Archive for the ‘Intercultural Economy’ Category
White Box Computers on the Rise
Mobile devices can be built in a modular way. Like Lego, the different modules can be sourced from different companies and assembled into a desired device. The key component is the Application Processor (AP).
Application Processor (AP)
(retrieved 20.04.2014 at http://www.dialog-semiconductor.com/products/power-management/applications)
(terieved 20.04.2014 at http://www.idc.com/getdoc.jsp?containerId=prUS24129713)
An interview with Joanne Chien, senior analyst & director, Digitimes Research
(…) a brand like Apple or Samsung controls everything in the process of bringing their products to market. Under the Chaiwan model, each sector does what it does best. For example, it starts with the key component provider, which in the case of smartphones is the application processor (AP). Companies like MediaTek or Qualcomm provide a turnkey solution and reference design to the players in the market.
Those other players include independent design houses (IDH), which provide design services and recommendations for components (such as connectors, casing, etc) that are not included in the AP turnkey solution. You also have EMS players, who do the manufacturing. And ultimately you have the customer, which could be a large brand, a small white-box brand, or any vendor that wants to bring a smartphone to market. Moreover, under this model, the order volumes don’t need to be very large, which means pretty much anyone who wants to can bring a smartphone to market in China, and it can be done quickly and cheaply.
Originally, this business model was developed by white-box players but it has been increasingly adopted by larger brands, such as Huawei, ZTE and Lenovo in China. A vendor such as Lenovo can direct development of one model through one IDH and EMS provider, while working with another pair of manufacturing partners for development of another model.
This has been a seismic shift for the market, but players are adapting. If you look at at AP provider MediaTek, the company no longer follows a strict roadmap. It simply reacts to what the market wants. In 2013, for example, MediaTek sometimes went a couple of months without releasing a new product and then would release two products in the same month. They weren’t following a roadmap, they were chasing demand.
This is also a new model for EMS providers, since they have been used to dealing with huge orders and following longer-term manufacturing plans. They now have to become more nimble and are learning how to cooperate with the IDHs and smaller brands for small orders and quick delivery.
Players adapt because this is where the growth is. China-based vendors account for approximately one-third of global smartphone shipments and the region had four of the top-10 vendors worldwide in 2013. For 2014, Digitimes Research forecasts that China will have five vendors in the top 10.
Looking at the rest of the market (non top 10 or “Other” segment) is even more interesting. This portion of the market is dominated by Greater China vendors and white-box players. The Other segment accounted for 12% of global smartphone shipments in 2012, 21% of the global market in 2013 and Digitimes Research forecasts the share will rise to 25.6% in 2014.
This means that the global smartphone industry is opening up rather than consolidating and it is directly a result of the dynamic interplay seen in the Chaiwan model. Moreover, China vendors are now exporting about 30% of their smartphones (as of 2013) and that proportion is forecast to rise. (…)
(retriewed 13.04.2014 at http://www.digitimes.com/news/a20140221VL203.html)
(retrieved 13.04.2014 at http://www.digitimes.com/news/a20131231RS400.html?read=toc#66)
(terieved 20.04.2014 at http://www.idc.com/getdoc.jsp?containerId=prUS24129713)
The Stan Shih Smile and Frown Curve
Stan Shih`s Smile Curve
Stan Shih`s Smile Curve / Frown Curve
Bill Weinberg completed Stan Shih`s Smile Curve by adding the “Frown Curve”, which describes the increased efficiency of the producing units. Read the whole article online here or check his LinuxPundit Weblog.
Only 30% of the world now has a higher GDP per capita than China (2013)
In many ways, what we are witnessing is not the ‘emergence of Asia’, but the ‘re-emergence of Asia’
(…) In 1820, Asia accounted for just under 60 per cent of total global output, with China and India together accounting for nearly half of global GDP. This was followed by nearly two centuries of economic decline in Asia, ignited by the European industrial revolution—a trend that has now been reversed. (…)
Jayant Menon, ADB
/retrieved 09.06.2013 at http://www.eastasiaforum.org/2013/06/09/asia-yet-to-earn-its-future/)
(retrieved 09.06.2013 at http://adnanramin.wordpress.com/2013/06/02/racism/)
China’s economic achievement is so enormous, indeed literally without parallel in human history, that it is sometimes difficult for people to take in its scale. A country which in 1978, when “reform and opening up” was launched, was one of the poorest in the world, has now reached a point where it has a higher GDP per capita than the countries containing the majority of the world’s population. Only 30 per cent of the world’s population now lives in countries with higher per capita GDP than China.
