globalEDGE Blog Archive February 2011

Qatar has said it is looking at spending $100 billion as it is currently trying to revamp its infrastructure in preparation for the 2022 World Cup.  In response to the government of Qatar’s request, the United States government is sponsoring a trade mission to Qatar in June this year.  The country has been growing rapidly and is looking to build multiple new stadiums to host the event.  The growth potential in this country and for this trip is phenomenal.

The music industry incorporates many individuals, more than just those that write the music or perform it. It’s an intricate web of producers, record labels, retailers, managers, and a plethora of other careers that can come about just from music. The music industry has really transformed over the years. In the late 19th century, it was sheet music that brought in the most profits. However in the mid-20th century, records (vinyl, 8 track, cassette, cd, digital) overtook sheet music as the main source of income. In recent years, live music has really taken off. Earlier in the blog series we talked about piracy as potentially being detrimental to the entertainment industry. Nowhere does that ring truer than in music. Illegal downloading has really hurt profits, yet on the other hand it has opened up more avenues to find new artists and possibly buy music and merchandise that wouldn’t have been purchased before. While there are a lot of worries in this industry, some countries are seeing a continued growth. However partly because of the piracy issue, partly because of the digital age of the single, record sales just aren’t enough anymore to keep many in the music industry afloat. So what can be done for the industry?

It is no secret that the entertainment industry is undergoing massive changes (just like any other industry) with the rise of the internet and new technology. In part 2 of our blog series, we talked about how the industry has had a huge increase in pirating. I think there’s no doubt that increase is largely due to the internet making pirating much easier. While that’s one way that increased technology has negatively harmed the industry, there are many positive ways that technology is helping the entertainment industry.

The entertainment industry has many different facets, and each country seems to have their own spin on each of these. One thing that seems to be universally enjoyed by every culture is live music. There really is nothing quite like it. Mp3 players and stereos are great, but nothing can replace seeing your favorite band live in concert. The music industry thrives off of this desire. Artists from all different countries plan world tours and plan shows in some of the world’s most impressive venues. Concerts have become their very own version of business. With fans willing to spend such a premium to see their idols, concert venues have turned into extremely lucrative buildings. There are some venues that truly stand above the rest, and make concerts that much better. Here are just a few of the world’s most captivating concert venues:

For just about as long as any living person can remember, Bollywood and Hollywood have both been producing movies and been dominating their respective countries and audiences.  As far as Bollywood goes, many people in the U.S. view this burgeoning industry as a distant neighbor (although Bollywood was created 11 years before Hollywood, in the 19th century no less) of our hallowed Hollywood. In some sad cases people think it is just a misspelling of Hollywood.  With both Hollywood and Bollywood having already survived over a century each and the massive trend towards globalization, most people would think the similarities between the two would be great.  In actuality, the difference is vast.

While the global entertainment industry may appear to be thriving, there are serious threats to its long-term prosperity.  Many countries have been accused of failing to effectively protect intellectual property rights.  Some businesses may be forced to reduce global marketing and sales efforts if this trend continues.  An article in the globalEDGE Business Review estimated that worldwide counterfeiting has increased from $6 billion in the 1980s to over $600 billion today.  Even the most prosperous of businesses would struggle to cope with such overwhelming losses.

A quick look around the globe can show you that the continued growth in emerging markets have led to rapid changes in many industries. One of the industries that many people seem to overlook is the entertainment industry. Global entertainment is actually in the crosswinds of many trends that have changed (and will continue to change) the face of entertainment.

As the benefits of international trade increase, many countries search around the globe for reliable markets that provide vast opportunities for exports and foreign investments. Over the past years, Latin America has proven to be a very important and dependable market for U.S. exporters.

A recent report by the U.S. Census Bureau highlights the U.S. Trade deficit for 2010. This report is very straight-forward and shows the change in the trade balance throughout the years. As most everybody knows, the U.S. has been running a large trade deficit (i.e. they have been importing more then they export) for several years now. The report gives us a good starting point to understand where the deficit is coming from and some of the reasons behind it.

After 42 years as the world’s second biggest economy, Japan officially fell behind neighboring China in 2010.  Many projections indicate that China will go on to surpass the United States as the world’s largest economy by the year 2025.

