Downstream Linkages in the Zambian Copper Industry

Downstream Linkages in the Zambian Copper Industry Resource extraction is often regarded by governments and people of resource-rich countries as a solution to poverty alleviation, ranging from tax revenues, technology transfer, and employment creation, export enhancement to upstream and downstream linkages. Downstream linkage industries do promise the widening of employment opportunities and high foreign earnings as a result of value-addition. Western resource intensive economies such as Australia, Canada, US and the like are examples of well-managed, resource-rich economies in which the mineral sectors spurred knowledge-intensive processes, created jobs and foreign exchange earnings and resulted in spill-overs into new industrial and service sectors. The scope of downstream linkages is often considered an important determinant of the extent to which a mineral-rich nation stands to gain additional economic benefits that come with it. This explains the continuous pressure that is always mounted on mining companies by host governments to engage further in downstream activities. However, downstream activities irrespective of their location are influenced by global market dynamics and competitive elements. Therefore, in an attempt to grasp the benefits that come with downstream activities, it is extremely imperative to examine the opportunities, risks and possible ways of striking a balance taking cognizance of the global demand and supply interplay to ensure that the highest possible net positive benefits are achieved and sustained. In focus is Zambia which has been an active copper mining country since 1900s though performed poorly along the line but revamped barely in the last decade. In 1968, Zambia held an important position as a copper producer, with peak output at 815,000 ton and a 15% share of world output, but the abysmal performance of its state-owned enterprises that took over after the 1969 nationalisation resulted in a drop of output to a trough of 250,000 tonnes in 2000 (Radetzki, 2009p.182). Nevertheless, the copper industry has been revitalised with the privatization of the mining sector which occurred between mid-1990s and early 2000s. In the period 2000-2005, copper exports contributed to around half of total foreign exchange earnings, but from 2006 onwards, this share increased to 73.5% 83.2% ( Fessehaie, 2012 p.3). Copper also provided 10% of formal employment and its contribution to GDP in the last decade increased on a yearly basis, reaching 9.1% in 2009. Copper mining has and continues to be one of the largest economic activities in Zambia, comprising approximately 10 percent of GDP and more than 60 percent of exports (Wilson, 2012pp798-799). The paper therefore examined downstream or for ward linkages to copper production in Zambia by first exploring the scope of downstream linkages and examined the risks, opportunities and risks mitigation measures in the downstream sector of Zambias copper industry. The rest of the paper is structured as follows; section two introduces the background and established the theoretical framework. Section three examined the scope of downstream activities, the risks, opportunities and possible measures for risks mitigation and section four concludes with recommendation. 2.0 BACKGROUND 2.1 A Brief Overview of Global Copper Production and Consumption The global cumulative annual growth in global mine output of copper has gone through significant changes over the period 1750 to 2007. It stood at 0.8% in 1750-1800, rose to 2.6% in 1800-1850 and from 1850 and until 1900, the annual growth of copper production accelerated to 4.5%. Output expansion subsequently reduced to an average of 3.3% between 1900 and 1950, and remained at this level until 2007 (Radetzki, 2009p.182). In 2011, global copper production reached an output level of 16100 metric tonnes from 15900 metric tonnes in 2010 with a total reserves value of 690000 metric tonnes (USDSp. 49) (2012). On the other hand, growth rates in global copper consumption fell from 4.48% in the period 150-1973 to 0.65 covering 1973-1983 largely explained by the oil price shocks of the 1970s and 80s and picked up again, reaching 2.51% for period 1983-2003 (Nishiyama, 2005p..132). The period following 1990 saw a significant increase of Asia, especially Chinas share of global copper consumption , currently about 40% (ICSG) which gradual spurred up copper prices in the mid-2000s. The interplay of Chinas demand growth and appropriate timing of additions to production capacity speaks a lot about the future global trends in both production and consumption. 