commer-cial opportunity for this kind ofproduct will be big in the future.With the support by ChineseGovernment, more and more newindustries related to environmentprotection will be encouraged anddeveloped, which give more com-mercial chances for the invest-ment.“With increasingattention of theGovernment oncleaner energyto protect theenvironment, morecapital will beinvested in suchgreener industries.”Roewe E50, introduced by Shanghai MotorsGENERAL BUSINESS
  34. 34. 34 Business AsiaChina -the Top Spender ofLuxury GoodsShuang JiaCornell University ’16College of Arts and SciencesThe Chinese consum-er, who accountsfor 25 percent of theworld’s purchases ofluxury goods, is by farthe top spender on lux-ury goods. The consumptionof luxury goods in China’s domes-tic market grew at an annual ratebetween 16 percent and 20 per-cent for the past four years, whileits overseas spending on foreigngoods in 2012 alone has increasedby 37 percent. Even with signs ofsubsiding growth of China’s do-mestic luxury good market, theprojected annual rate of Chineseluxury good consumption still fallswithin a 12 percent to 16 percentrange, and it is highly likely thatby 2015, Chinese consumers willmake up 34 percent of the world-wide luxury goods consumption.One major reason behind suchrobust demand for luxury goods isthe rising income of the Chinesepopulation. According to an esti-mate by McKinsey, in the comingthree years, the number of wealthyhouseholds with annual dispos-able incomes above RMB 1 millionwill grow by more than 20 percenteach year, and would constitute28 percent of the consumption inthe luxury good market by 2015.On the other hand, the consump-tion of middle class householdswith annual disposable incomebetween RMB 50,000 to RMB250,000 is also catching up. Al-though the nominal value of theirFigure.1 Consumption of Luxury Goods by Income LevelsGENERAL BUSINESS
  35. 35. Spring 2013 35total consumption is not compa-rable to the very wealthy house-holds, the number of middle classfamilies is like bamboo shootsafter rain -- their consumption ofluxury goods is by no means neg-ligible.An interesting point to noteis that over half of the spendingon luxury goods takes place inoverseas markets. The top threelocations for overseas luxury pur-chases are Hong Kong, Macau andEurope. One of the reasons drivingoverseas purchases is the higherprice level in the Chinese domes-tic luxury market due to tariffs im-posed by the government. The ris-ing income of the Chinese, morelenient visa policies, and a weakereuro drove a 38 percent surge inoverseas luxury good purchasesin 2012, and it is expected to groweven further. The worry of gettingcounterfeit goods within Chinaand more professional in-storeservices in overseas retail storesalso encourage Chinese consum-ers to buy from abroad.However, the statistics from2012 indicate a slowdown in thegrowth of luxury goods con-sumption. There are two majorconjectures regarding the dwin-dling growth. The first one is low-er retail spending through lowconsumer confidence due to theslowing GDP growth rate of thenational economy. However, ac-cording to a consumer sentimentsurvey conducted by McKinsey,the consumers with annual house-hold income above RMB 250,000,who contribute to major demandfor luxury goods, show very highconfidence towards their incomeoutlook. This result is understand-able because the upcoming eco-nomic structure transformationis gradually shifting away from acheap-labor reliant and energy-in-tensive economy, will impact thelow skilled workers most heavi-ly. Those who participate in highvalue-added economic activitiescould continue to benefit from thenation’s growth towards a moredeveloped economy.Another possible influence onthe slowing luxury goods marketis the efforts to combat corruptionunder the new leadership of XiJinping, which makes people waryof giving government officialsgifts. However, gift giving has beena deep-rooted practice in Chineseculture in order to foster strongerbonds and to maintain relation-Figure 2. Tax Rates on Luxury Products in ChinaFigure 3. Consumer Sentiment of High Income HouseholdsGENERAL BUSINESS
