globalEDGE Blog Archive June 2009

Flying has been the dominant travel option in our lifetimes, mostly due to its speed. However, disgruntled travelers have often been fed up with the long lines, invasive security checks and the occaisonal canceled flight. In light of these issues, another mode of traveling has been attracting customers the past few months – luxury trains.

“Less is more.” It is a phrase often used and many tend not to believe it – especially when it comes to business. This lesson especially applies to small business entrepreneurs would be worried that they do not have enough capital to achieve their goals. When a company is operating on a tight budget, it will tend to have a lean cost structure and accordingly perform much better than a company that has received a lot of cash from venture capital firms.

You may be surprised to learn that Brazil produced half of the world's coffee at one point. Although the nation doesn't enjoy this kind of pick-me-up dominance anymore, they still are the key player in the global market, and produce one-third of world's coffee beans. Despite the shear quantity of coffee coming out of Brazil, most consumers are more familiar with  Columbian beans, and Asian and African beans seem to be gaining in popularity. It's said that because of Brazil's large-scale production, the quality suffers. Poor quality controls and an economic crisis in the 80's and 90's led to less local consumption in Brazil. Their best beans were exported while they had the leftovers. I can see why coffee didn't appeal very much to Brazilians. In response to this unfavorable trend, the Brazilian Association of the Coffee Industry initiated a "coffee purity" program that was so succesful that it was expanded to 60 countries. That led to a more than doubling of sales in Brazil. Brazilians now consume more than any other nation with the exception of the United States.

One of the more interesting subplots of the environmental movement that has popped up lately is the potential of lithium-ion batteries to replace gasoline in automobiles. Lithium-ion batteries are lighter, more energy dense, and lower-maintenance than some of their more conventional counterparts.

A proposed 12-mile bridge across the Baltic Sea connecting Germany and Denmark, if approved, will be finished by 2018. The bridge will directly connect the two countries and replace the Scandlines ferries which operate on the route now.

There is a plethora of pros and cons to this proposal. The bridge will make travel not only easier between the two countries but also shorter. It will eliminate waiting at the dock and shorten the drive between Copenhagen and Hamburg. Consequently, business between the two countries will also be conducted more efficiently. Furthermore, an increase in tourists crossing the border between the two countries would likely result, and the tourism industry would stand to profit from this new option in travel.

We see them everywhere at Easter. Sometimes big, sometimes small, but always looking similar and always looking delicious. I'm talking about the famous chocolate bunny. I don't know about you, but I've had about 5 different kinds, and all had a similar shape. However, a few days ago in Luxembourg, the European Union's highest court ruled on a case about trademarking the shape of this tasty treat.

Richard Gelfond, co-CEO of IMAX, talks about the company's decision to sign a contract with a company in China due to the potential the country holds.

This deal is expected to increase profits for IMAX and the film industry in general. Furthermore, it will be helpful to the Chinese economy as it introduces a new product to the market with the potential for success.

One of the most well-known soccer teams in the world is the Spanish team Real Madrid. It is mostly famous for being able to afford the best players worldwide – Beckham, Di Stefano, and Zidane in the past and Kaka and Ronaldo in the near future. Recently it offered a world record amount (over $100 million) to Manchester United for their most recognized player – Cristiano Ronaldo. A few months ago some European teams were faced with the possibility of bankruptcy but this has never been the case with Real Madrid. Many wonder where Real is getting all this money from when the world is in a recession?

To many nations, having numerous fields of wind turbines seems like a far-off green dream. Denmark, however, has made it into a reality. The Danes are now essentially energy independent, and wind power plays a major role. In 2007, wind power provided nearly 20 percent of the nation’s electricity production and 24 percent of its capacity; proportions nearly double that of the next highest country. The Danish company Vestas has emerged as the top manufacturer in the world of these wind turbines, which are in high demand. Executive Erik Therkelsen says, "If we can make a turbine, it's sold." So what does this mean for the energy industry?

The U.S. dollar has, for a long time, maintained its position as the world’s reserve currency. That fact, though, could be changing. As the debt of the U.S. government grows, it is possible that the dollar will lose its significance and subsequently its role as the world’s reserve currency, most likely to China's yuan. The ‘safe haven’ aspect of the dollar will not be easy for China to overcome, but with China’s economy growing as strongly as ever, it could be possible. Furthermore, China has been making financial moves which could land the yuan in the role.

