Q: Why is Cisco expanding in India and China?
A: Cisco Systems is planning major investment in China and India as it focuses its attention on the world’s two fastest-growing major economies. The US firm intends to step up procurement from Chinese suppliers, develop its product research capacity and launch several joint ventures. It has also made a similar pledge to ramp up its presence in India, where it plans to triple its workforce by 2012.
Cisco said it was committed to “truly globalising” its business. China and India are key battlegrounds for global technology firms, because of their massive domestic markets and the attractive low-cost manufacturing locations they offer. Cisco has been in China since 1994 and claims to have invested an estimated US$8.5 bln there in the past five years.
Q: China’s steel output is up?
A: China Iron & Steel Association (CISA) forecasted that China’s crude steel output in 2007 would reach 480 million tons, up 14% compared with the previous year. Luo Bingsheng, executive vice chairman of the CISA, said China’s crude steel output in the first nine months stood at 363 mln tons, up 17.61%, and pig iron output increased by 15.68% to 346 mln tons. Driven by increasing international steel prices, China’s steel export amounted to 49.5 mln tons in the same period, up 73.2%, of which crude steel accounted for more than 40% of the total.
Meanwhile, international shipping prices for iron ore have increased significantly, such as spot-contract commission for delivery from Brazil to China which has rocketed to US$88.3 per ton. Comparing with the commission on long-term contracts which is usually below US$20, such an increase is “unusual and unreasonable”, CISA said. China’s iron ore transporting volume takes up 46% of the world’s total, far exceeding its shipping capability, which has only 30 bulk carriers for now, or 4% of the world’s total, Luo said.
Q: What are they talking about at the transport meeting in Singapore?
A: Mostly about open skies. Singapore is hosting the 13th Association of Southeast Asian Nations (ASEAN) Transport Ministers Meeting that was opened yesterday by premier Lee Hsien Loong. One of the key issues is the opening up of the Kuala Lumpur-Singapore air route, a sector that has been dominated by Malaysian Airlines (MAS) and Singapore Airlines (SIA).
Indeed, it is one of the worlds most expensive sectors, with a return ticket for the 35-minute flight costing some US$300. Few other city pairs are as costly (passengers flying London-Paris and Melbourne-Sydney have far greater choice of fares). Malaysia and Singapore are in the midst of opening up their skies to allow budget carriers such as AirAsia and Tiger Airways a piece of the action. MAS is crying foul but SIA says bring it on.
The increased deregulation that is forthcoming is likely to stimulate and significantly change the competitive dynamics of the KUL-SIN route. AirAsia is the main beneficiary of this move as the LCC has been dreaming about flying to Changi since it first flew in September 2001.
MAS stands to lose the most because it currently generates over 10% of its revenue from this sector. Not so for SIA, with less than 5%. The opening up of this market could reasonably reduce fares, at least 30-35% to begin with. Some ticket prices during peak hours could potentially go even as low as 50%, from what passengers are paying now.
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But as with many accords between Malaysia and Singapore, the devil is in the details. The ASEAN plan is to free access between ASEAN capitals (10 cities) by 2008. When it happens, open skies presents both an opportunity and a challenge for the regions carriers.
While a strong airline such as SIA is able to take advantage of operating more services, weaker carriers face the potential for increased and stiffer competition in their home markets. ASEAN wants a Single Aviation Market by 2015. The flight path leading up to that could be very turbulent.
No significant events
马来西亚和新加坡正着手开放各自领空，以便AirAsia和Tiger Airways等廉价航空公司能参与进来。马航高呼不公平，新航乐观其成。即将实施的进一步开放市场的措施可能会刺激及显著改变吉隆坡至新加坡航线的竞争动力。AirAsia 是主要的受益者，因为这间廉价航空公司自2001年9月首飞以来一直梦想能飞往樟宜机场。马航受影响最严重，因为其目前超过10%的收入来自这条航线，而新航不足5%。
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