Chi-Merican seesaw

This is a tussle for power worth mentioning. It is a seesaw which requires players on either side, America and China, such that neither player can evolve into a world power single handed. China had recently disclosed its decision to acquire nearly a 3 trillion dollar worth of natural resources majorly in crude oil, gold, natural gas, copper, iron ore, etc. On the face of it, there seems to be working on in securing the nation’s supply of raw materials for the nation’s growth.Due to China’s huge demand the copper prices are pushed up. Also the natural resources too are not left alone in the Bull Run. But when the purchase is viewed from the point of view that these are the resources most fought for and with limited supply, the issue becomes severe. It becomes more severe when the acquirer is the biggest holder of dollars outside USA.

It is the making of the perfect battle of supremacy. The Chinese are looking forward to two things by this purchase. Firstly they wish to reduce their US dollar dependency as a reserve currency. Keeping these reserves with very high dependency will be detrimental to their growth of international power because of the volatile world political environment. It is a double edged sword with China. While it gives China a good leverage and a say on the American policy decisions, but a prejudicial step taken by any nation to reduce the utility power of USD will reduce the value of Chinese foreign reserves. America on the other hand needs the utility value of USD to decrease to pay off its mounting debts and also help its exports to be more competitive. And here is the making of the first centre for power struggle between the two nations.

But China wishes to use the devaluation for its own benefit. If the USD is devalued it will also force the Chinese to shell out bigger sums to acquire the natural resources reducing the USD reserves. To counter this they are buying in resources which contain real value with them like gold, silver, metals, etc. Another aspect to the devaluation row is that US wishes to reduce its dependency on imports from China. This requires the Chinese goods to cost more in that case Chinese yuan should be valued more. With Chinese not willing to do so, US got an (probably) unintentional opportunity because of the financial system failure. It has taken lot many steps to devalue its dollars including the quantitative easing.

Secondly China wishes to promote its currency to be used in the international settlements. To be able to do this they will require the gold backing for its money and also decontrol its currency. Taking a step forward into this move China is said to have planned purchase of gold worth 1 trillion dollars. And as can be seen in the current market scenario where the price of gold is touching new highs every month, the purchase of gold is helping China to get rid of the dollar and showcase that its currency has more real worth backing. But the irony is gold is still valued in dollars.

The Japanese Recovery – Strategic view

The March 11 Japan earthquake, the 5th largest in world, has affected the world economy in more ways than just economics. So while looking at this major natural disaster the two criteria discussed in the article are Economics & Politics.

The Economics: A classic case of “supply side disruption” fueled by the unpredictable and dangerous cocktail of natural disasters - the Japan earthquake tsunami and nuclear disaster. Japan is amongst the major producers of capital goods and creates 10% of the world economic output. The good exported by Japan, consisting mostly of machinery and transport equipment was in 2010 worth about $470bn. This natural disaster wrecked havoc on the factories producing the goods heavily demanded by the whole world. This was visible in major reduction in production & sales figures of auto majors sourcing from Japan. Their May 2011 sales figures declined nearly 23%. Japan provides nearly 60% of the world’s computer chips and the calamity resulted in closure of 2 companies for repairs reducing the output by 25%. The nations round the world hence need an early recovery for the smoothening of the supply chain and depreciation of Yen.

The fund flowed into the nation for the reconstruction and there was a high appreciation of Yen. The bond market in Japan was also gathering pace. This proved one major point – Investor confidence in Japan’s recovery and repayment capability. The Japanese showed this capability and capacity. They have restored the infrastructure destroyed with great speed. An example of this would be the case of the Tohoku Shinkansen, a high-speed rail line connecting Tokyo and northeastern Japan. It recommenced operations 49 days after the earthquake.

Advertising. Is it attack on Indian traditions?

Why do the advertisers and the media time and again try to attack the Indian cultural roots to sell their products, inspiring the youth and the consumers to get away from their roots?
All of us distinctly remember the time when shampoos had entered into the Indian markets. It was promoted as useful agent to get rid of stickiness from hair oil. Indeed a necessary and an on target point, but at what cost? People reduced the oil usage. Youngsters opposed hair oil usage. And what happened? The younger generation of yesterday, the working generation of today; is facing heavy hair loss, dandruff and various other hair problems. You may argue that these problems were already present thousands of years ago when Ayurveda was discovered, but were these problems so aggravated? We had many other natural options which could effectively cleanse the hair of the extra oil and also give strong and silky hair like “areetha”, “shikakai”, etc. But to get ahead in the race to use the latest products the people started using shampoos. But when they could not see any good benefit they stopped using both shampoo and also oil. Effect – More damage.

Now the companies are bringing in products which are catering to the above problem by instilling in the minds of people that “look you people, you don’t have time for putting on hair oil. We have this shampoo which contains oil. Use this”. Phase shift of ideology for shampoo industry?

This is just an example. This is happening in other products too which had competed against the use of traditional items. Best example is soft drinks. All the soft drink brands pitched in as the new youth drink. This is “THE” drink, and the alternative natural drinks are no use. And now these soft drink companies are in a race to capture the natural health drink product markets. Interesting!

Some may term it as “Market Capture” – Erase traditional products, then re-introduce them with new packaging. To me this can be termed as “Re - Laying the base”. [I resist from using the term “Foundation” as that’s not what is being remade.]

So the question which props the mind is does selling means just sell and no ethics? No values to the inherent ideology of the nation, the traditions? I was and am still searching for the answers.

I am divided with the answers I have got till now. Sometimes the “Brain” says it’s all in the business. You need to sell the product come what may. While the “Heart” says don’t do this, its unethical. Don’t fool your traditions. But then I recollect a line from the movie “Lord Of Wars” –

Never go to war. Especially with yourself.