  36. 36. 36 Business Asiaships. As the Chinese becomemore affluent, it is expected thatpeople would want to buy high-class gifts as a sign of respect totheir friends and partners. At thesame time, gifting luxurious giftsshows off their wealth level andgood taste, which make the peoplewho buy gifts feel good. Therefore,it is arguable whether the tighten-ing state control on governmentofficials will necessarily impact theluxury market as a whole signifi-cantly.The robust growth in Chineseconsumers’ demand for luxurygoods is especially great news tothe luxury brands when the worldeconomy is far from optimistic.The luxury brands have expandedaggressively in 2009 and 2010 inboth major cities like Beijing andShanghai, and second and thirdtier cities. However, this trend ofexpansion slows down in 2012.Rising rental costs for commercialspaces, shortage of qualified well-trained in-store staff and risingwage of talents are very realisticreasons behind the slowed-downexpansion of luxury stores. Fur-thermore, many brands expressedthat they want to focus more onimproving and standardizing thequality of service across all thestores nationwide. Many Chineseconsumers feel that the in-storeservices in overseas stores aremore professional and consistentcompared to the ones back home.As more Chinese consumers trav-el more and have more knowledgeand higher expectations for theiroverall consumption experience,the luxury brands definitely needto work on eliminating the incon-sistency of in-store services in or-der to retain their sales in the Chi-nese market.Currently, foreign luxurybrands still dominate Chinese lux-ury good market. In 2012, HurunReport has released an interest-ing report of preferred brands forgifting by male and female Chi-nese luxury good consumers. Wecan see that among all the brands,only Moutai is a Chinese domesticbrand, and the rest are still big for-eign names.It is true that there are a widerange of Chinese luxury goods,such as china, cigarettes, alco-hols, tea, and fabrics, but branddevelopment is seriously lackingbehind, and there are hardly anydomestic luxury brands that havecomparable influences as the in-Figure 4. Luxury Brands Expanding Stores in ChinaFigure5. Prediction of Possible Chinese Luxury IndustriesGENERAL BUSINESS
  37. 37. Spring 2013 37ternational giants. According toZhou Ting, head of Fortune Char-acter Institute, China, there is stilllarge room for improvement interms of brand building, productdesign and quality managementfor Chinese brands. The lack oftalents is still the biggest weaknessin the development of Chineseluxury brands. However, despitethe amount of catch up to do be-fore an influential Chinese luxurybrand emerges, experts in the fieldare pretty optimistic in the po-tential of Chinese luxury brands.According to a KPMG report, theindustry experts and luxury con-sumers surveyed believe the cate-gories that Chinese luxury brandsare mostly likely emerge from arealcohol, restaurants, spas, hotelsand resorts. These are the indus-tries that do not need the histo-ry or heritage possessed by manyEuropean luxury producers, andChinese companies are more like-ly to capture those industries. It isbelieved that Chinese consumerswould be more aware of the lackof homebred luxury brands, andwould want to build and supportChinese luxury goods.It is foreseeable that the Chi-nese luxury market landscapewould go under substantial chang-es with possible change of govern-ment tax policies. Currently thereare conflicting opinions whetherthe government would reduce thetax on luxury products. On onehand, it is predicted that overseaspurchases of luxury goods by Chi-nese consumers will continue togrow under the current price gapbetween the Chinese market andoverseas markets. This results inan outward flow of savings andeconomic activities, which is un-desirable for the nation’s employ-ment and financial stability. Onthe other hand, reducing tax onluxury goods would benefit most-ly the wealthy, and it would exac-erbate the income gap. It is alsoregarded as non-beneficial for thedevelopment for homebred luxurybrands. However, true giants neverreply on artificially high price lev-el of competitors. We look forwardto seeing more Chinese brandsdevelop fueled by a stronger talentpool and business transformation.Table 1: Best Brand for Gifting by MenBrand % Key Gifting Category Country1 Louis Vuitton 13.9 Accessories France2 Apple 8.9 Electronics US3 Hermès 7.2 Accessories France4 Chanel 6.7 Apparel, Accessories, Perfumes France5 Cartier 5.6 Jewelry, Watches France6 Gucci 5.0 Accessories Italy7 Montblanc 4.9 Pens, Accessories Germany8 Dior 3.9 Accessories France9 Burberry 3.3 Apparel, Accessories UK10 Château Lafite Rothschild 3.0 Alcohol France11 Armani 2.9 Apparel, Accessories Italy12 Prada 2.8 Apparel, Accessories Italy13 Moutai 2.2 Alcohol China14 Tiffany & Co 1.9 Jewelry US15 Longines 1.7 Watches SwitzerlandSource: Hurun Chinese Luxury Consumer Survey 2013Table 1. Best Brand for Gifting by MenTable 2: Best Brand for Gifting by WomenBrand % Key Gifting Category Country1 Chanel 15.9 Apparel, Accessories, Perfumes France2 Louis Vuitton 14.3 Accessories France3 Cartier 11.1 Jewelry, Watches France4 Tiffany & Co 10.6 Jewelry US5 Apple 7.9 Electronics US6 Montblanc 6.4 Pens, Accessories Germany7 Gucci 6.0 Accessories Italy8 Prada 4.8 Apparel, Accessories Italy9 Dior 3.2 Accessories France10 Burberry 1.6 Apparel, Accessories UKSource: Hurun Chinese Luxury Consumer Survey 2013Table 2. Best Brand for Gifting by WomenGENERAL BUSINESS
