Asia – Today and Future

Presented by

Nat YogachandraKEY-Zen International

Book Titles

Soon to be included:

Globalization and Cultural Competency

AMECO Petroleum

Partial list of companies/

brands owned by

foreign companies

What is the Nationality Headquartered in Japan

Controlled by Renault (partly owned by the French government

In Mississippi, it’s a domestic car

Symbol of British Empire

Built by Germans - BMW

Swedish brand

Owned by Americans

Symbol of British Empire

Owned by Americans Swedish brand

Subsidiary of General motors

Manufactured in Mexico

Owned by the Germans

PT Cruiser – More German or Mexico than American

Hondas are built in Ohio

Toyotas are built in Kentucky

Hyundais are built in Alabama

A WORLDLY PLANE

Fischer (Austria)

InteriorAlenia (Italy)

Fuselage

Allied Signal (U.S.) Environmental Controls

Halla Heavy Industries (Korea)

Wing

Allied Signal (U.S.)

Customer Avionics

Honeywell (U.S.)

Avionics

Korean Aerospace (Korea)Nose

Israel Aircraft (Israel)Landing gear

BMW/Rollsroyce (Britain)

Engines

APIC (France)

Auxiliary power

ShinMaywa Industries (Japan) Horizontal Tail

One- half of McDonnell Douglas Corp,’s MD-95 was built overseas

1997 – McDonnell merged with Boeing and renamed to 717

Foreign Companies Have Control of

Nearly all the U.S. electronics industry Nearly all of the photo imaging industry Majority of the U.S. book/magazine publishing Almost half of the U.S. major motion picture studios One of the Big 3 auto manufacturers Majority of the U.S. tire manufacturers Large segment s of the U.S. food distribution

American Brands – Retail

Wal Mart in China (34 stores), Korea and Japan

McDonalds KFC TGIF Hard Rock Café Burger King Planet Hollywood Starbucks Pizza Hut

Microsoft HP DELL Coke Pepsi Intel Marlboro Nike Eddie Bauers Apple

Software giant Microsoft enters Malaysia

Offered a shiny new PC, running Microsoft Windows XP and other programs

Cost around $300. Monitor included

Thailand, Vietnam, Indonesia

How American Brands Are Expanding in Asia

The Big THREE factors

China has drove down the cost of manufacturing

Wal*Mart is driving down the cost of retailing

and now …….

India is driving down cost in services

Outsourcing of jobs Social changes

Women are postponing their marriages

Birth rates are falling Aging Population

China’s dominant role India’s Economy Challenges ahead

Impact - Asia

Customer Services moving overseas

Customer services are moving to India, Philippines, China. Mexico, and Ireland.

GE customer services calls - answered by Indians from a small village closer to Mumbai in India (also Nike, AMEX, BA)

GE Capital saves up to $340 million a year by moving tasks to India

Toshiba – call center is in Istanbul

Jobs - Going, Going, Gone

2003 2007Custom software development

20% 47%

Software maintenance

18% 47%

IT Documentation 13% 47%IT telephone support 9% 40%Remote network monitoring

3% 39%

Software reengineering

8% 36%

Systems management

5% 25%

IT administration and operations

3% 24%

Salary Structure

Country Cost per yearIndia $8,000Canada $36,000Ireland $28,000China $9,600Israel $25,000Philippines $7,000Ea. Europe $7,000Russia $7,000Mexico $7,000South Africa $18,000

India Vs the world

IT employee cost per year

Company Purpose INDIA staffGE capital Services Back-office work 16,000

GE’s John Welch Tech. Center

Product R&D 1,800

IBM Global Services IT Services, software 10,000

Oracle Software, services 6,000

Hewlett-Packard R&D, Services 11,000

American Express Back-office work 4,000

DELL Tech. support 3,800

Texas Instruments Chip design 900

Intel Chip design, Software

1,700

J.P. Morgan Chase Back-office, analysis 1,200

Some of the Biggest U.S. companies in India

Work - fraction of the price

Hourly Cost to operate a Call Center

Kansas City, Missouri = $12.47

Mumbai, India = $4.12

Kansas City, Mo

Mumbai, India

Equipment $0.39 $0.56

Labor $10.00 $1.50

Profit (mark up) $2.08 $2.06

Total cost $12.47 $4.12

Help Wanted – not in this country

Medical Processing insurance claims and hospital bills 10 percent of U.S. jobs in medical transcripts have moved

to India, Pakistan, Canada and other countries Animation

3-D animation special effects Linear and nonlinear editing

Insurance Benefits administration Between 10,000 to 20,000 jobs – claims-adjudications jobs

have moved overseas Architects:

Major firms are exporting drafting work. It is estimated a quarter of major firms are currently exporting jobs.

