East Eats West

The current financial crisis explained (in a movie)

 Picture: Those were the good old days when crisis created real smoke (the Esplanade celebration in Geneva).

Switzerland seemed to have avoided the global downturn for the longest time. Not any longer, should one believe the gloomy predictions by various researchers and market oracles. With a slump in the export and manufacturing industry the global recession has finally found Switzerland (we are tiny, you know). The reason for this recession is the global financial and economical crisis that has been going on for two years. It originated in the USA and one of the key ingredients of the crisis is cheap capital and debt. Should you wonder how everything is connected I can strongly advise to watch this movie sponsored by one of the partners of the private equity group Blackstone, Mr. Peterson. Be scared!

http://www.iousathemovie.com/

What job and qualifications to have a downturn

With a big recession on the plate companies worldwide have to slim down and lay-off staff. Switzerland has been spared  to recently by the effects of the recession but restructuring is now also going on here. The big question is if Switzerland will face only a mild recession or a severe depression as the USA and UK. With the first people being fired, formerly ‘dull’ professions like teacher, police officer or clerk get a popularity boost in Switzerland. At the same time international companies are hunting for “hungry 25- to 35-year-olds who are willing to travel”, according to The Economist. For mobile expat workers in Switzerland this could mean new opportunities abroad.

The recession scares away expats in Switzerland

 Picture: Zurich might seem sometimes like "hell" to expats. 

The recession is here and according to Credit Suisse it is even a depression. Anyone who has recently been to Britain has witnessed sales with discounts up to 90 percent and retailers going bust. Another sign is the newest copy of Wallpaper magazine that is much lighter because of less advertisement (same applies to Vogue, Elle etc.). With Christmas Sales still very strong recession hit Switzerland just very recently. The first lay-offs are underway. Switzerland historically boasts a very low unemployment rate. Nevertheless it is currently going up to three percent in November 2008. Apparently 46 percent of all unemployed workers are foreigners. