globalEDGE Blog - By Author: Lucas Blankenship

By 2030, demand for food, water, and energy is estimated to increase by approximately 50%.  Because of this, businesses that are currently implementing energy saving strategies will be far better off in the future than those who are not.  Fossil fuels are finite resources and as reserves of coal, gas, and oil run out, prices will climb rapidly.  The uncertainty of future supplies of fossil fuels and the growing popularity of “green energy” should incentivize businesses to adopt sustainable strategies. 

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Often times, raising capital is a stumbling point for entrepreneurs starting a business.  Sometimes personal funds just aren’t enough and venture capital can be tough to come by.  Because of this, entrepreneurs often turn to angel investors.  Angel investors are generally similar in practice; that is, most of them look for specific traits in the founder and business model that indicate whether the new firm has the potential to be successful.

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For some, eating insects may seem unappetizing and unappealing, but it is estimated that 2.5 billion people worldwide eat insects on a regular basis.  Students from McGill University in Montreal, Canada believe they have come up with a solution to cut down on global poverty and hunger.  It involves distributing cricket-producing kits to impoverished populations around the world that will give these people a source of protein and potentially a source of income as well.  Simply, families could eat what they want and then sell the rest.

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According to research, multilingualism can improve communication, intercultural sensitivity, cognitive abilities, and more.  For these reasons, linguistics Professor Antonella Sorace of the University of Edinburgh suggests that businesses should hire more multilingual employees.  For large multinational companies, multilingual employees are valuable assets and are increasingly being sought after. 

Sorace is adamant about the many advantages that are derived from knowing more than one language and as a result is concerned about the widespread failure of education systems to promote foreign language learning.  She believes that countries that are neglecting foreign language education are missing out on a more cognitively efficient and better communicating workforce.

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The shale-gas industry is flourishing in the United States and West African crude oil exporters are being negatively impacted.  Because of the “U.S. shale-gas revolution”, crude oil exports from Angola, Algeria, and Nigeria to the United States have fallen by over 40%.  Thus far, this has led to a decrease in overall crude oil exports from these three countries; however, the increase in supply of sweet crude oil has led existing buyers to increase their purchases and allowed new buyers to enter the market.

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How do you know if a currency is overvalued or undervalued?  Well, there are currently many measures that contribute to determining the fair value of a currency.   One common measure is evaluating purchasing-power parity (PPP) and another is determining whether or not a country’s trade deficit or surplus is representative of the country’s fundamental economic attributes.  Although these factors can together accurately determine a currency’s fair value, a universal method is still lacking.

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India’s trade gap, especially as of late, is increasing rapidly.  This is due largely in part to substantial percentage hikes in imports and stagnant export growth.  Some are growing concerned over the rising account deficit, which is directly correlated to the current trade deficit.  To put India’s trade deficit in perspective, exports grew by 0.8% in January while imports grew by 6.1%.

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In an effort to quell the widespread problem of overproduction, China is encouraging mergers in nine key industries: steel, cement, shipbuilding, autos, aluminum, electronics, pharmaceuticals, industrialized agriculture, and rare earths.  Chinese officials are confident that these mergers will increase economies of scale and limit brutal price wars.  Government officials are also hopeful that consolidating companies in these main industries will result in larger companies that will emerge as titans of international trade.

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Despite already being a large investor in Southeast Asia, Japan is looking to increase its economic ties with countries in this region.  To address economic as well as security issues, Japan’s recently elected Prime Minister Shinzo Abe is currently visiting countries in this region.  China, as of late, has increased its presence in Southeast Asia both commercially and militarily and Japan is intent on remaining competitive in this region.

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The way in which shipping is conducted can have huge implications for consumers and businesses around the world.   As talks of sustainability and green energy continue to dominate the energy sector, businesses are looking for ways to make shipping less harmful to the environment.  Hence, some companies have begun to ship their goods via sailing ships that use the wind as the source of energy. The organic and eco-friendly sector has jumped on this idea because the maritime industry is said to currently produce 3-5% of global carbon dioxide emissions.

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For the second year in a row, Singapore sits atop Mercer’s rankings for cities with the best infrastructure.  The rankings are a result of a survey conducted in 221 cities around the world.  In this survey, quality of infrastructure is measured by electricity supply, traffic congestion, availability of flights from local airports, quality of public transportation, telephone and mail service, and availability of water.  As businesses continue to expand beyond domestic borders, it is vital for cities that wish to be relevant in international business to have a solid infrastructure.

