Brazil’s BRIC Cracks on Disappointing Growth Figures

imagesLos Angeles, CA – There’s a serious fissure developing in the BRIC wall as the latest government figures show that Brazil has slipped into recession, with the Latin American giant’s gross domestic product (GDP) contracting for a second consecutive quarter.

According to the official government statistics bureau in Brasilia, the country’s GDP stands at about $567 billion, down 0.6 percent from the previous three months, while revised figures for the first quarter showed a drop of 0.2 percent.

The government had initially had reported first-quarter growth of 0.2 percent.

The country last experienced a recession in late 2008 and early 2 009, when a world economic crisis slashed demand for steel, minerals, farm goods and other key Brazilian exports.

The BRICS – Brazil, Russia, India, China and South Africa – together represent 18 percent of the world total, are all experiencing slowdowns in their once fast-paced rates of growth. Exacerbating the economic difficulties is Russia’s volatile activity in Ukraine, which has sparked a rash of sanctions on Moscow by the US and the European Union.

Last month, leaders of the five countries met in Brazil and decided to create their own development bank as a counterweight to what they perceive are “western-dominated financial organizations like the US-based World Bank and International Monetary Fund.

The new development bank will reportedly be based in Shanghai and is expected to be functional within two years. It will be capitalized at $50 billion, a figure that could grow to $100 billion to fund infrastructure projects. The fund would also have $100 billion at its disposal “to weather economic hard times.”

08/29/2014

Foreign Trade Zones Seeing Upsurge in Business

header01Washington, DC – The value of exports from America’s Foreign Trade Zones (FTZs) increased by 13.7 percent in 2013, to a record-high $79.5 billion in merchandise shipped to overseas markets, according to the US Foreign Trade Zones Board.

According to the group’s Annual Report to Congress, at $835.8 billion, the 2013 value of received merchandise into FTZs also reached a new high, surpassing the previous year’s record of $732.2 billion – a 14.1 percent increase.

Nearly two-thirds of the merchandise received by FTZs in 2013 was domestically sourced, with the value of domestic status inputs growing to $545.5 billion. The remaining $290.3 billion in received merchandise consisted of foreign status inputs, it said.

The composition of foreign status inputs received by FTZs has also shifted significantly, according to the report. In 2013, a 16 percent decline in foreign status petroleum inputs was offset by increases in other product categories, such as vehicles, electrical machinery, and consumer products.

According to the report, the $79.5 billion export figure is based solely on material inputs, and does not include the value added to those inputs by US-based manufacturers operating in FTZs.

“CAPTURING THE FULL VALUE OF EXPORTS”

The National Association of Foreign Trade Zones (NAFTZ) is currently working with the US Census Bureau and the US Foreign Trade Zones Board “to more accurately capture the full value of exports from FTZs, including the value added to foreign and domestic status inputs by FTZ user companies,” the report said.

“Record FTZ exports, merchandise received, and employment offer compelling evidence that the FTZ program is expanding and adapting to meet the needs of American-based companies competing in a global economy,” said NAFTZ President Daniel Griswold.

The zone program, he said, “has become vital to US economic policy goals of boosting exports, attracting foreign investment, and creating well-paying and sustainable private-sector jobs on American soil.”

“Since 2009, exports from foreign-trade zones have almost tripled, from $28 billion to nearly $80 billion,” Griswold added. “The FTZ program shows that when US-based companies are allowed to access global inputs at competitive prices, they can become export powerhouses.”

There were 177 active FTZs during 2013, with a total of 289 active manufacturing/production operations. A record high of 390,000 persons were employed at 3,050 firms that used FTZs during the year – an increase of 20,000 employees over 2012.

The FTZ Board processed 65 applications for new or expanded production authority in 2013, and reorganized 23 zones under the alternative site framework (ASF).

The first Foreign Trade Zone was opened on Staten Island by  the Port of New York-New Jersey in February 1937.

08/28/2014

 

How to Prevent Kinks in the Global Supply Chain

cummingsKnoxville, TN – Working with talented professionals, customer service, agility and reducing cost are just a few of the key issues on the minds of senior level supply chain executives in the US manufacturing and retail sectors, says Dr. J. Paul Dittmann, executive director of the Global Supply Chain Institute at the University of Tennessee – Knoxville.

Meeting in Chicago recently, the Institute’s Advisory Board shared its insights on solutions to some of the most critical issues facing the global supply chain. The board is comprised of 25 high-level managers from some of the largest companies in the country.

According to Dittmann, the executives feel that having “the right people in the right positions” is the key to every solution with companies needing to develop “better processes to assess, identify, recruit, develop and retain top talent, especially since supply chain talent is increasingly scarce.”

Understanding the customer’s current and future needs was also seen as absolutely critical, he says. “They understand that their customers should lead their supply chain strategies and they know that their customers should be better educated on the cost-service tradeoffs.”