2.2 Overview of Copper Mining in Zambia Copper mining in Zambia dates back to the 1900s under the control of two mining companies, Rhodesia Selection Trust and Anglo-American Corporation (AAC)( Fessehaie, 2011p.16) .The industry came to be nationalized in the late 1960 and was operated under state ownership and control, a typical characteristic of mining operations in mineral exporting countries in the decades following the Second World War. The government, following years of significant losses, privatized its copper mines, which were later consolidated into the Zambia Consolidated Copper Mines (ZCCM), majority-owned by Government (60.3%), with a minority share owned by AAC (27.3%)( Fessehaie, 2011p.16). For instance, Kansanshi mine, the largest copper project in Africa is 80% owned by First Quantum Minerals Ltd and 20% by the state run ZCCM Investments Holdings which replaced ZCCM (ARB, 2012). The mining sector is regulated primarily by Act No. 7 of 2008 (the Mines and Mineral Development Act of 2008). The Zambian copper industry is not insulated from the acquisitions and mergers characteristic of the global mining industry. In 2011, Barrick Gold Corp. of Canada acquired Equinox Minerals Ltd. of Canada (USp43.1). Newshelf 1124 (Proprietary) Ltd. of South Africa, an indirect subsidiary of the Jinchuan Group Ltd. of China acquired Metorex Ltd. of South Africa and its underground Chibuluma copper mine (Metorex Ltd., 2011, p. 8). Konnoco Zambia Ltd., a joint venture of African Rainbow Minerals Ltd. of South Africa and Vale, continues with the development of the Konkola North underground copper mine (African Rainbow Minerals Ltd., 2012, p. 70). Mining companies equally undertake joint ventures in explorative activities in Zambia. Argonaut Resources NL of Australias subsidiary Lumwana West Resources Ltd. in a joint venture with Mwombezhi Resources Ltd. of Zambia set to explore in Northwestern Province (Argonaut Resources NL, 2012, p. 2). Zambias economy is heavily reliant on mining, particularly its copper and cobalt, and the mining sector makes significant contribution to Zambia exports and economic growth. Copper output rose dramatically following the copper price rise in the mid-2000s with annual copper production increased from 335,000 metric tonnes in 2002 to over 569,000 metric tonnes in 2008 (Wilson, 2012) . From 2007, copper exports contributed 73.7-80.5 per cent of total foreign exchange earnings, 10 per cent of formal employment, and in 2010 Zambia was the largest copper producer in Africa and the 7th largest in the world ( Fessehaie, 2012). Copper exports jumped from $474 million in 2000 to almost $4 billion in 2008. In 2010, the mining and quarrying sector accounted for 9.9% of Zambias real gross domestic product (at constant 1994 prices) compared with a revised 9.3% in 2009. Copper exports earnings increased by 15.5% to US $6,660.2 million from US $5,767.9 million in 2010 (Bank of Zambia, 2012, p. 23,) a nd in 2011, copper exports were valued at $6.9 billion (Mobbs, 2012 p.43.1). 2.3 Theoretical Framework The concept of linkage development in the academic discourse has its root from early works of Leontief (1936) who applied an input-output analysis to static quantity modeling (Lenzen, 2003 p.1), modified by Rasmussen (1956) for inter-industrial analysis as setting the basis for structural interdependence. In determining the key sectors of an economy, Hirschman (1958) argued that above-average linkages are pre-requisites for economic development and structural changes within an economy or a region (p1-2). Contrary to this argument, Bharadwaj (1966), Panchamukhi (1975) and McGilvray (1977) highlighted that international comparative advantages, technical and skill endowment, final demand structure are among the driving forces of economic growth and concluded that linkage interconnectedness is a weak rod to rationalising a development policy(1-2) According to Hirschman as cited in Morris et al (2012), there are three main types of linkages in the commodity sector thus, fiscal, consumption and production linkages. In his view, fiscal linkage encompasses royalties and taxes which together form mineral rents; consumption linkage entails the consumption demands of workers of the commodity sector, whereas the production linkage encapsulates both backward and forward linkages. Authors such as Sonis and Hewings (1989, 1999) and Sonis et al. (2000) in their works on the dynamics of backward and forward linkages, and economic landscapes of multiplier product matrices pushed further the arguments of Hirschman and Rasmussen (Lenzen, 2003 p. 2). The linkage thesis has been applied in a number of studies in attempts to examine the impact of mining on economies. Lenzen (2003) utilised the input-output application in his analysis of the key environmentally important factors of production, linkages and key sectors in the Australian economy and concluded without a factual basis that strong forward linkages are characteristic of primary industries like grazing and mining whereas strong backward industries characterized secondary industries (p.29). Similarly, Cristobal and Biezma (2006 p1,5) analysed the forward and backward linkages of mining and quarrying in ten EU countries to determine whether the industry constitute a key sector and came to a conclusion that the mining and quarrying industry has a strong backward link to regional economys production more than other sectors and otherwise holds for forward linkages. Though not a metal mineral, the Southern Louisiana offshores oil fields is the most apparent successful linkage ca pture identified throughout the 20th century. The ability to sustain pre-existing competition and the availability of the commodity in large quantities were largely responsible for the successful linkage capture (Freudenburg and Gramling (1998p 575-576). Moreover, Aroca (2001p 131) employed the input-output Leontief matrix to determine the impact of the mining