For three and a half years Porsche tried to take control of the much larger Volkswagen. Finally they gave up on that idea and agreed to a merger instead. This merger is supposed to create an “integrated leading company” which will include VW’s nine brands and Porsche. However, details about the merger are not clear and many believe the deal will end up falling through. Furthermore, after years of quietly buying up shares of VW, Porsche now owns over 50% of the company. These share purchases increased Porsche’s debt levels, and the company is now beginning to show some signs of financial strain.

Last week in Amsterdam, the first of 1,200 households installed energy-saving systems aimed at cutting their electricity costs. Additionally, Dutch banks ING and Rabobank provided access to financing for the purchase of energy-saving light bulbs and efficient roof insulation. Actions like these are the beginning of a concerted effort to make Amsterdam’s infrastructure smarter, greener, and more eco-friendly.

It’s nothing new for tourists to visit a place in order to do something that would be prohibited where they live. Whether it’s lower drinking ages, legalized drugs, or legalized gambling, some places thrive off of such tourism. Bahrain, for example, serves as a sort of liberalized haven for many of those living in Islamist Saudi Arabia. The country's lenient drinking laws have attracted Saudi escapists, who in turn contribute nearly ten percent to Bahrain’s economy. So why are Bahraini legislators contemplating scrapping the country’s drinking laws and imposing near-total prohibition?

U.S. and Peruvian exporters received good news last February, when a new trade promotion agreement between the countries took effect. The agreement has a number of upsides for both countries, such as the fact that 80% of U.S. goods exported to Peru now enter duty-free.

Check out this interview from the International Trade Administration for more details on how your business can take advantage of the agreement.

You can also learn about other trade agreements with Latin America in this interview from the Small Business Advocate

Even after Google's little shutdown at the beginning of May, CEO Eric Schmidt is still predicting that cloud computing technology would elminate the need for software. Businesses and individuals would be able to access their information or programs, stored on a central server, from anywhere in the world. This would completely revolutionize the way that businesses communicate with eachother around the world. Check out this neat little interview from CNN Money on the future of server based applications. 

For decades, Coca-Cola’s main competitor has been Pepsi. However, in recent years Coca-Cola has faced increasing competition from non-carbonated drinks such as tea, coffee, and fruit juices. This has been especially true in Japan. In response to this growing trend, Coca-Cola has developed a new product – green tea-flavored Coke. The product targets mainly health concious women in their 20s and 30s. In response to this product, Pepsi is planning on launching basil-flvaored Pepsi. As of right now these new products are going to be sold in Japan only, however if Coca-Cola’s new bevarage is met well by customers, it will be marketed in other countries such as the United States and countries in Western Europe.

Recently, CNN Money’s Small Business section featured a great article on the "seven deadly sins" of entrepreneurship. According to SCORE, a nonprofit in support of entrepreneurial success, 2007 saw over 560,000 small business closures and over 28,000 bankruptcies! Additionally, only 31% of small businesses survive for seven years or more.

China has long-held a reputation of being one of the world’s top exporters. 2007 World Bank Figures amount China’s exports to around $1.22 trillion, or 37% of its GDP. It is the 2nd largest exporter in the world behind Germany, and is currently number one on globalEDGE’s Market Potential Index Market Growth Rate. The annual growth rate of China’s exports had traditionally been around 25 percent, although effects from the current economic downturn now project these numbers dropping to a modest 10 percent. So with a 15 percent drop, how can it expect to satisfy previous GDP growth expectations?

Facebook has become quite popular among people from all countries and age groups. The website is very convinient and easy to use. Most importantly it is free. However, there are rumors that facebook will start requiring its members to pay for certain applications and there is a possibility that users will have to pay for having an account on facebook in the future.

Russia has endured a long courtship period with the World Trade Organization - 16 years of talks and counting - yet official membership has always remained just out of reach. There are currently 153 members in the WTO, ranging from Albania to Zimbabwe. Russia is now the only BRIC country not to join, and is by far the largest economy of all the world’s non-members.

A recent survey done by the National Institute for Occupational Safety and Health found that employees who who went into work while sick were 53 percent more likely to take a sick leave of two weeks or more and 74 percent more likely to take a sick leave of two months or more.

A recent report done by Small Business Trends highlights the top 10 global small business trends to look for in 2009:

1. Disruptive innovation will be both the coolest and hottest new growth strategy in 2009 because it will transcend all boundaries and transform businesses.