Levis

1
Levis

• Levi Strauss, closes shop in the U.S.
• San Antonio, El Paso, Rio Grande and Brownsville
• Last three Canadian plants set to shut down in
  March
• Contracting out work to suppliers in 50 countries
  - Carribbean, Latin America and Asia
• Apparel workers union blames job losses on U.S.
  trade policy and might of retailers like Wal-Mart

Source NY Times and Levis website
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Tax policy

• Nabors Industries countrys largest operator of
  oil-well drilling rigs
• HQ in Houston, but uses Bermuda address as tax HQ
  and Barbados as legal HQ (to escape U.S. taxes)
• Wants to qualify for business under Jones Act

Source NY Times
3
Resentment against globalization

• President Lozada forced out of office by an
  Indian-led uprising
• Benefits of free trade and foreign investment,
  the Bolivian experience
• Export have declined, soaring unemployment,
  poorest country in South America
• Economic model has not solved problems of poverty
  and social exclusion
• Resentment against exploitation of Bolivian
  natural resources
• Opposition to gas pipeline
• Historical experience

Source NY Times
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Asia
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Asia foreign investment destination

• 2001 Worldwide FDI halved to 700 billion
• Uneven decline 60 for Europe and U.S. , while
  Asia only 24
• China registered an increase of 15 - low wages,
  WTO membership, developing consumer market
• Expectations for FDI often exceed whats
  practical India scores high on FDI confidence
  index but lags in actual ability to attract
  foreign investment
• Impact of Chinese boom for the Asian region
• Float all boats or crowd other countries out?

Source Far Eastern Economic Review
6
Local firms versus multinationals

• Local company protected position
• Multinational firms with significant advantages
  financial resources, superior technology and
  products, powerful brands, marketing and
  management skills
• Alternatives to local firms
• Local pressures (Bajaj - distribution Shanghai
  Jahwa low cost, mass market brands positioned
  around brands based on traditional ingredients)
  Multinationals Johnson and Johnson in the
  Philippines
• Extending local advantages abroad (Jollibee
  Foods, Televisa)

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Local firms

• Industries where pressures for globalization are
  strong Sell out Czech carmaker Skoda or
  Redefine core business Russian PC manufacturer
  Vist
• Global multinationals (from emerging economies) -
  how to compete on an even footing
• Concentrate on segments where technology is close
  to competition (Raba in Hungary)
• Access resources in developed countries (Samsung
  in Silicon Valley)
• Join a production consortium (upgrading of own
  capabilities)

8
Li Fung

• Hong Kongs multinational supply chain management
  company
• Origins as an export trading company broker
  between buyers and suppliers
• Trading a sunset industry?
• Creating a customized value chain for every
  customer
• Leveraging knowledge of the region quotas,
  products, dispersed manufacturing (Barbie dolls)

9
Indias new multinationals

• Software service companies - Wipro, Infosys
  Technologies, Tata Consultancy Services
• Moving upstream to lucrative full service
  consulting
• Taking on IBM Global Consulting, EDS
• Challenges
• Bringing in marketing, management and consulting
  expertise
• Creating locations overseas
• Learning to run a far flung enterprise

10
Camlin

• Camlin Ltd Indias premier art supplies maker
• Increased revenues despite competition from cheap
  Chinese imports and foreign giants like Faber
  Castell
• To achieve real efficiency, company needs to
  reduce its workforce by 40

11
Hidden Dragons

• National champions Haier Group home appliances,
  Huawei Technologies switches and routers
• Dedicated exporters Pearl River Piano, Galanz
  microwaves
• Competitive networks Chenghai and Shenzhen
  toys, Shengzhou ties
• High technology start-ups Beijing Yuande Bio
  Medical ultrasound tumor device, Innova
  Superconductor

Source HBR, 2003
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Asian strategies

• Going global Top value creators in Asian market
  generated 50 of their revenue from export
  markets
• Specialists Receive more than 80 of their
  revenues from single main industry sector (TSMC)
• Relying on intangible assets (Li and Fung)

Source McKinsey Quarterly, 2002
13
Smart globalization

• Globalization a decade ago get in fast, strike
  megadeals with top officials
• ATT 20 ventures in China, Enron giant power
  projects in India, Indonesia, GMs network of car
  plants led by facility in Shanghai
• Local competitors catch up fast, globalization
  backlash
• Extensive homework Whirlpool, HP, Citibank

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Competing in Asian markets

• Business model for emerging middle class
• Avoid being trapped in high-end niche
• Rethinking price performance equation (McDonalds
  v/s Nirulas)
• Brand management (Coke v/s Pepsi)
• Costs of market building (Kellogg cereals v/s
  pagers in China)
• Product design (Motorola pagers)
• Packaging (Distribution infrastructure)

Source HBR
15
Political risk in Asia

• Malaysia Mahathirs anti-semitic remarks
• Philippines Instability of Arroyo
  administration (allegations of corruption)
• India Religious tensions
• Taiwan Anti China rhetoric

Source New York Times
16
Challenges in Asia

• World Bank study contrasts 4 countries China,
  Bangladesh, India and Pakistan
• Similar GDP per capita in 1990, Chinas growth
  has rocketed, India and Bangladesh have grown
  moderately, Pakistan not at all
• Trade liberalization must be complemented by
  sound investment climate (infrastructure,
  efficient and transparent Government)

Source Yale Global Online
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