globalEDGE Blog Archive December 2016

The Korea Fair Trade Commission, a corporate regulator based in South Korea, declared that it would fine mobile chipmaker Qualcomm Inc. a hefty $853 million over the company’s purported abuse of antitrust laws. The announcement comes at the end of the Commission's three-year investigation of Qualcomm and constitutes the highest such fine charged to an individual United States-based company. The Commission concluded that Qualcomm broke antitrust laws by refusing patent access to competing chipmakers and by withholding necessary phone chips in order to pressure mobile manufacturers into strict licensing agreements. In addition, the Commission claimed that Qualcomm used patents from other chipmakers without fair compensation. Qualcomm has stated they will appeal this decision to the Seoul High Court, professing that their licensing practices follow decades-old industry standards. 

China has been one of the largest economies in the world for many years, however its place near the top has been impacted in recent times because of its currency. The yuan, the national currency for China, has been depreciating in value and will continue to do so into the first quarter of 2017. This decline has been the biggest for the Chinese yuan in the last two decades. For the past 14 consecutive months, money has been leaving China, causing a slump in the nation’s central banks. About 1.1 trillion dollars of foreign currency has vacated the country since China devalued the yuan in 2015.

In the United States, the gross domestic product expanded by 3.5% during the third quarter, the strongest growth rate in the last 2 years.  The data reflected strong consumer spending in services and investments in buildings and intellectual property. Since the recession ended in 2009, the U.S. economy has grown at the slowest average expansion rate since 1949, averaging about 2%.

In today’s blog, we will take a look at the logistics industry and how it deals with the incredible challenges of delivering packages to customers around the world. With the holiday season in full swing and as frantic shoppers look to purchase last minute gifts before Christmas, the shipping industry is forced to work 24/7 to meet demand. The holidays can make or break the year for many retailers and ecommerce websites, and these businesses depend on shipping companies to ensure their customers are satisfied.

During this past November, sales on United States homes have substantially increased, reaching an unexpected ten year high. Buyers have been flooding the market, rushing to invest in homes during this current period of low interest rates, especially with anticipated increases in borrowing costs in the near future. The sudden upsurge in home-buying activity may be a result from the strain of rising prices and mortgage rates.

On December 15, the Japanese Diet passed a law to legalize casinos in the country, opening way for projects combining gambling with hotels, shopping, and conference spaces. The first proposal for this law was submitted in 2013, and again last year. While Prime Minister Shinzo Abe and his ruling party support the bill, claiming that casinos will stimulate the Japanese economy and increase tourism, opposition parties are critical. This bill had failed repeatedly in previous parliaments to come up for a vote due to concerns regarding gambling addiction and money laundering.

Approximately two years ago, United States President Barack Obama and Cuban President Raul Castro proclaimed the official reestablishment of diplomatic relations between their nations. After decades of embittered disputes, economic sanctions, and general hostility, the two countries have come ever closer to bridging their differences. In the time since, Cuba and the United States reopened embassies on their respective mainlands and oversaw several other achievements: the expansion of aerial and naval transport between the two countries, the increase of agricultural sales to Cuba, and the augmentation of telecommunications services in Cuba. In addition, plenty of agreements involving business opportunities within the countries' private sectors are on the table, with the potential to take effect soon. Many of these efforts are taken up by the Cuba Working Group, a group of Congress lawmakers dedicated to legislating such advances. For the most part, the newfound ties between Cuba and the United States have been received positively on an international scale. The developments been praised domestically as well, as officials from both countries see the new diplomacy as a gradual establishment of democracy in Cuba. However, recent events have cast a shade of uncertainty, including the results of the United States presidential election and the death of former Cuban leader Fidel Castro. Now, citizens and leaders are pondering what comes next for the relationship between Cuba and the United States.

In this installment of the globalEDGE Mega Trends in Business series, we take a look at how global businesses are responding to climate change. Day by day, governments the world over are increasing collaborative efforts against climate change by solidifying various international deals and agreements. With this, regulatory pressure is mounting on multinational companies to ensure that their practices meet environmentally-friendly standards. Several firms are answering the call and taking active stands against the threat of climate change, framing it as a business issue as well as an environmental one. Some corporations are forming coalitions across countries to reach a common consensus on necessary action. Others are shifting their business and investment practices in order to adapt to government legislation. Whatever the process, it is clear that climate change will be an unavoidable factor in future global business practices.

