Globalisation and the

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Globalisation and the new globalisers

• The rise of the East - tipping the global scales?
  
• Or Are your wages being set in Beijing/Mumbai
  ?
• -

2

• Outline
• EU The twenty-first century is witnessing a shift
  in the East-West global balance of economic and
  political power with the rise of the two Asian
  giants China and India.
• EQ 1. How has globalisation contributed to this
  rise in power ?
• 2. What sorts of pressures might impede this
  rise?
• 3. What threats and possibilities does the rise
  of the East hold for Singapore? Can Singapore
  respond effectively to these?

3
What will be the overall impact of rise of China
and India on the world economy?

• Global effects on
• International trade, markets and finance
• Global workforce
• Integration of economies
• Neo liberal view(economists (who support freeing
  up national and international economies) believe
• If you free up the flow of private capital,
  goods and services across national borders then
  this will lead to raised levels of productivity,
  GDP growth, employment and real income.

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The East/South Asia is rising! Incomes increasing
absolute poverty reducing of middle income
earners increasing
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Globalisation

• Globalisation and economic interdependence how
  has it contributed to the rise of the East?

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China and globalisation some key areas for
external markets

• Manufacturing e.g. cars, white goods (frig,
  washing machines) and garments (clothing)
• Science and technology
• 8 cutting edge areas of science and tech
• biotech, IT, new material, advanced
  manufacturing, advanced energy, marine
  technologies, lasers and aerospace

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EQ1. How is rise of China shown by a
manufacturing case study? Track a T-shirt!

• Where does your favourite t-shirt come from?
• Ever stopped to think about how your t-shirt
  illustrates globalisation in action?
• How does your purchase as a consumer place you in
  a complex web of inter-relationships that starts
  thousands of kilometres away?

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History in pictures

• T-shirts in the 40s and 50s

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Who wears t-shirts?

• Traditionally young affluent consumers in the
  developed world (including Singapore). The more
  attractive and new the product, the higher the
  street value
• Increasingly aspiring new markets (e.g. China)
  which want a slice of the consumer pie
• In future emerging less conventional markets
  such as the second-hand markets in poorer nations
  
• Follow the animation!

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EQ 1 T-shirts today

• Before globalisation of markets
• Consumer American
• Traditional supplier - American

• After globalisation of markets
• Consumer American global consumers
• Supplier China
• Cheaper supplier - Bangladesh

?
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EQ1What are the factors that caused this
globalising shift?

• Cost in original country (e.g. USA) rising due to
  higher standard of living and labour costs
• Designers/manufacturers seek new sources (lower
  costs esp. labour)
• Manufacturers invest in infrastructure (e.g.
  sewing machines, packing machines, distribution
  chains etc.)
• Supply of goods outsourced to increase profit
  margins

12
EQ 2 Potential pressures? What happens to global
wages?

• China US117.00 147.00per month
• Vietnam US 94.00 per month
• Bangladesh US 64.00 per month

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EQ1 This is great! Chinas economy develops and
cheaper goods for me

• Benefits
• the consumer gets a quality product for a lower
  price
• Manufacturer gets better profit margins
• Supplying country (e.g China) gets higher levels
  of employment, better paid workforce, better
  infrastructurehooray!
• Wealth is shared globally and poorer nations make
  progress in standard of living, education etc.
• Wider choice of goods and no loss of quality

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How does a globalised product get to the
consumer? a trans-national Tshirt Who benefits?
How?(EQ1)

• US design
• China manufacturer
• HK owned company
• Raw materials from
• Sold to consumers in
• Shipped under flags of convenience
• Ships crew from
• Payroll/financial support in
• Consumer issues handled by
• Profits in tax-haven

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But

• Problems/issues/pressures (EQ2)
• Labour costs in new economies rise
• New sources for cheaper labour sought
• Emerging economies make short term gains but can
  outprice themselves
• Increased production creates wasteful consumerism
  (a throw-away attitude)
• Increased pressure on environment, resources etc.

