Archive for May, 2004

India Part III

Sunday, May 30th, 2004

By Dean Whittaker

As my memory of my trip to India begins to fade, I was reminded of the essence of the experience when I read the report by Rand titled “Labor and Population” (www.rand.org), in which the authors describe the forces that will shape work in the United States in the next 10 to 15 years. Those factors are demographic trends, technological advances and economic globalization.

India has a young, growing population, an emerging mid-class, a rapidly evolving R&D capability and an economy expanding at over 10% annually.  A recent small business roundtable discussion pointed out that many in India are working to feed their families and meet their basic needs while we busy ourselves figuring out how to pay for the 3,000 sq. ft. house in the suburbs with the three-car garage. The primary theme that came out of our discussion was that we are “one world,” and if we need to lower our standard of living so that they can raise theirs, then so be it.  Many even felt that as their standard of living increases it will create more opportunities for everyone.

The debate goes on… do we live in a world of scarcity or in a world of abundance? My sense is that the answer is both. The story about the drought-stricken rural farmer in India who moves into the city (with its rapidly growing middle class) to feed his family with a $40-per-month job sweeping streets illustrates that we live in a world of both scarcity and abundance depending upon where you are (http://timesofindia.indiatimes.com/). I suspect we are headed towards a similar situation in this country as our economy becomes more global. Some regions will thrive and prosper and others will struggle.

What will make the difference among those regions that flourish and those that struggle? How can we as economic development practitioners ensure that our regions experience abundance?  The Rand Study (www.rand.org) would say that it will have to do with the skills and knowledge that our workers possess.   The World Knowledge Competitive Index (www.higginsassociates.com) would say that it is about our human capital, our financial capital and our knowledge capital.

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The Great China Debate

Sunday, May 30th, 2004

By Pete Julius

China’s economy has been growing at unprecedented rates over the past few years.  A lot of people are speculating that this insurmountable growth trend is about to burst.  The United States grew very rapidly during the mid- to late-1990’s on the footings of a very sound infrastructure.  Then in the early 2000’s we experienced an economic bust, due in large part to the massive decline in tech-related industries.  As a result, we had a trickle- down effect that eventually led to a recession.  China, on the other hand, is growing at a much faster pace than we witnessed and under much more fragile conditions.  We debated about our own rapid economic growth during the 1990’s, and now the debate has begun about China’s ability to withstand their phenomenal growth, especially with heavy worries about their financial infrastructure. 

The banks in China are carelessly lending money to just about anyone, with very little effort to conduct appropriate background checks.  As a result, most of the loans are not performing up to par.  All of this careless financial lending is not just taking place in China’s four main banks.  The regional and local banks are also providing a plethora of irrational lending.  In addition, evidence of financial corruption and embezzlement is revealing itself. 

Their financial infrastructure is their biggest weakness and the Chinese government is taking needed steps to prevent a meltdown.  It appears that their efforts may be working.  April statistics showed positive signs: China’s economic growth slightly slowed, their trade deficit increased, their high-growth industries have slowed, and the central banks’ tighter monetary policies are showing signs of promise.  The question is whether these steps will be enough to avoid a downturn.

China went through an economic downturn in the early 1990’s under much worse conditions.  Since then, China has joined the WTO, improved road and highway infrastructure, and become more urbanized.  These improvements are definitely in their favor, but they may not be enough.  The country is growing way too fast for just about any country.  It would take a miracle for them to avoid a downturn.  Everyone is going to have their opinion.  Otherwise, this would not be a debate.  What is your opinion? Please, email me your thoughts pete.julius@whittakerassociates.com.

Sources:

BusinessWeek, May 3, 2004, “Headed for a Crisis,” pages 36-44

Fortune, May 17, 2004, “Why China Won’t Hit a Wall,” pages 27-32

Owen Brown (2004, May 13), “Chinese Data Suggest Slowing in Nation’s Rapid Expansion,” http://online.wsj.com

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Is eBusiness Starting to Roar Again?