sector on the Chilean II region and analysed the driving forces to the extent of the impact. With regards to the volume of production, his analysis indicates that the mining sector is very important but loses its importance in developing forward and backward linkages in the economy. Lydall (2009 p.2, 119) investigated backward linkage capture of South Africa platinum group metals and found different categories of supplier firms, ranging from base, medium to large able to satisfy the needs of the various PGM mines, concentrator plants, smelters and refineries. She however cautioned the existence of market-related and firm-speci fic factors militating against the growth and expansion of such linkages. Morris et al (2012 p 1-2,14) examined the underlying factors to linkage capture in the commodity sectors in low income countries in Sub-Saharan Africa with much attention on backward linkage capture and recommended for strategies to be mapped to propel industrial sector upgrading especially in commodity exporting countries. Also, Fessehaie (2012p 2,7) examined the determinants of upstream linkages to copper production in Zambia. She noted that backward linkage was growing and copper mining presents opportunities and recommended that in order to broaden backward linkage to utilize such opportunities there is the need to eliminate barriers to upgrading through an industrial policy which takes care of supplier competitiveness constraints. From the preceding literature reviewed, much attention on linkage capture studies has been directed at the backward linkage capture. The few works on linkage development in Zambia copper (Fessehaie, 2011 and 2012; Morris, 2012), the emphasis has been on the backward linkage. Therefore, the existence of paucity of studies that investigate forward linkages in the mineral sector particularly the copper industry in Zambia exposes a gap which the study aims to contribute to. 3.0 ANALYSIS AND DISCUSSION 3.1 The Scope of Downstream Activities Forward linkages encompass the establishment of downstream activities, at least processing and refining of copper ore and concentrates into primary metal, the fabrication of primary metal into semi-fabricated products and possibly, induced industrialisation. For the purpose of this study, mining ends with primary metal production and downstream activities begins with semi-products fabrication and beyond. Zambian copper industry has long history of existence but became more active and copper mine production of ore, anode and cathode increased following the privatization of the mining industry through the 1990s to early 2000s. The majority of copper ore mined in Zambia is smelted locally before being exported to foreign markets (Fraser and Lungu, 2007 Wilson). Fig 3.1 confirms that though greater share of mine output is refined locally, very less of it is used in the country. The graph covered a short period due to lack of access to up-to-date quality data. Zambias copper is mainly exported as cathode or blister, the standard forms of the internationally-traded commodity. Zambia uses less than 5 percent of its copper output to make fabricated products (World Bank, 2011 p ii). However, finished goods containing copper are mainly imported into the country. Zambia has developed a small copper fabrication industry that produces a narrow range of products for domestic use and for export to regional markets, largely informed by proximity to customers guided by profitability. However, these markets are small, and yet the industry competes with larger and more developed industries especially that of South African copper fabrication industry. Zambias fabrication industry is growing rapidly, but from a small base, led by Metal Fabricators of Zambia Ltd (ZAMEFA), a subsidiary of the US-based General Cable Corporation followed by others such as the Cast Product Foundry Non Ferrous Metals, Kavino and Central African Recycling in the scrap metal busi ness (World Bank, 2011p ii). ZAMEFA which has a domestic, regional and international market orientation produces wire rod, wire, cable, and a few other products. Its product portfolio is growing. Kavino, wire and cable manufacturer has a domestic market orientation whereas Central African Recycling is well positioned to utilized opportunities as they arise. Total number of employees falls below 1000. In 2008, Zambian mine, smelter and refined copper output in tonnes stood at 546 600, 232,000 and 416,900 respectively. The fabricated metals production sector contribution to GDP grew at an annual average of 0.2 percent for the period 2002 to 2008.(World Bank, pp 18). 