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Sidebar! Impact of globalisation on workers
rights

• Over 300 strikes repressed by employers or the
  police, in nearly 90 countries
• About 8,500 arrested or detained
• 209 trade unionists killed or disappeared
• Over 100,000 harassed
• 20, 000 dismissed because of their trade union
  activities
• 20 million bonded labourers worldwide
• 700,00 women and children victims of cross-border
  human trafficking each year
• Worldwide, women are paid anything between 10-50
  less than men for doing similar jobs or different
  jobs of equal value

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EQ 1 China In summary

• China has reaped tremendous benefits from
  astronomic growth in economy
• Chinas population continues to develop in terms
  of skills and education
• Prosperity has brought higher expectations and a
  shift from producer nation to consumer nation
• This brings significant soft power

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What about India?

• EQ1 Context of globalisation in India
• Slide show http//www.slideshare.net/captaink99/i
  ndia-globalisation?fromshare_email_logout3
• -- Massive changes since 1990s opening to the
  world, transformed business landscape, IT
  powerhouse, emerging world-class firms
• -- But lopsided growth benefits urban middle
  classes but not the vast majority of the poor
  unlike China

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EQ1 Why is India rising (and may be more stable
in long term than China)?

• Potential drawbacks the most difficult country
  to govern vast, hugely diverse, split so many
  different ways
• Messy democratic politics multi-party coalitions
  at the centre kaleidoscope of musical-chair
  politics in the states
• But advantages (compared with China) unity and
  stability checks and balances British-endowed
  liberal institutions the English language
  political and civic freedoms

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The role of the IT sector

• http//www.youtube.com/watch?vLnhTQFHkgmw
• India outsourcing (3 mins)

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An example NEW DELHI, India, and SAN JOSE,
Calif., December 6, 2006 (press release)

• - Cisco today announced the next stage of its
  globalization strategy with the selection of
  India as the site for its globalization center,
  called "Cisco Globalization Center East."
• "Cisco chose India as the location from which to
  expand its globalization vision because India has
  a highly skilled workforce, supportive
  government, innovative customers and world-class
  partners that already have global capabilities,"
  said John Chambers.
• "As our global development strategy. Under Wim's
  leadership, Cisco will lead the market transition
  being driven out of India with our talented
  employees and partners across the globe to meet
  the needs of customers on every continent in the
  world."
• As a multi-national corporation that today
  operates in over 120 countries, Cisco's
  globalization strategy represents an evolution in
  traditional business models by delivering an
  enhanced customer and partner experience on a
  24-hour basis.

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EQ1 India Other areas of globalisation

• International finance
• India, despite issues of corruption and
  transparency, has adjusted its regulations for
  financial markets to encourage international
  capital and finance managers and investors to
  operate from India.

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• Pharmaceutical industry (medicines)
• Indias share of world market in pharmaceutical
  manufacturing rapidly increasing
• As a production location, the country is
  benefiting from its lower wage cost
• Other advantages over western competitors when
  it comes to producing medicines e.g.
  transportation costs.
• BUT sectors development slowed by major
  infrastructure problems - qualitative and
  quantitative shortcomings in energy and transport
  sectors.

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Other potential growth areas

• Low cost small vehicle manufacturing (for
  domestic market) Tata unveils the 2,500 car
  (but what are the global environmental
• and energy demand implications ?)
• Internal consumer demand-
• (especially for IT- cellphones)
• Food processing and packaging
• Medical /cosmetic tourism

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• India and China Contest of the Century ?
• Potential threats to Rise of the
  East
• Rivalry over status as global forces Asian
  giants
• Competition between China and India especially
  for raw materials and energy sources
• Demographic stresses (population aging faster in
  China than in India)
• Multinationals outsourcing to lower wage
  developing countries
• Internal unrest (religious/economic tensions/
  strains of rapid growth)
• Corruption- political, legal and financial
• Environmental degradation

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Globalisation

• EQ3 What might this rise mean for Singapore?

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Concluding Reflections

• If emerging economies enjoy only short term
  growth before an industry relocates what
  then?
• If developed economies cannot afford to compete
  with countries with lower costs, what happens to
  employment in these countries?
• Globalisation is certainly reducing poverty in
  many developing countries BUT what is the impact
  for developed, more established nations?