Indonesia is a country that has been implementing a lot of reforms with a view to improving the investment environment and promoting growth. The forecast for Indonesia's growth is extremely positive at the moment, with The World Bank anticipating GDP growth of 5.1% in 2017, and 5.3% the following year. There are a lot of reasons why Indonesia is setting itself apart on the world stage as a developing market, and those interested in emerging markets on the whole or growing markets in Asia are seeing Jakarta as a promising investment opportunity.

Commodities

In the Southeast Asia region, Indonesia is one of the biggest commodity exporters. However, the country has also been decreasing its reliance on exports and looking to domestic consumption as a stronger driver in economic growth. Indonesia has a rapidly growing middle class, and this is enabling this increase in economic dependence on consumption within the nation. At present, around 55% of economic growth is attributed to private consumption, and this is predicted to be a trend that will continue as the currency (the Indonesian rupiah) remains stable and interest rates are low. This combines to create an environment of consumer confidence that is aiding consumption and therefore growth.

Reforms

Economic reforms in Indonesia are also a significant factor in terms of the confidence in the prospects for growth in the country. There have been structural changes to reduce overall bureaucracy, and to make the Indonesian economy easier for people to invest in, including changes to how the Indonesian markets can be accessed. Indonesia has seen improvements in its 'Ease of Doing Business' rankings as a result, and its trade surplus has increased as a positive effect of this. In March 2017, it posted a $1.23 billion trade surplus – a huge increase on its $0.51 billion surplus at the same point in 2016. It seems that the measures being taken to up Indonesia's game as a strong investment climate are working well.

Election

However, there is the potential that work on the reforms in Indonesia may be slowed or altered by the prospect of an election in 2019. The results of a recent gubernatorial election in Jakarta, which saw the challenger Anies Baswedan secure victory, are being used as a kind of barometer in terms of political opinion, and the possibility that reforms may be impacted is one that people considering long term investment in the Indonesian market will certainly be bearing in mind; currently the impact of the result hasn’t started to show. While there is some religious backdrop to the politics in Indonesia, the general sentiment seems to be that the country largely supports the work of current President Widodo on the economy, and so a change in leadership may introduce some unwanted uncertainty.

All in all, things are looking good for Indonesia, outperforming other emerging markets barring Brazil in the early part of 2017. If reforms continue and growth manages to reach the levels predicted, Indonesia will remain a very interesting prospect for investors who like to take advantage of opportunities in emerging markets.

There has been some heated controversy going on amid the successful start of Amazon in India. The marketplace giant launched with better than expected numbers coming in, but Flipkart, Amazon’s major rival in India, has made an amazing turnaround and so the race is on. For the past several years the economy in India has been staggering a bit, and so these two marketplaces just might rekindle hope for India’s future in e-commerce.

India’s Continued Growth Overall

The race may be on, but will it really matter who comes out the winner if their efforts can bring about the changes needed to put India back on the map again as a key player? Thought to be the most promising of all emerging nations, this nation with 1.25 billion inhabitants is quickly gaining momentum because of the entrepreneurial spirit of the largest portion of the population – India’s young adults.

While there have been some setbacks, they pale in comparison to those which many of the world’s superpowers are experiencing. Uncertainty still looms over Brexit in the UK and it is unclear what the highly controversial US president will do for the economy of the United States, so India is in a prime position for massive growth. Amazon and Flipkart are just two of the reasons why there is hope for the future.

India’s Youth Answering the Call

Since such a large portion of the population is young and with a high priority placed on education, India is in a prime position to literally explode in the technology sector. As e-commerce expands, India just might set the pace for the advancement of a digital economy in the region, according to US marketing agency Single Grain. With China also making a move towards expansion in the free-market, these two nations may soon enjoy a place of global dominance in the technology sector once dominated by Japan.

The reason why India is looking towards the younger generation isn’t only because of their sheer numbers but because of their thirst for knowledge and a will to succeed. Saying India’s youth have a pervading entrepreneurial spirit is an understatement at very best. It is more of a passion for working towards a better future for their impoverished country and Amazon and Flipkart might just set the stage for this generation to elevate the GDP far above where it now stands at less than a quarter of China’s per capita.