AGILITY, COST REDUCTION, REGULATORY COMPLIANCE

Near the top of the list, says Dittmann, are developing the “agility to adapt to changing environments,” given the increasing volatility in the global marketplace and a “need to stay current with technology on many fronts, from warehouse and transportation management systems to network optimization tools and inventory planning systems.”

Cost reduction “will always be a priority and supply chain executives know their companies expect them to take the lead in that area, while still improving service,” he says. “They know that they need to be more creative and proactive. They also understand that they must reduce cost while simultaneously redesigning their supply chains and leveraging the global environment.”

Also critical are developing efficient ways to comply with the growing list of government regulations, as well as optimizing performance despite the condition of the country’s “crumbling transportation infrastructure.”

Supply chain executives, says Dittmann, “understand they should have a better process to identify, prioritize and mitigate supply chain risks that can seriously damage their companies. Even weather must be considered, especially given the extreme challenges of last winter.”

08/27/2014

Asia Pacific Region Dominates Business Travel

chinatravelWashington, DC – Business travel in Asia Pacific, led by a dominant China, outpaces that in the rest of the world, according to a newly released travel forecast by the Global Business Travel Association (GBTA).

Global business travel spending is expected to hit a record $1.18 trillion in 2014, a 6.9 percent growth over the previous year, the forecast said.

Driven by infrastructure investments, exports and service development, business travel spending in China has grown from $32 billion in 2000 to $225 billion in 2013, an average of 16.2 percent each year. By comparison, growth in business travel spending from the US has grown at an annual rate of just 1.1 percent since 2000.

The report, which details travel spending in 75 countries, along with the top industries, economic factors and characteristics that influence business travel, finds that record high business travel spending is driven by a few dominant markets – namely the US, China and Western Europe.

The Global Annual Report & Forecast also shows that spending in the US and Western Europe will grow more slowly compared to Asia.

The Asia-Pacific region, the report said, is already the largest business travel region in the world, comprising 38 percent of global business travel. Business travel spending in Asia Pacific totaled $392 billion in 2013 – more than doubling in size since 2000 with a growth rate of 7.5 percent annually.

The GBTA expects business travel spending to continue growing at a 10.2 percent annual pace over the next five years. The association expects that by 2018, Asia-Pacific will have gained another 5 percent in market share, while the US and Western Europe will lose three percent and two percent, respectively.

Italy and Spain slipped in the GBTA’s annual rankings of the top 15 countries by travel spending, while the BRIC countries – Brazil, Russia, India and China – continue to rise in the growth ranking, representing four of the top six countries in terms of business travel spending growth.

There was some reservation about Russia’s position “as an escalating Ukrainian crisis could push Europe and Russia into a recession.”

Moreover, Russia – a country that has been on the rise in recent years in terms of business travel spending – “could see plummeting business travel activity if the crisis continues,” the forecast said, as sanctions from the West “are already taking their toll on the Russian economy with the GBTA expecting business travel spending in Russia will fall more than five percent in 2014.”

Ranked by spending in 2013, the trade group identified the top 15 business travel markets – the US topped the list ($274 billion), followed by China ($225 billion) and Japan ($61 billion).

08/26/2014

New Seafood Farm Planned Off US West Coast

musselsLos Angeles, CA – A project is underway to develop the US West Coast’s first commercial shellfish “farm” in federal waters to grow mussels and scallops in their natural environment under closely monitored conditions to produce a high-quality product well-suited for export to markets all over the world.

Organized by Catalina Sea Ranch and planned on 100 acres located between the ports of Los Angeles and Long Beach and Catalina Island, the  project is a joint effort with the Southern California Marine Institute (SCMI), the National Oceanic and Atmospheric Administration, several non-profits and a number of private sector companies including Verizon.

As the project is planned in government-controlled waters, approval was sought from the US Army Corps of Engineers and California Coastal Commission, both of which gave the project a green light last January.

Mussels, scallops and several other varieties of bivalves, as well as shellfish including spiny lobsters, grow naturally off the Southern California coast. The Catalina Sea ranch plan calls for the SCMI to spawn the bivalves in an aquatic “nursery, where they’ll be held until they mature before being suspended on lines 30 feet below the surface to feed to filtered phytoplankton under constant monitoring for up to eight months before they’re harvested.

According to Catalina Sea Ranch, the 100-acre farm could produce as much as 2.5 million pounds of high-quality shellfish annually with buyers reportedly already lined-up to sell out the product for the next three years.

Much of what the “farm” produces will be tagged for export to overseas markets.

Currently, with the US importing some 91 percent of the seafood it consumes, the company feels that should the project prove to be a success that’s replicated, the US could stop importing shellfish and actually be an exporter of the seafood.

