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Asian Aviation Industry: Boom Times But Slim Profits

(Photo: Boeing Inc.)

by David Parmer

The Center for Aviation Reports, CAPA reported on October 2, 2013 that Southeast Asia shows some of the highest growth rates in the global aviation industry. The Southeast Asian market has grown by 20% in the last 18 months. For example, Vietnam is headed to become the world’s third fastest growing market for international passengers and freight in 2014 according to an October 22, 2013 Reuters report. Both Low Cost Carriers (LCC) and full-service carriers have benefited due to generally favorable economic conditions in the region.

In remarks delivered in Singapore on October 16th 2013, International Air Transport Association (IATA) Director General and CEO, Tony Tyler noted that the airline industry worldwide is making steady profits, from a USD 7.4 billion in 2012 to USD 11.4 billion in 2013, and a projected USD 16.4 billion in 2014. Profit margins globally, however are slim, coming in as low as 2.2%. Tyler noted global trends include high oil prices, weak economy, disparity between passenger and cargo performance. A more positive note is the successful consolidation trend among airlines. Asia Pacific is expected to post a profits decline for 2013 to USD 3.1 billion, with a possible rebound to USD 3.6 billion in 2014. Asia Pacific news is generally favorable with high points being Japan restructuring and a big spike in China domestic air traffic of +13.7% in August 2013. India is a major concern, however, due to high operating costs and infrastructure issues.

Remarks by T. Tyler/IATA http://www.iata.org/pressroom/speeches/Pages/2013-10-16-01.aspx

CAPA http://centreforaviation.com/analysis/southeast-asia-airline-market-sees-more-rapid-growth–high-international-low-cost-penetration-rates-131369

N. Korea Vows Nuclear Retaliation

In a statement on the Korea Central News agency website on 12 October 2013, North Korea media says U.S.-Japan-ROK maneuvers are a provocative act, and that if attacked the DPRK will marshal its forces including nuclear capabilities to deal a counter-blow. (http://www.kcna.co.jp/index-e.htm). This is pretty strong rhetoric and suggests that the North might want to hold on to its nuclear capability for a long time to come. So are there really any chances for re-starting the Six Party Talks? And if so, could the North be trusted to disclose and disarm? Post you thoughts below.

China-Japan Trade Slumps in First Half of 2013

Ship Night View.jpg

(Photo: ConzNL/flickr C.C.)

by David Parmer

The numbers do not look good. Depending on the source, China-Japan trade for the first half of 2013 is down either 8.8% or 10.8%. Politics plays a part, but other than that, it is just business as unusual.

Reporting an 8.8% slump in its trade with Japan, a spokesman for China’s Ministry of Commerce, Shen Danyang, was quoted in China Daily on 23 August 2013 as giving three reasons for the downturn.

Low demand from China manufacturers reduced the imports of raw materials and parts from Japan
Appreciation of the Chinese Yuan against the Japanese Yen made China’s goods more expensive for Japan’s importers
The ongoing dispute over the Daioyou/Senkaku islands had a ripple-on effect resulting in the decreased purchase of Japanese vehicles and electronics

Even more dour was the estimate by Japan’s JETRO which reported on its website that the total of Japan’s trade with China dropped 10.8% in the first half of 2013. More bad news included a drop of 16.7% in exports to China and a trade deficit of $24.4 billion USD, which is an increase of 1.4 times over the previous year.

JETRO’s outlook for the overall year, 2013, is gloomy, with exports stagnant at best. The only glimmer of hope is seen in the weak Yen, which may give a boost to exports of electronic parts and automotive components.

China Daily 23 August 2013: http://www.chinadaily.com.cn/china/2013-08/23/content_16917587.htm

JETRO Trade Survey: http://www.jetro.go.jp/en/news/releases/20130820558-news

Q4-2013 Prospects-Good or Bad For Asia Pacific?

The fourth quarter of 2013 is already here. There are only 81 days remaining this year. There is quiet on the Korean peninsula (or a lowered state of tension at least), and the Diayou-Senkaku issue has also receded a bit from the headlines. So our question this week is: Will the APEC region continue quiet until the end of the year, or will 2013 bow out with tensions again heightened as earlier in the year? Please post your thoughts below.

Taiwan Defense Ministry: Invasion by 2020 Possible

(Photo: Defense Tech.org)

Taiwan’s Ministry of National Defense issued its 12^th National Defense Report on Tuesday October 8, just before this year’s 10/10 national day. In the report the MND said China’s continuing military buildup will make her fully capable of launching an invasion of Taiwan by 2020. The report cited the PRC’s building of two amphibious assault ships and upgrading its amphibious landing capabilities. The PRC has also developed a new anti-ship missile, the Dong Feng 21-D, that is seen as an “aircraft carrier killer.” Sources suggest that this is designed to deal with any U.S. intervention in the event of Taiwan-PRC hostilities. While relations have warmed somewhat during the presidency of Ma Ying-jeou, the PRC has still not taken the use of force off the table as a means of reuniting with what it considers to be a breakaway province. (Report compiled from Focus Taiwan News Channel and Taipei Times).

Taiwan Defense & National Security website: http://www.ustaiwandefense.com/

The PRC at 65-What next?

October 1, 2013 was the 64th anniversary of the founding of the People’s Republic of China. So now the countdown begins to her 65th year. Certainly celebrations will be held next year to mark the occasion, and much will be made of the country’s amazing economic progress. Economists will look to a movement to domestic consumption to fuel growth. Politically China will have to deal with ongoing disputes with her neighbors over various border regions. China’s military will surely get stronger. Domestic unrest in her western regions are likely to flare up again. And in the seas from Vladivostok to the Strait of Malacca naval forces will shadow each other at close proximity. So what will this century bring for China and her neighbors? Where will she be at 85? and at 100? Post your comments below.