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Lately, Iran has been under a lot of international fire because of its nuclear program and its questionable intent.  Iran claims that the goal of its nuclear program is to generate an alternative energy source, but American and European officials believe that Iran has plans to build nuclear weapons.  As a result, the United States and Europe have put sanctions on Iran’s oil and natural gas exports because they believe that this large source of revenue could be financing Iran’s nuclear program.  Sanctions, however, have not been applied to Iran’s renewable energy program, which happens to be the largest in the Middle East.  Iran is developing renewable energy sources to lessen its dependence on fossil fuels and in part to escape the sanctions that have been placed on its oil and natural gas industries.

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Foreign and domestic investment are spiking for Canadian Corn because of global warming and a drought in the Corn Belt region of the United States.  Climate change and the resulting increase in temperatures in the last 50 years have extended the growing season in Canada’s Prairie Provinces approximately two weeks.  The Prairie Provinces: Alberta, Saskatchewan, and Manitoba have long been big producers of wheat, but are now beginning to incorporate and in some cases completely switch to corn.  This is due to a decrease in corn supply in the drought-ridden Midwest region of the United States, high demand for the crop, and the fact that corn has a higher yield than wheat on a per acre basis.

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A significant percentage of China’s wealthy citizens, especially those looking to retire, have decided that they no longer want to live in China.  Instead, these members of the upper and middle classes in China are expressing serious interest in emigrating to the United States, Canada, and Australia.  These three countries are appealing to wealthy Chinese because of their open spaces, clean air, consistent medical care, and relatively stable political systems.

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Falling interest rates worldwide and a more stable Africa have together created a perfect storm for debt investment in Africa.  Globally, central banks are driving down interest rates and because of this; investors seeking higher yields are investing their money elsewhere.  Countries like Zambia, Nigeria, Ivory Coast, Senegal, and Namibia have begun issuing global bonds and investors around the world are quickly buying up these debt securities.  Many African countries are finally reaching the point of political and economic stability that is necessary to attract foreign investment.

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Over the past five years, Singapore has revamped its central business district.  Marina Bay, located in Southern Singapore, is now home to a unique blend of entertainment and business.  As regional headquarter buildings for companies like Google and Citigroup were being built, so too was a $5 billion Sands casino-resort that seemed a bit out of the ordinary for the typically conservative country. Nonetheless, the casino and revamped business district are attracting both domestic and foreign investment and so far “Singapore’s new skyline” has experienced huge success.

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As businesses continue to expand internationally, it is becoming more important than ever for these companies to adapt their strategies to different cultures in foreign markets.  Companies must extensively analyze the target market and determine whether or not their product or service can be successful in that market.  Often times, cultural differences require changes to be made to a company’s sales and marketing approach and sometimes even the product itself.

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In September 2011, India lifted a four-year ban that was responsible for limiting the exportation of wheat and rice.  Because of this ruling, India exported over 10 million tons of grain and soymeal in the first half of 2012, a figure that is nearly double what it was in the first half of 2011. The current drought in Russia, Ukraine, and Kazakhstan has significantly limited wheat production in these countries, yet world wheat prices have remained relatively stable due to India’s timely increase in the exportation of this commodity.

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Over a year after the Fukushima nuclear disaster, the future of nuclear energy in Japan is in jeopardy.  On March 11, 2011 an earthquake off the Eastern coast of Japan triggered a tsunami that killed nearly 20,000 people, devastated many towns along the Eastern coast, and severely damaged the Fukushima Daiichi nuclear reactors.  The damage to the reactors led to a significant release of radioactive chemicals, and a mass evacuation of the surrounding area was conducted.  Now, Japan is intent on cutting back and possibly even eliminating nuclear power productions, and the economic repercussions of such a transition are coming to fruition.

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Politicians in Estonia, shortly after the collapse of the Soviet Union in 1991, began to realize how computers could positively impact a country with a very small workforce and a general lack of physical infrastructure.  For the next twenty years, Estonia concentrated on using the internet to transform its government, economy, and society in general.  Today, Estonians can do just about anything electronically.  Citizens can pay for bus tickets and parking via text, vote in elections from a laptop, or even sign legal documents from a smart phone.

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As Cambodia furthers itself from the tumultuous ‘70s, ‘80s, and ‘90s, topics such as economic development and tourism are receiving more and more attention.  Developers in Cambodia believe that building casino resorts will be highly beneficial for tourism and the economy alike.  Currently, there are 25 casinos in Cambodia, but many of these are small and cater primarily to hard-core gamblers in the surrounding area.  Gambling in Southeast Asia is growing rapidly and Cambodia is seeking to capitalize on this, in hopes of increasing tourism and foreign investment.

