Tag Archives: Zara

The Economist, weekly digest, 12th-18th March

EU SPLITTING INTO EUROZONE AND NON EURO
Is the EU splitting into two tiers i.e. euro zone and non euro zone members? The euro zone members are to have their own meeting following the upcoming EU summit. The euro zone members are in general less economically liberal than the non euro zone members (driven by France). In particular, there are greater calls for more economic integration between the euro-zone members (e..g a common rate for corporation tax and more fiscal harmonisation). There is likely to be spill over into general EU matters which will further disenfranchise the UK, to the point of perhaps having to drop out of the union.

COTE D’IVOIRE – DON’T DO A KENYA/ZIMBABWE COMPROMISE
As Libya has dominated headlines, the post presidential election  stalemate in the Ivory Coast continues as the losing president refuses to refurnish power. Civil war has consequently broken out leaving many Ivorians destitute. The AU should resist its tendency to allow bad losers to stay on by endorsing governments of BOGUS NATIONAL UNITY (read Kenya and Zimbabwe). Such governments are often unable to govern and sets a bad example.

INEQUALITY GROWING IN THE UK BUT SHRINKING IN GERMANY
The Watford Gap (valley) is the unofficial boundary between the north and the south. Inequality has rocketed in the UK over the last 20 years, such that a quarter of the UK now has a per capita GDP of lower than municipal Shanghai. The parts of UK in question are typically the northern rural areas. Investment in education is seen as the means to best address this, however, this is unlikely in face of the looming public spending cuts. Note that in the equivalent period, the inequality between the most affluent and poorest parts of Germany has dramatically fallen as more investment went to the reunified East.

UK PENSION REFORM – MULTIPLE ATTACKS
George Osborne’s 3 pronged attack on public sector workers: 1) 2 year pay freeze, 2) large scale redundancies; and 3) less pension benefits. Public sector workers are to now contribute more to receive a smaller pension after retiring later. This is to help address the massive (£1 trillion) unfunded UK public sector pension liability that has accrued due to commonplace defined benefit (i.e. final salary) schemes.

HEATHROW BEHIND IN BATTLE FOR EUROPE’S PREMIER HUB AIRPORT
London Mayor Boris Johnson is calling for more airport capacity in London. He proposes the government should either invest in a new airport in the Thames Estuary or increase capacity at Gatwick or Stansted. This is in response to Heathrow already operating at overcapacity (after plans to expand it were voted down by parliament due on environmental  and noise pollution grounds) despite serving fewer destinations than Paris’s Charles de Gaulle and Frankfurt (serving 185, 200 and 300 respectively). So the fight continues for the crown of pre-eminent European hub. It is also seen as BJ taking aim at George Osbrone, his likely rival for the future leadership of his party.

UK FOREIGN POLICY BLUNDERS
– The UK tried to engage with the Libyan rebel Council by sending diplomatic representation into Libya under SAS cover. The team arrived unannounced in the dark and were subsequently were rounded up by the alarmed rebels.
– The UK was slow in its attempts to evacuate Britons stranded in Libya (mostly oil workers).
– The Foreign Office developed a strategy of sending ambassadors and  other high ranking officials (read Prince Andrew) to drum up business for Business abroad. It recently emerged that Prince Andrew has links to a convicted sex offender in America.

WE NEED A VIRTUAL CENSUS
Has been conducted every 10 years since 1801 (bar 1941 due to WW2). It’s suggested that the current formal paper based  complete and submit regimen should be replaced by a VIRTUAL CENSUS that feeds into information from existing computerised databases of public records (e.g. tax records), which has already been pioneered in Scandinavia. This is likely to to be cheaper, more current (as data increasingly expires more quickly) and likely to identify fewer Jedi knights.

BURLESCONI LIVES
Despite facing ongoing charges, his position is looking more secure thanks to the backing of coalition partners, the Northern League.

US MANUFACTURING REBOUNDING
Rebounding following the post recession huge slump as orders pick up from abroad. Each additional percentage point of another country’s growth boosts its imports from America by three percentage points.

CHINA SPENDING MORE ON INTERNAL SECURITY
Annual announcement of the revised 5 year budget included the announcement of double digit growth in national security spending. The growth, however, in addressing internal security threats was greater than that of external threats. Also it was announced that school children should receive an hour of physical exercise in school every day.

SUBWAY OVERTAKES MACCY D’S
Subway officially overtakes Macdonalds in number of worldwide branches (33 thousand to 32 thousand).

PC MARKET UNDER A TRIPLE THREAT
HP and Dell, the world’s two foremost PC manufacturers are coming under attack by three major computing trends:
1) The rise of the Tablet (notably the Apple iPad) has resulted in downgraded future growth projections for the PC.
2) Cloud computing is now encouraging businesses to store information in the Cloud (with say Amazon or Rackspace) rather than servers from HP or Dell. (In turn Amazon will need servers to host the cloud data but can drive a hard bargain because of their size).
3) Vertical integration means that consumers now expect an “all-in-one solution” from their IT systems provider. This has resulted in computer companies coming into HP/Dell’s turn (e.g. Oracle buying Sun Microsystems).

CLOTHING RETAIL – KEEPING PACE WITH CHANGING FASHIONS
Zara (SP) vs. H&M (SWE). Zara are the logistics experts in managing to get new clothing styles into their stores within weeks, whilst the same takes H&M months. H&M makes 65% of its wares in lower-cost Asian countries.

HOW MUCH OIL IS SLOSHING AROUND?
The US has a reserve of 727m barrels, Japan:320b and Europe as a total has 420b. The US consumes 20m barrels a day, thus its reserves could support it for about a month. Global world output is about 85m b/d , and less than half of this is opec. World consumption is also about 85m b/d.

Spreading human rights through trade

A documentary on BBC television investigating the use of child labour in developing countries for the manufacture of clothing items to be retailed in the UK is causing somewhat of an uproar. Retailers found to be relying on child labour are coming under heavy criticism for supposedly playing a role in depriving the children from the opportunity of attending school and generally living out their childhoods (amongst other things).

It is important to address the issue here of how widespread child labour in developing countries really is. It is likely that the developing countries in question do indeed have regulations in place which prohibit the use of child labour, however, the extent to which such regulations are enforced is an entirely different matter.

The reality is that the situation in some developing countries may be so grave that families are often having to rely on all its members to work in order to eek out a living irrespective of regulations or who the employer is. So the children who are being crammed into factories to help manufacture clothes for British retailers, may well have been employed under tough conditions elsewhere were the factory work opportunity not available.

The key difference, however, is that whilst worker/children’s rights remain merely a matter of principle in some developing countries, their adherence is paramount to British and western retailers. It is impressive and important that the scrutiny which British and western enterprises undergo is being extended to their operations abroad. It is this scrutiny which is highlighting the general plight of children in developing countries who are put into labour, and may help to ultimately raise the standards in these countries with respect to the enforcement of child labour regulations.