Photo: Dimitry B. via flickr

Person of Interest: Zhang Xin, CEO SOHO China

(Photo: wikimedia)

by David Parmer

So what is interesting about Zhang Xin? Her storied rise in post-Maoist China has become the stuff of legend. Raised during the Cultural Revolution she moved to Hong Kong at 14, worked in factories, saved enough money for a one-way ticket to England for English study, graduated from Sussex University and went on to Cambridge. After graduation, she joined Goldman Sachs, who eventually sent her back to China where she met and married real-estate developer Pan Shiyi. Fast forward: business picks up, she is now CEO and co-founder of property-developer SOHO China. She has a net worth of $3.6 billion and she is one of the richest women, not just in China, but in the world.

That’s the story. She seems willing to repeat it again and again to journalists who generally focus on the same range of questions about her life and wealth. (Warren Buffet and Bill Gates are probably no strangers to the same questions.) It appears that she neither seeks nor shuns the limelight, but rather treats it as if it is her duty to be interviewed. She is both gracious and forthcoming in her interviews. Perhaps this is because, in a sense, she IS the SOHO brand, much as Richard Branson IS the Virgin brand. And if appearances are what they seem, she is immune to the high-octane ego rush of fame and fortune.

So what is interesting about Zhang Xin? Her statements show a keen concern for the future of her country, and a firm belief in its inevitable extended democracy. In a BBC Hard Talk interview she notes the tremendous power of social media in China as a force for good and an antidote to corruption. Millions of Chinese are on now on Weibo, China’s Twitter. She describes social media like Weibo as the: “single most powerful tool pushing the Chinese society becoming more open, more progressive more transparent.”

As for transparency, SOHO puts it into practice. It its 2012 Annual Results, SOHO’s, co-founder Pan Shiyi states:

“Honesty is the most powerful guarantee to our development. Honesty is our determination to ensure that every matter is subject to transparency. Only transparency can deter and prevent corruption…In 2012 we undertook two endeavors. The first was to ensure that all our sales prices and rental prices are public and transparent prices without even one cent of discount offered. We have persevered in this process and results are favorable. Each of our clients is treated equally…Only transparency can ensure true fairness and equality.”

So what is interesting about Zhang Xin? The rags-to-riches story? The woman of immense means? The charming interview subject? Or a Chinese woman with a vision of twenty-first century China that is dynamic, democratic and transparent?

BBC Hard Talk, Zhang Xin: http://www.youtube.com/watch?v=7as_ZfQkyo0

SOHO China 2012 Annual Results: http://www.youtube.com/watch?v=woaQkrmGzIk

Soho China Website : http://www.sohochina.com/

RSVP: Taiwan’s Ma Will Not Attend APEC Summit This Year

Taiwan’s president My Ying-jeou will not attend the upcoming APEC summit to be held on Bali, Indonesia from October 5-8 2013. Instead Ma will send former Vice President Vincent Siew. Taiwan’s Focus Taiwan News channel reported that Ma said the time was not right for such a trip. In 1991, a memorandum of understanding (MOU) was signed dealing with APEC seats for China, Hong Kong and Taiwan. Taiwan was referred to as “Chinese Taipei” and must be represented by a dedicated APEC minister, and not the Foreign Minister or Vice Foreign Minister. This year’s delegation headed by former VP Siew also includes Mainland Affairs Council Minister Wang Yu-chi. Wang’s stated purpose is to be an advisor for cross-straits matters. There is speculation, however, that Wang will work with Mainland representatives to set up a possible meeting between President Ma and Chinese President Xi Jinping at next year’s Shanghai-based APEC meeting.

So this week’s question: Will a Xi-Ma meeting take place any time soon? And should it? And could Ma stand the heat politically if such a meeting DID take place? Would this be Ma’s downfall, or would it be his Nixon-to-Beijing, Deng-to-Tokyo moment? What do you think? Please post below.

APEC Schedules Summit in Paradise

Bali Dancer.jpg

Photo: Mark Veratt, flickr (CC)

by David Parmer

Political and Business Leaders Head to Bali, Indonesia October 5-8, 2013

Political and business leaders from the 21 APEC economies will be meeting on the tropical island of Bali,Indonesia from October 5-8, 2013. World leaders attending will include China’s president, Xi Jinping, U.S. president Barack Obama, Australia’s new PM Tony Abbot and Russian president Vladimir Putin. U.S. Secretary of State John Kerry will also be present.

The leaders’ meetings will be preceded by the APEC CEO summit from October 5-7. This year’s theme is “Towards Resilience and Growth:Reshaping Priorities for Global Economy.” Attending will be 1,000 business delegations from Asia-Pacific including China, the USA, Japan, Southeast Asia and Indonesia. Such participation is to be expected as APEC is the number-one forum for economic growth, trade and investment in the region.

On September 11, 2013, the Jakarta Post reported that Bali Governor Made Mangku Pastika stated that all venues, the airport, and Bali’s roads were ready for the event. Increased security is in place-reports indicate Indonesia will deploy up to 15,000 security personnel as well as 12-15 warships and air force units.

APEC CEO Summit: http://www.apec2013ceosummit.com/index.html

China FM Wang Weighs In On Syria

In his remarks before a meeting with U.S. Secretary of State John Kerry on September 19,2013 in Washington D.C., Chinese Foreign Minister Wang Yi said:

“Ultimately the issue of Syria needs to be resolved through political means. The Chinese side will play its positive and constructive role in that direction.”

This week’s question: What positive effect can China have on the outcome of the Syria question? What’s is China’s interest in helping solve this pressing problem. Please post your comments below.

Photo: China Daily