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Following a summit in New Delhi on March 29, 2012, the BRICS countries (Brazil, Russia, India, China, and South Africa) announced the proposal for a shared development bank.  The idea is that this BRICS bank would provide an alternative to the U.S.-dominated World Bank and even have the ability to protect the developing world from financial problems originating in wealthier nations.  Only a day after the summit in New Delhi, president of the World Bank Robert Zoellick said that the World Bank is interested in partnering with the BRICS bank and would be willing to share knowledge regarding global operations with the new bank.

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As large businesses worldwide amp up on cyber security, hackers are beginning to look elsewhere for their victims.  Research by Symantec, an internet security firm, states that 40% of all targeted attacks since 2010 have been on small to medium-sized businesses.  Attacks on large corporations, on the other hand, have accounted for only 28% of total attacks.  Hackers are targeting small businesses because they are aware that many small businesses do not have proper defenses in place and see these firms as lower-risk targets than large firms and financial institutions.

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As the date of the Facebook Initial Public Offering (IPO) creeps closer and closer, interest in the stocks of other social media companies has been growing.  This is especially true among social media companies that have recently begun trading their stocks publicly.  Social networking companies in the United States, as well as in Latin America and China have seen their stock prices increase significantly thus far in 2012.  As social media grows more and more popular, stocks in this industry are receiving a lot of attention.

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Small businesses in China for a long time have depended on small firms, wealthy investors, and loan sharks for funding.  Some of these tactics, depending on the terms, are illegal, but often times have been the only source for small businesses in need of loans.  This is the case because China’s major state-owned banks focus on lending money to large enterprises that are owned by the state.  The Chinese government has recently announced that authorities are looking for ways to legitimize this informal-lending sector, in hopes of transforming existing underground lenders into licensed investors and potentially small-loan companies.

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In an attempt to decrease its carbon footprint, China is asking its energy-intensive industries to reduce their energy consumption by a greater percentage than previously mandated.  These efforts by China are also a result of growing domestic and international pressure to decrease its reliance on fossil fuels.  Last year, China’s industries fell short of the government’s goals for lowering energy intensity and pollutant emissions, but the government is optimistic about firms meeting this year’s targets due to new and improved policies and controls.

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Recently, Novozymes, a company that makes enzymes used to make goods such as household detergents and soft drinks, announced that it has developed an enzyme that will make it possible to derive cellulosic ethanol from waste material like household trash or corn husks.  This company has discovered something that has been sought after by many clean energy producers- a way to inexpensively convert biowaste into fuel.  Novozymes officially announced its new enzyme, Cellic CTec3, February 22, 2012, and already has deals in place to begin supplying it.

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In an effort to develop closer trade ties with China, Canadian Prime Minister Stephen Harper met with Chinese Prime Minister Wen Jiabao in Beijing last week.  Canada’s goal is to continue to increase its trade with China in hopes of decreasing its reliance on trade with the United States.  This goal especially relates to the oil industry and Canada’s effort to overcome the increasing environmental regulations being imposed by the United States.  Canada sees China as a solid alternative for trade because of its vast market size and high demand for foreign oil.

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Indonesia’s economy grew by 6.5% in 2011, marking the highest percentage in over a decade.  This GDP growth, however, is not unprecedented because in seven of the last eight years Indonesia’s GDP has grown by more than 5%.  In the last couple of years, corporations and investors have begun to compare Indonesia’s economic growth potential with the likes of India and China.  Strong growth and political stability are two of the main reasons why corporations and investors share this confidence.

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Starbucks Corporation recently announced that it will begin opening cafés in India and plans on opening its first café as early as August.  Starbucks’ arrival in India is a result of a joint venture with Indian company Tata Global Beverages, which is currently the country’s largest conglomerate.  Although India is traditionally a tea drinking country, consumer demand for coffee is increasing.  In fact, domestic coffee consumption has increased by an astonishing 80 percent in the last decade. 

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Doug Barry, an expert in small business exportation, recently teamed up with Jim Blasingame of “The Small Business Advocate Website” in three interviews regarding the BRIC countries of Brazil, Russia, India, and China.  These interviews focus on exporting and doing business in these four countries and the many opportunities that are available in these countries in the business sector.

