2012
Research and Reflections
on the Global Economy
Voices From Paju
Voices From Paju
2
Table of Contents
About the Authors ...................................................................................................................................... 3
How the Recent Paradigm Shift in Electricity Affects the Global Economy
by Kenzo Sakamoto and Jongkwon Ham ................................................................................................ 4
Effects of Fair Trade Coffee on the Global Economy
By Katsuya Ishigaki and Hojaee Lee ........................................................................................................ 9
The Effect of Chinese Taste Change
By Toshiharu Kamada and Jongmin Kim .............................................................................................. 13
Camu Camu Fruit
By Hiroyuki Kaji and Hisami Natsume ................................................................................................. 17
The Possible Impact of Speech Recognition Technology
By Toshiharu Kamada and Hensu Jang ................................................................................................. 22
The Costs and Benefits of London Olympics 2012
By Jeongwoo Lee and So Kogahara ........................................................................................................ 28
Which One is More Proper in Korea and Japan, Big Mac Index or Starbucks Index
by Seunghyun Kim and Toru Yamashita ................................................................................................ 35
Why did “Occupy Wall Street” Demonstrators Show Up?
By Siyung Jo and Woojin Yang ................................................................................................................ 39
The Effect of Animation Outsourcing on Japan’s Economy
By Takahiro Aoki and Lee Woo Chan .................................................................................................... 44
Aging Population: Impact on the World Economy
By Jung Jaeyoon and Shoichiro Kitano .................................................................................................. 51
Chinese Luxury Shopping
By Jaewoo Kwon and Emi Yamazaki ..................................................................................................... 59
How the Chinese Economy Recovered Quickly After the Financial Crisis
By Yoshiyuki Suimon and Richie Hsieh ................................................................................................. 66
The Effect of China’s Foreign Exchange Reserves on the World Economy
By Sachiyo Urashima and Sangjae Lee .................................................................................................. 71
Free Trade Agreements
By Youngguo Seo and Ryuhei Oh ............................................................................................................ 75
The Reason why Korean Women Undergo Plastic Surgery
By Yosuke Suzuki, Youngwan Kim, and Sungmin Kim........................................................................ 82
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About the Authors
On a cold winter morning in early February 2012, business professionals from Korea,
Japan, and Taiwan descended on Gyeonggi English Village in Paju, South Korea. The 31
writers featured in this collection come from a variety of industries—electronics to automotive,
ship-building to financial—but are all among the leaders in their fields. They were accepted to
the University of Michigan’s Ross Business School Global MBA program, and have committed a
year and a half to their studies.
Their three weeks at English Village was the first step in this journey, a last chance to
fine-tune their English skills—writing, reading, speaking, and listening—before beginning an
intensive business-focused curriculum. The essays in this book represent the culmination of
their writing classes. Most of the writers—though highly intelligent and good English
speakers–came in with limited experience in writing English, especially academic papers. The
quality of the essays they were able to produce is a testament to their talent and hard work. On
a personal note and speaking as one of their teachers, they were the most energetic, focused, and
intellectually curious group I’ve seen pass through English Village. They will be missed.
-Alex Diamond, Paju, February 27, 2012
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How the recent paradigm shift in electricity
affects the global economy
by Kenzo Sakamoto and Jongkwon Ham
Introduction
A Massive 9 magnitude degree earthquake struck off Japan’s northeastern area on March 11,
2011. Because of this big earthquake, Fukushima nuclear power plant was severely damaged.
After the tragedy accident, the Japanese government implemented a variety of electricity saving
plans.
On September 15, 2011, a freak blackout plunged Korea into darkness. The sudden
power outage affected offices, baseball stadiums, and shopping malls. Korea faces a constant
threat of major power outages in the next four to five years1.
I. Saving electricity
A. Black out in Korea
1. Detail explain of Black out accident
The blackout paralyzed the entire country of Korea. The sudden power outage began
around 3 p.m. and the national emergency management agency reported 944 phone calls from
people who were trapped in elevators. Traffic lights went out and mobile phone services were
halted after power was cut from base stations in Korea2. It happened because of the sudden
demand expansion. The Ministry of Knowledge Economy in Korea put the blame of the massive
blackout on a false report by KEPCO (Korea Electric Power Corporation) about the country’s
electricity reserve level.
2. Japan Government’s policy
Tokyo electric power lost a third of its generating capacity when the earthquake struck and
power stations automatically shut down. Japan’s chief cabinet secretary said the government
1 KBS special documentary film “2011 The warning of winter blackout” broadcasted by KBS on Dec. 11.2011. 2 http://english.chosun.com / “Freak Blackout plunge Korea into darkness” Sep. 16. 2011.
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would look at the option of a power cut by rotation. The lights in office buildings and hospitals
turned off and commuter subway trains stopped.
However, the Japanese public overcame the unprecedented disaster with amazing
orderliness. The source of orderliness appears to be a deep-rooted trust in the Japanese
government. Japanese people still have confidence in what the government tells them.
B. The Cause of Power Shortage
1. Seasonal demand expanding
From 1990 to 2000 because of air conditioner supply, there was an increase in summer
electricity demands. However, recently more demand increase is due to heating system
translated from gas to electricity. In addition, the average low temperatures during winter time
are another reason3.
2. Commercial demand
Due to the industry structure changes, the service industry has an important role in the
recent global economy, and commercial demand of electricity is highly expanded. The weight of
service industry among the industrial products in Japan is almost over 38%4. Commercial
demand’s range of fluctuation is so wide that a stable supply plan is hard to establish.
3. Continuous occurrence of new power demand
The increasing demand for a convenient and comfortable life increases the use of many
home networks and well being home appliances, which also need a lot of electricity. It will
continue to expand in the future. For example, the home appliance market in Korea grew an
annual average 58.2% from 2006 to 20105. From now on society will transition an information-
oriented and environment-friendly society, and new power demand will increase.
4. Insufficiency of power plant supply plan
The power plant is lacking because government established a long-term power supply plan
3SERI (Samsung Economic Research Institute) CEO Information_2012.1.18: No.838 “The Cause and countermeasures of power shortage in winter time” page 5 4SERI (Samsung Economic Research Institute) CEO Information_2012.1.18: No.838 “The Cause and countermeasures of power shortage in winter time” page 6 5 Op. cit. page 7
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on the base of demand forecasting, but the real supply demand exceeded the prediction.
Expected demand growth in recent 3 years was about 2%, but actual demand was 5.2%6.
5. Delay of planned power plant
The disruption occurred to the planned plant because of complaints, environmental policy,
transmission line connection, etc. Until 2009, the fulfillment of the power plant establish plan is
just only 80%7.
C. Countermeasures
1. Reinforcement of seasonal demand management
The government should manage the growing demand for air conditioning and heating, so
they can secure the stable power reserve level especially for the peak time of summer and winter.
2. Systemize the response of crisis
The government should improve the power load management system in case of climate
change or power plant breakdown.
3. Expansion of basis power plant
The underlying lack of power capacity serves as a cause of power shortages and rising
electricity rates, so the expansion of basis power plants needs to avoid such a disruption of the
plan.
4. Modernization of power plant infra through technical innovation
There is a need to build a smart grid which is a fusion of IT technology and power
networks. We should take advantage of technology innovation and power grid expansion as an
opportunity for economic revitalization.
II. Electric Vehicles
A. Recent trends of Electric Vehicles
The Electric Vehicles (EVs) are automobiles which are propelled by electric motors, using
6 Op. cit. page 8 7Op.cit. page 9
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electrical energy stored in batteries or another energy storage device. Recently, to overcome the
high oil prices and the emission of the greenhouse gasses, the research and the production of the
EVs are gradually increasing. EVs, including hybrid cars, could represent as much as 15% of the
new car market by 2020.8 In this report, the analysis of the impact of the EVs on global economy
is described in terms of household impact, smart grid, and reduction of emission.
B. Impacts on the Households
The spread of the EVs would have huge impact on the car operating costs in households.
Given the average household uses a car for 50miles, the increase of the electricity cost would be
$40, and the decrease of the gasoline cost would be $180. Totally, the introduction of EVs would
be cost-effective to most of households even if the battery maintenance costs were included.9
C. Impact on the Electric Grids
1. About Electric Grids
Current electric grids were established in the 19th century. These days, the smart grid, the
concept of next generation electric grids which improve the efficiency and reliability of the
electric grid by digital and autonomiccontrol, is becoming prevalent.The smart grid is receiving
plenty of attention as the key technology to realize the expansion of the EVs as well as the
renewable energy.10
2. How it affects Electric Industry and Economy
For the prevalence of the smart grid, the comprehensive introduction of devices, such as a
8“Recharging electric cars: Bidding for volts,” The Economist online, September 6, 2011,http://www.economist.com/node/21528507, accessed February 16, 2012 9Ulrich Decher, “Economic and Emissions Impacts of Electric Vehicles,” The Energy Collective, February 15, 2011, http://theenergycollective.com/ansorg/51761/economic-and-emissions-impacts-electric-vehicles, accessed February 16, 2012 10Center for Entrepreneurship & Technology (CET) University of California, Berkeley, “Impact of Widespread Electric
Vehicle Adoption on the Electrical UtilityBusiness – Threats and Opportunities,” August 31, 2009,
http://cet.berkeley.edu/dl/Utilities_Final_8-31-09.pdf, accessed February 16, 2012
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smart meter, is necessary. In this process, not only manufacturers of power system equipment,
but also other related industries, including car makers or manufacturers of digital
communication equipment, are expected to find new markets, and this trend would have a huge
impact on global economy.
D. The Impact of the Reduction of Emission
1. How the EVs reduce the Emission
The amount of emission gases would not basically change by the introduction of EVs
according to the law of the conservation of energy, but the emissions caused by the combustion
of the oil would transfer from car engines to power plants, which reduce the effects of the
emissions to urban area.
3. The Economic Effect of the Reduction of Emissions
To reduce the emissions, the power system should be changed dramatically:one is smart
grid to enable all households to charge EVs at night, and the other is the shift of energy resources
from fossil fuels to nuclear power or renewable energy sources, such as solar, tide, and wind
powers. As the expansion of the nuclear power plants is becoming impractical after the 2011.3.11
earthquake in Japan and following nuclear accidents, mainly the shift to renewable energy
would be promoted. The renewable energies are expected to be cheaper resources for the future
and boost the creation of new jobs, stimulating the global economy.
III. Conclusion
In conclusion, the trend of saving electricity and introduction of EVs is becoming
dominant, and would be more accelerated in the future. The shift of the energy resources from
fossil fuels to renewable energy would be also promoted, and these trends generally have some
positive impacts to boost the global economy.
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Effects of Fair Trade Coffee on Global Economy
By Katsuya Ishigaki and Hojae Lee
I. I. The history of coffee
After medieval times, coffee spread through the world. The earliest credible evidence of
either coffee drinking or knowledge of the coffee tree appears in the middle of the fifteenth
century, in the Sufi monasteries of the Yemen in southern Arabia. From Mocha, coffee spread to
Egypt and North Africa, and by the 16th century, it had reached the rest of the Middle East,
Persia and Turkey. From the Muslim world, coffee drinking spread to Italy, then to the rest of
Europe, and coffee plants were transported by the Dutch to the East Indies and to the
Americas. 11 Coffee was popular by the 18th century in Europe and European colonists
introduced the crop to other tropical countries to help them supply a healthy domestic
demand.12
Coffee is the world's second most valuable traded commodity, behind only petroleum.
There are approximately 20 million farmers and coffee workers in over 50 countries involved in
producing coffee around the world. An estimated 11 million hectares of the world's farmland are
dedicated to coffee cultivation. Around the globe, the annual consumption of coffee has
expanded to 12 billion pounds.13
Coffee was traditionally developed as a colonial cash crop, planted by serfs or wage
laborers in tropical climates on large plantations of landowners for sale in colonial countries.
Coffee producers, like most agricultural workers around the world, are kept in a cycle of poverty
and debt by the current global economy designed to exploit cheap labor and keep consumer
prices low. Because of this situation, many coffee workers bring their children to help them in the
fields in order to pick the daily quota. These child workers are not officially employed and
therefore not subject to labor protections.14
11 Wikipedia, “History of coffee,” http://en.wikipedia.org/wiki/History_of_coffee, accessed 17 Feb 2012 12 facebook, “Brief Coffee History,” http://www.facebook.com/note.php?note_id=400497537218, accessed 17 Feb 2012 13 The Catholic Action Network for Social Justice, “Coffee in the Global Economy,” http://catholicactionnetwork.org/dec05/documents/FAQsfromglobalexchange.pdf, accessed 11 Feb 2012 14 Ibid
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II. The characteristics of coffee industry
Coffee beans are grown within an area known as the ‘bean belt,’ which is roughly
bound by the tropic of cancer to the north, and tropic of Capricorn to the south. The best
growing areas offer moderate sunlight and rain, steady temperatures of around 70 degrees
Fahrenheit, and rich soil.15 Top 10 green coffee producing countries in 2009 are Brazil, Vietnam,
Colombia, Indonesia, India, Ethiopia, Peru, Mexico, Guatemala, and Honduras in order of
production.16
The cultivation of coffee is a much more labor-intensive than alternative products of the
same regions such as sugarcane or cattle. Coffee beans must be picked, processed, dried and
roasted on a coffee plantation, so it is not subject to automation and requires constant attention.17
The prices of coffee beans are mainly determined by Coffee C Futures contract market
of ICE18 and NYSE Euronext.liffe.19 The factors which can affect the prices of coffee are the
weather of producing countries20, supply and demand of coffee21, and speculation22.
III. What is Fair Trade Coffee
Fair trade was introduced to help the farmers to have a better life and support their
family. The Fair Trade movement began in the late 1950s as alternative trade organizations
(ATOs) emerged in Europe and the US to promote grassroots development through direct,
equitable trade. These ATOs bought directly from Third World producers, eliminating the
middlemen, and paid the producers a fair price while providing assistance in developing
15 Coffee Producing Regions, “Coffee Producing Regions,” http://www.professorshouse.com/Food-Beverage/Beverages/Hot-Drinks/Articles/Coffee-Producing-Regions/, accessed 21 Feb 2012 16 FAOSTAT, “2010 Data,” http://faostat.fao.org/site/567/default.aspx#ancor, accessed 21 Feb 2012 17 http://en.wikipedia.org/wiki/Economics_of_coffee, accessed 21 Feb 2012 18 Coffee C Futures contract market of ICE(InterContinentalExchange): https://www.theice.com/productguide/ProductDetails.shtml?specId=14 19 https://globalderivatives.nyx.com/contract/content/29040/contract-specification 20 ezinearticles.com, “Brazil Weather Will Determine Coffee Prices, They Could Soar This Winter,” http://ezinearticles.com/?Brazil-Weather-Will-Determine-Coffee-Prices,-They-Could-Soar-This-Winter&id=6315290, accessed 21 Feb 2012 21 Kona Coffee Roasting, “Coffee Prices Rise in 2011 Due to Increased Demand, Reduced Coffee Supply,” http://www.konacoffeeroasting.com/coffee-prices-rise-in-2011-due-to-increased-demand-reduced-coffee-supply/, accessed 21 Feb 2012 22 The real news, “Speculation Drives Up Coffee Prices,” http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=7176, accessed 21 Feb 2012
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trading experience and market contacts. Such experiences helped producers raise their incomes
while reducing their dependency on commercial middlemen.23
IV. Issues of Fair Trade Coffee
There are some issues for the fair trade coffee: very strict rules to be Fair Trade Coffee
and not enough benefits from Fair Trade Coffee.
Producers need thousands of Euros to get the certificate of Fair Trade Coffee for a single
plant.24 There is an application fee, initial certificate fee, membership dues, annual audit fees and
more. Large corporate farms can often handle the paperwork and recuperate the cost of
certification more easily than small, independent farms. As a result, there are plenty of small,
independent farms that are not Fair trade certified even though they meet or exceed the Fair
trade standards.25
There is an issue that Fair Trade cannot help producers to be escape from poverty. The
ICA(International Commodity Agreement) raised prices for the consumer, but after several
decades of intervention, poverty remained a fact of life in coffee producing countries. Indeed,
studies of the ICA have shown that it had no effect on poverty reduction.26 It may become the
most of the profit goes to the middlemen.
V. Prospect of fair trade coffee
To help producers of fair trade coffee, the volume of fair trade coffee should be
increased. Nowadays, the volume of fair trade coffee is quite low compared with the volume of
other coffee. We should promote fair trade coffee and check the volume of fair trade coffee.
