News | RG21 - Part 31

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

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

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/

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/

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’s FM Wang Meets With U.S. Sec. of State Kerry

“I have come to the United States to implement the agreement reached between our top leaders to strengthen the mutually beneficial cooperation between our two countries to enhance the China-U.S. friendship” China FM, Wang Yi

Chinese Foreign Minister Wang Yi met with the top U.S. leadership on Friday 19 September 2013 including Vice President Joe Biden and U.S. Secretary of State John Kerry. Wang also met with U.S. National Security Advisor Susan Rice, Senate Minority Leader Mitch McConnell and House Foreign Affairs Committee Chair Ed Royce.

In remarks before their meeting, Kerry welcomed Wang back to the U.S., noting that he had been at Georgetown University 15 years before as a visiting scholar. Kerry added:

“China and the United States have also agreed to a new model of relations, and that was worked on and announced at the Sunnylands summit with our presidents. It is based on practical cooperation and constructive management of differences. We recognized the need to avoid falling into a trap of seeing one another as strategic rivals, and that recognition is now driving our partnership on issues from climate change to wildlife trafficking to military consultations and the promotion of balanced growth around the world.”

In his own remarks, the Foreign Minister touched upon the key point to be covered from the Chinese side:

“At the same time, we are also ready to have in-depth communication with the United States with an open mind on those issues, including Syria, issues on the Korean Peninsula, climate change, and cyber security. We also want to discuss with the United States the relevant issues in the Asia-Pacific region, to work with the U.S. side for sound interaction in the Asia-Pacific between our two countries.”

In addition to the pressing Syria question, the de-nuclearization of the Korean peninsula and the re-starting of Six Party talks were on the agenda.

http://www.state.gov/secretary/remarks/2013/09/214419.htm

Kaesong Economic Zone To Reopen September 16th

North and South Korea have agreed to reopen the Kaesong economic zone on September 16, 2013. The Zone, located 10km inside the North, has been closed since April of 2013 when tensions between the two neighbors heated up. Korean managers left and the doors have been locked ever since. Nearly 100 South Korean firms are represented in Kaesong. The Zone reportedly employs 53,000 North Korean workers who earn an estimated 80 million USD. This week’s questions are “why?” and “how long?” Why did the DPRK agree to the reopening, and how long will it stay open this time? Post your answers below.

Shanghai Free Trade Zone-Just The Beginning?

Pudong Night.jpg

(Photo by Sarmu, Panaramio, CC)

by David Parmer

In July 2013, China’s State Council announced the formation of the Shanghai Free Trade Zone (SFTZ), a Hong-Kong like free trade area. Tentatively set to open around September 29, the SFTZ will cover an area of some 29Km (11square miles). Reports say this project is the special interest of premier Li Keqiang, and could lead to a rapid replication of FTZs in other Chinese ports.

Changes in policies and services in the FTZs will include:

Freer Yuan conversion
Liberalization of interest rates
Relaxing restrictions on foreign investment

CCTV reports China’s big five banks have all set up branches in the SFTZ. Chinese banks may offer offshore services while under the new regulations qualified foreign banks may set up branches or joint ventures. Foreign financial institutions mentioned as participants include Citigroup, Standard Chartered and HSBC. The PayPal division of Internet market eBay has also been mentioned. Meanwhile, Focus Taiwan reports that Taiwan Offshore Banking Units (OBUs) have been invited to participate in the plan.

The South China Morning Post reported that Shanghai Vice-Mayor Ai Baojin will head the new commission to oversee the development of the SFTZ. The City of Shanghai has already sent officials to Singapore for training to learn from Singapore’s experience as a free-trade port and financial and shipping center.

Some observers see the establishment of the Shanghai Free Trade Zone as an advance equal to the creation of the Shenzhen FTZ under Deng Xaioping in the 1980s, or China’s joining of the World Trade Organization in 2001.

Not So Sunny: PRC Invokes Anti-Dumping for Polysilicon

(Photo: China Daily)

Only July 18, 2013, the Ministry of Commerce of the People’s Republic of China issued announcement No. 48,2013 which laid out the results of its year-long anti-dumping investigation into imports of solar-grade polysilicon originating in the U.S.A. and the Republic of Korea. The report concluded that:

It is preliminarily ruled by the Investigation Authority that, during the investigation period of this case, the products under investigation were involved in dumping and the solar-Grade polysilicon industry of China was materially injured, and there was causality between the dumping and injury. (Ministry of Commerce Website)

New tariffs range from 53-57% for U.S. companies and from 2.4-48 % for South Korean companies. The new tariffs are aimed at solar-grade polysilicon; electronic-grade polysilicon is not covered. Solar market research and analysis organization, Solarbuzz states that in 2012 China accounted for 76% of the world’s solar wafer production, and produced 40% of the world’s polysilicon. Sources say falling prices of foreign- produced product forced Chinese manufactures to seek protection under anti-dumping regulations. Polysilicon, due to its semiconductor-like properties is used as a basic material in most solar energy applications.

PRC Ministry of Commerce Announcement No. 48 http://english.mofcom.gov.cn/article/policyrelease/buwei/201308/20130800224101.shtml

Background from Solarbuzz: http://www.displaysearchblog.com/2012/05/growing-polysilicon-imports-and-falling-prices-provide-chinese-solar-manufacturers-with-anti-dumping-fodder/

Chen Kaige To Head 26th Tokyo International Film Festival

Chen Toronto IFF.jpg

(Photo: Toronto International Film Festival)

by David Parmer

Chinese director Chen Kaige has been tapped to act as Jury President at the 26^th Tokyo International Film Festival to be held from October 17- 25, 2013 in Tokyo’s Roppongi Hills complex. Chen, a member of the so-called “fifth generation” (1980s) of Chinese filmmakers is best known for his films “Raise The Red Lantern,” (1991) and “Farewell My Concubine” (1993), both films having received wide international recognition. “Farewell My Concubine” was nominated for two academy awards and received the Palme d’Or at the 1993 Cannes Film Festival.

In a piece published online in the Hollywood Interview, Chen was asked about working with talent from Japan, Korea and China during the filming of The Promise, a 2005 wuxia (martial arts) film:

“It wasn’t that difficult. It’s always been my dream to work with the best talents from different countries in Asia. I don’t mean that politically, but if you look at the history of these three countries, it’s very complicated. I think at least that if we show we can work together as artists, when the politicians are fighting against each other, we’ll show what we can do. We’ll show our dream of a peaceful future for Asia.”

The 26^th TIFF will open with “Captain Philips” and close with “The Kiyosu Conference.”

TIFF Official website: http://tiff.yahoo.co.jp/2013/en/

Hollywood Interview-Chen Kaige: http://thehollywoodinterview.blogspot.jp/2008/03/chen-kaige-hollywood-interview.html