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Sustainability is a huge topic in modern business, as corporations and environmental groups alike strive to create more sustainable methods of production.  For Indonesia, the world’s largest producer of palm oil, sustainability has been a sticking point.  In the last three decades, plantations have expanded by over 2000 percent, and the total land area currently devoted to palm oil production is an estimated 7 million hectares.  Some corporations around the world are realizing the negative environmental effects of palm oil production and are choosing to begin using only palm oil that is considered sustainable.

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Lately, global news has been dominated by the European debt crisis.  This news has been predominately negative and I personally have been looking forward to hearing something positive for a change.  Ireland has recently been experiencing moderate economic growth and the budget deficit has since been declining.  Germany and France have commended Ireland for making economic strides, and believe that this nation is not far from being out of the crisis.

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In response to decreasing domestic demand, small-to-midsize businesses in Europe are looking to export.  However, many of these enterprises are finding it difficult to be globally competitive because of high labor, transport, and real estate costs.  Many of these businesses produce equipment used in construction and high costs of production have led to unaffordable prices.  To be successful, these companies need to find new export countries and increase their competitiveness.

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Over a decade of recurrent high energy prices has prompted Kenya to look beyond traditional energy sources.  The traditional energy supply line in Kenya is unstable and has been for many years, which has caused consistently high prices that will unlikely subside.  Green energy firms are emerging and have been largely successful thus far because of the increasing demand for alternative energy sources.

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Monday, November 14, 2011 marks the beginning of International Education Week and this year’s theme is International Education: Inspiring Students Locally to Succeed Globally.  This is the 12th annual International Education Week, and its general focus is to increase our understanding of the world around us, so we are able to communicate and interact with people of cultures different than our own.

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As the earth’s conventional oil supply continues to diminish, the discovery of new fuel types is becoming as important as ever.  The Organization of the Petroleum Exporting Countries (OPEC) has recently released a statement stating that global tight oil reserves could produce as many as 300 billion barrels.  Tight oil is another name for shale oil, which is a form of light crude oil found in shale deep below the earth’s surface.  Although it will most likely be a decade before big supplies of tight oil are produced, the future production could rival the conventional oil production in Saudi Arabia.

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The constant rise in fuel prices and the movement to cut fuel emissions are leading airline companies to develop biofuels.  This year alone, the world’s airlines will emit 650 million tons of carbon emissions in the process of burning over 200 million tons of fuel.  In recent years, the popularity of developing biofuels has increased and is now becoming more of a reality than a theory.

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Community Supported Agriculture programs, commonly known as C.S.A.’s, were born in Japan and Switzerland in the 1960s and 1970s.  Since then, C.S.A.’s have expanded globally and are now becoming increasingly popular worldwide.  These programs enable consumers to buy fruits, vegetables, meats, and other goods in advance that are grown by local farmers.  Most commonly, consumers receive baskets weekly containing the goods specified in their subscriptions.  The growth of these programs is due largely in part to the numerous advantages that both consumers and farmers are experiencing.

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Germany and Vietnam recently expanded their economic ties by signing financial cooperation and partnership pacts.  Last year bilateral trade exceeded 5 billion dollars between these two countries and Germany was Vietnam’s largest trade partner in the European Union.  These countries are not only looking to increase trade, but also to create welcoming working conditions for businesses in each other's country.  This partnership aims to benefit both parties in ways far beyond just trade.

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China’s image as a low-cost place of production is likely to change due to the rapid increases in worker wages.  In fact, wages for the average manufacturer worker in China are expected to double by 2015.  As this has begun to unfold, many foreign manufacturers have begun looking for alternative low-cost production bases and have been largely unsuccessful in finding better options.  Foreign reliance on China for inexpensive production will likely be a thing of the past as these wages continue to climb.

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Are companies that have implemented carbon reducing practices performing better financially?  The recent release of the CDP Global 500 report by the Carbon Disclosure Project answers in the affirmative.  In fact, this report has revealed that the companies working to decrease their carbon emissions are outperforming those that have not begun this change.  These same companies are said to be performing better in the stock market as well.

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On behalf of the globalEDGE team, I again welcome you to the new website!  As stated in the previous blog post, the posts this week will focus on introducing and explaining some of the recently added features found on the new site.   Today’s focus will be on the new Export Tutorials section.  This section answers your questions about exporting and provides great insight and knowledge into the realm of international trade. 

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In the last decade, Argentina has undergone a rapid ascension from widespread poverty and a huge budget deficit towards economic prosperity and stability.  The government of Argentina, only ten years ago, defaulted on a $100 billion budget, sending over half its population into poverty.  Following this economic catastrophe was a period of contraction.  This, however, would last only three months and would then give way to economic growth.

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