There are few shops or cafes which produce fair trade coffee, while a lot of people want
to buy. For increasing sales volume of fair trade coffee, more diversification of sales is necessary.
For example, cans of coffee or packs of coffee are effective options. Before selling them, sellers
may make an advertisement which introduces fair trade coffee to common people and influence
23 Ibid 24 FLO-CERT, “PRODUCER CERTIFICATION FEES,” http://www.flo-cert.net/flo-cert/65.html, accessed 21 Feb 2012 25 Wikipedia, “Economics of Coffee,” http://en.wikipedia.org/wiki/Economics_of_coffee, accessed 21 Feb 2012 26 Mercatus Center, “Does Fair Trade Coffee Help the Poor? Evidence from Costa Rica and Guatemala,” http://mercatus.org/publication/does-fair-trade-coffee-help-poor-evidence-costa-rica-and-guatemala, accessed 21 Feb 2012
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people buy more fair trade coffee.
To promote volume of fair trade coffee, tax exemptions are also effective. Tax
exemptions will encourage sellers to sell more fair trade coffee and producers to produce more.
It is necessary for related countries to negotiate each other for protecting the coffee producers.
VI. Conclusion
Historically, coffee producers suffer from their own poor wages. Fair trade coffee is
initiated to protect such poor producers, but it does not work well and there are a lot of poor
producers who still suffer. It is better to promote the volume of fair trade coffee
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The Effect of Chinese Taste Change
By Toshiharu Kamada and Jongmin Kim
Ⅰ. Introduction
“13.5 hundred million”, “960 thousand”, “300 thousand dollars”27
These numbers indicate China’s population, the number of Chinese billionaires, and the
amount of money the Chinese billionaires spend annually overseas, respectively. In the past,
many people believed that Chinese are very economical consumers and do not like to spend
their money. However, this idea is far from the truth nowadays. Chinese are spending
considerable amounts of money on shopping, eating, and traveling every year. People can easily
encounter many Chinese who travel in many sightseeing cities and look around luxury brand
shops. This large group of Chinese is starting to create changes not only in the middle priced
market but also in the luxury market all around the world. The movement to adapt to the
change is getting faster.
Ⅱ. Effects on Travel Business
A. Luxury goods for Chinese Travelers.
The change of markets is observed in travel business. First and foremost, Chinese taste’s
change has strongly influenced overseas travel business. For example, according to The
INDEPENDENT, 22.7 million Chinese tourists, out of a total of 36 million over 12 monthsin 2010,
have travelled to Hong Kong,compared tothe 7.5 million Chinese tourists had done so in
2003.28The main purpose of their travel was still shopping. However, what they wanted to buy
and actually bought had changed from cheap goods to luxury goods.Actually, Chinese travelers
to Hong Kong spent more than those who came from other countries. They spent approximately
HK$12,000 (1,100 Euros) on average every time they came to Hong Kong.29
B. Luxury Service for Chinese Travelers.
27Myungshin Kim, “Trend Report”, KOTRA(Korea Trade-investment Promotion Agency), November 17th, 2011 28“Chinese taste for luxury changes the face of Hong Kong shopping,” The INDEPENDENT, March 29, 2011, http://www.independent.co.uk/life-style/fashion/chinese-taste-for-luxury-changes-the-face-of-hong-kong-shopping-2255987.html, accessed February 2011. 29 Ibid.
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In addition, many of the companies which sell luxury goods throughout the world are
developing new products and services adequate for Chinese tourists. According to The WHERE,
one of the Canadian travel magazines, the affluent Chinese travelers sought for high-quality
Asian-style services besides European goods.30 Actually, Hilton started special hospitality
services for Chinese travelers. Specifically, it provided them with Chinese breakfast and front
desk attendants who was able to speak the Chinese language31.
Moreover, we can also observe the tendency described above, not in the overseas travel
market, but in the domestic market, that is, in the Chinese market. The changing taste of Chinese
consumers begins to focus on service qualityother than pricing. Specifically, many Chinese
people tend to seek for information such as user reviews, shipping options, or product
guarantees, other than price.According to The Wall Street Journal, we can also observe this trend
in e-commerce companies. “In China e-commerce is all about discount shopping, said Hurst Lin,
general partner at venture capital firm DCM and former COO of Chinese web portal and
microblog operator Sina, but that won’t last. Mr. Lin believes that in several years, Chinese
consumers will have more discerning taste and that online retailers with the best design and
branding will challenge the dominance of Alibaba Group’s Taobao websites.”32Alibaba Group’s
Taobao websites are the current biggestonline shopping in China. However, the top position will
not always continue in the future. Actually, the sales of Alibaba Group’s Taobao websites have
recently decreased. From now on, e-commerce companies will need to differentiate themselves
from competitors by providing customers not with cheaper prices, but with added values such
as better services or better design. As the example illustrates, Chinese taste change has strongly
influenced overseas travel business.
Ⅲ. Effects on Wine Market
A. French Wine Market
30“Travel Trends: Why Chinese Tastes Matter,” Where, September 23, 2011, http://www.where.ca/blog/check-in/travel-trends-why-chinese-tastes-matter/, accessed February 2012. 31Ibid 32 Loretta Chao, “DCM Partner: Taobao Discount Model Not the Future of Chinese E-Commerce,” The Wall Street Journal, November 2, 2011, http://blogs.wsj.com/chinarealtime/2011/11/02/dcm-partner-taobao-discount-model-not-the-future-of-chinese-e-commerce/?mod=WSJBlog, accessed February 2012.
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In addition, Chinese taste change and its effects on the market are observed in other
spheres. One of the spheres is the wine market. Recently, it is perceived that there is a big change
in the global high-end wine market. The change coming from wealthy Chinese wine collectors is
making Bordeaux wine cry and Burgandy wine smile. Until recently, French wineries have led
the high-end wine market. Many people who enjoy drinking wine have unconsciously
memorized many kinds of the names of French wines and usually ordered them in restaurants.
However, wealthy Chinese people who enjoy drinking wine have begun to pick up Burgandy.
Even though 60% of Bordeaux’s total exports are still consumed in mainland China and Hong
Kong, no one can guarantee that Bordeaux’s wine will be able to maintain its popularity.
Therefore, in the near future, it is expected that this trend will cause the price of Burgandy to
surge. According to Janicy Robinson, the British wine expert and critic, the effect that greater
Chinese interest in Burgandy could have on the broader global market would be "dangerous" for
Burgandy lovers. Because the quantities of top Burgandy produced are limited, this
phenomenon could upset the market. 33
B. Australian Wine Market
In addition, a similar phenomenon is observed in the Australian wine market.
According to Campbell Thompson, an Australian and co-owner of the wine importing and
distributioncompany, The Wine Republic, French wines have led the gift-giving and corporate
dining market until recently34. However, the demand for Australian wine is increasing
dramatically. Australia’s top wine brands, like Jacob’s Creek, have begun to have more interest
in the Chinese market. They expect that their major target will be businessmen, officials, and
young white-collar workers, who are increasing rapidly in main cities in China.35 Therefore,
many Australian wine sellers anticipate that the sales of the wine will surge and then the price of
Australian wine will reflect the change.
33Jancis Robinson, “Growing Chinese Taste For Burgundy Could Prove “Dangerous”, Jing Daily, November 22nd, 2011, http://www.jingdaily.com/en/luxury/jancis-robinson-growing-chinese-taste-for-burgundy-could-prove-dangerous/ 34 “Demand for Australian wine soars as Chinese taste change”, China Daily, December 13th, 2011, http://www.chinadaily.com.cn/bizchina/2011-12/12/content_14250015.htm 35 Ibid
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Ⅳ. Conclusion
In conclusion, many companies have tomake more efforts to establish the strategy to
reflect Chinese taste change. As the example above illustrates, Chinese people penchants for
spending money are largely changing from essential to luxury, such as overseas travel, wine, or
designer goods. Many of the economists and the economic magazines predict that theChinese
economy continues to grow for the moment. According to the Wall Street Journal, “A recent Bain
study forecast that the Chinese market would grow 11 per cent per annum for five years,
butLindit&Sprungli said it believed the market was growing by 30 per cent a
year based on research conducted for it by Nielsen.”36If companies aspire to affect the Chinese, to
obtain Chinese money, and to make profits, they shall revise their strategy to reflect new Chinese
taste. Companies will have to focuson service qualityand provide other information,such as
product guarantees, user reviews, or shipping options, and not only focus on pricing. To
summarize our interpretation of the results, we can explain that many businesspersonsneed to
endeavor to revisetheirplans of actionto reflect Chinese taste change.Last, please excuse me ifI
overemphasized my opinion more subjectively than was necessary.
36 Patti Waldmeir in Shanghai , “Confectioners bite into China’s soft centre”,THE FINANCIAL TIMES, December 23, 2011, HTTP://WWW.FT.COM/INTL/CMS/S/0/DD414766-2D6E-11E1-B5BF-00144FEABDC0.HTML#AXZZ1LRIBIRPA, accessed February 2012.
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Camu Camu fruit
By Hiroyuki Kaji and Hisami Natsume
Thesis: The Camu Camu fruit’s impact on the global economy.
I. Introduction
Recently, the number of people who are interested in health topics is growing in the world.
Along with this, many kinds of nutritious fruits have become a part of people’s lives. Camu
Camu, a specific kind of fruit made in Peru, is closely-related not only to human health but also
to the global economy. Although Camu Camu is getting more popular in Japan, Camu Camu is
not widely used in the market. There is a possibility of expanding Camu Camu market in Japan.
II. What is Camu Camu?
A. Features
Camu Camu is a small bush which grows in the Amazonian rain forest of Peru. The Camu
Camu bush produces a fruit which is about the size of a large grape and has a purplish red skin
with a yellow pulp.37Camu Camu fruit contains powerful phytochemicals with health benefits,
including the amino acids such as serine, valine, and leucine, and more Vitamin C than any
other known plant in the world. Camu Camu is energizing, mood-lifting and highly effective in
strengthening the immune system.
Camu Camu has more natural Vitamin C than any known botanical on the planet and the effects
on the human body are incomparable. Because of its food form, with bioflavonoids and other
phytochemicals, clinical evidence suggests that it is far more effective, milligram for milligram,
than synthetic Vitamin C (ascorbic acid). Many people report that just two capsules daily (1/3
tsp.) is sufficient to significantly increase their wellness.
37Wikipedia,”Myrciaria-dubia,”http://en.wikipedia.org/wiki/Myrciaria_dubia, accessed February 2012.
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Table 1: Nutrition values of Camu Camu and Lemon: 1 cup (Health Benefits of Camu Camu38,
Lemon nutrition facts39)
B. Cultivation of Camu Camu
Camu Camu planting started in 1996 in Peru as part of government funded reforestation projects
(under the Program Nacional de Camu Camu) for export to Japan. Since then Camu Camu has
become a widely cultivated fruit species in the floodplains of the Peruvian Amazon.40
The Peruvian government expects that it will become a major export when its amazing
properties are discovered in the United States. It is preparing for the expected large increase in
demand by making Camu Camu seedlings available free of charge to communities of native
people who are rain-forest dwellers for them to plant and to tend. It takes four to five years for
the Camu Camu bush to bear fruit. The growing popularity of this wild rainforest fruit is
contributing to the sustainable development of the Amazon River basin and helping the forest
dwellers to maintain their traditional way of life.41
38Life Style Lounge, “Health Benefits of Camu Camu,”http://lifestyle.iloveindia.com/lounge/health-benefits-of-camu-
camu-8860.html, accessed February 2012. 39Power your diet, ”Lemon nutrition facts,”http://www.nutrition-and-you.com/lemon.html, accessed February 2012. 40Entrepreneur’s Toolkit,”Camu Camu Cultivation,”http://www.entrepreneurstoolkit.org/index.php?title=Camu_Camu_Production_in_the_Peruvian_Amazon, accessed February 2012. 41WHOLE WORLD BOTANICALS, “Camu Camu(Myrciariadubia),
http://www.wholeworldbotanicals.com/herbal_camucamu, accessed February 2012.
Vitamins CamuCamu Lemon
Vitamin B1 0.07 mg -
Vitamin B2 0.16 mg -
Niacin 8.25 mg 0.10 mg
Vitamin C 7.49 g 0.53 g
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III. Camu Camu Fruit in Peru
A. The Economy of Peru
Being among the Pacific Rim nations, Peru has recently joined the group of emerging
nations.Despite the continuing improvements in addressing the problem of poverty, expanding
the income disparity continues to be a problem. The disparity between urban and rural areas is
severe, and there is a serious mismatch between markets. In Peru, 19% of the Peruvian people
live in "absolute poverty," meaning they survive on less than US$1 a day. Furthermore, while
31.2% of the population lives in urban areas, and 69.3% of the population lives in rural areas are
"absolute poverty." Moreover, the percentage of GDP in agriculture is 0.7%, and percentage of
labor force in agriculture is approximately 25%. 42
B. The advantages of producing Camu Camu in Peru
In Peru, by producing Camu Camu, social issues such as poverty problem, nature preservation,
and eradication of illicit drugs can be solved.
1. Poverty program
Producing Camu Camu helps farmers to raise their income. At present, farmers can earn only
small amount of money by farming, and there is no other way for farmers to earn cash. The
distribution of Camu Camu would aid in the improvement of the farmer’s livelihood. Also, this
would contribute to improve the standard of living in Peru.
2. Nature preservation
Producing Camu Camu has positive impacts on the rainforest in Amazon areas. Peru's rainforest,
which represents 20 percent of the Amazon, faces a number of environmental pressures,
42CIA-the world factbook,“ Transnational issues in Peru, ”https://www.cia.gov/library/publications/the-world-factbook/geos/pe.html, accessed February 2012.
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including deforestation. Many kinds of fruits are not able to grow during the rainy season
because these fruits are submerged in water. On the other hand, Camu Camu can grow in the
areas even if the Camu Camu tree itself is immersed in water. Therefore, cultivation of Camu
Camu would make international contributions not only in carbon dioxid reduction but also in
nature protection.43
3. Illicit drugs
Camu Camu will be an alternative crop to the coca leaf. Peru is the world’s second largest
producer of the coca leaf, after being named number one until 1996. The cultivation of coca
in Peru was estimated at 40,000 hectares in 2009. Produced cocaine is shipped out from Pacific
ports to the international drug market, increasing amounts of base and finished cocaine.
However, produced cocaine which used to be ported into the international drug market is
moved to Brazil, Chile, Argentina, and Bolivia for use in the Southern Cone or transshipment to
Europe and Africa, increasing domestic drug consumption in 2011. If Camu Camu is
successfully used as an alternative crop to coca, it will lead to the reduction of illegal drugs. That
can have a great impact on a global scale.44
IV. Camu Camu market in other country
A. Trade agreement
The Peruvian government has banned taking trees, seeds, and fresh fruits of Camu Camu out of
Peru. Other countries import the fruit in dehydrated, extract, flour, or powder form.
Market overview in Japan
The fruit has recently become the large-scale cultivation and sale in the world. Especially,
Japan is the major buyer becauseof the market which puts emphasis on the fruit nutritional
43Council on foreign relations,”Deforestation in Peru’s Amazon.”http://www.cfr.org/south-america/deforestation-perus-amazon/p20968, accessed February 2012. 44CIA-the world factbook,“ Transnational issues in Peru, ”https://www.cia.gov/library/publications/the-world-factbook/geos/pe.html, accessed February 2012.
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value.
In Japan, there is significant demand for juice drinks and nectars. So, suppliers of Camu Camu
products in Japan mainly sell such kind of products. Currently they explore the creation of new
products such as jam, sweets, and cosmetics using the fruit's essence. In order to promote a
better sale in Japan, the suppliers include the fruit’s history and a map of its origin into each
commercial packages of Camu Camu. According to the market research, there are three
fundamental requirements that Japanese buyers require: The fruit must be a 100% organic
without the use of pesticides or chemical fertilizers. Vitamin C of the fruit must be at least 1800 to
2300 MG. per 100g pulp. The fruit must pass phytosanitary standards in Japan.45
V. Conclusion
Recently, Camu Camu is getting more popular in Japan than in the past. However, Camu Camu
is not widely used as other berries in the market. There might be two solutions to find an answer
to the problem. First, Camu Camu suppliers should cooperate with major suppliers of processed
fruit products such as Dole Food Company, because the company is skilled at promotion
strategy. Second, Camu Camu suppliers should create new distribution channels. Though they
only focus on retail stores to sell their products, there might be potential distribution channels
such as fitness centers. By strengthening marketing strategies, it would help expand Camu
Camu market even more and contribute to the economic growth of Peru as well.
