Archive for the ‘Commerce’ category

Is the “China Price” Over?

June 11, 2009

According to a BusinessWeek article, China has lost some of its competitive edge in manufacturing. When storage, transportation and supply disruption costs are factored in, there may be as little as a 5.5% cost difference between exporting machined goods from China and manufacturing them domestically in the U.S. The change is largely due to currency fluctuation and increased labor costs for manufacturing higher-tech items – the article points out that China still has a strong competitive advantage in toys and apparel.

More surprising, however, is that manufacturing auto parts and electrical switches in Mexico may now be 20% cheaper than in China. Even so, companies are unlikely to switch their entire supply chains over due to current investments and fears that the “yuan will drop like a stone,” making such a move both costly and futile.

But even aside from the obvious cost issues (and the article does not mention this), companies will eventually have to factor political stability more heavily in their sourcing decisions. There has been a considerable amount of grumbling over both Mexico’s violence and corruption and China’s “iffy” long-term economic prospects — the recent financial crisis has shown China the limitations of its resource-dependent, export-heavy model. China’s urban middle class comprises only a tiny minority of its population, and the bulk of the country’s people have yet to see much of the last 20 years of progress trickle down. It is not too much of a stretch to imagine that Beijing’s biggest fear – a government-toppling peasant revolt – could become a reality if millions of people are left without even $1.26/hour manufacturing jobs to sustain them. And if Mexico’s reputed lawlessness continues unchecked, companies will continue to shy away even if cost-related aspects are beneficial.

Interestingly, this article only explores Mexico as a potential sourcing option. India immediately comes to mind as a leader for U.S. manufacturing contracts, should the obvious choices become less and less attractive. In fact, India has already overtaken China in certain areas of skilled manufacturing.

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For women, poverty can lead to empowerment

May 15, 2009

Consider this sobering fact:

Worldwide, women and girls make up 70% of the estimated 1.3 billion people living in poverty, two thirds of the one billion illiterate adults, and two thirds of the 130 million children who are not in school.

Now consider this story:

A teacher by training, Lynne Randolph Patterson never expected to find herself at the helm of a multi-national financial services company.

Twenty years ago, she was volunteering at a young mothers club in La Paz, Bolivia, where her husband had been posted for work.

She was there to deliver empowerment lessons but the women, who attended twice a week in exchange for donated food, all told her one thing: “We need to earn money.”

Along with her colleague, Carmen Velasco, a psychologist, they began to offer the women business training and tried to find them credit.

Inspired by Grameen Bank in Bangladesh, whose founder Muhammad Yunus pioneered microfinance, they began to offer small loans of around $50.

The women formed groups to guarantee each other’s loans, and made simple business plans showing how they would invest and repay their first loans.

“Not being very financial, we made lots of mistakes in the beginning,” she says.

But they persevered, and Pro Mujer (Pro Woman in Spanish) as their organisation is now called, now provides 222,000 women with loans, business training and healthcare in five Latin American countries. [BBC]

And this one as well from Kigali, Rwanda:

A group of 15 female entrepreneurs will receive business courses at university level, which includes mentorship through a partnership with fellow female entrepreneurs in the US, as part of the “Peace Through Business” programme later this August.

The group of 27 was short-listed after completing an extensive eight-week course largely administered by last year’s pioneers, with their graduation ceremony being held at Christ’s Church in Rwanda (CCR), at Gacuriro Estate last Sunday.

Jane Natukunda, a mother of three and a tea dealer is one of the entrepreneurs who were simply ecstatic after being named at the graduation ceremony.

“I really feel very happy being among the fifteen women. We learnt many useful business skills in the past few weeks,” a cheerful Natukunda said.

“Previously, most of us conducted business without the proper know-how, but have learnt much – bookkeeping, networking, business management, risk management and even leadership. I am highly empowered and motivated to teach others as well.” [allAfrica.com]

And before I continue, consider this fact as well:

Research has shown that women are more likely to repay loans in full and on time than men. It has also been established that giving a woman access to primary education will ensure that her entire family receives better health care and nutrition. This indicates that providing equal access to education, credit, property and employment for women, will ensure economic justice and sustainability for all.

*Ref: Empowering Young Women to Lead Change

Produced by WMCA and Supported by the United Nations Populations  Fund, published in 2006

So what’s the lesson here?

Simply put, investing in the education and training of women worldwide leads not only to self-empowerment and independence, but also encourages the self-sustainability of small enterprises that promotes business and trade at the grassroots level.

Sometimes an overlooked part of the population, in many communities women are the backbone of the family. Empowering them, empowers more than just an individual.

The Global Financial Crisis: How Developing Communities are Coping

February 23, 2009

The global financial crisis has left few nations untouched and is hitting developing countries especially hard, as we were recently reminded by China’s Hu Jintao who used the crisis as a rally call for China’s sometimes questionable relationship and interest with impoverished African countries (think Zimbabwe). Hu recently tied up a tour of Africa as part of China’s attempts to foster close ties with the continent.

Hu’s African tour, despite China’s personal interest in the region, has highlighted the obstacles developing countries – not just in Africa but around the world – face during these challenging times:

“The impact of the crisis on economies around the world is still deepening and its grave consequences will be felt more in the days to come,” he said in a speech at a town hall gathering in the Tanzanian capital Dar es Salaam.

“It has put developing countries in a particularly disadvantaged position. Many African friends are concerned that in the face of the daunting challenges of the financial crisis, their international developing partners may scale back aid, debt relief and investment in Africa,” Hu said.

So how are developing communities coping and is it possible for them to be self-sustainable in the context of such a weak world economy?

One village in Thailand has found a solution:

During a period when foreign aid risks falling victim to strained resources, less money and donor fatigue, it’s always great to see communities find solutions on their own in creative and effective ways.

H/T to Global Voices Online and Al Jazeera.