(source: The Wall Street Journal)

Help Wanted – not in this country

Digitizing Converting text, engineering drawings, architectural designs

and maps from paper to digital format Desktop Publishing

Page layout Advertising campaigns Typesetting and color separation

Telemarketing Customer-service management for international banks,

software companies and credit-card companies Financial

27% Planned foreign outsourcing 61% already engaged in the activity planned to expand

outsourcing

Future -Outsourcing $1.5 billion- India’s IT enabled services

exports in 2002 $17 billion – Forecast - India’s IT enabled

services in 2008 By 2010

277,000 jobs in computer science 162,000 in business operations 83,000 in architecture would have moved to

India and China By 2015

Will generate loss of 3.3 million jobs in service sector ($130 billion in wages)

120,000 engineers in Silicon Valley

150,000 engineers in Bangalore, India

In Favor of Outsourcing and Manufacturing

Saved U.S. consumers (mostly middle-class)$100 billion dollars on shoes, textiles and households, since 1978

Between 1978-2003, cheaper baby clothes helped families $400 million

Boeing, Ford, GM, IBM, Motorola, saved billions of dollars by outsourcing to China Global competitiveness Focus on high technology Save millions

For every dollar off-shored, U.S. economy accrues $1.12 and $1.14 while receiving country captures just 33 cents The U.S. benefits comes from reduced costs(58 cents), purchases

from U.S. providers (5 cents) and repatriated earnings (4 cents) and rest come from redeployment of labor into higher value added jobs

Japanese birth rate dropped to a record low last year- an average of 1.34 per women

They compete with Sweden for having the oldest median age for first time marriages. - 27 for women, 30 for men

Women are no more called Christmas Cake, a corruption of English language. A woman is no good after 25 th birthday - December 25. The ideal age was 24.

Government is offering incentives to reverse the declining birthrate

$47/month for the first and second child $94/month for each subsequent child Law requires private companies to

Birth Rates FallJapanese Women Choose

Work Over babies

Love Boat Cruise – Speed Dating and Incentives

Love Boat cruises and weekend barbecues for bachelors

Only state-run dating agency in the world- cupid

Campaign promotes families to have three children – offering incentives

Tax breaks and a bonus of up to $5,100 for a second child - Twice that for a third child

Divorce in increasingly losing its stigma Divorce rate in Asia has been steadily

climbing for the past two decades Common practice “Chi Le Ma” (Have you

eaten?) now had turned into “Li Le Ma” (Have you Divorced ?) in Beijing

Nearly 70% initiated by women in China In Korea, a TV soap opera- “Ajumma” – a

story of a women leaving her husband is a national hit (challenging traditional values)

NO divorce laws in the Philippines – discouraged by the government

Divorce Asian Style

Narita Rikon - Japan Japan’s divorce rate is up nearly 50 % since 1970

Women are initiating divorces.

One break up for every 2 minutes and 42 seconds

‘Narita Rikon’ (Narita Divorce) is reference to crash land of marriages after the honey moon at the airport

Divorce among couples who have been married for 20 years or more has been increasing

- 2/3rd initiated by wife- More job opportunities- Takes place after children leave home

Korea

Confucius: A woman must obey her father before marriageObey her husband during her married lifeObey her eldest son after the death of her husband

About 30% of Korean marriages end up in divorce. Women are initiating divorces

Teenagers are challenging age-old customs and traditions based on Confucius values

In 1989, the Family Rights Law ended most of discrimination for divorced

women, but still a struggle Men get a better deal For every two marriages registered in

2002 there was one divorce Office Ladies - Tea girls still serve male

workers at the office

Korea

Divorce in Islamic Countries

Divorces in most Islamic countries are initiated by men

Men must make a simple declaration “I divorce you” three times, before he takes the case to “shariah” court

In United Arab Emirates, a wife missed a curfew and received a message on her mobile phone, “Why are you late ? You are divorced,”. 16 cases in April-June 2001

Some countries have changed the divorce procedures, requesting men to file divorce in court

The divorce laws are not in favor for women in Pakistan and many Arab nations

Gender Imbalance – Bride Shortage

China has 118 boys per 100 girls under the age of 5

In Hainan & Guangdong – 130 to 100 Govt. providing Insurance to HH with daughters.

100K girls exempt from school fees One child policy Age-old custom – female infanticide in rural areas Sex selection clinics

Nearly 30 million Chinese bachelor destined to marry by 2020

Need to look elsewhere Kidnapping brides from Mongolia, Tibet, Nepal reported Bachelors need to be socially accepted

Gender Imbalance – India

929 women for every 1,000 men. Northern States of India: Girl-to-boy ratio is 8-to-10, Haryana State in India has 6-to10 In 2001 census count of children 6 or younger, there were

927 girls for every 1,000 boys – down from 945 girls in 1991 and 962 in 1981

“Pay 5,000 rupees now and save 500,000 rupees in future on dowries”

Raising a girl is like watering the neighbor’s garden• The statistics mean there are anywhere from 20

million to 40 million “missing “women in India.