45Article directory, “Supply and demand for camu camu”http://www.centrorisorse.org/supply-and-demand-for-camu-camu.html, accessed February 2012.
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The possible impact of speech recognition technology
By Toshiharu Kamada and Hensu Jang
Introduction
Quarrels through the Siri–
Man says“Tell my wife I’m gonna be 30 minutes late.”,
Woman says“Tell my husband I’m not surprised.”
Man says “Tell my wife if she has a problem with my work schedule she is more
than welcome to get a job of her own.”
Woman says “Tell my husband that I do just as much work as he does.”
Man says “Tell my wife that if watching “Ellen” is a job she should get
a promotion.”
Woman's Siri “Message from your husband: “I appreciate you.”46
The above dialogue is from the parody videos on the online humor site in the USA. The main
point of this dialogue is that Siri, a speech technology of iPhone 4S, tries to meditate a quarrel
between husband and wife. This is just a parody for humor, but it is good example of the future
of speech recognition technology.47What is speech recognition technology?
“Speech recognition converts spoken words to text. The term "speech recognition" is sometimes
used to refer to recognition systems that must be trained to a particular speaker—as is the case
for most desktop recognition software. Recognizing the speaker can simplify the task of
translating speech. Speech recognition is a broader solution that refers to technology that can
recognize speech without being targeted at single speaker—such as a call system that can
recognize arbitrary voices.”48
Thesis statement
How can the speech recognition technology affect the world in the future?
46College Humor –Siri Argument, Nov 19, 2011, http://lybio.net/college-humor-siri-argument/comedy/ access Feb 2012 47College Humor –Siri Argument, Nov 19, 2011, http://lybio.net/college-humor-siri-argument/comedy/ access Feb 2012 48Wikipedia, “Speech Recognition”, Feb, 2011, http://en.wikipedia.org/wiki/Speech_recognition, accessed Feb 2012
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How big will the impact of the speech recognition technology be?
Siri, thanks to artificial intelligence techniques such as speech recognition services can be
connected to commerce in the future. It could analyze your preferences and characteristics, and
propose the most appropriate products and order. The speech recognition services of the future
will search for flight schedules and show the tendency of your personal tastes like a personal
assistant. It will be connected to a speech-commerce service and a new ecosystem.49 How can
the speech recognition technology affect the world in the future? How big will the impact of the
speech recognition technology be? We tried to examine these questions.
I. Definition of Speech Recognition Technology
A. The Siri
Siri is a new application that will be included with the iPhone 4S. This application is a new way
to control your phone with your voice. Instead of just dictating a message to your phone, you
can ask your iPhone to do stuff for you.50
B. Other technologies
In the first half of this year, the speech recognition service 'Mazel' will be released. Mazel, similar
to the Siri, a little more advanced natural language processing capabilities. 'Tell Me' a speech
recognition service of Microsoft has competed against Siri from January 2012. Windows phones
voice recognition service ‘Ask Ziggy' presented its application this year51
II. The situation of a gap between rich and poor
A. The situation of poverty
There were 1.4 billion individuals living on less than $1.25 a day in 2005 and 1.2 billion
49JuHuiYoo, “Smart Tech for Human”, Seoul Newspaper, Jan 13, 2012,http://economy.hankooki.com/lpage/it/201201/e20120131170341117700.htm, accessed Feb 2012 50Josh Smith, “What is Siri?”, Oct 05, 2011, http://www.gottabemobile.com/2011/10/05/what-is-siri/, accessed Feb 2012 51Hui Kyung Kang, “Future of Sir”, HankookIlbo, Jan 03, 2012,http://news.hankooki.com/lpage/economy/201201/h20120126211408111720.htm, accessed Feb 2012
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individuals living on from $1.25 to $2 a day in 2006. So in total, there were 2.6 billion extremely
or moderate poor individuals in the world, which represented about 47% of all population in the
world.52 Also, based on another standard, there were 4.6 billion individuals living in the
countries where GNI per capita was under $ 8.9, which represented about 69% of the world
population.53 That means there are plenty of suffering people on earth and there is a huge gap
between the rich and the poor, and there are 2 main causes: unaffordability and illiteracy.
1. Inaccessibility(unaffordability)
It is obvious that people who cannot access the Internet cannot get much information, and such a
situation is called “Digital Divide.” In Japan, whether people can use broadband and the Internet
or not was strongly correlated with the income level of the user.54 Also, the word “Digital Divide”
means that whether people have a computer or not can expand the gap between rich and poor.
In short, one possible cause of inaccessibility can be not having money.
2. Illiteracy
Illiteracy can also cause the economic gap to expand. The number of illiterate adult population in
the world was 8.85 million in 1995, in which the share of individuals living in developing
countries was 99%.55 Generally, people who cannot read and write have little chance to get jobs,
and if possible, they cannot get much money. In a sense, the illiterate people can be the lowest
level of the pyramid.
Ⅲ.Analysis of the possible solution
52The World Bank, “People Poverty rates at international poverty lines,” World Development Indicators 2011(April 2011):65. 53The World Bank, “People Population Dynamics,” World Development Indicators 2011(April 2011):38. 54Ministry of Internal Affairs and Communications, Japan, “White paper Information and communication in Japan Outlook Japanese ver.,”http:// www.soumu.go.jp/johotsusintokei/wh itepaper/eng/WP2007/2007-index.html:40, accessed 13 February 2012. 55Ken Kikumoto, A Fundamental Study on the Establishment of the ScienceofInternational Cooperation in Education as an Academic Discipline(March 1998):1.
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A. Possible Solution for unaffordability
1. Possible solution to unaffordability for personal computers
There were 1.8 billion people who could access the Internet at the end of 2009, which
represented about 26.6% of the world population.56 Intel Corporation has suggested that when
weeks of income to purchase a notebook computer falls between 4 weeks and 8 weeks, the
saturation level of the notebook can be accelerated.57The company has also estimated that the
penetration would accelerate in China, Latin America, and Eastern Europe soon, which means
that about 1.8 billion people who currently cannot use the Internet would be able to access the
internet in the near future.58 But 40 billion individuals would still not be able to access it because
of the unaffordable price.
The number of the sales of personal computers was 1 million, and the average price was about
$ 4,000 in the U.S.in 1980.59 But the number of the personal computers was 350 million in
2010,60and the retail price level of personal computers was about $700 in June 2011.61
In Japan, from 1996 to 2000, as the number of personal computers manufactured increased by
170%, and the price fell by about 30%.62 In the U.S., during the 1990s the number of personal
computers increased at double-digit rates, and at the same time PC prices decreased by 80%, to
$500 at a rate of the time.63How much the price at a certain time would be depends on where the
point would be on the gradual diminution curve, and it is difficult to predict the future price. But
if the price decreases, the price level would not be affordable enough for the bottom level of the
56Garbagenews.com.,”The saturation level of the Internet in the world,"http://www.garbagenews.net/archives/134032, accessed 13 February 2012. 57Intel Cooperation, “Investor Meeting 2011,”http://intelstudios.edgesuite.net/im/2011/live.htm, accessed 13 February 2012. 58Ibid., 59Sano seminar, “historical trend of PC,”http://www.sanosemi.com/wordpress/?p=122, accessed 13 February 2012. 60BCN Bizline, “The map of the personal computer industry,” http://biz.bcnranking.jp/map/pc/, Accessed Feburuary 2012. 61My Navi News, “Silicon valley101,”http://news.mynavi.jp/column/svalley/328/index.html, Accessed 13 February 2012. 62Link general research, “The trend of Information Communication device industry,”http://search.yahoo.co.jp/search?p=%E3%83%91%E3%82%BD%E3%82%B3%E3%83%B3%E3%80%80%E7%94%9F%E7%94%A3%E5%8F%B0%E6%95%B0%E3%80%80%E4%BE%A1%E6%A0%BC%E3%80%80%E6%8E%A8%E7%A7%BB&aq=-1&oq=&ei=UTF-8&fr=top_ga1_sa&x=wrt, accessed 13 February 2012. 63Peter E. Carlson, “personal Computer Industry Trends” NCEE (December 2006):1.
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pyramid.
2. Possible solution to unaffordability for tablets and smartphones
Instead, in terms of accessibility to the internet, tablet types are better than personal computers
because of the lower price. The sales number of the mobile tablet types was 20 million in 2010,
and 66 million in 2011. Yano research institute also has predicted that the number would reach
300 million in 2017, about 5 times the number in 2011.64Moreover, smart phone types are much
better than the others, and the sales number was 300 million in 2010 and 480 million in 2011.
The institute has estimated that the number of smart phones would reach 1.5 billion in 2017,
about three times the figure in 2011, and low-end models under $150 would be getting attention
more and more.65
If we apply the case of the gradual diminution of the price of personal computers to the case of
tablet types and smart phones, we can predict the same phenomenon as the personal computer
case. Also, technologies, competitions, and other factors can decrease the price. As a result, for
example, if the price of smart phones decreases to the level of $112, it can fall under the range in
which individuals living on under $2 a day can afford smart phones with their 8 weeks of
income, which means penetration can accelerate explosively.
B. Possible solution to illiteracy
It would be possible in the near future that individuals living on less than $2 a day would be able
to buy some devices that enable them to access the internet. Also, the competition of speech
recognition technology would be harder. As a result of the competition, even suffering illiterate
people would be able to access the internet by buying devices with higher quality and lower
prices.
64Yano research Institute, “The summary of a new market survey on tablet,” http://www.yanoict.com/yzreport/181, accessed 13 February 2012. 65Yano research Institute, “The summary of a new market survey on smart phone,”http://www.yano ict.com/yzreport/180, accessed 13 February 2012
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Conclusion
We have seen how big the role the internet could play in the changes in politics in many Arabian
countries around 2012. Even in the Western countries, the internet is playing important roles in
creating new public opinions that can affect their politics and economy. But only about 30% of
the population in the world was able to affect our society at this time. In short, people who can
access the internet can have such power. What will happen if people who are forced to live
under severe conditions come to be able to access the Internet? What will happen if illiterate
people come to be able to access the Internet? Those miserable people can have the same
opportunities that richer people have. This can shorten the huge gap between rich and poor. Or,
the alternate might be able to change the situation drastically.
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The Costs and Benefits of London Olympics 2012
By Jeong woo, Lee (John) and So kogahara
1 Introduction
1.1 The Olympics will be held in London 2012.
Today, we have many major events. This year, the London Olympics is carefully watched around
the world. Plenty of people are looking forward to watch sports games.
1.2 Londoners will get the benefits but also spend the costs before and after the Olympic
period
Journalists and some media estimate the total expenses for the London Olympics is less than the
Beijing Olympics. However, many people believe that the London Olympics will bring
Londoners to get much profit before and after the Olympic period. The following passages show
estimations about the benefits and the costs of the London Olympics 2012.
2 Examples
2.1 Advantages of hosting a major event
2.1.1 Raise the profile of city and country
Hosting a major event is absolutely competitive for cities and countries. If cities and countries
were to become host places, it might contribute to their profiles. According to previous major
events, cities which host the Olympics can be assured of a persistent increase in recognition and
tourism. Barcelona, Sydney, Beijing have all seen this from hosting the Olympics. For a country
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like China with a controversial human rights record, hosting a major sporting event can be a way
to gain greater international acceptance. These events’raised profile can be important for giving
economic benefits, such as, attracting tourists and business investment. In the case of most recent
major event, the London Olympics 2012, London already has a very strong reputation66.
2.1.2 Long Term Investment
Some major events require long term investments to facilities for the events. The city and
country will have a legacy of improved sporting venues. Also, cities will usually have to invest in
infrastructure and transport to ensure efficient and reliable transportation. For example, London
has already invested in public transport projects around London. This will leave a lasting legacy
for residents of London, especially East London1.
2.1.3 Jobs and Investment
Planning to long term investment of the Olympics, the host city or country needs plenty
employees before and during the major events. Also, it is able to revitalize depressed cities, such
as the East London. It is estimated the London Olympics 2012, will create 8,000 full time jobs,
and also lead to a boost in economic output of close to £2bn1.
2.1.4 Enthusiasm
A major sporting event brings in enthusiasm and excitement for the city orcountry. It will
contribute to the nation to get better health and lead to a rise in volunteerism which promotes
civic virtues1.
66TejvanPettinger, “Advantages of Hosting A Major Event”, Economicshelp, January 24
2012.http://www.economicshelp.org/blog/4909/economics/advantages-of-hosting-a-major-event/accessed on February 13, 2012.
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2.1.5 Short Term economic benefits
Many people will gather together at London in the London Olympics period. This will provide
an increase in spending and injection of money into the local economy1.
2.2 Economic impacts of 2012 London Olympics
2.2.1 Benefit from ticket sales
The Olympics require much cost to prepare. For instance, the estimated cost of the London
Olympic 2012 would be between $15 to 18 billion. This number is the second most expensive
Olympics below the 2010 Beijing Olympics with the cost of $40 billion. However, The Telegraph
estimated that the London Olympics has already sold $470 million on the ticket sales. This ticket
revenue guarantees to grow the economy by 0.1%. It is also expected that overseas visitors will
spend$1.1 billion during the Olympic Games67.
2.2.2 Expectation of London Olympics 2012
The whole of the UK’s economy will get some sort of benefits from the London Olympics
because British companies have contributed to the project mostly. The London Olympics acquire
30,000 employees for the project. Also, 98% of facilities have been built by British companies and
generated $9.5 billion value2.
2.3 Costs and benefits of London Olympics
67Atsushi Sawa, “Economic Impacts of 2012 London Olympics”, World Sports Today,February 2 2012.
http://world-sports-today.blogspot.com/2012/02/economical-impact-of-2012-london.htmlaccessed on February 20,
2012.
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All the various costs and benefits of the London Olympics include both the monetary costs and
benefits and the non-monetary costs and benefits.68
2.3.1 Costs of London Olympics
There are many monetary and non-monetary costs of the London Olympics. Therefore, many
people worry about the negative impacts of the costs.
The first negative effect of monetary costs is for the facilities.
England will spend plenty of money to build facilities, which may only be used to their full
potential for a short time during the Olympic Games.
Second, the investment is short term.
Many facilities can only be used for the 3 week duration of the Olympics. After that there is a
danger of ‘white elephant projects’ – facilities that cannot be effectively reused such as the
Millennium Dome.
Third, the opportunity cost.
Many reports showed that the cost of the Olympic village could cost up to £1billion. This
£1billion cannot be spent on alternative investment schemes like transport and education in
London.
Fourth, the credit crunch is coming. That means the private sector investment has dried up.
This increases the cost for the tax payers. Spending of government is already under strain
because of the bank bailouts and recession.
Last but not least, the London Olympic logo is truly awful.
They alreadyspent too much money to produce it.However, according to the Sun newspaper it
could trigger epilepsy3.
68TejvanPettinger, “Costs and Benefits London Olympics 2012”, Economicshelp, March 11, 2011.
http://www.economicshelp.org/blog/1390/economics/costs-and-benefits-london-olympics-2012/accessed on
February 13, 2012.
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2.3.2 Benefits of the London Olympics.
On the contrary, hosting the Olympics also hasmany positive effects.
The first positive effect ofhosting the Olympics is providingjobs and economic activities.
Whenthe time is in recession, the private construction sector is going down. The
government’sexpense can be seen as part of an expansionary fiscal policy.
Second, hosting the Olympics boosts the prestige of the country.It may be a ‘once in a lifetime’
opportunity to show a greatest festival to the world. Not all things can be reduced to simple
accounts. This is a good example of non-monetary benefits.
The third positive effect of hosting the Olympics is to boost tourism and travel to London,
during the Olympics period and after.
The fourth one is a lasting legacy of the Olympics. East London has a new rail line (Dockland
light railway extension) and improved public transport, such as improved international rail
station at Stratford. This will help to reduce congestion and to increase productivity.
Last, many venues will be used after the event;for example, Olympic stadium will remain not
only an athletic track, but also will be used by West Ham F.C. Other venues like the Velodrome
provide a much needed international standard track in the capital3.
2.4 The false economy of the London 2012 Olympics
2.4.1 Economic impact of the London Olympics
From the time when the London’s Olympic bid was accepted in 2005, every economistall over
the world has been debating how this short but big event will affect the UK’s economy.
Following theglobal recession of the year 2008, more still have been speculating on its impacts.
The general consensus shows that the British economy has been intensified by activity in and
around the Olympic Village. Price of houses in Stratford and the surrounding areas have been
increased significantly (in some cases they have increased by 10 per cent), and almost 40,000 jobs
have been created as a direct result of the Games. Stratford City has seen a major revampitself,
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with the construction of the new Westfield which is the largest shopping centre in Europe,
constantly drawing trade from tourists and locals alike. In fact this new supermall has proved so
popular, that it saw 160,000 customers on the first day alone4.