Present-day society has become extremely technologically advanced, and economic sectors with on-demand technologies are continuing to evolve at a rapid pace. Specifically, on-demand refers to services with digital platforms that give you instant access to the services they provide. While these technological advances are often seen as beneficial and representative of how far we may advance in the 21st century, many businesses have been negatively affected by unforeseen issues.

The International Monetary Fund has lowered its global outlook for the 2016-2017 year, despite a fairly strong performance during 2016. The U.K.’s vote to leave the European Union has led to uncertainty macro economically and may lead to a negative impact due to damaging investor confidence and market sentiment. The IMF is projecting that the advanced economies will hold steady with growth at 1.8% for both 2016 and 2017, and the overall global growth is projected to increase by 3.1% in 2016, 3.4% in 2017.

In the third installment of the long-term mega trends blog series from globalEDGE we will examine urbanization and its implications for economic growth. Urbanization is taking place across the globe from the developed nations of North America & Western Europe, to some of the poorest places on Earth, including Sub-Saharan Africa and Southern Asia. Each region of the world is urbanizing at different paces and are creating different degrees of economic growth as a result of urbanization. In this blog we will examine how the world is urbanizing and the differences in urban population growth rate/population percentage throughout the world.

This week, the globalEDGE blog is taking a look at long-term mega trends that will have a major impact on international business in the coming years. Today, the focus is on changes in demographics and society, and how these factors can influence business decisions. Being aware of demographic and social shifts is vital for businesses, especially those who are conducting business across international borders. Changes in population or consumer attitudes can force businesses to adapt, or risk losing their place in the industry. Because of this, many businesses are constantly looking to the future to try to get ahead of the trends before their competitors can.

Traditional grocery shopping will be changing in a big way starting in 2017. Amazon has ventured away from their online domain to shake up the in-person shopping industry. On Monday, Amazon released a video showing off their newest project: Amazon Go. This store has eliminated checkouts, cash registers, and most importantly, lines. What better way to propel an industry into the future than fresh competition.

It is expected that Beijing will tighten capital controls after the foreign exchange reserves fell by nearly $70 billion due the Central Bank’s policy to prevent the Renminbi from further depreciating due to high capital outflows. According the Institute of International Finance, October was the 33rd consecutive month of net outflow of capital.

The Business Language Syllabi section of globalEDGE provides a number of language course syllabi focused on the business vocabulary for a given language. Syllabi are provided by a variety of community colleges and universities, and include languages such as Arabic, Chinese, English, French, German, Russian, and Spanish. Take a look at this section if you are looking to further develop your business language course! Other International Business syllabi can be found on globalEDGE in the Course Syllabi and Community College Course Syllabi sections. 

On December 4, Italian Prime Minister Matteo Renzi mandated a referendum for a major constitutional reform. The goal was remove certain powers from the Senate—the upper house of the national legislature—so as to establish sole approval power in the lower house and expedite the legislative process. A powerful movement against the referendum was led by populist coalition Five Star Movement, reflective of a global trend of increased populism in national governments over the world. The results mirrored this: 60% of referendum voters chose to reject the measure, causing Renzi to meet with Italian President Sergio Mattarella the following day and offer his resignation. However, the referendum results have not just shaken Renzi's political career; Italy's entire future now lays in the balance, with several potential crises at hand.  Questions have risen over probable political changes, the future of Italy's place in the European Union, and the effects on the banking system.

Last month we wrote a blog series on Central Banking policy in several regions of the world. One region that was not covered in that series was the second biggest country by population, and the world’s 7th largest economy by GDP; India. India has come into focus in recent weeks as Prime Minister Narendra Modi has called for India to demonetize, particularly calling for a ban on high-value bank notes in an effort to cut down on corruption and tax evasion. This has had several side effects on the Indian economy, most of which seem to be negatively impacting the nation as a whole, and sending India on a path towards cutting interest rates at a time when the US is heading towards possibly a series of rate hikes.

Second Shift: The Inside Story of the Keep GM Movement, looks at how Lansing, Michigan was able to save one of its auto plants from closing. Tomas Hult, professor and director of the International Business Center at Michigan State, co-authored the book along with David Hollister, Ray Tadgerson, and David Closs. The four authors recently gave a talk at Google, highlighting their research and perspectives on the efforts to save the General Motors plant from closing.

Check out the “Talks at Google” video here!

The Zimbabwe central bank issued its first currency since 2009 on Monday, in an effort to ease the nation’s shortage of US dollars, which is their primary tender. This move, which was first announced back in May, has sparked outrage across the nation, leading to several violent anti-government protests and demonstrations. In order to understand the indignation of the Zimbabwean people, one must look at the past decade of currency history within the South African nation.