Gender Selection

Korea - Bride Shortage

116 boys for every 100 girls By 2010, will face a cumulative shortage

of brides – One million women Match Making services- all over the

country Only 3/5th of ethnic Koreans live in

S.Korea Looking to “Yanbian Brides” in N/E China May look into North Korea – inter

marriages may be a good solution for

Surfing Internet and watching - Satellite TV –

Increasing number of women using Internet 45% in Korea 42% in Singapore 41% in Taiwan 40% in Japan

By its very nature - e-mail is gender neutralWomen can express themselves better

Express their opinion better

Satellite TV is dominating their daily life

Vietnamese cable watchers enjoy NYPD Blue and Seinfeld

Bay Watch and Dallas - very popular in most Asian countries in India and China

Aging Population

There will be more grand parents in Asia (esp. in Japan, Hong Kong, Singapore) than grand children

For every person 65 or older, there will be 2.5 people of working age (15-64)

China alone will have 120 million – 65 or older (growing at 9million persons each year) Implications on Pension plans Business opportunities (nursing homes, living

facilities) Japan – automatic tubs in nursing home

By 2015

Aging Population Declining Man power

Between now and 2015: N/E Asia – absolute size of the working populations

will decline Taiwan and Korea will be negligible Japan will be shrinking significantly China’s man power growth will have just turned

negative All man power growth will come from three

countries

Impact: Flow of immigration

5% of workforce in Singapore and Malaysia are non-citizens

Japan still refuse to accept flow of immigration (lower than ratio of 17 European nations). Throughout the 90s, fewer foreigners naturalized Vs tiny Switzerland

Challenges Ahead

8-9 % in Thailand and China 10 % in South Korea 11% in Taiwan 15 % in Hong Kong 24 % in Japan

United Nations defines an aging society as one in which 7% or more of the population is

65 or olderBy 2015

Graying of Asia - opportunity Property developers for retirement communities Developers of hospi ta l -equipped ret i rement

condominiums Insurance agents for life insurance (developing

custom-made programs) Beauty parlors (specialized in offering new young look

for older women) Health care professionals (catering to medical needs) Travel agencies (specialized in senior citizens luxury

tours or cruises) Fund managers (handling retirement or pension funds) Cosmetic surgeons (who can help smooth wrinkles)

IF YOU WANT IT, you can have it.

DOUBLE EYELIDS:By cutting open the upper eyelid and restitching it to create a crease, surgeons can give eyes more definition and a more Westernized look. $2,300

EYEBAGS:The lower eyelid is cut open and the small sack of fat inside is removed. A laser is often used. $4,630

NOSE JOB The nose bridge is raised by adding a prosthesis or a piece of bone normally taken from the patient's rib or thigh-bone. $3,240

IF YOU WANT IT, you can have it. BIGGER BREASTS: Despite the cancer warnings,

breast implants remain popular in Asia. Saline-filled envelopes are inserted between the breast tissue and the chest wall. $11,100

FULLER LIPS: Tiny amounts of collagen are

injected into the lips to plump them up and make them look more sensual. $2,780 per lip

IF YOU WANT IT, you can have it BALD NO MORE: Hair-grafting involves removing strips of

hair-bearing skin from the dense growth at the back of the head. Tiny incisions are then made into the bald section of scalp. The follicle strips are woven into the head, where they eventually take root and grow. From $4,630

TUMMY TUCK:

Asian Governments attract senior citizens

The Philippine Retirement Authority: Each settler pays $50,000 deposit, plus

$15,000 per dependent child. Right to live in the Philippines with the deposit returned if they leave the country

Silver Haired Program: Malaysian government initiated the

“Silver-Haired Program” to attract Japanese and Europeans over the age of 55.

CHINA will be the dominant power in Asia

BIG BROTHER

Signed a free-trade agreement ASEAN (10 countries) – 500 million people

Free trade area with 6 countries in 2010

Free trade area with 4 countries in 2015

World's biggest trading area: 1.7 billion consumers

$1.2 trillion two-way trade

•

China - Today

In 2003 it accounted for one fifth of the growth in world trade

China is the factory floor of choice for the world’s low-coast manufacturing

It assembles more toys, stitches more shoes, sews more garment than any other nation in the world

It has become the world’s largest consumer for electronics

Military spending: spends $2billion annually to buy hardware from Russia

China will continue to emerge as a strong player in the world economy

By 2015, nearly half of all China’s people will live in rural areas

CHINA

Huge market for automobiles

In 2004, about 5 million cars will be sold

2004 - In volume, China is bigger than Germany

2007 – Could beat Japan ( becomes second to America)

2010 – 10-20% of total volume – General Motors

Nine top international manufacturers plan to spend $9.7 billion between 2004 and 2007