2.4.2 The Olympicsis the hope for many people to bring England out of its current
slump.
Now that the event draws ever closer, and the Olympic hype reaches new heights, what effect
will the 2012 Games really have on the UK’s economy? One thing is for certain; in the midst of
the Eurozone crisis, many people are wondering, and hoping, that London 2012 will be enough
to bring England out of its current slump for good.
We feel that between July and September this year, Britain’s economy will indeed be boosted4.
2.4.3 Olympics’boom is not a continual phenomenon
This short boom cannotbe a sustainable phenomenon. When the Olympics are over,
unfortunately, the two months of economic growth that wediscussed above is unlikely to be
significant enough to lift England out of recession in the long term.
The London Organizing Committee for the Olympic Games and Paralympics Games (LOCOG)
has to make plans to convert the Olympic Village into 3,600 new apartments and homes for the
local community. The area which is underdeveloped now, this may well prove to be the
regeneration needed to attract workers and businesses to the region.
However, whether this will be enough to impact the rest of the UK’s economy is something that
remains to be seen4
4Daniel Fox, “The false economy of the London 2012 Olympics”, The independent, January 30. 2012.
http://blogs.independent.co.uk/2012/01/30/the-false-economy-of-the-london-2012-olympics/accessed on February 13, 2012.
5Michael Carty, “Economic prospects for 2012: Will an 'Olympic bounce' help the UK skirt a double-dip
recession?”Xpert HR,
January 9. 2012. http://www.xperthr.co.uk/blogs/employment-intelligence/2012/01/economic-prospects-for-2012-wi.htmlaccessed
on February 13, 2012.
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2.5 Economic prospects for 2012 (Potential uplifts to 2012 GDP growth)
Before and after the Olympics period, London would get much economic growth in 2012. In the
first quarter of 2012, the Bank of England's October 2011 extension of quantitative easing aided
London’s economy. Martin Weale estimates that the current program of asset purchases boost
growth by up to 0.5%,in line with the Bank's official calculations.
In the second quarter of 2012, London might benefit from an Olympic bounce. Revenue from
advance Olympic ticket sales have been deferred. ING estimates that Olympic ticket sales are
worth £400 million in total, which could have created a 0.2% "Olympic bounce" had they been
incorporated into GDP data for Q2 2011.
In the third quarter of 2012, the Olympic will boost their GDP5.
3 Conclusion
3.1 Londoners should think about the cost of the Olympics.
The Olympics may well make an economic loss in the short term. Some people will say it’s better
to spend the money on health care and education.
3.2 Benefits of the Olympics will make big profit to Londoners.
However, there are also many benefits of hosting the Olympics. Furthermore, it is a once in a
lifetime opportunity to host the most important sporting event on the calendar.Let’s enjoy and
take pride in the London Olympics.
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Which one is more proper in Korea and Japan,
Big Mac Index or Starbucks Index?
By Seunghyun Kim (Aeron) and Toru Yamashita
There are many tools and measurements which can evaluate the appropriateness of currency
rates. The Big Mac Index and the starbucks index could be two of famous things however there
are some differences between them caused from change of social concept toward the products.
These differences are making the starbucks index much more proper one to adjust advanced
countries such as Korea and Japan.
The Big Mac Index was developed in September
1986 as a relatively simple way to calculate the
over- and under-valuation of currencies against
the dollar.69 The index is based on the theory of
purchasing-power parity (PPP). It means that a
dollar should buy the same amount in all
countries. Therefore the exchange rate between
two currencies should move towards the
equalized rate. For example, identical products
such as big Mac hamburgers should have
equivalent prices in every country.70
The Big Mac Index has maintained its position as
a popular measurement to support analysis of currency rate for several years. Especially in
Korea it showed dramatic accuracy during Korea’s economic crisis period from 1997 to 2000.
Before the crisis began, the real exchange rate was 850 KRW per 1 USD compared to 950 KRW
69 “Ten years of the Big Mac index” The Economist, April 9, 1998, http://www.economist.com/node/397291?story_id=E1_PJSNJT&CFID=5300954&CFTO=, accessed February 2012. 70 “Big Mac Currencies” The Economist, April 9, 1998, http://www.economist.com/node/159859, accessed February 2012.
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per 1 USD according to the Big Mac index. This over-estimation
of Korean won was cleared right after the crisis was started.71
However, some economists have tried to develop another index
for several years. They have argued that the Big Mac index is
improper for some reasons. Most importantly, they have
insisted that the Big Mac does not have the same value in all
countries because although the Big Mac is considered a delicacy
in many countries but people in advanced countries start
regarding it as a junk food.72 This is especially true in Korea and
Japan. As a result, some economists tried to choose alternative
options such as the Starbucks’ Tall Latte Index. In fact, the
magazine that introduced the Big Mac Index, The Economist later
suggested the Starbucks Index as a better alternative.73
The tables below shows price trends and Index of Big Mac and Starbucks Tall Latte. the measure
is USD.
The Big Mac Index (2004, 2008, 2011)
Index (%)
(Year) 2004 2008 2011 2004 2008 2011
USA 2.90 3.50 4.07 0.0% 0.0% 0.0%
South Korea 2.72 3.10 3.28 -6.2% -11.4% -19.4%
Japan 2.33 3.60 4.02 -19.7% 2.9% -1.2%
Phillippines 2.02 2.08 2.19 -30.3% -40.6% -46.2%
71 “The Usage of Big Mac Index” The imail newspaper, July 28, 2008, http://www.imaeil.com/sub_news/sub_news_view.php?news_id=34623&yy=2008, accessed February 2012. 72 “Fast food for thought “The Economist, Jul 30, 2011, http://www.economist.com/node/21524873, accessed February 2012. 73 “Burgers or beans?” The Economist, Jan 15, 2004, http://www.economist.com/node/2361072, accessed February 2012
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The Starbucks Index (2004, 2008, 2011)
Index (%)
(Year) 2004 2008 2011
2004 2008 2011
USA 2.80 3.08 3.00
0.0% 0.0% 0.0%
South Korea 2.97 3.01 3.64
6.1% -2.3% 21.3%
Japan 3.16 3.48 4.48
12.9% 12.9% 49.3%
Phillippines 3.50 3.85 3.60
25.0% 25.0% 20.0%
GAP Big Mac vs Starbucks
2004 2008 2011
0.0% 0.0% 0.0%
12.3% 9.2% 40.7%
32.5% 10.0% 50.6%
55.3% 65.6% 66.2%
As above table shows, although the indexs of philippines had been stable, but the Big Mac
index indicated that the currency value of Korea has been underestimated from -6% in 2004 to -
19% in 2011. The index of Japan is similar condition. However the Starbucks index has shown
different situation especially the currency value of Japan is highly overestimated in 2011. It’s very
similar conclusion comparing to most of economists’ opinion that Japan’s currency was
overestimated in 2011.
Why the big mac index mismatched to the starbucks index and economists’ common consensus
about the currency value of Korea and Japan? One of possible reasons is that McDonald’s has
lots of sales promotions. For example, McDonald’s in Japan has tried to sell a set with a much
cheaper price than before, which will Japan’s rating in the Big Mac Index.74 On the other hand, it
is able to assume that the Starbucks Tall Latte’s pricing strategy has kept stability.75
74 “Fast food for thought “The Economist, Jul 30, 2011, http://www.economist.com/node/21524873, accessed February 2012.” 75 “The Usage of Big Mac Index” The imail newspaper, July 28, 2008, http://www.imaeil.com/sub_news/sub_news_view.php?news_id=34623&yy=2008, accessed February 2012.
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For analyzing this kind of gap , the most important factor which has led declining of the Big
Mac’s price is a change of social concept. Especially to fast food, people start regarding it as
unhealthy, junk food. They don’t want to spend their money to buy it anymore, so sellers are
forced to reduce the price of their product. This means their product drops in value when
compared with Big Macs in other countries. This change has especially happened in advanced
countries.76 For this reason, we can assume that the starbucks index is more proper than the big
mac index in Korea and Japan. In addition, the starbucks index also have strength in the point of
cultural reason, For example, Hindi people view beef as sacred animal. Instead of beef, Big Macs
in Hindi countries are made with chicken and heep’s meat. Therefore, it is difficult to precisely
compare Big Macs around the world because their materials are different in different countries.
On the other hand, the Starbucks Tall Latte Index is not affected by such cultural reasons or
changes in social concept. The material—and social concept— of the Tall Latte is standardized
around the world.
In conclusion, the Big Mac index is very well known. However, it’s concept is flawed because its
material isn’t standardized around the world. Additionally, the ways the Big Mac’s social concept
has changed in some countries is also very important to explaining the shortcomings of the Big
Mac Index. The Starbucks Tall Latte Index is more reliable because it is made out of standardized
material and has a standardized social concept in every country it’s sold..
76 “Business and human capital-Mc Donalds” The imail newspaper, July 28,
2008http://morrisseyhr.wordpress.com/2011/05/10/mcdonalds/
http://www.pugetsoundoff.org/blog/erino/15540, accessed Feb. 2012
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Why did "Occupy Wall Street" demonstrators show up?
By Siyung Jo and Woojin Yang
“Occupy Wall Street” demonstrators appeared for the first time in September 17, 2011. They
justified that major banks and multinational companies are threatening democracy and have the
power related to corruption.77 They also point out that severe economic recession was caused by
Wall Street. So they desperately opposed the rich who made the unfair global economic order.
Let’s go back to 2008 when the global economic crisis broke out by Lehman Brothers’
bankruptcy. The US government saved the financial institutions which were on the verge of
bankruptcy by using $900 billion paid by 99% of the US citizens. However, what happened in
Wall Street? Bankers had a bonus party instead of self-reflections. There was an attempt to
introduce a bill called “the Buffet Tax”. But the bill making the richest pay more taxes did not
pass through Congress. In 2011, another global economic crisis hit the world. At that time, 99%
of the US people started to lose their temper. On the behalf of 99%, “Occupy Wall Street”
demonstrators shouted “why are the innocent 99% of the US citizens taking responsibility for the
mistakes of the greedy 1% people?” It was not long before “Occupy Wall Street” spread out to
more than 100 cities in the US and 1,500 cities worldwide.
Ⅱ. Causes of increasing the gap between the rich and the poor and solutions for reducing the
gap
1. Causes of ‘the rich get richer, the poor get poorer’ phenomenon
Participants at “Occupy Wall Street” demonstrations insisted that ‘the rich get richer, the poor
get poorer’ phenomenon spread all over the world. Why did the trend happen?
A. Deregulation spread over all industries
First, Neo Liberalism which has dominated the world economy for the last 30 years
77OccupyWallSt.org, “About Us”, http://www.occupywallst.org/about/, Accessed February 10, 2012
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emphasized competition and effectiveness. As a result, both domestic and international division
of labor has become common. For example, Apple designs their products at R&D centers in the
U.S.A, purchases the electronic parts from companies in Korea, Taiwan and Japan, and
assembles them at factories in China. By help of the international division of labor, Apple has
earned historically high profits in the last several years. However, Apple’s subcontractors in
China still struggle to make ends meet. In a pyramidal structure of manufacturing, a top
company takes most of the profits but a myriad of companies in the bottom always has trouble
in survival. It is not difficult to witness similar cases happening in one country.
During the dominance of Neo Liberalism, the gap between the rich and the poor has been
getting bigger. In the world, 29.7million people have assets worth more than $1million.78 There
are 6,000million people in the world. Therefore, only 0.5% of the global population takes 38.5%
of the total gobal assets. In the U.S. while the top 1% households’ income soared by 275% from
1979 to 2007, the bottom 20%’s increased only by 18%.79 The former took 9% of the national
income in 1979 but the number recorded 24% in 2007.80
B. Decrease of regular jobs
Second, enterprises seeking high profits to win decreased regular jobs. For example, the revenue
of the Hyundai Heavy Industries in 1999 was ₩6,330billion. It was increased to ₩ 45,700billion
in 2010. However, regular jobs of the company decreased by an 8% point in the past 11 years.
From an employees’ standpoint, there is a huge gap between the regular jobs and irregular jobs.
The average salary of the regular jobs in Hyundai Heavy Industries doubled in the past 11 years.
But, that of the irregular jobs is the same as the money that regular workers earned 11 years ago.
The situation of decreasing regular jobs has made many people think that their social status is
78Credit Suisse, “Global Wealth Report 2011”(Oct. 2011), p.4 79Congressional Budget Office, “Trends in the Distribution of Household Income Between 1979 and 2007”(Oct. 2011),
p12, http://www.cbo.gov/ftpdocs/124xx/doc12485/10-25-HouseholdIncome.pdf, accessed Feb. 2012 80William Domhoff, “Who Rules America”, http://www2.ucsc.edu/whorulesamerica/power/wealth.html, accessed Feb. 2012
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deteriorating. According to a survey by Korea Statistics in 2011, 45.3% of households in Korea
answered that they are lower level of the socioeconomic status and only 1.9% said that they are
upper level of that. The middle level was 52.8%.81 If we compare the 2011’s result to the survey
conducted in 2009, the lower level increased by a 2.9% point. Otherwise, the upper and middle
level decreased by a 0.8% point and a 2.1% point, respectively.
In addtion, the global economic crises in 2008 and 2011 hammered the world economy,
therefore, the poor got seriously poorer. Financial institutions, which earned much money from
the Neo Liberalism, suddenly faced the crisis of the Lehman Brothers. If one bank bankrupts, the
rest of banks which lent money from the bank fall into big trouble. This ‘domino phenomenon’
has affects on ordinary people. Because the banks struggled during crises, the poor could not
borrow money at lower interest rates. All the governments acted to save the endangered banks.
Naturally, the ordinary people became very angry at the situation, which the major beneficiaries
of the Neo Liberalism like banks tried to recover and maintained their status using tax ordinary
people paid.
2. Solutions for the problems
How can we solve ‘the rich get richer, the poor get poorer’ phenomenon? Are there any solutions
for this kind of historically complicated problem? Yes, we have to be positive, otherwise, there
will be a disaster in our future.
A. Need for another way of economic system instead of Neo Liberalism
One possible solution is to find another way of an economic system instead of Neo Liberalism.
Professionals are still struggling to look for a new economic system. Paul Krugman, who is one
of the Nobel Prize winners for economics and a liberal originating from Capitalism itself,
insisted that governments should nationalize the financial institutions. It was surprising that
81Statistics Korea, “the social survey”, http://kostat.go.kr/portal/korea/kor_nw/2/1/index.board?bmode=read&aSeq=252361 February 16, 2012
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such a kind of harsh criticism about the Neo Liberalism appeared in Wall Street. The new system
could be located in between Neo Liberalism and Keynesism. But, many people agree with the
argument that the new system needs to care for the social stability of ordinary people. If people
in lower and medium level of social status feel their lives are more stable, not only will they
think that the economic gap between the rich and the poor is disappearing, but they also can
spend more money on consumptions. Increase of household consumption can be good news to
the economy as a whole.
In addition to strengthening the social stability of people, introducing new regulations for
greedy entrepreneurs is discussed as a good care system for the failure of Neo Liberalism. As
“Occupy Wall Street” demonstrators argued, greedy executives of large financial institutions
were designated as main culprits of the 2008 global crisis. They made their employees ignore the
risks of their jobs like trading high risk financial derivatives. Not to experience similar cases, the
new economic system needs to equip strong instruments to suppress the greed of some
entrepreneurs.
B. Making enterprises to reduce part time job
What could be a solution to create stable jobs? There can be two ways for this issue.
First of all, setting up new guidelines for job security is important. “Job Sharing Movement” in
Korea is a good example. When working in “Job Sharing” company, two or three workers can
share the same position in a company, each doing a part of the work. Compensation is
apportioned between the workers, thus leading to a net reduction in per-employee income.82
Supporters of the movement argue that “Job Sharing” will not reduce the regular jobs. Generally,
most companies layoff the irregular workforces in downturn and rehire them during the
economic boom. By “Job Sharing”, the causes of reducing the regular jobs will disappear.
Secondly, promoting medium and small sized enterprises is reasonable method to create more
regular jobs. It is not easy to expand the regular jobs for global conglomerates, since they operate
82Wikipedia, “Job Sharing”, http://en.wikipedia.org/wiki/Job_sharing February 20, 2012
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the R&D sectors in advanced countries and the production departments in underdeveloped
countries. Instead of the conglomerates, it is easier to increase the regular jobs for small and
medium sized companies. Additionally, raising the level of salaries of those companies will
decrease dissatisfaction of the poor class and enlarge the home market gradually. There will be
some positive efficacy if we invigorate small-scale enterprises and tiny ventures.
Ⅲ. Worldwide and nationwide efforts are necessary
‘The rich get richer, the poor get poorer’ phenomenon threatens the future of Capitalism. With
Neo Liberalism dominating the world for the last 30years, deregulation strengthened the
‘winner takes all’ situation and regular jobs have gradually disappeared. Now, worldwide and
nationwide efforts are necessary to solve the problem of increasing the gap between the income
of the rich and that of the poor. We should not only think of another way of the economic system
instead of Neo Liberalism, but also care for the social stability of the lower and medium social
classes. The possible solutions are introducing new regulations for greedy entrepreneurs,
making enterprises reduce part time jobs, setting up new guidelines for job security, and
promoting medium and small sized enterprises to create more regular jobs.
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The Effect of Animation Outsourcing on Japan Economy
By Takahiro Aoki and Lee Woochan
1. Introduction : Outsourcing may destroy the Japanese animation industry
Outsourcing has financial advantages. Animation productions can reduce their producing costs.
But in the long run, outsourcing may destroy the Japanese animation industry in the future.
Prior to the study of the effect of outsourcing on the
Japanese animation industry itself, it is necessary to
check out the basic structure & current situation of
Japanese animation outsourcing. It is well known
that the industry is struggling to overcome
problems with production cost cutbacks, while
Japanese animation has been in the spotlight
overseas.
Production has increasingly been outsourced in
recent years due to the matter of its cutbacks. While
planning, directing and other processes requiring
advanced expertise have remained in Japan, animating,
coloring and other simple operations are being shifted to
other countries. 83
83 Japanese Economy Division, “Japan Animation Industry Trends”, JETRO Japan Economic Monthly (June 2005) : 3.
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The Effect of Animation Outsourcing on Japan Economy
By Takahiro Aoki and Lee Woochan
1. Introduction : Outsourcing may destroy the Japanese animation industry
Outsourcing has financial advantages. Animation productions can reduce their producing costs.
But in the long run, outsourcing may destroy the Japanese animation industry in the future.
Prior to the study of the effect of outsourcing on the
Japanese animation industry itself, it is necessary to
check out the basic structure & current situation of
Japanese animation outsourcing. It is well known
that the industry is struggling to overcome
problems with production cost cutbacks, while
Japanese animation has been in the spotlight
overseas.
Production has increasingly been outsourced in
recent years due to the matter of its cutbacks. While
planning, directing and other processes requiring
advanced expertise have remained in Japan, animating,
coloring and other simple operations are being shifted to
other countries. 83
83 Japanese Economy Division, “Japan Animation Industry Trends”, JETRO Japan Economic Monthly (June 2005) : 3.
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The Effect of Animation Outsourcing on Japan Economy
By Takahiro Aoki and Lee Woochan
1. Introduction : Outsourcing may destroy the Japanese animation industry
Outsourcing has financial advantages. Animation productions can reduce their producing costs.
But in the long run, outsourcing may destroy the Japanese animation industry in the future.
Prior to the study of the effect of outsourcing on the
Japanese animation industry itself, it is necessary to
check out the basic structure & current situation of
Japanese animation outsourcing. It is well known
that the industry is struggling to overcome
problems with production cost cutbacks, while
Japanese animation has been in the spotlight
overseas.
Production has increasingly been outsourced in
recent years due to the matter of its cutbacks. While
planning, directing and other processes requiring
advanced expertise have remained in Japan, animating,
coloring and other simple operations are being shifted to
other countries. 83
83 Japanese Economy Division, “Japan Animation Industry Trends”, JETRO Japan Economic Monthly (June 2005) : 3.
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[ Exhibit 1 ] 84
2. - (1) Current Statuses & Scale of the Industry
Industry experts estimate that major Asian countries such as Philippines, Taiwan, South Korea and
China are the preferred outsourcing destinations for 2D Animation, Canada and UK are the leaders in 3D
Animation.85
l Global Demand
The continued demand in the global animation market has allowed the Asia-Pacific region to
further emerge as a premier destination for animation outsourcing.
[ Exhibit 2 ] 86
84 Ibid. : 3. 85 TATA Strategic management group, “Animation and Gaming Industry in India” (Feb 2010) 86 Tholons Inc., “The Philippine Animation Industry Landscape” (May 2008) : 3.
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l Japan
The Japanese animation industry's main business is selling the video program rights,
merchandising rights, film distribution rights, broadcasting rights and video distribution rights
to foreign countries. Because DVD sales of Japanese animation in the United States have
declined, the branch offices of video program manufacturers in Japan have been forced to
withdraw. In the industry in 2006, right license revenue was 20 billion yen in size in 2010, has fallen to
about 13 billion yen, overseas market size is estimated to 195 billion yen in 2010.87
[ Exhibit 7 ]
87 http://humanmedia.co.jp/database/PDF/5-1.pdf, accessed Feb 2012.
1,013
780
149246
Japan's domestic animation sales(2010)
Video Software Sales
TV animation advertisement sales
VOD
Animation Movie Sales(Top 20)
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A famous animation director, Yoshiyuki Tomino, thinks the current situation of Japanese
animation industry is not good. Because more and more individual products are appearing one after
another and there is a trend that is making light of “studio work.”88
l India
The Animation Entertainment segment in India is estimated at USD 122 Million (2009) and is expected
to show a CAGR (Compound Average Growth Rate) of 20% (2009-2013) to reach USD 253 million by
2013. 74% of the animation entertainment work in India is outsourcing work for overseas clients. It is
only 26% of the overall animation entertainment in India, which is for domestic clients. 89
[ Exhibit 3 ] 90
[ Exhibit 4 ] 91
(Unit : USD Mil.) (100% = USD 122 Mil.)
2. - (2) Expected Effects of Outsourcing
l Positive Effects
88 http://bizmakoto.jp/makoto/articles/0907/08/news035_3.html, accessed Feb 2012. 89 TATA Strategic management group, “Animation and Gaming Industry in India” (Feb 2010) : 13. 90 Ibid. : 13. 91 Ibid. : 13.
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A famous animation director, Yoshiyuki Tomino, thinks the current situation of Japanese
animation industry is not good. Because more and more individual products are appearing one after
another and there is a trend that is making light of “studio work.”88
l India
The Animation Entertainment segment in India is estimated at USD 122 Million (2009) and is expected
to show a CAGR (Compound Average Growth Rate) of 20% (2009-2013) to reach USD 253 million by
2013. 74% of the animation entertainment work in India is outsourcing work for overseas clients. It is
only 26% of the overall animation entertainment in India, which is for domestic clients. 89
[ Exhibit 3 ] 90
[ Exhibit 4 ] 91
(Unit : USD Mil.) (100% = USD 122 Mil.)
2. - (2) Expected Effects of Outsourcing
l Positive Effects
88 http://bizmakoto.jp/makoto/articles/0907/08/news035_3.html, accessed Feb 2012. 89 TATA Strategic management group, “Animation and Gaming Industry in India” (Feb 2010) : 13. 90 Ibid. : 13. 91 Ibid. : 13.
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A famous animation director, Yoshiyuki Tomino, thinks the current situation of Japanese
animation industry is not good. Because more and more individual products are appearing one after
another and there is a trend that is making light of “studio work.”88
l India
The Animation Entertainment segment in India is estimated at USD 122 Million (2009) and is expected
to show a CAGR (Compound Average Growth Rate) of 20% (2009-2013) to reach USD 253 million by
2013. 74% of the animation entertainment work in India is outsourcing work for overseas clients. It is
only 26% of the overall animation entertainment in India, which is for domestic clients. 89
[ Exhibit 3 ] 90
[ Exhibit 4 ] 91
(Unit : USD Mil.) (100% = USD 122 Mil.)
2. - (2) Expected Effects of Outsourcing
l Positive Effects
88 http://bizmakoto.jp/makoto/articles/0907/08/news035_3.html, accessed Feb 2012. 89 TATA Strategic management group, “Animation and Gaming Industry in India” (Feb 2010) : 13. 90 Ibid. : 13. 91 Ibid. : 13.
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Basically, the prime-contractors can expect the positive effects of cost-cutback on their producion
through their outsourcings. At the same time, the subcontractors may anticipate the creation of
new jobs and development of their skills and techniques.
The positive effects of animation outsourcing seem more favorable to the prime-contractors such
as Japan and USA in short term. As a prime-contractor, there is no doubt outsourcing must be
the most attractive method for the cost-cutback, because its main expenses come from labor cost.
Therefore, outsourcing is an essential factor to accelerate the base of the animation industry.
In addition, it is well known that the animaiton industry is strongly inclined to expand its areas
related to other parts of industries such as characters, movies, and distribution. Moreover, it is
also a good way for countries to spread out their own cultures elsewhere. Therefore, it is
abolutely true that animation outsourcing has been playing a positive role for both companies
and countries.
l Negative effects
Outsourcing, the creative work to foreign countries, has negative effects.
First, the fear of hollowing out of the animation industry is a serious matter. Japanese animation
studios are outsourcing relatively simple labor works, but to become skilled and creative
animators, beginners should experience those simple labor works. If the number of skilled
animators continue to decrease, it will lead to land subsidence of the Japanese animation
industry.
Moreover, there are problems beyond that, namely the fact that animation production, which should
be a team effort by the production staff, has become divided into a relationship between the
planning/development/design stage (production including planning, script, and storyboards), and
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production that takes place in a factory (animation onward).92 This is more remarkable in overseas
outsourcing than domestic production.
Second, quality is a problem. Japanese animation industry has a long history over 50 years. But
those outsourcing countries such as India and the Phillipines, China, South Korea do not have
enough history. Because of this background, animators in outsourcing countries tend to have
inferior technics. Therefore, outsourced animation films have a quality problem in some cases.
Case review of negative effect of outsourcing
There are some cases that some of the Japanese animation films are produced in Japan in spite
of expensive production cost. The main purpose to produce in domestic way is to keep product’s
quality. In this sense, some production companies realize potential risks of outsourcing.
Therefore, those companies maintain intergrated production system and do not choose
outsourcing.
[Case 1] Studio Ghibli
Studio Ghibli is one of the most famous animation production companies in Japan. It has many
hit titles such as “Princess Mononoke” and “Spirited Away.” Studio Ghibli has a unique
employment system. Unlike other animation production companies, Studio Ghibli hires full-
time employees. Studio Ghibli is trying to improve the quality of its products and keep excellent
staffs, educate human resources by improving the treatment of employees.
Moreover, Studio Ghibli has an integrated production system93 which enables all the production
process from planning to shooting inside Studio Ghibli.
[Case 2] Kyoto Animation
Kyoto Animation is also a famous animation production company in Japan. Since the late 2000s,
it has many enthusiastic fans. Kyoto Animation has a similar production system. Thanks to the
production system, staffs have maintained close communication.94
2. Conclusion
92 http://www.japanator.com/the-japanese-animation-industry-is-going-straight-to-hell--6130.phtml, accessed Feb 2012. 93 http://www.smrj.go.jp/keiei/dbps_data/_material_/common/chushou/b_keiei/keieichosa/pdf/h18con_2.pdf, accessed Feb 2012. 94 http://www.kyotoanimation.co.jp/company/outline/, accessed Feb 2012.
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As mentioned above, animation industry needs its outsourcing because of its limited budget. In
fact, more and more Japanese animation production companies are outsourcing their work to
foreign countries. There is economic rationality and international division of labor seems to be
valid. But this is shortsighted. Actually, animation pruduction companies could reduce the
production cost by outsourcing. Though, there are some risks such as hollowing out of the
animation industry and degradation of quality in the long run. Therefore, Japanese animation
industry should consider those risks of outsourcing and find a better cooperation with foreign
animation production companies.
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50
As mentioned above, animation industry needs its outsourcing because of its limited budget. In
fact, more and more Japanese animation production companies are outsourcing their work to
foreign countries. There is economic rationality and international division of labor seems to be
valid. But this is shortsighted. Actually, animation pruduction companies could reduce the
production cost by outsourcing. Though, there are some risks such as hollowing out of the
animation industry and degradation of quality in the long run. Therefore, Japanese animation
industry should consider those risks of outsourcing and find a better cooperation with foreign
animation production companies.
Voices From Paju
50
As mentioned above, animation industry needs its outsourcing because of its limited budget. In
fact, more and more Japanese animation production companies are outsourcing their work to
foreign countries. There is economic rationality and international division of labor seems to be
valid. But this is shortsighted. Actually, animation pruduction companies could reduce the
production cost by outsourcing. Though, there are some risks such as hollowing out of the
animation industry and degradation of quality in the long run. Therefore, Japanese animation
industry should consider those risks of outsourcing and find a better cooperation with foreign
animation production companies.
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Aging Population: Impact on the World Economy
By Jung Jaeyoon and Shoichiro Kitano
I.INTRODUCTION
The world is entering substantially uncharted waters in terms of the size of its elderly
populations. Recent declines in fertility rates and increases in life expectancy, combined with the
dynamic evolution of past variations in birth and death rates are producing a significant shift in
the global age structure. The number of people over the age of 60 is expected to reach 1 billion by
2020 andalmost 2 billion by 2050 (representing 22 percent of the world’s population). The
proportion of individuals aged 80 or over (the so-called “oldest old”) is projected to rise from 1
percent to 4 percent of the global population by 2050.95
II.SOCIAL IMPACT: DEMOGRAPHIC TREND TO 2050
A. DEMOGRAPHIC CHANGE
In 1950, there were 205 million persons aged 60 or over throughout the world. At that time, only
3countries had more than 10 million people aged 60 or over: China (41 million), India (20
million), and the United States (20 million). By 2009, the number of persons aged 60 or over had
increased three and a half times to 737 million and there were 12 countries with more than 10
million people aged 60 or over, including China (160 million), India (89 million), the United
States (56 million), Japan (38 million), the Russian Federation (25 million) and Germany (21
million). By 2050, the population aged 60 or over is projected to increase again nearly threefold
to reach 2 billion.
95 David E. Bloom, David Canning and Günther Fink, “Population Aging and Economic Growth”, The Commission on
Growth and Development, Working Paper No.32,The International Bank for Reconstruction and Development / The
World Bank, 2008, p.11, http://www.growthcommission.org/storage/cgdev/documents/gcwp032web.pdf accessed
February, 2012
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Also by 2050, 32 countries are expected to have more than 10 million people aged 60 or
over,including five countries with more than 50 million older people: China (440 million), India
(316 million), the United States (111 million), Indonesia (72 million) and Brazil (64 million).96
Already by 1950, developed countries as a whole had a higher proportion of their population
aged 60 years or over than developing countries (12 per cent vs. 6 per cent). In 2009, developed
countries continue to be at a more advanced stage of the demographic transition and have
populations that are already showing strong signs of ageing. Furthermore, their populations are
projected to remain considerably older than those of developing countries as a whole. Currently,
21 per cent of the population in the more developed regions is aged 60 years or over, whereas
about 8 per cent of that in the less developed regions is in that age group. By 2050, almost 33 per
cent of the population of the more developed regions is projected to be 60 years or over, whereas
the equivalent proportion will likely be 20 per cent in the less developed regions.97
B. THE CHANGING BALANCE AMONG AGE GROUPS AND “DEPENDENT” RATIO
In most populations, the increasing proportions of older persons have been accompanied by
steadyreductions in the proportion of young persons. At the world level, the proportion of
children (that is,persons under 15 years of age) dropped from 34 per cent in 1950 to 27 percent in
2009. By 2050, the proportion of children is projected to decline by over one fourth and the
proportion of persons aged 60 years or over (22 per cent) will, for the first time in history, exceed
that of children (20 percent). During 2009-2050, the proportion of persons whose ages range from
15 to 59 will change slightly, passing from 62 percent in 2009 to 58 percent in 205098.
The old-age dependency ratio is the ratio of the population aged 65 or over to the population
96 The Population Division of the Department of Economic and Social Affairs of the United Nations, “World Population Ageing 2009”, December 2009, p.26,http://www.un.org/esa/population/publications/worldageing19502050/ accessed February, 2012 97Ibid., p.27 98Ibid., p.31
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aged 15 to 64 expressed per 100 population. Although the current differences among major areas
in the old-age dependency ratio are expected to persist until 2050, all major areas will experience
remarkable increases in that ratio. From 2009 to 2050, the ratio of persons aged 65 or over to
those of working age is projected to grow from 6 per 100 to 11 per 100 in Africa, from 10 to 27 in
Asia, from 10 to 31 in Latin America and the Caribbean, from 16 to 30 in Oceania, from 19 to 36
in Northern America and from 24 to 47 in Europe.99
Currently, Japan has the world’s highest old-age dependency ratio of 34 older persons per
100persons of working age. It is followed closely by Italy and Germany, with ratios of 31. Over
the nextfour decades, the old-age dependency ratio is projected to increase substantially in most
countries ofthe world. By 2050, Japan, with an old-age dependency ratio of 74, will still have the
world’s highestlevel of old-age dependency, followed by Macao SAR China (64), the Republic of
Korea (63) and Italy (62). In another 16 countries, most located in Europe, the old-age
dependency ratio is projected to be higher than 50 older persons per 100 persons of working age.
At the same time, in 29 countries or areas, most located in Africa, the population aged 65 years or
over is expected to be less than one tenth the size of the working-age population.100
III.INFLUENCE ON THE ECONOMIC GROWTH
Economic growth in Brazil, Russia, India and China, the countries so called BRICs, hasbeen a
driving force of world economy since the end of cold war in 1989. This trend will continue for
more than ten years.After the economic crisis in 2008, these countries play important role to the
world economy. Since the start of the economic crisis in 2007, the BRICs’ contribution has risen
and about 45% of global growth has come from the BRICs, up from 24% inthe first six years of
the decade. The contribution from all emerging marketsas a whole was over 80% (vs. the 2000-
2006 average of 45%). The G7 (developed countries including the United States, Japan, Germany,
99Ibid., p.36 100Ibid., p.36
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the United Kingdom, France and Italy) has onlycontributed 20% between 2005 and 2007.101
A.ECONOMIC GROWTH FORECAST
1. DEVELOPED COUNTRIES
According to the report by Dominic Wilson and Anna Stupnytska in 2007, growth of the GDP
(Gross Domestic Products) of all the G7 countries and Korea is comparatively low.102 In 2006,
sum of the GDP in these 8 countries was $28.9trillion, whereas the figure of 2050 is estimated
$70.1 trillion. During 44 years, GDP will be only 2.4 times in these countries.
US$ GDP Projections (G7+Korea)
2006
US$ bn
Canad
a France
German
y Italy Japan Korea UK US Total
2006 1,260 2,194 2,851 1,809 4,336 887 2,310 13,245 28,892
2010 1,389 2,366 3,083 1,914 4,604 1,071 2,546 14,535 31,508
2015 1,549 2,577 3,326 2,072 4,861 1,305 2,835 16,194 34,719
2020 1,700 2,815 3,519 2,224 5,224 1,508 3,101 17,978 38,069
2025 1,856 3,055 3,631 2,326 5,570 1,861 3,333 20,087 41,719
2030 2,061 3,306 3,761 2,391 5,814 2,241 3,595 22,817 45,986
2035 2,302 3,567 4,048 2,444 5,886 2,644 3,937 26,097 50,925
2040 2,569 3,892 4,388 2,559 6,042 3,089 4,344 29,823 56,706
2045 2,849 4,227 4,714 2,737 6,300 3,562 4,744 33,904 63,037
2050 3,149 4,592 5,024 2,950 6,677 4,083 5,133 38,514 70,122
2050 to
2006 2.5 2.1 1.8 1.6 1.5 4.6 2.2 2.9 2.4
101 Jim O’Neill and Anna Stupnytska, “The Long-Term Outlook for the BRICs and N-11 Post Crisis”, Goldman Sachs Global Economics Paper No: 192, December 4, 2009, pp.6-8, http://www2.goldmansachs.com/our-thinking/brics/brics-reports-pdfs/long-term-outlook.pdf, accessed February 17, 2012
102 Dominic Wilson and Anna Stupnytska, “The N-11: More Than an Acronym”, Global Economics Paper No: 153, March 28, 2007, p.19, http://www.chicagobooth.edu/alumni/clubs/pakistan/docs/next11dream-march%20'07-goldmansachs.pdf, accessed February 17, 2012
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Based on the data from Dominic Wilson and Anna Stupnytska, 2007
2.DEVELOPING COUNTRIES
On the contrary, economic growth in developing countries will continue. In 2050, estimated GDP
of China is $70.7 trillion,compared with that of $2.7 trillion in 2006, the amount is more than 26
times. Also in India, GDP will be $37.7 trillion in 2050 and the figure is 41 times of 2005, which is
only $909 billion.
US$ GDP Projections (BRICs)
2006
US$ bn Brazil China India Russia Total
2006 1,064 2,682 909 982 5,637
2010 1,346 4,667 1,256 1,371 8,640
2015 1,720 8,133 1,900 1,900 13,653
2020 2,194 12,630 2,848 2,554 20,226
2025 2,831 18,437 4,316 3,341 28,925
2030 3,720 25,610 6,683 4,265 40,278
2035 4,963 34,348 10,514 5,265 55,090
2040 6,631 45,022 16,510 6,320 74,483
2045 8,740 57,310 25,278 7,420 98,748
2050 11,366 70,710 37,668 8,580 128,324
2050 to
2006 10.7 26.4 41.4 8.7 22.8
Based on the data from Dominic Wilson and Anna Stupnytska, 2007
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Dominic Wilson and Anna Stupnytska, 2007
Dominic Wilson and Anna Stupnytska, 2007
Dominic Wilson and Anna Stupnytska, 2007
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B.PROMISING INDUSTRIES
1. MEDICAL
The population of India is projected to reach 1.6 billion by2050. India will become the world’s
most populated countryby 2025. 189 million Indians will be 60 or older up from about 63 million
in year 2004. Thisprojection shows the global demand of pharmaceutical drugs will rise in the
future.103
2. HEALTHCARE
In addition, related industries such as medical machineries, skincare, and health foods are also
projected to expand their market growthbecause of aging and economic growth in the
developing nations. For example, according to the DrAkash S Rajpal, a head of HOSMAC India
Private Ltd,India presently has a bed deficit of approximately 30 beds as per the WHO
recommendation of four beds per 1000 population. Considering even a 250 bedded hospital on
an average, the country would need 12000 hospitals in the near future.104 It means that there is a
huge market for healthcare industries.
IV.POLITICAL INFLUENCE
In Japan, where society is aging so rapidly, there are many concerns to be solved immediately.
On Japanese newspapers, it is easy to find questionssuch as 1) Howcan thecountry support the
pension system? 2) How would Japan deal with the upward expense trend of healthcare system?
3) How would Japan maintain the labor force?These questions are not only limited in Japan, but
also applied to the world. Globally, the impact of aging population is so huge, it is necessary to
find solutions as soon as possible, learning from Japan.
A. POLICY MAKING PROCESS
103Corporate Catalyst India PVT, Ltd. “Report India's Pharmaceutical Industry”,p.11,www.cci.in/pdf/surveys_reports/indias_pharmaceutical_industry.pdf, accessed February 19, 2012 104 Express Healthcare, "Future Trends in Healthcare Industry in India", http://www.expresshealthcare.in/201101/anniversaryspecial09.shtml, accessed February 23, 2012
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The impact of aging on the policy making process, which will expand year by year, must also be
considered.
1.DIFFERENT NEEDS AND DIFFERENT BEHAVIORS
There is a huge gap between elder people and young people. It is important to recognize their
demands and behaviors. In the aging society, those who have paid for pensions and who are
paying for them might have different opinions and it is sometimes difficult to adjust.
Furthermore, in most countries, election systems are comparatively easily accessiblefor elder
people. In Japan, it is not an easy task to force young people to vote. Consequently, most political
parties reflect senior people’s needs and young people’s opinions are sometimes put off.
2.MORE FOCUSION ON INTERNAL AFFAIRS
Even in the United States, its policy would more focus on internal affairs in the future by the
aging population. As a consequence, it is possible that the country might cut its defense
expenditures. The superpower may lose its ability to deal with international conflicts.
V.CONCLUSION
In conclusion, as the shift of global age structure, along with the increasing population and
economic growth in developing countries, the world as a whole is facing inexperienced
circumstance in this century. Currently, there is no international organization to deal with this
situation. These issues are dealt by each nation states. Therefore, it is time to establish specialized
international organization to deal with aging world and make cooperative, borderless policies.
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CHINESE LUXURY SHOPPING
Jaewoo Kwon and Emi Yamazaki
According to The European Business Review,“China recently became the world’s
second largest market for luxury goods with an annual increase of more than 30% in 2010, even
surpassing Japan.Further estimates predict that China will become the largest upscale product
and consumer goods market in the world.”105 Current Chinese economic growth is quite rapid
and strong, so it seems to make sense that Chinese people buys such luxury goods. However,
GDP per capita does not show strong increase because of growing population. Chinese culture
and tradition reveal three reasons to support Chinese luxury shopping enthusiasm.
1. Current situation
1-1. Comparison of China, the United States, Japan, andSouth Korea
The World Bank tracks current data of gross domestic product (GDP) per capita. GDP
per capita shows not only a country’s productivity but also its consuming power. According to
macroeconomics theory, basically, all products made in the country are divided to employees
and consumed asinvestments. The products which divided and consumed are same amount of
products made in the country, vice versa. Thus, GDP is almost equal to gloss domestic
expenditures.
Table1 is a comparison of China’s GDP per capita (constant 5 years)with three other countries:
Japan, South Korea and United States.
Table 1106GDP per capita (constant 2000 US$) (2006 to 2010)
105The European Business Review,Luxury consumer behavior in mainland China: What exists behind the facade of new wealth?,http://www.europeanbusinessreview.com/?p=2418[Accessed February 2012] 106The World Bank,2011,GDP per capita (constant 2000 US$),http://data.worldbank.org/indicator/NY.GDP.PCAP.KD [Accessed February 2011]
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This data suggests that China shows a high growth rate, but the amounts are below the other
countries.
Table2 is a line graph which shows GDP per capita change from 1970 to 2010, a long-term data.
Table 2107 GDP per capita (constant 2000 US$) (1970 to 2010)
This graph indicates that Japan, the United States and South Korea has been increased their GDP
per capita since 1970. The three countries’ trends are almost same. On the other hand, China’s
change is quite slow and slight.
107Google PublicData,2012,GDP per capita(constant 2000 US$),http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_#!ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_pcap_kd&scale_y=lin&ind_y=false&rdim=country&idim=country:CHN:KOR:JPN:USA&ifdim=country&hl=en&dl=en [Accessed February 2011]
Country Name 2006 2007 2008 2009 2010China 1,641 1,864 2,033 2,208 2,425 Japan 39,772 40,707 40,254 37,766 39,310 Korea, Rep. 14,469 15,158 15,458 15,463 16,372 United States 38,342 38,699 38,336 36,677 37,527
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These data suggests one interesting fact. China is not richer than the other three
countries. GDP per capita has increased, but much less than that of the United States, Japan, and
South Korea. Therefore, not all Chinese people became wealthy enough to enjoy luxury
shopping.Neither the population structure norgrowth is the reason China is a large market for
luxury goods.
1-2. Advanced Analysis
Louis Vuitton Moet Hennessy(LVMH) which has one of the most famous luxury brands,
Louis Vuitton, shows the interesting data. It suggests the steep growth of Asian Market
(excluding Japan). See this chart below;
Table 3Revenue by geographic region (2009-2011):108
(Unit: EUR million)
Table 4 Revenue by geographic and the number of stores:109
108LVMH, 2012, Investor Relations Documentation, 2011 Financial documents,http://www.lvmh.com/uploads/assets/Com-fi/Documents/en/Reports/Reports_2011/Documentsfinanciers31122011VA.pdf P.2 [Accessed February 2012] 109Ibid., P2
Region 2009 2010 2011France 2,478 2,725 2,866 Europe(excluding France) 3,664 4,236 4,797 United States 3,840 4,611 5,237 Japan 1,683 1,784 1,970 Asia(excluding Japan) 3,850 4,991 6,430 Other 1,538 1,973 2,359
Total Revenue 17,053 20,320 23,659
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(Unit: EUR million)
The data indicates Asia is strong market for LVMH luxury goods, more than its base, France.
In addition, Daimler AG which provides Mercedes-Benz has succeeded by focusing on Chines
Market.
Table 5 Revenue by region (2009-2011):110
(Unit: EUR million)
Both LVMH and Daimler have developed their business by focusing on Asia region, including
China market.
1-3. Related News
Chinese enthusiasm on luxury shopping seems to be a good impact for the economy,
especially under this hardrecession. However, the impact has negative sides. 110Daimler AG. Annual Report 2011,http://www.daimler.com/Projects/c2c/channel/documents/2125319_Daimler_2011_Annual_Report.pdf P245 [Accessed February 2012] Annual Report 2012,http://www.daimler.com/Projects/c2c/channel/documents/1985489_Daimler_Annual_Report_2010.pdfP2 [Accessed February 2012]
Region 2011 Stores Sales per a storeFrance 2,866 396 7.237Europe(excluding France) 4,797 883 5.433United States 5,237 621 8.433Japan 1,970 360 5.472Asia(excluding Japan) 6,430 621 10.354Other 2,359 165 14.297
Total Revenue 23,659 3,046 7.767
Revenue by region 2009 2010 2011Western Europe 36,458 38,478 39,387 United States 16,569 20,216 22,222 Other American Countries 3,366 9,112 10,232 Asia 12,435 19,659 22,643
thereof China 4,349 9,094 11,093 Other countries 10,096 10,296 12,056 Total 78,924 97,761 106,540
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In January 2012 in Hong Kong, apopular place to shop, there was a protest which shows
complicated feelingsabout Chinese tourists coming to luxury shop. Wall Street Journal Blog
reported: “People in Hong Kong went to the streets on Sunday, but unlike previous mass rallies
in the city, this one wasn’t about politics or democracy. The cause: The right to take photos in
front of luxuryretailer Dolce &Gabbana. More than 1,000 people showed up outside the Italian
brand’s flagship store on Canton Road after the retailer reportedly prevented people taking
pictures of its store front earlier in the week. The protest forced the store to shut at 3 p.m. as the
crowds swelled.”111
This news spread via Facebook and made Hong Kong natives lose their temper. The incident
shows the frustration of Hong Kong natives with mainland Chinese visitors, who are playing an
increasingly significant role in the city.
Anyway, one big question comes to mind. Why do some of Chinese people want to buy
suchextravagantluxury goods?
2. The reason for the surge in Chinese luxury shopping
Rapid economic development has encouraged Chinese luxury shopping.However, why does a
country with an average GDP per capita of 2,425 USDhave such a strong propensity for
consuming luxury goods and products?112
We can find hidden reasons for the mass consumption of luxury goods in Chinese cultural
backgrounds.
First,China is found to be a high power-distance culture.113A power-distance culture means that
high levels of social hierarchy are present in a culture. Therefore, the Chinese are motivated to
show off their power in every possible way. In a consumer context, consumers are motivated to
111The Wall Street Journal Blogs, Dolce &Gabbana Photo Ban Sparks Protest 2012, http://blogs.wsj.com/scene/2012/01/09/dolce-gabbana-photo-ban-sparks-protest/ [Accessed February 2012] 112The World Bank,2011,GDP per capita (constant 2000 US$),http://data.worldbank.org/indicator/NY.GDP.PCAP.KD [Accessed February 2011] 113International Journal of Retail & Distribution Management Volume 38, Issue 6 pp423-442 ISSN 0959-0552
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seek higher quality products that represent higher status.
Second, the Chinese culture is represented by high-uncertainty avoidance.114 Individuals in a
high-uncertainty avoidance culture generally hold a higher level of anxiety and lower level of
tolerance on any risk when they deal. Therefore, Chinese consumers tend to be attracted by the
high reliability of foreign products, which offers a guarantee of quality.
Third, Chinese Confucian culture still plays an important role in influencing consumers'
purchasing behavior.115 “Face saving” is one of the most important factors Chinese consumers
consider during decision-making. The Chinese feel comfortable in the knowledge that products
they buy give out a desirable image to others.For these reasons, Chinese are willing to pay a lot
of money to purchase luxury items.
Of course, China’s rapid economic growth has been necessary to make the recent Chinese luxury
buying possible.
3. Future expectations for Chinese luxury shopping
China’s cultural background explains why Chinese consumers are willing to spend a lot of
money to purchase luxury items. This Chinese propensity to consume will continue in the future
for several reasons.
First, an open market and the culture of hierarchy will combine to boost the consumption of
luxury items. Since China adopted a free market economy, the imbalance of wealth has grown
steadily. In 2010, the wealthiest 1% of the Chinese population had 41.4% of all national
wealth.116Hierarchy in China has reinforced.