To give absolutely precise numbers, drawing on the newly published data for the world economy in 2012 released by the IMF, the chart shows that by 2012, only 30.2 per cent of the world’s population lived in countries with a higher GDP per capita than China, while 50.2 per cent lived in countries with a lower one. China itself constituted 19.6 per cent of the world’s population at this time.
China is, therefore, now in the top half of the world as far as economic development is concerned, and to avoid any suggestions of exaggeration, it should be made clear that these comparisons are at the current market exchange rate measures usually used in China – although calculations in parity purchasing powers (PPPs), which are the measure preferred by the majority of Western economists, makes no significant difference to the result.
The chart also illustrates China’s extraordinary progress. In 1978, when “reform and opening up” began, only 0.5 per cent of the global population lived in countries with a lower GDP per capita than China, while 73.5 per cent lived in countries with a higher GDP per capita. The transition to a situation where China has overtaken the majority of the world’s population in per capita GDP is the greatest economic transformation in human history, both in terms of the short time frame required and number of people affected.
Given that the data clearly shows China has progressed into the top half of the world economy in terms of economic development, why do some persist with misrepresenting China as being “in the middle” or even more misleadingly dubbing it a “poor” country by international standards?
Such misrepresentations make elementary statistical errors which are familiar to those who analyse income distribution data. For example the following argument is sometimes presented: The IMF World Economic Outlook database gives GDP per capita statistics for 188 countries with China ranking 94th – therefore China is “in the middle”. Another sometimes-cited statistic compares China to the world average – in 2012 China’s GDP per capita was 59 per cent of this average figure – making China appear a “poor” country.
The problem with this “list” method is that it does not take population into account. For example, the Caribbean state St Kitts and Nevis, population 57,000, has a higher GDP per capita than China while India, population 1.223 billion, has a lower one. To say China is “between the two”, as though St Kitts and Nevis and India represent equivalent weights in the world economy, is playing games with words rather than carrying out serious analysis. This elementary statistical rule is particularly relevant given that the number of developed economies with small populations is disproportionately large. The population of countries must therefore be taken into account when calculating China’s real relative position in the world economy.
The second mistake, comparing China to the “average”, makes an error so well known in income distribution statistics that it is somewhat surprising anyone gives it any credence, let alone continues to propose it.
Statisticians know that averages, technically speaking the “mean”, can be disproportionately affected by small numbers of extreme values. It is well known that this applies to incomes within countries as small numbers of billionaires artificially raise average incomes in a way that misrepresents the real situation.
This statistical distortion is clear from international data. Average world GDP per capita, that is world GDP divided by the number of people, is slightly more than $10,000 per year. But only 29.9 per cent of the world’s population lives in countries with GDP per capita above that level while 70.1 per cent live in countries below it. Something with only 29.9 per cent above and 70.1 per cent below is not most people’s idea of an average!
What most people understand by an average, the mid-point, is, in proper statistical terms, not the average but the median. Reputable studies on income distribution, therefore, almost invariably use the median, not averages, to avoid this distorting effect of small numbers of extreme values. Using the statistically misleading average, instead of the mid-point, bizarrely transforms the real situation – that China now has a GDP per capita above that of the majority of the world’s population – into giving the impression that China is a poor country!
There are three main reasons why it is important to accurately present China’s level of development.
First, policy must be based on accurate analysis – in serious matters there is no virtue in either optimism or pessimism, only in realism. As the famous Chinese phrase tells us, it is better to seek truth from facts.
Second, accurate presentation is necessary to clearly understand the real economic challenges China faces. For example China’s GDP per capita is now higher than all developing South and South East Asian countries except Malaysia – clarifying why any competitive strategy for China based on low wages is unviable.
Third, China’s position in the top half of the world in terms of GDP per capita makes clear its technological level – China’s economy is now dominated by medium, not low, technology.
Does an accurate presentation of China’s real level of development endanger its international legal status as a developing economy? The World Bank has not yet published new criteria for the GDP per capita necessary to qualify as an “advanced” economy, but the 2011 criteria and statistical data is available and it tells us that the answer to the question is “no”. To classify as “high income”, an economy must have an annual GDP per capita of slightly more than $12,000. Only 16 per cent of the world’s population lives in such economies. It will take 10-15 years for China to achieve “high income” status – although when it does this will more than double the number of people living in such economies.
