China's competitive advantage

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Research from Jack McCann of Lincoln Memorial University, in Tennessee, suggests that China could become the dominant economic power within a few years if it exploits the competitive advantages it is creating politically, culturally, legally and economically.

Writing in the current issue of the International Journal of Sustainable Strategic Management, Jack McCann suggests that China's business and political leaders have long worked to build strong relationships with developing countries. However, it is strengthening of its global political presence that is closely aligned with economic expansion, which could lead to a sustainable dominant position in the world.

The Chinese Communist Party has governed China for the past 55 years and remains secure in its position as the sole political party in China. Despite its seeming inability to respond with ease to changes in Chinese society, the Party has nevertheless witnessed an average annual growth of about 10% for nearly two decades and unique stability during the current world economic crises. Indeed, China's merchandise trade has been growing at about 14%, three times faster than world trade, making China the third largest economy as of 2008.



"On paper, globalization poses the long-term potential to raise living standards and reduce the costs of goods and services for people everywhere," says McCann. However, globalization does not mean equitability. China currently produces almost three-quarters of the world's today, nearly two-thirds of its bicycles, a third of its television sets and air conditioners, and half of the world's microwave ovens. "China's pool of cheap labor may dominate world labor markets for decades, giving it a monopoly on cheaply manufactured goods," McCann explains.

There is an intriguing undercurrent to China's development and trade practices that concerns those in the West. "Competitive strategies, currency manipulation, and piracy of intellectual property are causing concern in the global economy and creating protectionist reactions in many countries," adds McCann. It is interesting to note that as China utilizes its various competitive advantages, not least those ethical considerations, it has in recent years become the world's second-largest oil consumer after the US while the US trade deficit with China increases year after year into the hundreds of billions of dollars. Globalization has wrought new opportunities for many nations. China is no different than any other in attempting to make the most of this emerging world order.

More information: "The Chinese competitive advantage" in Int. J. Sustainable Strategic Management, 2011, 3, 1-12
Provided by Inderscience Publishers (news : web)
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Trends in US, Europe will affect the Malaysian Economy

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Economist: Trends in US, Europe will affect M’sia

By LIZ LEE lizlee@thestar.com.my

KUALA LUMPUR: Malaysia should keep an eye on political trends and unemployment rates in the United States and European countries as these factors will affect the local economy, says UBS Investment Bank managing director and global economist Paul Donovan.

Due to persistent long-term unemployment in the United States and Europe, governments in these countries would want to protect their local jobs and therefore limit international trade, he said at a roundtable session with the media yesterday.

As a result, Donovan said, politicians would try to run economies, which meant rising political risk in the global economy.

Donovan: I believe we will now see a period of relative stability.

 

Donovan said while politics had always influenced Asian economies, the United States and European governments had for the past two decades maintained a declining role in managing their economies.

“If we look back, the trend of reducing political risk will be reversed as politics is rising in the United States and Europe (now). What happens there will affect this region significantly.

“Malaysia, as a global open economy, will have to take note as decisions made in these foreign countries will have implications as to where the Malaysian economy is heading in the next few years,” he added.

Donovan said the Middle East remained potentially volatile but would not be the biggest political risk for this region.

“Through regulation, governments are playing a direct role in managing the economy. Certain countries will impose capital control and restriction on investments, which changes capital flow around the world.

“The trade protection that the United States and Europe has put in place means that Asia has to change the way it generates growth,” he said.



Donovan noted that exports would no longer be a reliable source for economic expansion. “Malaysia should look into (having a) domestic-focused economy with more domestic investments and consumption,” he said.

As for the world economy, Donovan said the forecast 3.9% growth had been slightly revised downward to 3.6% following the natural disasters in Japan recently.

“At the start of this year, growth momentum was quite good. First-quarter GDP numbers were better than expected in Malaysia but economists say there will be a levelling off of growth.

“I believe we will now see a period of relative stability,” he said, attributing that to continued fair growth in the United States and Europe.

He added that there would be limited slowdown in Malaysia in the second and third quarters.