Second, the Chinese high-uncertaintyavoidance tendency will promote consumption of luxury
goods in the near future. This is because it will be very hard for Chinese companies to make
114International Journal of Retail & Distribution Management Volume 38, Issue 6 pp423-442 ISSN 0959-0552 115Journal of Technology Management in China Volume 3, Issue 3 pp292-306 ISSN 1746-8779 116Seoul Economy, Chinese income polarization, http://economy.hankooki.com/lpage/worldecono/201005/e2010052517023469740.htm[Accessed 21 February 2012]
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brand-name products such as Chanel in the foreseeable future.
Third, global brands bring their users an international image and young Chinese consumers
tend to use global brands to impress their peers.117 Young Chinese people follow the latest
fashion with the widespread use of the internet. This trend is added to Chinese Confucian
culture.
Lastly, continuing rapid Chinese economic growth will accelerate the consumption of luxury
goods.
117Young Consumers Volume 10, Issue 2 pp98-109 ISSN 1747-3616
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How the Chinese economy recovered
quickly after the financial crisis
By Yoshiyuki Suimon and Richie Hsieh
1. Introduction
The financial crisis happened in late-2000s because of the collapse of the complicated financial
products’ markets. This financial crisis caused a worldwide recession. In that time, many
countries’ economic growth stopped and the bad condition damaged many kinds of industries.
However, the Chinese economy quickly recovered relative to the other countries. In this report,
we introduce the background of financial crisis and focus on high-tech industry in China.
2. Financial crisis in Late-2000s
2.1What happened in Late-2000s
The Late-2000s recession was caused by severe global economic problems that began in
December 2007 and took a particularly sharp downward turn in September 2008. It is said that
the emergence of “credit derivatives” was one of the causes of the financial crisis.118 It was a kind
of derivatives and made from mortgaged backed securities. Such derivatives made the financial
system complicated and accelerated speculative investment of commercial banks, insurance
companies, and pension funds. Generally, these corporate investors do not need to take the
financial market’s risk. However, they started to invest such speculative assets. To make matters
worse, after the bankruptcy of Lehman Brothers on September 15, 2008, a major panic broke out
on the financial markets. As the credit derivatives’ prices declined, many large and well
established financial firms suffered huge losses and even faced bankruptcy.
At the financial crisis, first, the world economy was breaking down primarily because of a lack of
financing. Second, a global recession has resulted in a sharp drop in international trade, rising
unemployment and slumping commodity prices. Trade flows collapsed, and companies and 118Wikipedia, "Late-2000s recession," http://en.wikipedia.org/wiki/Late-2000s_recession, accessed February 2012
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individuals stopped spending. It seemed clear that halting the slide was critical. The recession
has affected the entire world economy. A recession is "a period of reduced economic activity".
Paul Volcker, former United States Federal Reserve Chairman, asserted that speculative
investment played a key role in the financial crisis. After the crisis, he made a rule in order to
restrict these speculative activities.119
Fig1. HANG SENG Index recovered relative to NKY225 Index
[Note] Hang Seng is Hong Kong’s and NKY 225 is Japanese stock market index
2.2 Changes of the world economy after the crisis
Not only financial systems but also the world economy has changed since the crisis. In the
recession caused by the financial crisis, the worldwide economic growth stopped and the bad
condition damaged many kinds of industries.120. However, as Figure2 shows, in terms of GDP
growth, the Chinese economy quickly recovered relative to the other countries. As for stock
markets, the Hong Kong stock prices obviously rose much relative to Japanese market’s price
even though both of these are Asian countries.
Fig2. GDP Real Growth after the financial crisis
119Wikipedia, "Volcker Rule," http://en.wikipedia.org/wiki/Volcker_Rule, accessed February 2012 120Floyd Norris, "Crisis Is Over, but Where’s the Fix?," Now York Times, March 2011,
http://www.nytimes.com/2011/03/11/business/economy/11norris.html, accessed February 2012
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[Note] World map showing real GDP growth rate after the financial crisis (for 2009)
3. High-Tech industry in China
3.1 National High-Tech zones
In spite of the global financial crisis, the High-Tech industry in China maintained a sustained
growth. Although the growth of National High-Tech zones dropped slightly in 2008, compared
to the international situation, the growth was still very stable. Figure3 shows China’s High-Tech
exports from 1995 to 2009. After the global financial crisis, in 2010, China’s High-Tech industry
had an output value of 58 trillion Yuan, an increase of 141% over that in 2009.121 The local
government now plans to build an ‘Internet Cloud Zone’ with no firewall filter, in order to gain
international market share in cloud computing. The well-known online payment company,
Paypal, has agreed to establish an International electronic commerce center in China, which will
boost exports from the nation by helping hardware manufacturers from Taiwan or any other
worldwide internet companies to conduct faster cross-border trade. High-Tech zones have
already marked the sign of technology spot in China. China has been trying to build its Silicon
Valley for the High-Tech industry. In the global financial crisis, China’s national High-Tech zones
demonstrated the advantages of making their positions even more important. Therefore,
strengthening the role of High-Tech zones and further development and expansion of High-Tech
121 Liumingliang, “The development of China’s high-tech industry contrarian,” http://www.builderrors.com/tech-news/2011/10/16/the-development-of-chinas-high-tech-industry-contrarian/, accessed February 2012
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[Note] World map showing real GDP growth rate after the financial crisis (for 2009)
3. High-Tech industry in China
3.1 National High-Tech zones
In spite of the global financial crisis, the High-Tech industry in China maintained a sustained
growth. Although the growth of National High-Tech zones dropped slightly in 2008, compared
to the international situation, the growth was still very stable. Figure3 shows China’s High-Tech
exports from 1995 to 2009. After the global financial crisis, in 2010, China’s High-Tech industry
had an output value of 58 trillion Yuan, an increase of 141% over that in 2009.121 The local
government now plans to build an ‘Internet Cloud Zone’ with no firewall filter, in order to gain
international market share in cloud computing. The well-known online payment company,
Paypal, has agreed to establish an International electronic commerce center in China, which will
boost exports from the nation by helping hardware manufacturers from Taiwan or any other
worldwide internet companies to conduct faster cross-border trade. High-Tech zones have
already marked the sign of technology spot in China. China has been trying to build its Silicon
Valley for the High-Tech industry. In the global financial crisis, China’s national High-Tech zones
demonstrated the advantages of making their positions even more important. Therefore,
strengthening the role of High-Tech zones and further development and expansion of High-Tech
121 Liumingliang, “The development of China’s high-tech industry contrarian,” http://www.builderrors.com/tech-news/2011/10/16/the-development-of-chinas-high-tech-industry-contrarian/, accessed February 2012
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[Note] World map showing real GDP growth rate after the financial crisis (for 2009)
3. High-Tech industry in China
3.1 National High-Tech zones
In spite of the global financial crisis, the High-Tech industry in China maintained a sustained
growth. Although the growth of National High-Tech zones dropped slightly in 2008, compared
to the international situation, the growth was still very stable. Figure3 shows China’s High-Tech
exports from 1995 to 2009. After the global financial crisis, in 2010, China’s High-Tech industry
had an output value of 58 trillion Yuan, an increase of 141% over that in 2009.121 The local
government now plans to build an ‘Internet Cloud Zone’ with no firewall filter, in order to gain
international market share in cloud computing. The well-known online payment company,
Paypal, has agreed to establish an International electronic commerce center in China, which will
boost exports from the nation by helping hardware manufacturers from Taiwan or any other
worldwide internet companies to conduct faster cross-border trade. High-Tech zones have
already marked the sign of technology spot in China. China has been trying to build its Silicon
Valley for the High-Tech industry. In the global financial crisis, China’s national High-Tech zones
demonstrated the advantages of making their positions even more important. Therefore,
strengthening the role of High-Tech zones and further development and expansion of High-Tech
121 Liumingliang, “The development of China’s high-tech industry contrarian,” http://www.builderrors.com/tech-news/2011/10/16/the-development-of-chinas-high-tech-industry-contrarian/, accessed February 2012
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industries became a focus of China’s industrial restructuring.
Fig3. China’s High-Tech exports from 1995 to 2009
3.2 Intertwined “Chaiwan”
Almost all Taiwanese computer makers as well as hundreds of component producers have
factories in China, making it the most important computer production base in the world. As the
IT industry in China and Taiwan became intertwined, some tech types already fuse the pair into
“Chaiwan.”122 Although many companies were hit by the 2008 global financial crisis, business
was back just half a year later. Major personal computer brands, such as HP, Acer, Dell, and Asus
are made by Taiwanese companies and manufactured in China. During the period of the global
economic slowdown after the financial crisis, these companies continued to thrive with various
forms of financial assistance offered by the Chinese government. The authorities offered many
incentives such as direct charter flights, cross-border Chinese Yuan’s trade settlement services,
10-year subsidies on income taxes, and export tax rebates. As IT is becoming a more and more
important part of the Chinese economy, the investments in the High-Tech industry have been the
largest in China for three consecutive years. They are now the home of most world’s largest
makers of computers and associated hardware, which produce more than 50% of all chips, 70%
of computer displays, and more than 90% of all portable computers.
122 “Hybrid vigour,” The Economist, May 27,2010, http://www.economist.com/node/16220584, accessed February 2012
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4. Conclusion
From the statistic data and information mentioned above, we can find that the economic
situation of the world is changing. Emerging economies such as the High-Tech industry in China
are no longer waiting for the developed economies to take concerted action. They are now
committed to sustaining economic growth even during an obvious slowdown of most
developed countries.
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The Effect of China’s foreign exchange
reserves on the World Economy
By Sachiyo Urashima and Sangjae Lee
China’s Foreign Currency Reserves Have Been Growing
“Foreign exchange reserves are the foreign currency deposits and bonds held by central banks
and monetary authorities”123. In 1978, China's foreign exchange reserves were minimal, but
enough to cover the requirements for its small import bill. However, in 1980s, the export amount
rapidly increased and it contributed to a rise in reserves to a peak of US$17.4 billion. However,
the economic slowdown at the beginning of the 1990s produced a sharp fall in imports, while
exports continued to rise, producing a merchandise trade surplus of approximately
US$9.2billion. Although the trade and current accounts were in deficit in 1990s, the acceleration
in inward FDI flows kept foreign exchange reserves rising. After China joined the World Trade
Organization (WTO) in 2001, imports recorded rapid growth, but exports also expanded
at a fast pace, while FDI inflows became over US$60 billion a year by the middle of the 2000s. In
2006, China's foreign exchange reserves reached USD trillion for the first time. After 2 years, the
reserves topped USD 1.9 trillion. The rapid growth tendency has continued with some
opposite periods and in 2011 foreign exchange reserves had reached USD 3.2 trillion.124
Now these reserves have made many problems in China. For example, China cannot effectively
use this huge amount of money in investment and they have been strongly criticized.
Furthermore China has received high pressure from abroad to reduce its foreign exchange
reserves because the current Renminbi Yuen has purchasing power parity equal to other
countries. With this huge amount of foreign currency, China could bring big economic
opportunities to itself and also other countries125.
123 Wikipedia, “Foreign-exchange reserves,” http://en.wikipedia.org/wiki/Foreign_exchange_reserves, accessed Feb 2012 124 CIA "The World Factbook" CIA websit, “China's Foreign Exchange Reserves and its Effect on the Global Economy,” http://marketsandculture.blogspot.com/2010/11/under-construction.html, accessed Feb 2012 125 柯 隆, “
世界一となった中国
外貨準備、その意味と問題点性,” http://jp.fujitsu.com/group/fri/downloads/report/economic-review/200610/05-4.pdf, accessed Feb 2012
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Background and Impacts of Foreign Currency Reserves
The main source of growth of China’s foreign currency reserves are the Foreign Direct
Investment (FDI) and trade surplus. Until 2004, many other countries established factories or
invested in China to dominate the huge Chinese market. Each year, plenty of companies from
other countries invested more than 5 billion dollars each year126. However, FDI was surpassed by
the trade surplus from 2005. China had exported its products and services explosively. Therefore,
the trade surplus led the growth of foreign exchange reserves. At the end of 2008, foreign
exchange reserves of China were reaching USD 2 trillion127. Finally, it passed foreign exchange
reserves of Japan in Feb 2006
for the first time and kept 1st
place up to now.
(Graph source: www.seri.org)
With its USD 2 trillion
foreign exchange reserves,
China’s central bank has
managed its reserves with
‘stability’ and ‘liquidity’ bases.
By diversifying its reserves
currencies, it can reduce
exchange fluctuation risk. As a
way of diversification, China
used the US currency as the
primary asset. It is possible
because the U.S. has low degree
126 Analysis of time series of ‘Data stream’ in 2008 127 International Economy team, Bank of Korea, ‘Inspection of China’s foreign exchange reserves change’(09.02)
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of dependence on foreign trade and also has less possibility of currency changes. In brief, China
has focused on stability and liquidity, with considering profitability. To be specific, China has 70%
of its foreign exchange reserves with U.S assets, especially with 36% of U.S treasure bonds128. As
of 2008, China became the number 1 country possessing U.S treasure bonds.
With possessing proper foreign exchange reserves, there are plenty of controversies. Actually,
there is no international standard scale of foreign exchange reserves. Each nation decides it on
the base of the economic scales of the nation, forms of international trade or foreign liabilities.
When considering dependence on the high trade, sufficient foreign exchange reserves are
needed. When comparing it to the GDP basis, China has 47.3% higher percentages,
compared to that of 27% of Korea, 22% of Japan, 23.5% of India, 37% of Russia etc.
Especially compare it with foreign liability, which are generally rated 1 or 2 multiples,
China has 4.8 multiples of the ratio. The problem is low profitability of the U.S bond. Even
though the U.S bond prices were
dropping, China Central Bank
insisted on buying them129.
Investment of Money Abroad Is
Being Expected
Now China’s foreign reserve is
almost the same as the 2011 GDP
of Germany, which is ranked
fourth in 2011 GDP all across the world. Furthermore, as mentioned before, they receive strong
pressure about using them. They should use the money for investing abroad because of the
following two reasons. One reason is that by using the money, China can avoid other countries
accusations and also they could earn money. Another important reason is that the money can be
128 International Economic Team, Statistics of Korea, ‘Treasury International Capital System(TIC, 09.02) 129 Excerpted from U.S Treasury Department Reoprt, International Financial Center (www. Kcif.or.kr)
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used to support financially weak European countries from default. Even though other European
countries, the U.S, and Japan are expected to support them, they had spent their money on
huge companies in serious danger of collapsing to recover from the Lehman Shock’s damages.
Therefore, they are short of enough money to do that.
However, at the same time, that kind of investment would prove to include critical risk for other
countries. As China’s foreign reserves are huge amounts of money, if China intentionally uses
them to manipulate other country bonds’ rate, the market all over the world would be fatally
damaged. In addition, China could use its position to take advantage in the political field and it
could bring various kinds of distortion and confusion all over the world. Therefore other
countries should carefully watch its activity and continuously discuss these issues with China.
From the end of 1978, China's foreign exchange reserves had been increasing, and by 2011 they
had reached US $3.2 trillion. The main sources of growth for them are the Foreign Direct
Investment (FDI) and trade surplus. Also China’s focus on stability and liquidity while
considering profitability has enhanced the growth. With this huge amount of reserve, a lot of
problems have been brought to China. Now China should use the money. By doing this China
can avoid other country’s accusations, it can earn money, and also it could also support
financially weak countries. However, at the same time, those kinds of investments would prove
to bring critical risks for other countries because of their amount. Therefore, China should
morally act as a responsible country and other countries should carefully watch its activity and
continuously discuss these issues with China.
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Free Trade Agreements
By Youngguo Seo and Ryuhei Oi
Thesis:FTAs are mutual agreements between countries that eliminate or reduce tariffs and trade
barriers. All countriesattemptto build strong relationships with each other, since these days the
world is globalized rapidly. All countries should form mutual free trade agreements (FTAs) since
FTAs will help all countries to develop their economies without tariffs.
Introduction
In recent years, all countries, including Japan, and Korea, have interested in FTA negotiations.
When FTAs are conducted in the near future, what influence will be caused onKorea and
Japanese economy?
In the creation of an FTA in Korea and Japanese companies obtainmanyadvantagesfrom trade
facilitation, tariffelimination, and so on. However, toobtain such benefits, these companies
should also reorganizetheir organization, supplychain management, utilization of human
resources, etc. On the other hand, companies maysuffer great disadvantagedue to the
occurrenceof a seriouscompetitive condition, through tariffelimination, deregulation, and other
measures taken by thecountry in the area.