Achieving the “Chinese dream” requires that the present reality is accurately understood. China has entered the top half of the world’s level of economic development. Only 30 per cent of the world’s population lives in countries with a higher GDP per capita than China. That is the accurate analysis of China’s relative position in the world economy. To achieve the “Chinese dream” requires eliminating not only any exaggerated bombast but also any systematic underestimation
This article originally appeared in Chinese at Sina Finance and in English at China.org.cn.
Is Visiting Professor at Antai College of Economics and Management, Jiao Tong University, Shanghai
TrackBack URL for this entry: http://www.typepad.com/services/trackback/6a00e554717cc988330192aa48c0e8970d
(retrieved 25.05.2013 at http://ablog.typepad.com/keytrendsinglobalisation/2013/05/only-30-of-the-world-now-has-a-higher-gdp-per-capita-than-china.html)
Read more about China and it’s economy from John Ross
Key Trends in Globalisation
Seek truth from facts – 实事求是 (Chinese saying originally from the Han dynasty)
World Economic Outlook (WEO) – International Monetary Fund – Survey 2013
(above retrieved 25.05.2013 at http://www.imf.org/external/pubs/ft/weo/2013/01/, http://www.imf.org/external/pubs/ft/weo/2013/01/pdf/text.pdf, https://laofutze.files.wordpress.com/2013/05/world-economic-outlook-april-2013.pdf)
What that dramatic economic shift means to people, describes Onionjuggler in her Force Feeding Duck Style:
A student told me this story as part of a midterm last year, and I thought it was so cute I would share it with you.
For her fifth birthday, Helen’s* mother wanted to make her a special dinner. She lived in the country, and at that time everyone was very poor, so meat was hard to come by. Her mother had to take the day off to travel to a different town to buy some pork, and in the end was only able to afford enough meat for Helen– the rest of the family would have to make due with the usual vegetables and noodles.
That night, Helen was so excited to eat her fancy dinner. But when her mother handed her the bowl, her older brother pointed at it and said, “Look out! There is a spider on the bottom of the bowl!”
Helen tipped the bowl over to look for the spider, and poured her whole dinner onto the dirty floor. Her mother scolded her brother, but she couldn’t salvage the dinner. Poor Helen cried and cried, and she never forgot that birthday.
*Her real name isn’t Helen– that’s just the name she chose for class.
(retrieved 25.05.2013 at http://onionjuggler.wordpress.com/2013/05/20/a-short-story/)
China in 2050
(retrieved 13.07.2013 at http://de.ce.cn/photo/right/201211/21/t20121121_597748.shtml)
Learning to do Business in China
The Evolution of BAT’s Cigarette Distribution Network in China 1902 – 1952
(…) Today, a visit to the Duke Homestead and Tobacco Museum in Durham provides one with a fascinating overview of the history of tobacco, the development of a unique local tobacco culture, and the pioneering role of the Duke family in the manufacture and marketing of cigarettes. Less well-known is the fact that the Duke family was involved in the global marketing of tobacco products well before the term “globalization” was coined. It is reported that immediately after the invention of the cigarette machine in 1881, James B. Duke (1865-1925) leafed through a world atlas to survey the population of foreign countries. Upon coming to the figure 430,000,000 he exclaimed: “That is where we are going to sell cigarettes.” The country was China and from 1890, when the first cigarettes were exported there by the Dukes, sales skyrocketed to 1.25 billion cigarettes in 1902 and to 12 billion in 1916 earning $20.75 million with a net profit of $3.75 million. From 1915 through the 1920s, more cigarettes were exported each year (with one exception) from the United States to China than to the rest of the world combined. British American Tobacco Company (or BAT, a multi-national company formed in 1902 with the Duke’s chief competitors in England) would sell 80 billion cigarettes in China in 1928 alone and amass a total profit of over $380 million between 1902-1948. Leading the way was James A. Thomas (1862-1940), the managing director of BAT in China from 1905 to 1922 (…).
Stanley K. Abe
received 17.11.2012 at http://ducis.jhfc.duke.edu/archives/tobacco/introduction.html
(…) There was an anti-cigarette movement in the early 1900s, but it was more concerned with morality than health. A rise in smoking among women and children fed into a wider concern about the moral decline of society. Cigarettes were prohibited in 16 different US states between 1890 and 1927.