It is hardly surprising that the world’s most populated country would pass its tenth largest.  Japan maintains a significant lead on China when population is accounted for in per-capita measures of wealth.  Regardless, this does draw attention to recent economic struggles in Japan.  Several indicators of the nation’s economic well-being have recently fallen and Standard & Poor’s went as far as to downgrade the Japanese credit rating from AA to AA-. 

Retailers around the world are beginning to test new strategies that are designed to strengthen their brand and increase their relevance to customers. One strategy that is gaining increasing popularity around the world is Fast Fashion – read more about it in February's Newsletter.  Another strategy being used by clothing manufacturers is producing their products using Fair Trade principles.

Valentine's Day, contrary to popular belief, is a holiday filled with history and tradition worldwide. There are several different legends that surround Valentine's Day and Saint Valentine himself. Legends vary from culture to culture, and so do the traditions and the ways that the holiday is celebrated.

The protests in Egypt have taken over the media for the past few weeks. People have been treated with viewings of thousands in Tahrir Square calling for the resignation of President Hosni Mubarak. With Mr. Mubarak announcing that he is stepping down today, I’m not going to spend too much time talking about the implications of that particular uprising. Instead, I’d rather talk about the reasons behind the uprisings and some of the consequences that it may have in the Middle East.

Last week we talked about microfinance, and specifically ways to help alleviate poverty in the poorest of areas. A topic that’s closely related to microfinance, but in some ways a better option is micro-franchising. It’s basically business ownership training. It is not only for developing counties however, it can be used for the poor in cities of developed countries as well.

Are you familiar with the free webinars on the Basics of Exporting provided by the U.S. Commercial Service? These webinars have been especially designed to meet the needs of new exporters. There is no fee to participate, although registration is required. Each webinar will begin at 2:00 p.m. EST and will last one hour. Content will include slides, live audio, and question-and-answer sessions with international business experts. 

The newest upcoming webinars are:

As much of the Eurozone has struggled to make ends meet during the recession, Germany has embraced global importing and exporting through a variety of thriving industries.  The country’s 3.6% growth in GDP over the last year can be attributed to a variety of factors in a time when the rest of the Eurozone barely topped 1% growth.  During this same time period, exports from Germany jumped by 21.7% including a 17% increase in sales to China. 

In 2001, global economist Jim O’Neill labeled Brazil, Russia, India, and China as the premier emerging markets of the world with enormous economic potential. The mainstream BRIC acronym was applied to these countries and the hype surrounding these countries was well deserved. Over the past decade, the countries have contributed to over a third of world GDP growth. Recently, Jim O’Neill named the next tier of large emerging economies using the term MIST – or Mexico, Indonesia, South Korea, and Turkey.

To cap off our Blog Series this week I decided to interview a local Microfinance organization started by some of our own Spartans. The Spartan Global Development Fund was started officially on July 4, 2009, when they made their first four microfinance loans.

The main idea behind microfinance is to provide small loans to the poor small entrepreneurs to help them rise out of poverty. Due to the nature of this finance sector and its origination in NGOs, funding for microfinance institutions comes mainly from subsidized funding.

Microfinance has seen such an increased popularity in the last decade, which has led to more than 91 million customers, most of them women, with loans totaling more than $70 billion by the end of 2009. India and Bangladesh together account for half of all borrowers! However, the system is not as perfect as you may think. In fact, it may be quite the opposite. In India some lending firms are growing at 60 percent to 100 percent a year. Investors in India’s largest microcredit firm, SKS Microfinance, sold shares last year for as much as 95 times what they paid for them a few years earlier!

As I am sitting here working from home due to massive amounts of snow, it got me wondering; if my office is closed, how does weather affect other businesses worldwide? There is no question that weather affects our everyday lives. It helps us decide what we are going to do and where we are going to go, so it's no wonder that it affects businesses too.

If you’ve been reading our blog series then you know that microfinance is a term that describes the practice of giving small loans to entrepreneurs in developing countries that would not otherwise be able to get a loan. This seems great, but some say that these loans are unfair because of their high interest rates they charge. There are companies that specialize in this and make a lot of money because of the extreme interest rates, however Kiva is different.

To most people in the developed world, banks have become an integral part of our lives. For the most part they have operated silently in background just as we would wish. We take out a mortgage (or two), pay our credit cards and deposit any extra money into a savings account. We don’t really think about it – they have always been there and we assume they will always be there to serve us. This lifestyle is in direct contrast with low-income citizens from small towns in developing countries.