3.2 Risks Associated with Downstream Activities The resource-based industrialiation that characterized the development process of resource-rich developed economies is often quoted to back resource-rich developing countries quest for resource-driven industrialisation which in their view masterminded the in dustrialiation process of some mature economies. However, the growth strategy of the Nordic countries, United States and Canada for instance did not based entirely on mineral extraction but span from a low-technology based on low-cost labour to highly sophisticated knowledge-intensive activities (Walker and Jourdan, 2003. P.30.). Nevertheless, risks, largely economic, abound alongside the potentials of further downstream activities. Downstream activities beyond primary processing are capital intensive and require less skilled labour. Guided by profit motive, firms seriously consider capital cost in securing capital to finance assets. Backed by the electronic revolution, market efficiency sets the ground for capital and skills to be deployed to most productive locations (Walker and Jourdan, 2003p 30) and countries without traditional comparative advantages like Zambia are less strategic in competing for foreign direct investment. Again, the capital intensive nature of further processing of copper questions the employment multiplier and rather breed associated risks of either expanding or contracting employment opportunities. Moreover, the fabrication industry uses 37 percent of copper that is derived from scrap metal which is limited in the country (World Bank, 2011p.iii). Therefore, importing other raw materials including scrap for fabrication may not make any comparative advantage sense in the short to medium t erm and highlights the risk associated with an uncompetitive and injudicious allocation of the nations scarce economic resources. The ability to compete and access adequate market, both regional and global to justify downstream activities on any significant scale comes with a risk. Committing resources into fabrication without any competitive market edge exposes the copper mining sector to possible collapse and the entire economy to possible shocks. This is because upon the small size of the sub-regional market (less than 1 percent) of the global total for fabricated copper products (World Bank, 2011p ii) better established firms in South Africa have captured a greater portion of the regional market. Internal demand for fabricated products is woefully inadequate and therefore, the promised job expansion, high foreign earnings and associated growth potential are easily erodible, if even attained. Walker and Jourdan, 2003p 33 noted that domestic demand was instrumental in Swedens initial resource-oriented industrialisation. Closely linked is tariff escalation that discourages exports of higher value-added products from Low Income Countries (LICs) (IMF, 2011p.16). Tariff escalation and high physical transport cost jointly further accentuate the risks to Zambian copper downstream activities. Consuming countries of copper metal and semi-fabricated products especially the newly industrializing countries and roaring developing countries of China and India, in their industrialization drive, have in one way or the other resort to restrictions in the form of differential tariffs (varies directly with the value already added) on raw materials imports for their industries. Dimaranan et al, (2006 p. 13) note that Indian policy measures in this regard include more effective duty exemptions for intermediates used in the production of manufactured exports. The high transport cost and tariffs imposed on value-added products together can cancel completely if not negate the often expectant high profits and associated em ployment multipliers. The prices for both the primary and fabricated products of the mining industry are characterized by troughs and peaks. However, the existence of terminal markets such as London Metal Exchange (LME), the Commodity Exchange Division of the New York Mercantile Exchange (COMEX/NYMEX) and the Shanghai Metal Exchange (SHME)(ICSGP.33factbook) provides mitigation to the risk on primary metal resulting from price volatilities. On the other hand, high-value added downstream products are more prone to price shocks as there exist no such terminal markets in that sub-sector of the industry. Therefore, the often envisaged employment multipliers and high foreign earnings that motivate pressure for further downstream processing places the entire economy at risk in the event of weak prices without any competitive edge. Mainstream fabricated metal products are largely low margin items. However, high level of capacity utilization and throughput is required to generate sufficient margins which are currently in non-existence in Zambian copper industry. This is largely informed by the uncompetitive and comparative disadvantages to the downstream sector of Zambian copper industry. The situation exposes the downstream copper fabrication industry to the risk of at best earning low margins. In 2008 for example, First Quantum Ltd, a leading European copper rod producer made profits of 12.2% and 49.6% from large Cap Cast Copper Rotors (CCR) rod mill and Oxygen-free High Conductivity (OFHC) rod fabrications respectively (World Bank, 2011p.13) but earned a profit of 85.4% from primary cathode production. Such low margins in fabrication gives the signals that even internationally competitive manufacturers of range of specialist copper products rather earn high margins in primary metal production. 3.3 Opportunities in Downstream Value-addition The existence of copper deposits in substantial quantities is a basic requirement for mining in the first place and possibly, further downstream processing (Freudenburg and Gramling, 1998). The existing domestic and regional market does not incentivise further copper fabricating on any significant scale, but some localised small-scale opportunities may emerge. In this regard, there may be a scope for some gradual scaling-up of existing output and/or product diversification by existing operations especially ZAMEFA and for some small-scale artisanal processing, probably based on scrap metal. Sectorial opportunities could be enhanced if the basic and mainly infrastructural bottlenecks are remedied. One of such opportunities is the World Bank support to revamp Zescos existing distribution networks in selected areas to reduce losses and improve supply quality (World Bank, 2011p.33,34). Depending on the roll-out of electrification extensions, there may be some demand for low and medium vol tage. Moreover, the global copper industry has identified a potential market which could exploit the known biocidal properties of copper in combating Methicillin-resistant Staphylococcus aureus (MRSA,) spread by its use in touch surfaces and all fixtures and fittings in hospitals and clinics. The international competitive nature of the downstream activities of fabrication limit these opportunities as well established firms are ever ready and prepared to cease any market opportunities as they arise and compete out less competitive ones. Chinas dominance in the recent global copper consumption forecloses in comparative and competitive terms, any opportunities of developing an internationally competitive further copper processing in Zambia at least, for the short to medium term. For instance, Chinese refined copper consumption expanded by an annual 15.3% in the 1998-2007 period and by 2007, Chinas share of global copper usage rose from 10.5% to 26.9% (Radetzki , 2009. P. 177) in a decade. Though very important, the geological potential does not itself guarantee comparative and competitive advantage in any appreciable further downstream processing. For instance, Chile, the worlds largest copper producer, accounting 34 percent of world mined copper output and 17 percent of wor ld refined copper output, yet its use of refined copper is less than 1 percent of the world total (World Bank, 2011.8) 3.4 Mitigating Downstream Activities-Associated Risks and the Way Forward Value-addition is critical to ensuring greater benefits and competitiveness for countries incorporated in the global economy (Mtegha and Minnitt, 2006 p. 236) hence further downstream processing should be encouraged and driven by state incentives taking cognizance of the external environment. A strong manufacturing base has to be developed if any significant expansion of copper value-addition activities is to grow. In order to grow and sustain a downstream fabrication sector and even beyond, new sources of accessing competitive foreign direct investment and the continual adaptation and innovation of technology which is critical to maintaining technological competitive edge globally are ideal prerequisites. Moreover, demand is indispensable in industrial development and therefore any effort in that regard must first address the market end of the value chain ranging from local, regional to global levels. The ability to create a clear niche advantage is required if the copper downstream activities are to undergo substantial growth. Ideally, attaining global competitiveness is the single most important driver in mitigating risks ranging from further downstream processing or fabrication. While this may possibly be a long term growth and development goal in the downstream sector, the provision of adequate energy, communication and other infrastructure coupled with the effective and judicious use of economic returns from copper mining for diversification in new comparative advantage industries would in the papers view set the foundation for any competitive industrialisation in the long run. From table 1 below, South Africa is better positioned to cease any downstream copper fabrication and market opportunities at regional level and at the global level, China. 4.0 CONCLUSION AND RECOMMENDATION The study explored the scope of downstream linkages in the Zambian copper industry and examined the risks of engaging in downstream fabrication as well as the opportunities and suggested ways for mitigating the risks. The study reveals a small and modest fabrication activity producing a narrow range of products for domestic use and for export to regional markets, largely informed by proximity to customers guided by profitability. The decision in going downstream beyond primary metal processing encapsulates political and economic dimensions hence, requires striking a balance between both dimensions. Shaping a competitive mining industry alongside conscious efforts to diversify into other industries which gradually grow to shake off the initial copper-based dependence is a policy option and at the same time revitalizing the national science, technology and innovation policy to provide the foundation for long term skills and knowledge development. Chile, having built a competitive minin g industry, diversified its economy into other competitive sectors which propelled its growth. In the short to medium term, developing a competitive copper mining industry is plausible and more realistic in comparative advantage terms while mapping out strategies to attain competitiveness from national, regional to global scales which will mitigate further copper processing or fabrication risks.

Selling-Out the Asian-American Community in Amy Tans The Joy Luck Club :: Joy Luck Club Essays

Selling-Out the Asian-American Community in The Joy Luck Club i wish i could join in the universal praise for amy tan and her best-selling novel "the joy luck club." i wish i could find the latest chinese-american literary dish as appetizing as the rest of the american public does. but i can't. before amy tan entered the scene, public images of asian america had not developed since the middle of the century. the asian american male did not exist except as a barbaric japanese or vietcong soldier. the asian american female remained the adolescent suzy wong pipe dream, toyed with for a while and then deserted. amy tan, a gifted writer, had the chance to change those images, to dispel the public's misconceptions and to forge a new asian american identity. instead, she copped out on her obligations, meekly reinforcing every conceivable stereotype. if you believe tan's first novel "the joy luck club," asian amerca is some mystical oddity, conforming to the mascot-culture view of the white thirtysomething women who predominated at tan's reading. san francisco chinatown is filled with hysterical chinese women playing secret mah jong games. china itself is a dreamlik landscape, filled with secrets and traditions, all exuding a delicate, storybook aura. chinese mothers are all one-dimensional, superstitious and ignorant. their chinese phrases are delightful italics with quaint meanings. of course, what chinese comedy would be complete without a couple of garbled english words? when tan was late for her berkeley reading, her white husband directed the audience to mimic her mother's amusing syntax: "why so late?" rimshot. amy tan's heroines are the white mother-in-law's dream come true. these china dolls talk and have strong feminine sympathies. as one of tan's heroines admits, "i used to push my eyes on the sides to make them rounder." futile self-denial, but, oh, isn't it cute? tan's heroines gain identity by separating themselves from and looking down on their culture. when the heroine in "the kitchen god's wife" hears about her grand auntie's "spirit money," she sneers are her aunt's attempt to "bribe her way along to chinese-heaven" immediately suggests a negative contrast to the "truer" western heaven. the same dichotomy is used with men as well. asian american men are inadequate -- they're either bothersome brothers or unsuccessful lovers who lead to "apathetic boredom." love with a white male, however, is different.

Reading Comic May Help Students Do Better in School

Comics as Learning Opportunities Comic books have come a long way since their inception more than 75 years ago. Particularly in the past decade or so, comics have become increasingly recognized for their potential literary value. Offering a combination of reading and visual stimulation that research shows many pre-teen and teen-aged boys prefer, comic books can, according to some studies, help improve literacy. And this learning potential has not gone unnoticed. Take the non-profit Kids Love Comics, whose main mission is to raise awareness of comic books as educational vehicles.Consisting of comic book creators and publishers along with educators and even fans, the organization, through tours and participation at comic book conventions, seeks to make comics more accessible and available to children. Encouraging Creativity Children can develop writing and reading skills when they are given the chance to create their own comics through New York City's Comic Book Project. Established in 2001 and hosted by the Center for Educational Pathways, the program emphasizes learning by having children express themselves through drawing and writing comic books.And Reading With Pictures, a nonprofit organization founded by graphic novelist Josh Elder in 2009, strives to provide comics for educational use by raising awareness in schools around the country. Its goal is to ‘get comics into schools and schools into comics. ‘ The organization conducts research, consults with schools, works with cartoonists on scholastic comics and assists universities in designing courses focusing on the study of comics. Equating Enjoyment with Reading Well-known comic book writer and editor Stan Lee, who created, among others, Spider-Man, the Incredible Hulk and the X-Men, founded the Stan Lee Foundation in 2010.The nonprofit organization is dedicated to providing literary resources and fighting illiteracy. To that end, in May 2011 it joined forces with Team Prime Time, a Los Angeles- based foundation offering programs for low-income and developmentally-disabled children. When asked if he was surprised that comics and education could be combined, Lee answered that as far back as the 1960s he had begun receiving letters from teachers heralding the positive effects of comics on their students. These teachers indicated that they saw improvement in grammar and composition in children who read comic books.Studies show that comics can help young and beginning readers better understand narrative concepts, story structure and character development. At an event at Dodger Stadium hosted by the Stan Lee Foundation and Team Prime Time, graphic novels were given out to any child in attendance. ‘Comics really are a good aid to getting kids to read more literature, increasing their vocabulary and making them want to read,' Lee told IGN Entertainment. He added, ‘If you're a kid†¦ you begin to equate enjoyment with reading. ‘

The advantages and disadvantages Essay Example

The advantages and disadvantages Essay Example The advantages and disadvantages Essay The advantages and disadvantages Essay Citigroup may find many advantages of entering joint venture arrangements with Chinese partners. First the banking Chinese market is a restricted one and Citigroup cant enter many branches of banking activities. A joint venture is a way to allow them to penetrate those new markets with a minimal cost. The specific importance of guanxi in China is another argument in favor of this agreement since a joint venture can help acquiring these connections. On the other hand a joint venture can help making a positive impression on the POBC since it shows that the company wants to build relationships within the country and that it is here to last and to implement in the long-term. A joint venture can also help providing staff from local population more easily. For the retail business, a joint venture may be helpful for building a broad customer base thanks to Chinese banks ones which can help the targeting of Citigroups customers. In general a joint venture with a Chinese company allows the foreign company to understand better the ins and outs of the question. But some disadvantages may appear if the decision is taken to build a joint venture with a Chinese bank. First Citigroup has very few experiences in building a joint venture (only two, in Hungary and in Saudi Arabia) and it was only when forced by central banks authorities. That means that they might not be able to manage such an endeavor, in particularly since they have to deal with the specific Chinese culture and customs. Then we can see that in the case of a joint venture between Citigroup and a Chinese bank, the contribution of each partner would be unequal. Citigroup is efficient, hasstrong brand equity, and is known as very successful worldwide. The Chinese banks, on the opposite, have to be reformed since they have a lot of bad loans, they must support inefficient state-owned companies, and the government wants to control them. Even if the entry of China in WTO would force the government to let them go and to open markets, it would be very expensive for Citigroup to repair a wrecked bank1. The banking activity is very different from the industrial activities that usually use joint ventures to enter the Chinese market. And there seems to be no appropriate Chinese partner for a joint venture. Citigroup can effectively enter the Chinese market, but it needs to take care about a few important elements. It is, as we know, a strong financial institution, but the Chinese market is a very particular one. Whenever we go, we need to know the local culture and the business we are getting into. Knowing the way business works and how people think at it, is very important, and Citigroup put a big effort on trying to understand Chinas practices and the way people from there act when doing business. This is the reason why we strongly believe that they can have success, but only if they continue to commit some jobs to locals and train their best managers on-site. This will make their business healthier and more efficient. The question, anyway, is unfortunately not answered yet. Will this strong effort on local people be enough for them? Of course not. This is an important variable in the game, but not the only one. As we know, China is a mixed economy close to the extreme of command or centrally planned economy2, so it is very difficult to get state permissions to open businesses in the country. Citigroup, anyway, got it, but now it has to face with some challenges. China is going through a transition, so it is important for managers to understand the direction and the speed of change and how their own industry will be affected by these changes. Even if Chinese growth has been far stronger than for other countries in transition, China has maintained totalitarian political control while loosening the economic one, and a major challenge is privatizing SOEs. The companys success so, will also depend from the liberalization pace. To work properly and in the best way Citigroup needs really open markets. Its products, financial servies, can have a very huge market in China but, as everybody knows, the more open are the markets, the more competitive can the company become. This element let us think, especially if we consider that Chinas pension system is largely unfunded, corruption is widespread and the country rates very low in the Opacity Index and even worst in the Transparency Index, in which it is rated worst than Nigeria3! Moreover, the company allocated a lot of resources on e-business, but this is not really the best thing to do in a market like the Chinese one. The big number of restrictions on telecommunications and Internet let it be a waste of resources for the company, that pushed on this investments from an international perspective. This wont be a competitive advantage in the short term, period in which they have to rely on th one side on guanxchi and Joint Ventures that, as also the companys managers said, give to the institution short-term advantage, but not long-term benefits, and on acquisitions (their favourite strategy between the two) on the other side. The short-term objectives, anyway, are not the only one to be considered. Citigroup has got the WTO on its side. The WTO membership forced China to open its financial system to foreign corporations and, even with some hesitation, China is opening more and more its borders to foreign companies. Another reason for the possible future companys success is the fact that Chinese companies can learn a lot from Citigroup, copying its way of doing business and trying to achieve specific skills that nobody else have, so they will not strive for eliminate a company that can give them such an innovation. Some critics say that to achieve complete success in china and Compete more effectively within the market the Communist party should be advocated to an end. Maybe this will be impossible in the short term and, even if it could be useful, we dont think it will be necessary. Citigroups long-term objecives, then, summarized in the concept of expansion in China, can be achieved from the company just by moving slowly and following the Chinese market step by step. Despite the market situation and darkness, there are absolutely good elements that let us think at Citigroup as successful in competing with Chinese financial institutions. 4. Present and defend your recommendations in regard to a strategy for Citigroup. Citigroup wants to enter the Chinese market to expand its product line and market share, but before starting with that the company needs a deep analysis of the market in which it wants to operate.