“We will see a trend-like growth globally, which will continue to keep the Malaysian economy at a reasonable growth rate of 4.5% or 5% over the next two years,” Donovan added.

However, he said, this also meant that things did not get worse or better, reflecting the unchanging unemployment rates and spare capacity in countries that had not recovered well from the recession in 2008 and 2009.

The United States is facing its highest unemployment rate since 1983, with more than 40% of its citizens unemployed for more than six months.

Astro Astro to revise rates despite being urged to review price hike; Boycott threat looms!

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Astro to go ahead with plans to revise rates from Monday

By RISEN JAYASEELAN and EUGENE MAHALINGAM starbiz@thestar.com.my  Friday July 8, 2011

PETALING JAYA: Despite all the brouhaha that has arisen following Astro's planned revision of its rates, indications are it will take effect this Monday as planned.

This is according to industry sources. Astro has yet to reply to e-mail questions on this at the time of writing.

Industry experts also said the Communications and Multimedia Act 1998 (CMA) did not prevent Astro from carrying out its price revisions.

Corporate lawyers familiar with the CMA pointed out that companies operating under the Act did not need the prior approval of the Malaysian Communications and Multimedia Commission (MCMC) for price revisions.
 

“The same applies to all broadcasters and telecommunications operators. The Act doesn't require them to seek approval for any price changes.

“Telco's change their rates all the time as it is a dynamic industry. It would also not be feasible for these operators to seek the commission's approval for price changes every time,” a lawyer explained.

Another lawyer said that while the minister in charge had the right to intervene in the determination of rates of companies licensed under the CMA, as provided for by section 199 of the Act, that section should be read in the full context of the CMA.

“In particular, reference must be made to section 198, which determines the general guidelines for licensees to determine rates,” he said.

Section 198 of the CMA states among other things that rates must be fair and not unreasonably discriminatory and should be based on costs of the operator. It also states that rates should be structured at levels “set to attract” investment into the communications and multimedia industry.

In an advertorial published in major newspapers yesterday, Astro clarified that its price adjustment was in essence “a rationalisation of its existing packages, with the specific intention of creating more value for the customer.”

“Under the previous structure, prices were based on an add-on rate. Under the revised price structure, the more packs purchased, the greater the discount.

“Depending on the choice of package, customers could either save, experience a price increase or remain unaffected by the new price revision,” Astro said.

Astro also said the rationale for the new price structure was due to escalating global and local content costs.

“In 2007, our total content cost was at RM760mil and this figure escalated to a staggering RM1.3bil this year. Where premium content is concerned, the increase has been as high as 300% with every renewal of content rights.

“While Astro has absorbed escalating content costs over the years, it can no longer do so without compromising on the quality of its services,” it said.

Meanwhile, an analyst who used to cover the stock when Astro was listed said the rate increase was justified to cover its rising content cost.

“With rising content cost, it makes sense to raise prices. Of course, passing it on to customers is not the best way to do it, but it's the only way,” she said.

The analyst said Astro had been trying to “re-jig” the cost of its packages over the years to ensure that it was not a burden on the lower-income group of customers.

“The prices of its basic packages have not changed for many years.” She said it made business sense to raise rates or it would be difficult to sustain profitability.

“Content cost has been going up over the years and the only way to combat it is by increasing rates.”
Another analyst said Astro had been investing a lot in upgrading its facilities, adding that a price hike was necessary.

“When they started offering their packages in high-definition, content cost naturally went up.”

He also said from his understanding, in the past, Astro only needed to inform the MCMC about potential rate hikes and that no approval was necessary.

Astro urged to review price hike 

By Karen Arukesamy , newsdesk@thesundaily.com July 1, 2011

KUALA LUMPUR: Domestic Trade and Consumer Affairs Minister Datuk Seri Ismail Sabri Yaakob urged local pay-television giant Astro to be sensitive to consumers' needs and review its price increase.

Saying that the price increase will indeed burden the people, especially middle and low-income subscribers, he said Astro's price revision should be in line with the government's initiative to reduce prices.