08/25/2014

 

Kenco Muscles Up For Little Debbie IRONMAN Tennessee Triathlon

By Carolyn Hillgren

kenco-biggerChattanooga, Tenn. – Kenco will make a big splash as a sponsor of the legendary IRONMAN triathalon when it comes to Chattanooga this fall.

As a provider of integrated logistics solutions, real estate services and material-handling equipment, Kenco will be the Swim Course presenting sponsor and will handle equipment and supply logistics for the event.

“Kenco is proud to help bring IRONMAN to Chattanooga for the first time,” says Senior Vice President Sean Coakley. “We are headquartered in a beautiful city with fantastic recreational opportunities, and we can’t wait to show it off to the IRONMAN athletes. Plus, our sponsorship is an inspiration for our own employees to stay active and fit.”

In the spirit of the event, many of Kenco’s 3,500 employees are participating in their own full distance triathalon. Between May 1 and September 28, Kenco employees from more than 90 locations across North America are working to complete 2.4 miles of swimming, 112 miles of biking and 26.2 miles of running—the same distances that will be covered in the IRONMAN Chattanooga event. However, rather than one day to cover the distance, Kenco associates have three months!

Little Debbie IRONMAN Chattanooga to Benefit the Cohn’s and Colitis Foundation of America is one of 17 North American IRONMAN triathlons and will be held on Sunday, September 28, 2014 with more than 2,000 athletes expected for the event.

Moscow Says ‘Nyet!’ to McDonalds; Cites ‘Food Safety’

moscowmcdsLos Angeles, CA – Russia has ordered the closure of four McDonalds fast-food restaurants in Moscow because of what the government says are possible “breaches of sanitary rules.”

The four restaurants include the first ever McDonald’s in Russia, which the Oak Brook, Illinois-headquartered global mega-giant says is the busiest in its entire 35,000 outlet global network.

Raising an eyebrow at the move by Russia’s food safety watchdog, many in the business community dismiss Moscow’s assertion saying the move is a another reaction to the sanctions imposed by the US and the European Union over the country’s seizure of the Crimea and its incursion into Ukraine.

“Obviously, it’s driven by the political issues surrounding Ukraine,” said Alexis Rodzianko, president and CEO of the American Chamber of Commerce in Russia at a press conference held after the move was made public. “The question on my mind is: Is this going to be a knock on the door, or is this going to be the beginning of a campaign?”

The day after the decision, a sign on the door of the largest McDonalds that was shuttered said the restaurant had been closed “for technical reasons.”

A statement released by the government stated that “documents” had been presented to McDonalds’ management and that the shops had been closed for “numerous sanitary violations dealing with product quality,” without giving any details.

McDonald’s head office released a statement to the press saying that the company “is closely studying the subject of the documents to define what should be done to re-open the restaurants as soon as possible.”

Russia’s first McDonald’s opened on Moscow’s Pushkin Square in 1990.

The company currently operates 438 restaurants in Russia and considers the country, which currently generates about 10 percent of the company’s European operating profit,  as one of its top seven major markets outside the US and Canada.

Other US companies with operations in Russia are closely monitoring the situation, curious as to whether Moscow will expand the regulatory scope of its sudden, intense concern over “product quality” issues.

That list of vulnerables includes such icons as Coca Cola, Starbucks, KFC, Pizza Hut, Jack Daniels, and McDonalds’ arch-rival Burger King.

08/22/2014

FDI in China Drops to New Low; Anti-Trust Actions Blamed

fdichinaLos Angeles, CA – China attracted $71.1 billion in foreign direct investment from January to July, down 0.4 percent on the same period in 2013, with FDI in the country reaching $7.8 billion in July alone, the first decline in overseas capital inflow in 17 months.

The slashing of spending in China’s manufacturing sector by companies from the US, Japan and the European Union is being blamed, primarily, on an increase in Beijing’s recent crackdown on foreign companies alleged to be engaging in “anti-competitive” business practices.

Over the past year, China has taken action against a number of ‘big ticket’ foreign companies, accusing them of breaking the country’s anti-trust regulations, which many feel are opaque and in violation of World Trade Organization rules.

Most recently luxury car brand Mercedes-Benz has been accused of manipulating prices for after-sales services in the country, while Beijing has imposed fines on milk powder companies including Mead Johnson Nutrition Co and Danone SA, alleging breach of its anti-monopoly laws.

China has also launched a probe into US-based Microsoft and chip maker Qualcomm over anti-trust claims, while several pharmaceutical companies including GlaxoSmithKline are facing probe in the country over alleged corruption and price fixing.

The probes have raised concerns among foreign investors that the country is targeting foreign firms operating there in an effort to, as one source out it, “flex its muscles.”

According to the Ministry of Commerce in Beijing, though, the anti-trust investigations aren’t responsible for the drop in FDI. Instead, the agency said, the “volatility of FDI” is a natural reaction to the country’s “efforts to balance the economic structure.”