Sunday, May 30th, 2004

By Leigh Howe

Around 1996, we all watched as Internet companies and “dot-coms” began to shake things up.  Amazon changed the game of selling books and music, while Expedia and a few others took out the travel agents.  Online players were basically selling commodities–items that the customer has to touch, see, and experience. 

Then came 2000 and the bottom dropped out.  Many of the dot-com companies went belly up. Everyone stopped talking about the disruptive power of ebusiness and simply went about business. The surviving companies got their houses in order (with nearly 60% of the remaining public Internet companies showing a profit, according to Business Week). Meanwhile, the technologies that allow business transactions to happen on the Internet became more stable, more usable and more affordable. Broadband access is now widely available. People also got more comfortable with doing business on the web and have begun to expect a web presence from every entity.  Today, we wonder about the legitimacy and longevity of a company if they are NOT on the web.

Now, ebusiness and the Internet are back in the spotlight and there is a buzz about several industries currently being revolutionized.  However, this time around the players are more sophisticated and are selling more complex items.  Now the focus is on cutting long supply chains (i.e., cutting out the middleman), changing the selling/buying process, or packaging a bundle of products and services for the customer.

The industries that are changing their business models via the web include jewelry, bill payment, telecom, hotels, real estate, and software.  You can tour a house or property virtually.  You can name your price on a hotel room.  Here at Whittaker Associates, we are currently looking into using VoIP (Voice over Internet Protocol – a technology for transmitting ordinary telephone calls over the Internet). And I can testify to the ease and convenience of online bill payment.  Think about these six industries and how the business process is different today than it was only a year or two ago.  How are they impacting your life?  How are they impacting your community?

So what does all this mean?  The Internet will continue to have sweeping impacts on certain industries and on the economy as a whole.  The resurgence of ebusiness will drive another round of productivity gains as more industries are transformed.  So hold on to your seats: it could be a wild ride!

 

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Wi-Fi – Where are You?

Sunday, May 30th, 2004

By Jeff Vedders

It seems like all we hear about these days is wireless.  It’s almost taken on the degree of magnitude and hype as the terms Internet and e-Business did a few years ago.  Everything you read says that wireless technology is going to change how we do business and how we interact with computers and the Internet.  That’s nice and all, but wireless still has a ways to go to live up to current expectations.

I purchased a notebook computer a few months ago.  My computer came with a wireless card, so naturally I was excited to try it out.  Our office has a wireless network, and I also have one installed at home.  Indeed, once I got everything installed and working, it was pretty cool.  At home it was nice to be able to access the Internet and check email from anywhere in the house. 

I figured that since I was able to access the Internet wirelessly, I would also be able to do so while traveling.  It seemed natural that airports and hotels would offer wireless connectivity.  But strangely, wireless services are difficult to find.  And when you do find wireless service, you either have to pay for it, or it’s extremely difficult to figure out how to connect to it.

I recently came across an article on BusinessWeek Online that illustrates why wireless service is so difficult to find and use.  While wireless technology is definitely hyped these days (and maybe even over-hyped), several barriers prevent the successful implementation of wireless services.  These barriers include:

  •  Many consumers are not even aware wireless exists.
  • Where it does exist, different and confusing ways to actually access the technology prevent use.
  • Security is a huge obstacle, and one that will have to be overcome before companies roll it out in big numbers.  In fact, only 10% of big companies have installed wireless networks to date.
  • A lack of roaming agreements prevents customers who buy wireless service from a phone company from using it anywhere in the country.
  • The wireless service market is extremely fractured, which makes seamless roaming impossible.  Tracking and servicing customers from one provider to the next is complicated with billing and logon problems.
  • Currently only 20,000 to 25,000 commercial “hotspots” exist.  Each “hotspot” has a range of about 200 feet, so even if you could connect them all together, they don’t come close to covering all of the locations where consumers want to use wireless.
  • It’s generally not yet available in the air.

To top all of this off, competing wireless technologies are being developed that, while offering better service and range than current wireless technology (802.11b), contribute to customer confusion.

While I do believe that wireless technology is the wave of the future, don’t forget to pack a network and phone cable in your travel bag.

Source: “Before Wi-Fi Can Go Mainstream,” Alex Salkever, BusinessWeek Online, February 18, 2004.

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