Bonsack’s cigarette machine
retrieved 18.11.2012 at http://news.bbcimg.co.uk/media/images/63659000/jpg/_63659428_cigarette_machine_bonsack.jpg
Howard Cox of the University of Worcester says Thomas was one of the first Westerners to understand Chinese ways of doing business, based on networking and reciprocal favours. At first, cigarettes were imported from the US, but manufacturing soon shifted to China. For Cox, this transfer of production technology rather than product marks a move from colonial trade towards the current age of globalisation and multinational corporations. Thomas had his own team of salesmen from the US, but he also formed joint ventures with established Chinese firms to distribute his product. This way of doing business is the norm today for international firms hoping to tap into the Chinese market. (…)
received 17.11.2012 at http://www.bbc.co.uk/news/magazine-20042217
Howard Cox about James A. Thomas
(…) Under the managerial guidance of James Thomas, BAT soon began to look beyond (those) limited horizons. On assuming control in Shanghai, therefore, Thomas began to step up local production facilities and recruited an expatriate sales team who, supported by salaried Chinese interpreters, could take these low-priced cigarettes “up-country” and establish relations with the traditional Chinese merchant houses that managed China’s internal trade. During the ten years in which Thomas was in control of BAT’s operations in Shanghai, the company established an extensive network of Chinese dealers who conducted warehousing arrangements for them beyond the treaty ports, and who took responsibility for the distribution of their products to the final consumer. So effective did these links with Chinese merchants become, that, by the latter part of the 1920s, the need for Western salesmen to engage in travelling had more or less ceased.
Traditionally, American tobacco manufacturers had merely employed a few travelling salesmen to make contact with local jobbers and retailers, while the bulk of the trade remained in the hands of independent wholesalers who supplied small retailers with a variety of goods, of which tobacco was only one. However, during the mid-1880s the largest cigarette manufacturers began to set up their own warehouses to serve dealers in the largest cities. The effect of this was to eliminate many commission merchants and some of the largest urban jobbers from the distribution system for cigarettes in the United States.
One of the tasks of these travelling BAT salesmen was to monitor the market conditions in the different parts of the country to which they travelled. This was undertaken through the completion of Form 163, a survey of market conditions which had been designed by Thomas during his early excursions into the field. The form was completed monthly by all of the company’s travelling representatives as they visited dealers, before being returned to the company’s headquarters in Shanghai. It set out the prevailing conditions for each town in terms of population, dealers operating, depot facilities available, stock levels by brand, the local currency exchange rate and the general income levels of the inhabitants. Duke had understood well the importance of accurate information of this kind, and his chief accountant in New York, W.R. Harris, created an accounting system for the American organisation, based around daily reports on brand sales by town, in order to keep stocks flowing smoothly.
Important as the American and other foreign salesmen were to the company’s early growth in China, the expansion of BAT’s distribution system also necessitated the increasing participation of Chinese merchants. One reason for this lay in the provisions of the trade treaties themselves which prevented foreigners from owning land outside of the treaty ports and thus presented BAT with severe problems in terms of expanding their network of warehouse provision. To overcome this it was necessary to develop a system of warehouses which were under the ownership of Chinese nationals. In addition, BAT needed to tap into the well-established Chinese trading networks that already delivered goods extensively within China.
Download here the whole pdf, or see below for the online versions.
UNIVERSITY OF WORCESTER , Learning to do Business in China: the Evolution of BAT’s Cigarette Distribution Network, 1902-41 by Howard Cox 1997. This is an electronic version of an article published in Business History, Vol.39, No.3, (1997), pp.30-64. Business History is available online at: http://journalsonline.tandf.co.uk/fbsh
Received 17.11.2012 at http://www.google.de/url?sa=t&rct=j&q=james%20thomas%20cigarettes&source=web&cd=2&ved=0CCwQFjAB&url=http%3A%2F%2Feprints.worc.ac.uk%2F221%2F2%2FLearning_to_do_Business_in_China.pdf&ei=J32nULyfCMnNswavtIGAAw&usg=AFQjCNHbO53II9i8xtSNravGLxFi3_qXcQ
James A. Thomas with two Eunuchs
See more about the Life of James A. Thomas in the Duke University / North Carolina, USA http://library.duke.edu/lilly/about/lillyartproj/
Individualism – Collectivism and Accountability in Intergroup Negotiations
However, for those who place a high emphasis on collectivism, cooperative behavior and harmony with others, especially with persons with whom one is similar, is normative and is likely to ensure positive evaluations in accountable negotiations.
In the low-accountability condition, those who had high levels of collectivism reported less cooperative intentions and behavior, and achieved lower outcomes, as compared to representatives with low levels of collectivism.
However, the current research suggests that negotiators’ behavior depends both on the nature of the negotiation situation, as well as on negotiators’ collectivism. Applying this to cross-cultural investigations, this suggests that broad generalizations about the negotiation styles of cultural groups, which does not take situations into account, are likely to be inappropriate.