Big Three Imports from China

GM and Ford – now accepts Chinese supplier now serves as global “benchmark” prices for quality and price on certain components

During past 4 years, 133,000 jobs disappeared

By 2010, same study predicts a further 127,000 jobs will disappear to China and Mexico

Look I am richLuxury goods

More women are buying luxury goods Armani plans to open 20-30 new stores by 2008 Prada will invest $40 million in the next two

years - 15 stores Louis Vuitton will have 13 stores by Y/E Drive BMW, eat at Hard Rock café, children

wear GAP clothes, Levi jeans, digital cameras – sign of wealth

Each month 5 million new subscribers sign up for mobile phone service

300 million subscribers – largest in the world Nokia, Samsung, Motorola Motorola plans to invest more than $10billion by 2006

Chinese traveling

Chinese are trading places with Japanese

Australia: 3.7% of overseas visitors from China in 2003 but in 2013, expected to reach11.1%

China- Changing Life Style

As late as 1989, six out seven newly married couples would not have had sex before the paper work is completed

Now, as many as 70% of young adults in urban areas have indulged

Divorce rate 3% in the 1970 to 14% today China formally eliminated the need for employers

to sanction weddings Only last year the court laid out procedures –

divorced couples should split their property (includes joint assets, stocks and bonds)

Now Chinese women are demanding pre-nuptial agreement and public notaries (NP) are making roaring trade.

China’s Little Emperors Will Emerge As Driving Force in 2010

Beijing Intelligence and Capability Kindergarten

-Violin is optional

- Golf is mandatory

- Tuition is $6,000/year

- At least 100 million - under the age of 25 – have been raised in one-child households

Growing Pains In China’s 11 big cities 50,000 people die

prematurely and 400,000 people are infected by chronic bronchitis each year because of air pollution

If no changes, 380,000 people will die prematurely each year by 2010, and will rise to 550,000 people annually by 2010

Government is planning to reduce its reliance on coal

Unemployment: In 2004, China had 2.8 million graduates from all colleges combined – double the number two years ago

China will produce 325,000 engineers in 2004 Five times as many as in the U.S (decreasing since 1980)

Salaries are falling

More Foreign Investment in India

Indian government has raised ceiling on foreign equity in Indian Banks, from 49 to 74 percent, which was unthinkable 10 years ago

Recently when New Delhi computerized its tax and revenue departments, the first contract was won by HP and Microsoft

Coke is bottled in plants in many parts of India with the formula protected

IBM is planning to buy a large call centre operations

India has become a major trade partner for the U.S. - $7.2billion in goods and services in 2002 double the level five years ago

India Today

To set up business In Singapore – to start a business is 8 days Hong Kong – 11 days In India – 88 days

If you want to get out of it: Hong Kong take one year Singapore – less than 7 months India – 11 years

Future Growth of India

By 2020 The size of its population — 1.2 billion by

2020 47% of Indians will be between 15 and

59, compared to 35% now. Technologically driven economic growth

virtually dictate that India will be a rising regional power.

Goldman, Sachs & Co projects India will be able to sustain 7.5% annual growth after 2005

Watch for Vietnam

Asia’s best performing economy Grew average 7.4% per year for the past ten

years It raked foreign investment worth more than

8 percent of GDP in 2003 1993 – World Bank estimated 58% population

poor – By 2002, it had fallen to 29% Nearly 55 percent of population is under 25

and 85% under 45 years old

East Asia Today

China – 1.25 billion

Indonesia – 200 mill

Japan – 125 mill

Other countries – 40 mill

One of the World’s largest developing country regions

1/3rd of world’s population

In 2000 – 261 million living on less than $1 a day

Drop to 80 million in 2015

Southeast Asia Today

520 million

South central Asia Today

(includes India, Pakistan)

1,486 billion

Nearly 50 percent of the world’s population lives in Asia

Asian Brands to Watch in the next ten years

LG refrigerator from Korea – (with flat panel TV screen) niche market (changed from Lucky gold star)- compete with GE, Whirlpool, Maytag

HAIER – already sells at Wal-Mart, SEARS and Best Buy (2003 revenue $9.75 billion)

Bajaj scooters – link with Kawasaki- Japan- now sells for $2,700 in America

TCL Mobile Phone/TV – linked up with RCA in the America

Samsung Legend computer in China and Asia Hyundai

Asia in 2015 FIVE Asian countries (China, Japan, India, a unified

Korea and Indonesia) will grow substantially relative to the rest of the world. They will account for more than 45 percent of the global product, the U.S. about 25 percent and the European Union only 15 percent

The GDP and military capital of China will become relatively large (GDP will be about $11-12 trillion, same as that of U.S.)

Chinese economy will account quarter of the global product, twice as that of Japan. A unified

RAND school of Policy Studies

Thank You