E-commerce Offers a Better Future

As one of the world’s poorest nations and sadly one of the four most populous, India lacks the infrastructure that many other emerging nations now enjoy. Pumping money into the system will enable the Indian government to update that very same infrastructure that is holding the nation back.

With travel and communications often hindered by this very lack of updated infrastructure, e-commerce takes on greater significance. Startups can work from home with just a computer and an Internet connection, and that is likely the one factor that will bring India up to the ranks of finally being a ‘developed’ nation and a global presence to contend with.

Q1 economic growth in China was forecast at 6.8%, but the actual figure came in at 6.9% on April 17, 2017. For the quarter ending in March, Chinese GDP grew at a year-on-year rate of 6.9%, up 0.1% from Q4, 2016. Those GDP growth figures were largely the result of increases in fiscal spending, higher retail sales, and greater industrial output. For 2017, the GDP annual growth rate has been on the up and up so far, but recent events have given pause to the rally in China.

In April this year, the Chinese economy stumbled. The Chinese government has been working extremely hard to prevent China from falling into a debt trap. Several key industries in the country reported weaker performance including investment, retail sales, and factory output. One of the drivers of economic uncertainty in China is speculative financing – cheap credit. The authorities in Beijing have wised up to the risks inherent in this type of economic growth paradigm, and they are rejecting it across the board.

How Is Chinese Government Policy Impacting Economic Performance?

Figures from January through April 2017 indicate that there is lacklustre performance in the Chinese economy. This is evident in the April fixed-asset investment levels which are lower than predicted. That the world’s second-largest economy is now enduring manufacturing sector weakness is not an encouraging sign. Policymakers are not yet at a point where they are deeply concerned about the performance of the Chinese economy. In other words, there is no urgency to dramatically change direction.

For example, factory production in March 2017 was up 7.6% year on year, while that figure dropped to 6.5% in April. From January through March, fixed asset investment was at 9.2%, while the January through April figure was 8.9%. This all indicates that there is a decline in China’s economic performance through April. Part of the reason why the Chinese economy is stumbling is commodity prices. Iron ore and steel prices are weakening on the back of higher inventory levels and weak demand. Recall that the Chinese government instructed its mills to churn out massive quantities of steel to push production quotas.

Can the Chinese Government Prevent Asset Bubbles from Developing?

Where China scores heavily is infrastructure expenditure. April figures reflect a 23% increase year on year, despite fixed asset investment declining to 4.9% (from 5.8% January-March 2017). The Chinese government is more concerned with asset bubbles developing than it is with a slowdown in specific metrics. The People’s Bank of China has raised the short-term interest rates to relieve debt burdens from the economy.

One of China’s most troubling risk factors is the high speculation on real estate. There have been reports of increasing Chinese credit card debt over the years, prompting a sharp increase in debt consolidation options for everyday folks. Increasing debt levels are commensurate with rising standards of living in China. The burgeoning middle class is placing greater demands on itself with housing, education, travel, investment, and entertainment. This is especially noticeable in the property market.

The asset bubble that is fast developing in that sector is raising eyebrows in China. In April for example, a huge uptick in property development took place, despite slowing sales growth. The problem for China is in retail sales which was down 0.2% in April, now at 10.7%, compared to March. It is the slow pace of growth in domestic consumption and weak external demand that is precipitating a slowdown in economic growth in China. For the full year, the PBOC is anticipating a GDP growth rate of 6.5%. The debt-fueled stimulus policies that are driving Chinese growth will likely be addressed in short order.

By Contributor

China has always been a lucrative market for the e-commerce business with its 770 million+ working population and their love for shopping online. The real situation, on the other hand, is a little different than what someone inexperienced with the Chinese market might presume. Although it is the biggest e-commerce market in not only Asia but globally as well, it is nothing like any other market in the world. As many big brands batten down the hatches in realisation of this fact, let us take a close look at some of those shutdowns.

Lotte

Lotte Group Retail has been in China for the last two decades and currently has five shopping malls and 115 supermarkets in the country. However, the group’s first attempt at opening an online mall (Tmall) came to an end this January when sales fell well below expectations during the last quarter of 2016 as compared to Q4 2015. The South Korean MNC had not been seeing too much growth in China recently and as was made evident by the closing of the Tmall, e-commerce wasn’t working for them either.