The monthly decline “is not sufficient enough to reflect the general trend. It must not be linked to the anti-monopoly probes into some foreign invested companies or be associated with other baseless speculations,” said Commerce Ministry spokesman Shen Danyang.

“All market players should operate their business according to the law,” he added. “They should be punished according to the law and be subject to appropriate legal penalties if they violate the law.”

Beijing, he said, “expects foreign investment to keep a steady growth in the coming years and total FDI in 2014 to remain at a similar level with last year.”

08/21/2014

2024 Mobile Commerce Sales Expected to Soar to $59 Billion

m commerceChicago, IL – Many US merchants that place mobile at the core of their e-commerce strategy are reaping big rewards with “m-commerce” sales of $59 billion in 2014, up 74 percent from $34 billion in 2013, according to the Internet Retailer’s latest 2015 Mobile 500 report.

Mobile sales, the report said, will account for 23 percent of total 2014 online sales of the US merchants analyzed in the report.

By contrast, e-retail sales in the US grew 15.7 percent in Q2 2014, according to the US Commerce Department. With their combined $30.8 billion in 2014 mobile sales, No. 1-ranked Amazon.com and No 2.-ranked Apple Inc. command a 37 percent share of total Mobile 500 “m-commerce” sales, the report found.

“But since the mobile commerce market is far from mature, there’s still plenty of room for growth and new players, both domestically and internationally,” it said.

The 134 overseas retailers studied in the 2015 Mobile 500 are expected to reach $25 billion in “m-commerce” sales in 2014, up an impressive 96 percent from $13 billion in 2013.

The report estimates that the world’s 500 largest mobile commerce businesses combined will increase their mobile sales by 80 percent in 2014 to more than $84 billion.

“The quantum leap in mobile sales growth worldwide is prompting many retailers to prioritize their tech spending and match consumers’ online shopping behavior, which leans toward mobile shopping on apps as opposed to shopping on a mobile web site,” the report said.

“Mobile commerce is like a hurricane rearranging the coastline of e-retailing,” said Internet Retailer publisher Jack Love in Chicago. “For e-retailers trying to ride the wave rather than being swamped by it, the 2015 Mobile 500 is a survival guide to e-commerce in the mobile age.”

08/20/2014

New Offshore Incorporations Increase in 2013

offshore (1)Los Angeles, CA – New company registrations increased in most offshore jurisdictions in the second half of 2013, according to Appleby, one of the world’s largest providers of offshore legal, fiduciary and administration services.

In total, there were 44,615 new offshore company incorporations in the second half of 2013, and the total number of active companies rose to 671,000, according to the firm’s latest On the Register report.

The report provides insight and data on company incorporations in offshore financial centers and is focused primarily on the second half of 2013.

“As the global economy follows a path to recovery, offshore company registration data reveals that levels of new company registrations are up in most jurisdictions during the second half of 2013, with increases of between 5 percent and 10 percent,” said Farah Ballands, partner and global head of Fiduciary & Administration Services at London, UK-based Appleby.

Overall, the report found, the combined total of new offshore incorporations in the second half of 2013 “represents a slow-down compared to the preceding six months,” attributing much of the pull-back to a decline in incorporations in the British Virgin Islands (BVI) – which is the offshore jurisdiction that attracts the most company registrations.

Though it maintained a two-fold lead over its nearest comparator, the Seychelles, the number of new companies joining the BVI register shrank by 17 percent when compared to the first half of the year.

The story of company incorporations, the report said, “is largely positive with the Cayman Islands being the only other offshore jurisdiction to report a decrease in new registrations in the second half of 2013 when compared to the first half of the year.”

However, the report attributed the decrease to a seasonal decline in company registrations and, when looking at 2013 as a whole, Cayman experienced a healthy 5 percent growth.

During the second half of 2013, the Crown Dependency jurisdictions of the Isle of Man and Guernsey revealed the largest increases in new companies joining the registers at 10 percent and 9 percent, respectively, over the previous half.  The number of new companies added to the register in Mauritius, meanwhile, was up 8 percent on the previous period.

The largest year-on-year increase was seen in the Seychelles (29 percent), followed by Bermuda (16 percent), which saw a recent high in new incorporations – more than 1,000 annually for the first time since 2008.

Data for the report was collected from reported figures produced by the national registries of Bermuda, the Cayman Islands, Guernsey, Hong Kong, the Isle of Man, and the UK.

In addition, data available from Jersey Finance, the Central Bank of Seychelles and the Financial Services Commissions of Mauritius and the British Virgin Islands, Seychelles International Business Authority, The US Census Bureau, The State of Delaware, The Federal State Statistics Service in Russia and the State Administration of Industry and Commerce of China was also analyzed.

08/19/2014