linux essays

linux essays Today ninety-five percent of home computing is under Microsoft Windows based software. This staggering figure gives the impression that Windows is the only stable operating system on the market. The truth is that Windows is not the fastest or the most stable operating system. What other options do users have? The alternative to the costly world of Windows software is called Linux. Linus Torvalds created the Linux operating system in the early 1990s hoping it would bring about a revolution within the software industry. To date things have not changed rapidly, but they are beginning to inch forward. Many believe Linux is the answer to our home computing needs; performing well in all of the factors that choosing an operating system includes: cost, reliability, and, of course, the availability of applications within that software. One factor when comparing operating systems is the cost itself and the cost of the programs that run within it. Windows software is on average very expensive. Programs that run within Windows often cost hundreds and even thousands of dollars, while Linux software is free for the most part. To understand this you must first understand that all programs run on source code, or sets of instructions used to navigate and utilize computer resources. Windows chooses to keep their source code private, while Linux offers source code free to the public. This means that for the most part Linux software is free. A lot of the same people writing programs for Windows based software write Linux based software as well. As the world becomes more dependant upon computers in our daily lives the cost of the software we use will become much more prevalent. The second, and probably most important factor is the reliability of the software your computer runs on. Windows is quite a large operating system, and often allocates computer resources at an alarming rate. Windows tends to slow down not only the memory,...

Goals Essay Example | Topics and Well Written Essays - 1000 words - 1

Goals - Essay Example There is something strongly helpful in writing one’s goals. It does not simply help an individual to remember his goals but it also aids in his focus towards his visions. Having pointed that out, it is my desire to do the same, to write my life goals, understanding as Goddard did, that I have also my limitations which can only be minimized by focusing on the goals that I set for myself. As Goddard said, â€Å"I set up a blueprint of goals so that I would always have something to work for† (22). Due to the limitation of space, I will discuss only four of my most important goals which include my aim to get into the soccer team this year, travel all of the 50 states of America, complete my college education in two years instead of three and to establish my own business company that I will expand to other countries. One of my passions is sports and so it would really be a good thing if I can become a part of the soccer team in school this year. Team sport does not simply help me physically but also mentally and socially. Therefore, I plan to stay fit and competitive in the field of soccer so I would be able to achieve this goal. I will exercise at least two hours a day, concentrating more on improving my agility and endurance because I believe these are important qualities for a soccer player. Of course it is also a part of my duty to have good grades so that I will not be disqualified due to academic incompetence. Thus, I need to concentrate also in my studies, submit all necessary requirements on time and read a lot. As I continue to exercise my brain and body, I will enlist in the soccer team and practice well with the team to ensure my entry. I plan not to miss any practices because I believe that every meeting is important and there are always new things or insights that I could learn from the coach and the other players. Since I have other goals in mind, I want to achieve this goal this year. As a student of Business Administration, my eyes are set on

What the real reason gas prices are rising Research Paper

What the real reason gas prices are rising - Research Paper Example Predictably, Obama is being attacked by the Republican opposition for not doing enough to control prices and for what they deem a flawed energy policy which, if corrected would drop prices to what GOP Presidential candidate Newt Gingrich claims could be $2.50 per gallon. The price of gas is determined by mainly by world politics; make that Middle East politics, speculation and forces of supply and demand. This discussion will address these and other, possibly less obvious, factors that determine the price of a gallon of gas. As consumers pump gas into their vehicles the dollar amount is literally right in front of their eyes as the digital display quickly calculates the total. People feel they are being taken advantage of when that number increases every week for the same amount of product. Some blame oil companies, others their local gas station or regional oil refineries. While all of these entities profit from gasoline none are the real culprits, none have much, if anything, to do with the escalation of prices. The global demand for refined gas does have a major impact. In other words, the person pumping their gas is more to blame than oil companies. During the recent recession the demand for gas dropped because unemployed persons don’t drive to work and fewer were taking a vacation. As the recovery is taking hold worldwide the demand goes up along with prices. (Faucon, 2012). â€Å"Analysts warn that oil could become even more expensive in the second half of the year as supplies struggle to catch up with rising demand.† The average consumer would be better served to pump their gas into a more fuel-efficient vehicle. This would lower demand therefore the price. (Motavalli, 2012). During his cross-country energy tour Obama called for Congress to stop subsidizing the enormously prosperous oil companies with billions of dollars in tax