ASOS

The prospects of e-commerce are bright in the UK and reliable VPS hosting UK makes sure that even emerging online businesses never have a bad server day. This positive experience at home led ASOS to believe that the company could make it in China as well, and the biggest online fashion retailer in the UK entered China with a bang in 2013. They poured in over a hundred million RMB into the market and developed a sales team, opened its own website as well as a Tmall, and imported the best of the British contemporary style it had to offer. All that effort and optimism came to an end in April 2016, when they decided to close shop and leave China for good, with a loss of 4 million GBP! It was a mix of import taxes, complex Chinese clothing trade regulations, ineffective marketing, and stiff competition from local Chinese competitors that ultimately pushed the huge brand out of China.

Coach

Coach, the US luxury brand in handbags launched its first official Tmall in 2015 and closed it down in September 2016! They did give a vague explanation along the lines of “shifting operational strategy,” but it wasn’t really a secret. Just like many other foreign established brands venturing into China, Coach just wasn’t making a profit that justified its Tmall. Coach, however, has not yet left the Chinese online market completely. The company has realised that WeChat is probably the best platform for online businesses in China right now and continues to remain quite active there.

As one can see from the examples above, in spite of China being the largest online retail market in the world, it isn’t a place where a business can enter with pre-conceived notions and zero market research, irrespective of their stature in the outside world. Understanding government regulations, logistics, and the unique Chinese market are some of the aspects of e-commerce that should be thoroughly researched and assessed before entering the nation and its fiercely competitive online market.

China is continuing pro-globalization efforts despite global policy changes, notably in the White House. Let’s look at what China has done to improve its global ties politically and economically over the past few years and it’s positioning for continued growth and domination in the years to come.

China’s Expanding African Influence

China has made significant inroads into Africa both in terms of trade and influence. For example, China’s import export bank gave over 62 billion dollars in loans to African nations between 2001 and 2010, 20% more than the World Bank did.

Around 22 billion dollars has been invested in Africa by China in natural resource extraction, power generation and infrastructure, with products like copper, oil and agricultural exports going back to China. The biggest investments have been in Angola, Sudan, Nigeria and South Africa. China is projected to become the biggest trading partner with Africa with an estimated 1.7 trillion in trade in 2030. It was 166 billion dollars in 2014. The relationship mirrors prior colonial patterns where Africa exports raw materials and receives mostly manufactured goods in exchange.

Online MBA learning resources help you to learn both the history of trade and development and the trends that are affecting international business today.

China's Growing Influence in Asia

The China-Pakistan Economic Corridor running from Gwadar in Pakistan to Xinjiang in China is supported by a 46 billion dollar agreement. This is just one case of China developing land-based trade routes and production facilities in Asia. China is building a new silk road through Central Asia to give it non-maritime trade routes to Europe and a new “maritime silk road” through Pakistan to reduce reliance on traditional sea lanes.

Japan is wary of China’s literal construction of islands to bolster claims to territorial waters and shipping lanes. Yet it entered a Yuan-Renminbi trading pact several years ago that lets the two nations trade directly instead of using American dollars as an intermediary currency. This pact was partially a hedge against American currency inflation and partially a step to improving trade between the two often hostile nations. China has also shifted from devaluing its currency to maximize exports to the U.S. to improve its trade volume with the rest of Asia. If you get an MBA online, you will better understand the economic factors behind currency valuations and government policies that partially determine the value of currency.

China has been expanding its influence globally for a number of years both to gain stronger dominance in key regions and improve its trade relationships with parts of the world the West has neglected. China is working most actively in Central Asia and southern Asia to dominate its part of the world and gain multiple trade routes with current major trading partners in the West. China has long set its trade policies to what was in China’s best interest, though it is criticizing the U.S. for finally doing the same. U.S. – Chinese trade is not likely to change dramatically, but China has already positioned itself to be less reliant on U.S. imports for its continued economic growth.

Photo credit / China Dialy

The first half of 2016 has seen gold demand at record levels, making it the second largest half year ever recorded and with significant increases on 2015. Figures released by the World Gold Council (WGC) showed that demand in Q1 reached 1,290 tonnes, a rise of 21% on Q1 in 2015, while further growth in Q2 of 15% meant that the total for the first half of 2016 reached 2,355t, with the overall H1 gold price going up by 25%, the best half-yearly rise in 35 years.