Michele J. Gelfand / University of Maryland at College Park
Anu Realo / University of Tartu, Estonia
Journal of Applied Psychology , 1999, Vol. 84, No. 5, 721-736 – retrieved 08.12.2011 from http://www.bsos.umd.edu/psyc/gelfand/index.html
Vertical Disintegration in Supply Chain Management (SCM)
(…) Acer’s supply chain management strategy can perhaps best be characterized as a strategy of “vertical disintegration.” In the recent past, Acer sold majority stakes in both Wistron and BenQ. These companies were main providers of manufacturing services in Acer’s supply chains. By selling its majority stake in these companies, Acer clearly demonstrates that it intends to “disintegrate” its supply chains and focus on branding and marketing.
(…) The vertical disintegration of Acer’s supply chain becomes even more evident when analyzing the supply chain of specific Acer products. Components are sourced from many different component manufacturers, while assembly is carried out by a small group of selected contract manufacturers. In some cases, Acer holds a considerable stake in these contract manufacturers, although it almost never owns these companies. The selected contract manufacturers are allowed to manufacture final products for Acer. It does not matter whether a desktop computer or notebook is assembled in China, the Philippines or in the Netherlands. In the end, all Acer products are sold as “made in Taiwan”. The following charts show the supply chains for two Acer notebooks: the Travelmate C110 (…).
Supply chain for the Travelmate C110
(…) In most cases, one particular component can be provided by two or three different component manufacturers. A hard disk drive (HDD) for the Travelmate C300, for example, can be supplied by Toshiba or Fujitsu. This is necessary to guarantee continuous supply of critical components. If a supplier fails to provide a particular component just-in-time or on demand, the selected contract manufacturers can rely on other suppliers that are able to provide the same component. For some components, however, the contract manufacturers depend on a key supplier. If these components are out of stock, delays in delivery are likely to happen. (…)
Acer Incorporated / Company profile (Draft Version) Bart Slob Amsterdam, December 2005, SOMO Stichting Onderzoek Multinationale Ondernemingen – Centre for Research on Multinational Corporations http://www.somo.nl / firstname.lastname@example.org
Get the whole script here.
Direct and Indirect Supply Chain Management
Stan Shih, the founder of Acer Computers in an interview in October 1996: (…) beginning in 1992, we developed the fast-food model, which revolves around each of our local businesses doing local assembly from components manufactured here. So today we have 39 assembly lines in 35 countries. We operate these assembly lines globally the way fast-food restaurants operate locally. We airship components from Taiwan — which is cost effective — to the regional business units overseas for assembly into products. This approach provides “hot and fresh” computers to our local customers.
Not only does this provide fresh products, it also accelerates the speed of new-product introduction and it accelerates the inventory turnover rate. This fits with our strategic philosophy. (…)
Indirect Supply Chain Management (Fast Food Model)
Direct Supply Chain Management
The Emerging Global Direct Distribution Business Model – Its Making and Research Opportunities; Shong-Iee Ivan Su, Ph.D.; Professor, Director of Supply Chain and Logistics Management, Research Lab, Department of Business Administration, Soochow University (Taiwan)
Get the full article here.
International Matrix of Acer Inc.
Innovation in a Modular Network
Learning From Evolution: A Study of Acer’s Corporate Strategy by Anil Kumar Sahai; System Design and Management, Sloan School of Management, Massachusetts Institute of Technology
Modular network structures appear as a logical consequence of horizontal Supply Chain Management systems.
The modular network form compared to other organizational forms
Country-specific production network models: where the modular production network model fits
Modular Network Matrix of Walter W. Powell
Source: adapted from Powell (1990: 300). Italic entries added to original. Powell, W. (1990), ‘Neither market nor hierarchy: network forms of organization,’ Research in Organizational Behavior, 12, 295–336. / Industrial and Corporate Change, Volume 11, Number 3, pp. 451–496, Modular production networks: a new American model of industrial organization Timothy J. Sturgeon
Read the whole article here.
Links about SCM (Supply Chain Management)
Nice introduction to Supply Chain Management – A REVIEW OF APPROACHES TO SUPPLY CHAIN COMMUNICATIONS: FROM MANUFACTURING TO CONSTRUCTION (2007)
For easy understanding a ppt about supply Chain Management by A.V. Vedpuriswar
Links about Acer
For the history of international trade / globalisation see the post “Learning to do Business in China“
For info about Stan Shih please click here.