"Astro should rethink about increasing the price for its service channels. "Not just Astro but all other corporate companies should be more sensitive to the needs and burdens of the people," Ismail told a press conference today after launching the National Consumers Month 2011 at KL Sentral here.

Noting that Astro is under the purview of the Information, Communication and Culture Ministry, Ismail Sabri said he will engage with Minister Datuk Seri Dr Rais Yatim to ensure that the people are not burderned by the price hike.

"It is not under my jurisdiction and my ministry cannot take action against it but I have advised Astro about my concern and the concerns of the people on the price revision," he added.

He stressed that it is "inappropriate and wrong" for Astro to state that its price hike is "inevitable" despite Rais's reminder that it has to first get the approval of the Malaysian Communications and Multimedia Commission (MCMC) before increasing the subscription fee.

He said the consumers have the right to demand for a reasonable price for the goods and services they purchase.

Reiterating the theme of the programme "Consumers Rights Are Your Responsibility", Ismail Sabri said consumers can lodge reports on any unsatisfactory service or products with the Consumer Tribunal.

On recent calls by various consumer associations to boycott Astro by freezing payment for three consecutive months due to its price hike, he said: "It is their right to boycott."



Ismail said consumers have a choice and they can choose to boycott satelite pay-television and revert to the local television channels which are free.

On June 15, Rais said the ministry would discuss with Astro on the issue and the notice issued by Astro that from July 11, Astro customers may experience increases ranging from RM1 to RM15 per month was considered invalid as it did not obtain the approval from the MCMC.

However, Astro chief operating officer Henry Tan had in a statement on June 22 said that the hike was imminent and inevitable because the content costs had increased to RM1.3 billion in 2011 from RM760 million in 2007.

The company, however, will maintain the price of its Family Pack at RM37.95 per month with access to 38 channels.

The price adjustment effective July 11 is based on the subscribers' package selection. Some subscribers may be charged an increase of between RM1 and RM15 per month, while some would enjoy a reduction of between RM4 and RM14.95 per month.

Boycott threat looms over Astro

KUALA LUMPUR (June 27, 2011): Consumer associations urged Astro subscribers to boycott the pay-television giant for its decision to increase prices from July despite the government’s pending review.

The Malaysian Islamic Consumers Association (PPIM), along with over 70 NGOs including the Consumers Association of Penang and Federation of Malaysian Consumers Associations, have urged all Astro subscribers to stop payments for three months.

PPIM chairman Tunku Azwil Tunku Abdul Razak said that this is in view of Astro chief operations officer Henry Tan’s statement that the price hike is “imminent and inevitable”.

“Since Astro did not take heed of consumers’ demands made in a statement on June 17, PPIM urges all subscribers to boycott its services until it fulfils consumer demands to reduce the price and enhance its quality,” he said at The Mall here today.

He said the NGOs will also be calling for a boycott of all products that are advertised on Astro in order to demonstrate consumer power.

He said PPIM has set up a secretariat to monitor complaints on Astro’s price increase and services, and to take note of companies advertising with it.

He said that the NGOs are not against Astro but want the company to be more responsible and adhere to customers demands.

“We regret that Astro is not being considerate with the public’s complaints, and dissatisfaction over its price hike and deteriorating service quality that is not in line with the government’s motto of People First; Performance Now.”

He said thousands of complaints have been received from consumers via an online survey and more was coming in through Twitter, Facebook and phone calls.

Tunku Azwil was disappointed to note that Astro had denied that the public was against the increase when the association had submitted its customer demands on June 17.

He said that the 70 NGOs comprising consumer groups and non-consumer groups have three million supporters.

Tunku Azwil urged the government to pay heed to this boycott by ensuring that consumer demands are fulfilled.

“We call on the Domestic Trade and Consumer Affairs Ministry and Information, Communications and Culture Ministry, to protect consumer rights.”

He said the government should stop monopolies.

From July 11, Astro customers may experience increases ranging from RM1 to RM15 a month but this will be balanced by savings of RM4 to RM14.95 a month in subscriptions.

The company, however, will maintain the price of its Family Pack which gives access to 38 channels at RM37.95 a month.

Sundaily