Of this, the investment demand of 1063.9t was 16% above the previous highest H1 level (in 2009), driven by ongoing enthusiasm amongst investors for exchange traded funds (ETFs). Q1 and Q2 also represented the first time ever that investors made up the biggest component of demand for gold in two consecutive quarters. This upsurge in investor demand is, however, set against a backdrop of lower household demand in India and China, meaning western ETFs and central banks are behind these price rises, rather than consumers in Asia.

Analysts have identified several underlying factors driving the surge in demand for gold. For instance, the increase in supply has been at its slowest for 8 years (H1 growth of just 1%), with increased recycling and hedging, fuelled by higher prices, contributing to this slowdown in the growth of supply.

There has also been a decrease in the household gold demand in both India and China in 2016, with the overall H1 demand of 925t being down 17% on the first half of 2015. The gold price trend upwards is responsible for curtailing this demand to some degree, as greater rates of recycling due to these higher prices have meant the weakest jewellery demand in China in Q2 since 2009, down almost 25% from the same period in 2015. The fall in demand was also marked in India, where at 186.3t it was at its lowest level for seven years. Industrial action in India, where there was a 42-day strike by jewellery producers, also impacted negatively on that country’s traditionally strong demand.

Set against this, however, has been unprecedented rises in investor demand. Global economic uncertainty, particularly with regard to a perceived slowdown in China’s economy and confusion over the ultimate outcome of the Brexit vote, along with concern over US, European and Japanese interest rates, have all led to central banks continuing to be strong investors in gold, and for the twenty-first consecutive quarter these have been net purchasers – 109t in Q2 – as they seek to diversify further away from the greenback.

ETF inflows into gold have also increased significantly and have been a major driving factor in increased demand and rising prices, having more than doubled when compared to H1 in 2015 at 1064t, and up 16% on the first two quarters of 2009, the previous high point. Analysts suggest that similar concerns about the stability of global markets and the interest rate policies of major economies as driving the uptick in ETF purchases of gold, as investors seek greater stability and reliability in a volatile financial climate.

These same factors are therefore likely to see continued positive growth in both gold demand and prices in H2 of 2016, as it remains the asset that governments, financial institutions and ETFs turn to in times of uncertainty. The good news for speculative traders is that this means there is still an opportunity to take advantage of this predicted continued growth, as when you add in to the mix an expected return to previous levels in Indian and Chinese household demand, along with further slowdown in the growth of supply, everything points to gold being the standout commodity investment for the remainder of 2016.

In recent years China has made the news as the world’s leading exporter of goods with a total of over $2 trillion being exported in 2015 alone. The United States continues to hold the number one position and it doesn’t look like they are set to lose that spot any time in the near future, but when combined, China does export more goods to the Asian continent. Going into the fourth quarter of 2016, there is no doubt that the list of countries that China exports to will not change in rank to any great degree and that’s why political relations need to be a focus going forward.

China Leads the Globe in Exports

In terms of exports, China leads on a global level with the United States in second place and Germany coming in third. The top five global exporters being China, the United States, Germany, Japan and believe it or not, the Netherlands with positions six and seven being held by the Republic of Korea and Hong Kong respectively. Rankings are always shown in US dollars since it is still considered to be the strongest currency in the financial markets.

US Trade Deficit with China

Those studying in online MBA programs will be the first to admit that the number of imports the United States receives from China is ultimately the reason why they are in such an extreme deficit. In the reverse, the United States only exported approximately $116 billion to China in 2015 while importing almost $482 billion in the same year. That leaves a deficit of about $365 billion. It doesn’t take a masters in business administration online to see the reason why the US is in a trade deficit year after year but they are not alone. Again, as the world’s leading exporter, few countries could hope to export as much as China ships to their trade partners.

Top 15 Countries China Exports To

While no one comes near to the amount that China exports to the United States, the top 15 countries account for over 2/3 of China’s total exports. The import partners that topped the list in 2015 were as follows:

What is interesting to note is that many of those countries that receive the biggest value of imports from China are considered to be emerging nations. It will be worth watching how those nations progress in coming years.