  38. 38. 38 Business AsiaVisitors to India have been charmed by its local conveniencestores for decades. Escaping the sterile environment of corpo-rate retail in the West, India’s disorganized, cluttered assort-ment of shops have always been a delightful change, hearkening backto a simpler time. However, under newly passed legislation, this isall to change. After years of rumbling, India’s Parliament has finallyagreed to allow foreign retailers to enter the country. The change theywill bring will be momentous.The thousands of these stores that decorate India’s towns and citieshave been passed down for generations. Despite the hustle and bustleand changing face of today’s India, these small, independent storeshave maintained a connection to the past. Personal relationships haveRetail on the Subcontinent“Of greatest concernis the life expectancyof these reforms”“The thousands of thesestores that decorateIndia’s towns and citieshave been passed downfor generations. “Advai PathakCornell University ‘15School of Industrial and Labor Relations
  39. 39. Spring 2013 39been cultivated between customerand shop owner, often transcend-ing generational gaps – a mer-chant’s family business in manycases has served the same custom-er’s family as far back as memoryextends.However, there are undoubt-edly inefficiencies to this model.Every year, over 30% of food pro-duced in India spoils because ofits poor infrastructure and badhygiene practices. In a nation withover 200 million under-nourishedpeople, this is a shocking statis-tic. Many issues could be solvedthrough large-scale foreign directinvestment and more streamlinedand organized networks betweenproduction and distribution.The Indian government hasoscillated on this issue sever-al times in the past decade. Thecurrent solution is undoubtedlya compromise and has receivedcriticism domestically and inter-nationally. Legislative distinctionshave been made regarding multi-brand and single-brand retailers-,only 51% foreign ownership isallowed in retail ventures, and halfof foreign companies’ investmentmust be spent on infrastructuredevelopment.As such, there has been nogreat scramble to invest in India.The growing perception of Indiaas being an unfriendly climate forforeign business is compoundedby other several other variables.Contentious tax policies thathave led to protracted, high-pro-file disputes with Shell, Nokia,and Vodafone add another reasonfor foreign investors to be wary.Corruption and bribery scandalsexposed annually at all levels ofbusiness and government reveala complex business environment.Even national giants have beenforced to seek business abroad.In 2011, Indian firms made $11billionbn worth of foreign acqui-sitions.Of greatest concern is thelife expectancy of these reforms.The opposition Bharatiya JanataParty has threatened to rescindthe legislation if voted into powerand several members within theincumbent Congress Party holdsimilar opinions. With nationalelections to be held next year andafter similar reform was suspend-ed in 2011, foreign companies arewary of making expensive inroads.How India balances homedevelopment with foreign invest-ment will be key. Annual growthhas slowed by half and recentdebacles like last year’s masspower outages and the organi-zational mayhem surround-ing the Commonwealth Gameshave embarrassed the nation.India needs foreign investmentto counter its growing currentaccount deficit and to facilitateeconomic growth. Big brands havestruggled to gain footholds in theChinese market and local owner-ship has survived alongside biggerstores in Brazil. However, inves-tors remain confident India canembrace change and its youngergenerations are eager for it. Theonly certainty is that India holdsthe keys to its own prosperity.India needs foreign invest-ment to counter its grow-ing current account deficitand to facilitate economicgrowth.GENERAL BUSINESS
  40. 40. 40 Business AsiaAsia DrivesInternational StudentGrowth inUnited StatesNowadays, more and moreforeign students are par-ticipating in U.S. highereducation. There has been a tre-mendous increase in internation-al students in United States in thepast decade. Reports from the In-stitute of International Education(IIE) show that total internationalstudent enrollment in the U.S. hasincreased to a high record highof 764,495 international students,which contributed over 22.7 mil-lion dollars to the U.S. econo-my during the 2011/12 academicyear. Asia is a significant drive ofinternational student growth, asshown by the graph. In terms ofplaces of origin, China is at the topwith more than 764,000 students,making up 25.4% of total interna-tional student population. Indianstudents place second on the listat 