Only five countries — Mexico, Chile, Morocco, Jordan and Israel — have concluded FTAs with
both the United States and the EU. In addition, Korea and Japanare one of the world’s largest
economiesin terms of trade, forming FTAs will help to develop their economics and achieve
many benefits ofgreater significance. The following diagramshows the increase of exports and
imports after FTAs in five sample regions:
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130
In this sense, FTAs are indispensable to the attainment of success in economy
Economic effect of Korea – U.S. FTA
1. Intro (current situation of Korea)
FTAs have helped Korea, which is country with scarceresources.The economy is raised to rank
as the world’s ninth largest trading country. The effect of FTAs has a greater significance fortwo
huge economies. Without FTAs, exporters and farmers face high tariffs and other non-tariff trade
fencesin foreign markets. FTAs enable exporters to continue a level playing field with foreign
companies in foreign markets.
This article will provide the advantages and disadvantages of FTAs especially on Korea using
examples to support my ideas.
2. Advantages and disadvantages of FTA concluded with U.S.
The Korea-U.S Free Trade Agreement would create huge Korean jobs and opportunities for
economic growth by immediately removing fencesto Korea services and goods in U.S., which is
an important market for manufacturers, Korean workers,and farmers
2.1. Create new-Korean jobs and growth
America, the largest economy in the world, is Korea’s largest trading partner and export market.
130Tae-Hoon Lee, “What benefits will FTAs bring to Korea?”, The Korea Times, July 11, 2011, http://www.koreatimes.co.kr/www/news/nation/2011/11/116_98295.html, accessed Feb, 2012
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Trade and investment between Korea and U.S. supports tens of thousands of Korean
jobsincluding the manufacturing, agricultural, and servicesdivisions. This agreement would help
expand Korean jobs across every divisionof the economy by increasing Korea exports and
pullingnew investment into Korea, which will also create new jobs in Korea.
2.2. Level the playing field for Korea business
The agreement would also create new opportunities for Korean businesses and workers. Korea
exports to U.S. currently face an average applied tariff of 54% for agricultural products and 6.2%
for nonagriculturalproducts. 95% ofthese tariffs will be eliminated within 3 years, and nearly all
of the remaining tariffs will be eliminatedover 10 years.131
The agreement eliminatessignificant market access and non-tariff fencesin Korea to American
goods and chattels, investment, and servicesincluding strong foodson transparency,
competitionthat would make Korea businesses more competitive in U.S.
2.3. Advance global Korea competitiveness
Implementing the agreement would guarantee that Koreanbusinessesand workers are not left
behind as U.S. economies move forward with preferential trade deals that do not include Korea.
2.4. Strengthen animportantpartnership
Korea is a one of important U.S. alliance and a strong partner in enhancingglobal security.
Implementing the FTA willimprovethe strategic partnership by increasing the relationsbetween
thetwo countries as theyworktogether to encourageshared goals and values around the world.
FTAs are the most important tool for encouraging fair competition. They force foreign
governments to adoptopen and transparent rulemaking systemsthat would protect Korean
exporters againstunfair discrimination. FTAs also include processesto imposeinternationally
acceptedstandards that would help promote consumer safety and foster a
expectabletradingenvironment.According to the World Trade Organization, there are 283 FTAs
in force around the globetoday132.
131“What is a Free Trade Agreement (FTA)?”, , The U.S.-Korea FTA Business Coalition, http://www.uskoreafta.org/, accessed Feb, 2012 132Kozo Kiyota and Robert M. Stern, “Economic Effects of a Korea-U.S. Free Trade Agreement”, April, 2007, http://www.fordschool.umich.edu/rsie/workingpapers/Papers551-575/r557.pdf, accessed Feb, 2012
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133
Economic Effect of Japan – Asian countries FTA
1. Intro (current situation of Japan)
There are advantages and disadvantages on Japanese companies attributed to FTA in the near
future. The surveys show Japanese companies have much interesting tariff ratesbecause there
are some advantages of FTA. But there are still high tariff rates around the world, and tariff rates
seem to be a large barrier for many companies.
2. Advantages and Disadvantages of an FTA betweenJapan and Asian countries.
On the subject of Japanese FTA with East Asian countries, the survey inquired if a company’s
business occasions would expandwith boosted sales or improved profits, in East Asia when
133Tae-Hoon Lee, “What benefits will FTAs bring to Korea?”, The Korea Times, July 11, 2011, http://www.koreatimes.co.kr/www/news/nation/2011/11/116_98295.html, accessed Feb, 2012
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Japan successful negotiated a FTA with any country in East Asia, such as ASEAN, Korea, and
China, individually or widely (see Chart below).
“A 16.4% share of the respondent companies answered “Expand greatly” to this question, and
44.1% of the companies answered “Expand a little.” The companies that answered both “Expand
a little” and “Expand greatly” represented 60.5% of all responses. The overall ratio for “Expand”
for those industries is above 70%. Conversely, only 2.0% of the companies answered “Decrease a
little” and “Decrease greatly.” “No particular change (or with no change by a setoff)” was given
as an answer by 25.8% overall, and “No relation with business” was given by 6.6%.”134
The table below shows the Contents of Business Merit and Demerit of FTA135
134Akira Kajita, “The Influence on Japanese Companies by East Asian FTAs, and an Overview of East Asian Countries’ Tariff Rates” IDE APEC STUDY CENTER Working Paper http://202.244.105.132/English/Publish/Download/Apec/pdf/2003_05.pdf, accessed Feb 2012 135Industrial Structure Council, METI “2003 Report on the WTO Consistency of Trade Policies by Major Trading Partners”,http://www.apec-iap.org/, accessed Feb 2012
M/D Contents Share
(%)
Merit By tariff abolition of a partner country, the competitive power of
the company's goods in a partner country market increases, and 54.5
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The results above made it clear that the respondent companies’ concern is focused on the
elimination of tariff rates, which is a primary agreement of FTA. The company obtained a tariff
eliminationadvantage from not only a partner country but also from Japan. “Adding these two
advantages, it will come to no less than a total share of 76.8%. Furthermore, there were many
answers that improvement of customs formalities is aadvantage of FTA, apart from tariff rate
elimination itself. It turns out that Japanese companies have high prosepectregarding the tariff
issue, such as tariff elimination, and customs-formalities improvement, when an FTA is
concluded with countries in East Asia.”136
Conclusion
The conclusions of this paper are as follows. 136Akira Kajita, “The Influence on Japanese Companies by East Asian FTAs, and an Overview of East Asian Countries’ Tariff Rates” IDE APEC STUDY CENTER Working Paper http://202.244.105.132/English/Publish/Download/Apec/pdf/2003_05.pdf, accessed Feb 2012
sale is expanded (or sale is started newly).
By simplification and facilitation of customs formalities, cost
reduction becomes possible and leads to an improvement of
profitability.
42.7
By tariff abolition of Japan, import costs fall, such as a product,
parts, etc. from a partner country to Japan and it leads to an
improvement of profitability.
22.3
By improvement in the transparency of the investment related
rule of a partner country, smooth business becomes possible and
the incentive of investment expands.
20.4
Demeri
t
Inflow of the competition goods from a partner country and
entry of a competition company increase, price competition
intensifies, and the profit of its company falls in a Japanese
market.
19.4
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First, most companies have a positive view of FTA and expect their business to expandaround
the world if FTA are agreed in the future. So FTA should be agreed upon through the world as
soon as possible.
Second, companies think that tariff elimination with partner country by FTA is most important
for their business advantage. It is also important for companies to make easyclearness of custom
procedures, in order to decrease their business costs.
Finally, in spite of several efforts at tariff reduction in APEC and the WTO, the tariff rates of East
Asian countries generally are still high, except for a few developed countries. Continuous effort
at tariff cut in the area is critically expected for the formulation of East Asian FTA in the future.
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The Reason why Korean Women undergo Plastic Surgery
By Yosuke Suzuki, Youngwan Kim (Johann), and Sungmin Kim (Leo)
Plastic surgery is so popular in Korea because of a combination of four different reasons: social
pressure around appearance, social acceptance, ease and cost, and the focus on education.
Korean people regard plastic surgery as an ordinary, not a special practice; eight out of 10
Korean women over the age of 18 feel they need cosmetic surgery, and a survey found that one
out of two has undergone cosmetic surgery at least once,.137 So what is the reason that so many
Korean women undergo plastic surgery? One reason could be some sort of stress coming from
society such as job seeking or pressure to marry. One survey revealed that 69.9 percentof the
respondents aged 18 and over living in Seoul and Gyeonggi are suffering stress because of their
appearance.138 In addition, 55 percent agreed that "external factors, rather than internal factors,
are more important in defining a person's beauty.”139 There are similar problems in other
countries, but why in Korea are the numbers of people who get plastic surgery higher?
First of all, parents’ view of plastic surgery plays a big role. In most countries, parents normally
teach their children to love themselves as they are and do not think of plastic surgery as a
positive practice. However, in Korea, parents not only allow their children to get the surgery but
even encourage it.140 . There is one interesting reason for Korean parents to encourage their
children to undergo plastic surgery: self-satisfaction for mothers. Sometimes people can see
mothers with perfect features who have undergone plastic surgery walking with small-eyed
plain-faced children who have completely different features from their mothers. These mothers
undergo trauma because their children’s looks are completely different from their own. In order
to overcome this trauma, Korean mothers encourage their children to undergo plastic surgery at
137 “Half of Korean Women Have Had Cosmetic Surgery,” Feburary 22, 2007, The Chosunilbo, http://english.chosun.com/site/data/html_dir/2007/02/22/2007022261030.html, accessed February 2012. 138 Ibid. 139 Ibid. 140 “Plastic-Surgery-Happy in Korea,” July 11, 2011, LifeAfterCubes, http://www.lifeaftercubes.com/2011/07/11/plastic-surgery-happy-in-korea/, accessed February 2012.
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as early an age as possible.141 Once this cycle begins, it is difficult to stop unless “DNA Surgery,”
rather than plastic surgery, become available.
Secondly, the cost and ease of plastic surgery in Korea make it popular. In Korea, plastic surgery
is cheaper and more readily available than other countries.142 It is easy to recognize the signs of
authentic surgery clinics in Apgujeong area, which contains almost half of the 627 certified
plastic surgery clinics in Korea.143 In addition, not only Korean women but also foreign women
visit Korea to get plastic surgery. More than 50,000 foreign women came to Korea for cosmetic
surgery in 2009 and the number is increasing every year.144 For example, a New Zealander Jacky
Ng, 21 years old and interviewed by the Korea Joong Daily, said, “Korea is the safest place for
plastic surgery and the price is also affordable.” 145 Because of this, about 30 percent of Korean
women from 20 to 50 years old, or 2.4 million people, have experienced cosmetic surgery.146
Thirdly, lots of Koreans believe that finding a good job happens by being beautiful (wide eyes,
high and long nose, pale skin, no fat, etc.). In order to get a nice job, they often try to undergo
plastic surgery wishing to be western looking which most Koreans think cool and nice. The
following survey carried out by Saram-In, one of the most popular job sites in Korea, shows the
reasons for plastic surgery among job seekers:
[Survey chart]147
141 “Is Korea Mecca of Cosmetic Surgery?,” August 14, 2009, The Korea Times, http://www.koreatimes.co.kr/www/news/opinon/2011/04/196_50131.html, accessed February 2012. 142 Ibid. 143 Economy Blunts Korea’s Appetite for Plastic Surgery, January 1, 2009, The New York Times, http://www.nytimes.com/2009/01/02/business/worldbusiness/02plastic.html 144 Chinese Make Beeline for Korean Plastic Surgery Clinics http://english.chosun.com/site/data/html_dir/2010/04/13/2010041300537.html 145 Coming to Korea to see the doctors, Korea Joong Daily, February 26 2011, http://koreajoongangdaily.joinsmsn.com/news/article/html/945/2941945.html 146 Ibid 147 Survey on Plastic surgery for jobseeker http://hipretty.tistory.com/tag/%EC%82%AC%EA%B0%81%ED%84%B1
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According to the result of the survey, 67.2% of job seekers think that plastic surgery is one of the
most important factors when they try to get a job. Because a better appearance makes them more
confident they will be better able to show their ability without being nervous.
The authors carried out another survey carried out in Gyeonggi English Village of female
university students, preparing for a career as flight stewardesses. The survey shows they are
highly interested in plastic surgery:
[Survey chart]
● How do you think of plastic surgery?
Positive 16 (88.9%)
Negative 2 (11.1%)
● Have you/your friend ever had plastic surgery?
Yes 17 (94.4%)
No 1 (5.6%)
● Does appearance affect your life a lot?
Yes 12 (66.7%)
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According to the result of the survey, 67.2% of job seekers think that plastic surgery is one of the
most important factors when they try to get a job. Because a better appearance makes them more
confident they will be better able to show their ability without being nervous.
The authors carried out another survey carried out in Gyeonggi English Village of female
university students, preparing for a career as flight stewardesses. The survey shows they are
highly interested in plastic surgery:
[Survey chart]
● How do you think of plastic surgery?
Positive 16 (88.9%)
Negative 2 (11.1%)
● Have you/your friend ever had plastic surgery?
Yes 17 (94.4%)
No 1 (5.6%)
● Does appearance affect your life a lot?
Yes 12 (66.7%)
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According to the result of the survey, 67.2% of job seekers think that plastic surgery is one of the
most important factors when they try to get a job. Because a better appearance makes them more
confident they will be better able to show their ability without being nervous.
The authors carried out another survey carried out in Gyeonggi English Village of female
university students, preparing for a career as flight stewardesses. The survey shows they are
highly interested in plastic surgery:
[Survey chart]
● How do you think of plastic surgery?
Positive 16 (88.9%)
Negative 2 (11.1%)
● Have you/your friend ever had plastic surgery?
Yes 17 (94.4%)
No 1 (5.6%)
● Does appearance affect your life a lot?
Yes 12 (66.7%)
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No 6 (33.3%)
● which part of your body do you want to undergo plastic surgery?
Eyes 3 (16.7%)
Nose 9 (50.0%)
Body-Shape 5 (27.8%)
Others 1 (5.6%)
● If you noticed your friend is an artificial beauty and more beautiful than you, how do you
feel?
Positive 11 (61.1%)
Negative 7 (38.9%)
According to the results of the survey, most respondents (88.9%) think plastic surgery is positive.
In addition, it is obvious that plastic surgery is very common in Korea. Korean people think that
appearance has a strong influence on their lives. Especially, female university students who are
looking for a job think plastic surgery is very important to be able to improve their chances for a
more attractive job.
Fourth, plastic surgery is also encouraged by an excessive focus on education. Korea is packed
with students who are rewarded with cosmetic surgery treatments for the hard academic work
they put in.148 Korean parents are famous for their eagerness for educating their children, and
spend $20 billion per year to educate and motivate their children to improve their exam scores.149
About 94% of the respondents from the English Village survey also answered that the right age
to start to undergo plastic surgery is in their teens or 20s. Moreover, 78% of the respondents said
they would spend $1,000~$5,000 on plastic surgery. Even young female students who do not
have a job can easily get cosmetic surgery with their parents’ support.
148 “Know Your Limits – Parents Reward Child's Good Grades with Plastic Surgery,” March 04, 2011, Articlesbase, http://www.articlesbase.com/plastic-surgeries-articles/know-your-limits-parents-reward-childs-good-grades-with-plastic-surgery-4347827.html, accessed February 2012. 149 Ibid.
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[Survey chart]
● How much money should be the appropriate for the plastic surgery?
~1 mil. KRW 5 (27.8%)
1mil.~3mil. 9(50.0%)
3mil.~5mil. 4(22.2%)
5mil.~ 0 (0%)
● When do you think is appropriate age to get plastic surgery?
Teens 3 (16.7%)
20s 14(77.8%)
30s 1(5.5%)
40s~ 0 (0%)
An attractive appearance has a positive impact on a person’s career. Korean parents want their
children to have more opportunities and therefore think plastic surgery will help them to have
better future.
Plastic surgery is incredibly popular in Korea due to, its social acceptance, ease and cost, parents’
passion about their children’s education, and pressure to be good looking. Having an attractive
appearance is important not only for people to achieve a good career but also to be confident in
their daily lives. The young Korean girls surveyed at Gyeonggi English Village saw plastic
surgery as a positively accepted way to develop themselves. However, it is dangerous if people
stick only to outward appearance because they can lose their identity. Being a beautiful person
means developing inner beauty as well as having a better outer appearance .