One of the leading areas of concentration for many business students is a focus on how to even out the trade deficit with China when the US continues to import many times over what they export. This has even been a talking point in the political realm with this being an election year and the economy not yet recovered to pre-recession days. Although financial analysts will be watching China’s top import partners in 2017, it is forecast that the list will not change to any great degree.

Over the past few months, the Singapore stock market has witnessed a succession of privatisation exercises. Companies that have delisted include OSIM International, China Merchants Holdings, and Eu Yan Sang International to name a few. Forecasts suggest mild consolidation for the Asian markets though, thanks in large part to fears of a rate hike and slump in the price of crude oil.

What’s more, if the Singapore stock market follows recent positivity in Europe and the US, made possible by the decision to unlock €10.3 billion in new bailout loans to Greece, there could be plenty of promise for investors, especially via a leveraged product like CFD trading. So, why are companies in Singapore delisting?

Details of recent delistings in Singapore

In March 2016, OSIM International’s founder Ron Sim launched an offer to take the company private. This was followed in May by the majority owner of China Merchants Holdings’ decision to acquire all the company’s shares it did not already own.

Earlier this month, Eu Yan Sang International also announced that chief executive Richard Eu made an offer to take the company private with the help of other investors including family members and Temasek, one of the Singapore government’s investing arms.

In its fiscal year ended 30th June 2015, Eu Yan Sang saw net profit figures fall from S$15 million to just S$4.6 million. Furthermore, profit shrank by over 90 per cent from $8.2 million to just S$634,000 in the first nine months of FY2016.

However, its particularly interesting to note that at the firm’s share price of S$0.65 just prior to the buyout offer, it was valued at 1.8 times book value, meaning Eu Yan Sang has had an average price-to-book ratio of 2.0 over the past three years.

Reasons for recent delistings in Singapore

One of the many problems listed companies face is keeping track with management responsibilities while at the same time providing quarterly or half-yearly reports to investors. Listed companies on Singapore’s stock market must also answer to public shareholders, making it harder for struggling businesses to implement turnaround strategies successfully.

Therefore, if a company decides to go private, it can realign attention on managing core operations with the diminished responsibility of answering to a small handful of investors. However, it is imperative that companies strike the right privatisation deal to satisfy the interests of all parties.

Instead of going voluntarily with a general offer, like most delistings, the potential acquirer of Lantrovision recently picked a “Scheme of Arrangement” method for privatisation, which requires a court meeting and vote. Due to its valuation angle, this could have put shareholders in a disadvantageous position, but as Stanley Lim Peir Shenq, CFA explains, a favourable arrangement was agreed upon.

“As part of the deal, the company’s three co-founders and all its employees will remain employed after the buyout. As for the minority shareholders, the buyout price is higher than any price at which the company’s shares have been trading at since late 2012.”

Contributor / Sophie Davidson

In the United States and Canada, technology plays a heavy hand in farming, and most farms are mechanized. The machines used to run most of North America’s farms are the same machines that some countries in Asia have adopted to improve their agricultural markets. Asia is growing rapidly, and making a huge impact on agricultural trade.

The Rise of Asian Agricultural Trade

Asia is a vast region, with a population of 4.427 billion in 2014. Half of Asia’s 4.427 billion population relies on agriculture to fund their lives. Amazingly, most of these crops are located in North Asia where agriculture exports account for $6 billion in profits. As the years go on, the billions earned from agriculture continue to rise.

Compared with North America, Asia is experiencing a boom while the North American agriculture industries are slowing down or remaining steady. In the United States, farmers actually account for less than two percent of the population, but that two percent is responsible for feeding the country, as well as providing agriculture for export.

North Americans are encouraged to learn from their Asian neighbors, and explore the benefits of farming. With fewer farmers, there’s low competition in many areas. Moreover, North America continues to export agriculture, including grain, dairy products, wheat, and more. It’s beneficial for farmers to choose one specific export and focus on creating that.

To remain competitive with other markets, North America needs more farmers and more agriculture to export. Luckily, this business is one that’s relatively easy to start. Simply acquire farm land, and search for the equipment needed to manage that land. Farms rely on machines to operate, and you can garner machines for less than retail cost if you search used farm equipment online.

Common Agriculture in Asia and the United States

In Asia, the number one crop is rice. 90 percent of the world’s production of rice occurs in Asia, which makes sense considering 90 percent of the rice consumed worldwide happens in Asia. Asia also produces oats, millet, sugarcane, cabbage, beans, eggplant, and onions.

North American crops include a lot of the same (cabbage, beans, oats, eggplant, etc.), but North America also exports fruits and legumes. Despite having a relatively small farming population, North America has a varied agricultural offering with many types of plants used for food and nonfood uses. Some of North America’s crops are actually designated for clothing, and not food.

Rice on its Way Out

Despite the popularity of rice, many economists refer to it as an inferior good. This is due to the rapid development of Asia, and less poor communities on the continent. As incomes grow larger, the desire for rice decreases. So, Asia’s good fortune may result in farmers growing new foods.

It will be exciting to see how Asia’s agriculture market continues to develop, and how North America will adapt to these developments. It’s estimated that Asian crops will change in coming years, and that there will be less rice produced. If such is the case, it’s likely Asian farmers will embrace a new good, something that is as popular or more popular than rice.

Written by Jane Brown

To reach globally a business must think locally.

Large companies such as Apple, Microsoft, Malboro, Coca-Cola, and more, have the benefit of being dominant players in their industries. With this dominance they have the budget and resources to identify the local aspects when they expand their brand on a global scale.

Your business, however, isn't likely to have multi-billion dollar budgets to open divisions in new countries, hire teams of professionals from the region, and network with other companies which ease the transition to the new marketplace.

But that doesn't mean it's not possible to make a splash.

The key term I would like for you to remember throughout this work is assimilation (the process of changing one's language & culture to resemble another group).

When companies fail to assimilate to the new culture, their efforts to grow globally often backfire, such as some of these blunders rounded up in a post by Geoffrey James:

• Coca-Cola's brand name, when first marketed in China, was sometimes translated as “Bite The Wax Tadpole”.

• Ford blundered when marketing the Pinto in Brazil because the term in Brazilian Portuguese means “tiny male genitals”.

• The American Dairy Association replicated its “Got Milk?” campaign in Spanish-speaking countries where it was translated into “Are You Lactating?”.

This brings us to one of the important elements of extending your brand abroad and that is language.

Though English has become widely-used around the globe (and especially online) it's worth your while to seek quality translation services for any online or offline business assets. The easiest method is to reach out to companies within the area that are experienced in great translation services that also can report if a campaign needs to be tweaked to avoid a language blunder.

Another of these important items for reaching the global marketplace (with the attention to detail to the local marketplace you plan to enter) is the presentation of your goods and services.

A quick showing of this idea of presentation can be seen through how companies change the look & feel of their websites such as from this article by Graham Charlton; most notable when examining the difference that come to mind include:

• Promotional material is tailored to the market based on culture, economics, and needs

• Copy and creative shift depending on location where there may be rivalry

• Translation and a reformatting of what is frequently displayed is shifted due to marketplace demands that may not reflect the home country

The presentation continues to evolve and take shape in the physical side of selling products. In the States we have seen the trend of minimal design on many product boxes whereas in places such as Japan the boxes may be littered with celebrities, cartoon characters, expressions, promotions, and so much more.

A method to allow your business to reach those locals (abroad) is by working with box suppliers to develop and create designs that will fit within that local marketplace. An idea of what is possible with customized packaging can be seen online, where many companies display the different shapes, styles, coloring, and printing options. The Custom Boxes Now blog even has a post entitled "6 Examples of Companies Using Custom Boxes to Reflect Their Products."

The final element (but in no way the only other worth noting) is to understand cultural differences.

We've already talked about the language barrier but what other cultural differences are there to take into consideration when going global?

• Body language, mannerism, and gestures play an important role to set the right tone for doing business with people from the region (it's important to know them so you avoid create offense).

• Conversations are also conducted in a different manner; such example is the direct discussions we may have in the States versus the passive type of conversation you may find in Japan.

• Politics, without a doubt, will come into play when trying to understand cultural differences and in this case it's best to stay neutral on both sides to avoid aggravation or hostility.

All-in-all, it comes back to the term I wanted you to remember assimilation.By doing research about the culture, devoting the resources for services that remove language barriers, learning the cultural differences and customs, and adapting the presentation to the design styles of the region you will be one step closer to global growth.

Written by Jane Brown

Photo credit / INSEAD