13.1%, whereas South Koreaand Saudi Arabia place third andfourth at 9.5% and 4.5% respec-tively.Only 20 years ago, Asian stu-dents only contributed a smallproportion of international stu-dents. However, the recent growthhas been unprecedented. Whyare Asian students becoming sointerested in continuing their ed-ucation in America? Various rea-sons explain the drastic increase intheir participation in U.S. highereducation. First of all, the U.S. hascomprehensive resources in edu-cation provided by different typesof institutions. There are NationalUniversities with majors acrossdifferent fields of study like Cor-nell University, as well as LiberalArts Colleges with more specificfocuses like Parsons and The NewSchool for Design. There are pri-vate schools and public schools,and there are also communitycolleges with much more afford-able tuition fees. The wide rangeof choices is one of the many ad-vantages that attract internationalstudents from Asia.Second, the reported increaseis related to the active recruitmentefforts of U.S. schools. Accordingto a snapshot survey conducted byIIE, 68% of the institutions indi-cated that they have been activelyseeking new foreign additions totheir student population. Specialsteps taken include devotion ofadditional staff time and atten-tion to international recruitment,and new funding for internationalrecruitment trips. All of these ef-forts have made college educationmore accessible to internationalstudents.Thirdly, schools encouragemore international engagementby providing help for internation-al students to better adjust to thecampus environment. Schoolsfacilitate various programs de-signed specifically for interna-tional students. For example, atOrigins of international students studying in the U.S.Mengtian WuCornell University ‘15,College of Arts & SciencesLIFESTYLE
  41. 41. Spring 2013 41Juniata College in Pennsylvania,incoming freshmen can partic-ipate in the InBound program,which unites small groups of stu-dents around commons interests.The program aims to preempt thenatural inclination of students tobond only within their own cul-ture groups, i.e. Asian circles, andbuild more interaction with do-mestic students. At Cornell Uni-versity, international students arerecommended to participate ina three day pre-orientation pro-gram called “PREPARE”, duringwhich they not only get to inter-act with upper-class internationaland American students and learnabout their experience at Cornell,but also make friends through so-cial activities.Despite all the efforts andchanges encourage internationalstudents to attend colleges in theU.S., Asian students are facing asubstantial amount of difficultyin the U.S. university campuses. Amajority of them are not eligibleto receive financial aid from theU.S. government and scholarshipsare extremely limited. As a result,personal or family funds are theprimary source of tuition. The tuition could be a strongfinancial burden for families withmiddle or low income. The av-erage expenses of both publicschools and private schools havebeen increasing tremendouslyover the past ten years, shown bythe graph above. According to Na-tional Center for Education Sta-tistics of U.S. Department of Edu-cation, for the 2010–11 academicyear, annual current dollar pricesfor undergraduate expenses in-cluding tuition, room, and boardwere estimated to be $13,600 atpublic institutions, $36,300 at pri-vate not-for-profit institutions,and $23,500 at private for-profitinstitutions. A report by DanielObst and Joanne Forster from In-stitute of International Educationstates that the U.S. Departmentof Commerce ranks internationaleducation as the 5th largest servicesector export. This huge benefiton the U.S. economy is one of themajor incentives for the U.S. gov-ernment to promote U.S. highereducation to accept more interna-tional students.In addition, language andcultural barriers are also majorproblems. International studentsfrom Asia, especially those fromnon-English speaking countries,lack proficiency in English lan-guage and communication, whichcould make both professional pur-suits and social life difficult. Fur-thermore, according to the studyUnderstanding the Collegiate Ex-perience for Asian InternationalStudents, Asian students alwaysface external pressures from fam-ily – they are expected to obtainwell-developed education andachieve prestige from attendingan U.S. institution; thus they tendto be a highly stressed group oncampus. “China’s one child pol-icy,” says Peggy Blumenthal, se-nior counselor to the president atIIE, “has led to a situation that re-sources are being concentrated byfamilies on a single child, therebyallowing them to get the best ed-ucation they can get.” The strongundivided attention and high ex-pectations of parents put morestress on Asian students.The emerging popularity ofAsian students pursuing high-er education in the U.S. has beenboth culturally diversifying theU.S. campuses and actively con-tributing to economic develop-ment. With the active support giv-en to international students fromU.S. colleges and government, theoverall trend of Asian interna-tional students in U.S. schools isexpected to increase at even fasterrate in the future.LIFESTYLE
  42. 42. 42 Business AsiaThe thought of India con-jures up the thoughts ofbring yellow rays of lightpercolating across the pearly, whiteTaj Mahal. It also contrives imagesof the mighty Ganges River, eachrippling wave carving the deli-cate mud around as it continuesto flow. It even creates thoughts ofthe powerful monsoon winds cre-ating harmonic flute-like soundsas they pass through bamboo. Butthese strikingly beautiful imagesare contrasted sharply with recentevents occurring in the country,particularly its capital. A recentrape case has started to mold a newand vicious view of India, withmany people terming Delhi as the“rape capital.” The idyllic scenes ofIndia are being replaced by dark,grimy acts of sin—a change mostIndians, including myself, are re-senting.A few months ago, a young23-year-old female physiother-apist was raped on a New Delhipublic bus that the many of thecities 16 million inhabitants trustand rely on to get to work, themovies, and the town markets. Sheand her boyfriend boarded the busafter watching a movie together.Everything was going as planneduntil the six remaining men on thebus began to lock the door. Next,the bus began to veer of its usualcourse, invoking suspicion. Thesix men then began to insult theyoung lady for being with a manso late at night, provoking a fightwith the boyfriend. The boyfriendthen charged at the men and waspromptly struck across the skullwith a metal rod, knocking himunconscious.This is when the cruel andtwisted nature of humanity beganto unveil itself in which the atroc-ities of six men shook a nation ofone billion. The driver then gavethe wheel to another accomplice,and started to rape the innocentgirl who rushed to her boyfriend’said. The five men took turns rap-ing her—a concept known as“gang rape” while the bus circledthe crowded city streets. The poorwoman’s agony did not end there;she literally faced pure hell whenthe five men then inserted a metalrod it in her vagina so deep that itdamaged her internal organs. Thecouple was then ejected from thebus, lying abandoned on the streetfor hours until a passerby noticed.India’s Image,from the Taj to RapeAjay KailasCornell University ‘13College of Agricultureand Life Sciences“This is when thecruel and twistednature of humanitybegan to unveilitself in which theatrocities of sixmen shook a nationof one billion.”LIFESTYLECitizens of Delhi holding candles at a vigil for the girl
  43. 43. Spring 2013 43After arriving at a hospital thecouple was able to give statementsto the police on what happened.The boyfriend was released withonly minor damages. However,the woman’s condition began todeteriorate rapidly and she wasrushed to a Singaporean hospi-tal which specialized in multi-ple-organ transplant. Doctorsnoted that the rod was insertedwith such force that it pulled outa large amount of her intestinesin the process. Two days later, shedied, despite receiving emergencytreatment and mechanical ventila-tion. The news pulled at the heartstrings of the woman’s family andthe country became drenched indisbelief. People all over India be-gan to riot and protest against thisgruesome rape and also push forharsher penalties for rapes all overthe country. Rape is too commonin India, as a rape is reported ev-ery 20 minutes and only 26% ofcases result in a conviction. Thisevent was the gasoline in the fireof justice that was burning uncon-trollably as men and women alikebegan to feel unsafe in their owncity.The six men were caught andcharged with murder. One of themen, a 17-year-old, will be triedin a Juvenile Court in which themaximum sentence is three years.Authorities are pushing for thedeath penalty for the men, who arecurrently awaiting trial. The dis-gusting act the six men committedshows us the animosity of humankind; I feel incredibly sorry forthe woman. As a physiotherapistshe had incredible potential andher life was cut short by savagery.She was from India’s rising mid-dle class and her parents had in-credible dreams and expectationsthat are now dashed into pieces.Furthermore, this case (althoughparticularly cruel) is among manyrape cases rising across the coun-try. This case brings light to fu-ture policy and legislation and hascalled for change in India’s sexualassault policy. Men like those area breed that is instilling a horridreputation of our country. Al-though I am not a proponent ofthe death penalty, some cases aretoo extreme to ignore.Since the initial attack, all ofthe men are currently in jail await-ing prosecution, however one ofthe “men” who was arrested, is 17years-old and cannot be tried asan adult. Instead he will be triedas a minor can only be sentencedto a correctional facility until heturns 18. Furthermore, one of theaccused, Ram Singh, had recentlycommitted suicide in prison, al-though some of his family mem-bers claim he was murdered. Thelawyers of the accused are current-ly arguing that their clients are notreceiving a fair trial because of thedrama of the nature. The lawyersare so engulfed in meetings andpress, that they can barely withtheir clients to update them andargue their clients do not even re-alize they may get the death pen-alty.Recently, two of the accusedasked to proceed with the trialin Hindi, but this was refused bythe Police because they called it astalling tactic since there are manyaccounts and eyewitness state-ments that will have to be translat-ed. Regardless of the outcome ofthe trial however, this has resultedin strong change across India. OnMarch 19th, 2013, the Indian Par-liament passed a new bill whichallows the death penalty for rape.This is a powerful legislative moveand hopefully will prevent futurerape cases and allow India to final-ly power through the grimy wavesof crime and become the glorifiednation it once was.Street of Delhi“Rape is too common in India, as arape is reported every 20 minutesand only 26% of cases result in aconviction.”LIFESTYLE
  44. 44. 44 Business AsiaThe Asian Worldof Real Estate CapitalInterview with Robert M. White, Founder and President of RealCapital AnalyticsTimothy LinCornell University ‘14Masters of Professional Studies in Real EstateRobert M. White, Jr., CRE, isthe founder and presidentof Real Capital AnalyticsInc., an international researchfirm that publishes the CapitalTrends Monthly. Real CapitalAnalytics provides real time dataconcerning the capital markets forcommercial real estate and thevalues of commercial properties.The firm maintains offices in NewYork City, San Jose (CA), andLondon. It has about 800 clients,including the industry’s leadingbrokerage firms, institutionaladvisors, REITs, developers, for-eign investors and banks.Mr. White is a noted authorityon the real estate capital marketswith credits in The Wall StreetJournal, Barron’s, The Economist,Forbes, The New York Times,Financial Times, among others.In addition, he was named one ofNational Real Estate Investor mag-azine’s “Ten to Watch” in 2005,Institutional Investor’s “20 RisingStars of Real Estate” in 2006, andReal Estate Forum’s “10 CEOs toWatch” in 2007. Previously, hespent 14 years in the real estateinvestment banking and brokerageindustry and has orchestrated bil-lions of commercial sales, acquisi-tions and recapitalizations. He wasformerly a managing director andprincipal of Granite Partners LLCand spent nine years with EastdilRealty in New York and London.Mr. White is a Counselor ofReal Estate, a Fellow of the RoyalInstitution of Chartered Surveyorsand a Fellow of the Homer HoytInstitute. He is also a memberof numerous industry organiza-tions and a supporter of academicstudies. He is a graduate of theMcIntire School of Commerce atthe University of Virginia.BackgroundMasters of Professional Stud-ies in Real Estate studentswith Mr. Robert White (3rdfrom left) and Mr. Dan Fasulo(5th from left) from RCAINTERVIEW
  45. 45. Spring 2013 45Q1: Could you tell us aboutyour observations on Asian realestate capital over the past 5 to 10years?A1: The flow of capital fromeast to west has never been greaterin recent times. There has been agrowing pool of capital in-flows,particularly from the pensionfunds of Japan, South Korea, Chi-na and Australia. After the 2004tsunami which hit Japan, therewas a noticeable increase in theamount of Japanese capital inflowinto the U.S. – as Japanese inves-tors wanted greater geographicaldiversification for their invest-ments. I believe this is just thetip of the iceberg. The amount ofChinese capital flowing into theU.S. alone has been enormous.The actual figure is difficult to tellbecause unlike the Japanese in the1980s, the Chinese today are using“proxies” such as fund managersto carry out the transactions.In terms of international realestate capital flowing to Asia, in-vestment in emerging marketsmainly started gaining tractiononly around 2005. Initial exposurewas through established financialinstitutions and investment firms,as part of their funds’ global diver-sification strategy. This peaked inaround 2007. However, by 2008-09, western capital as a group be-came net sellers, possibly due to afear of a “hard landing” in Chinaand other major Asian markets.The situation has improved a littlesince then.InterviewINTERVIEW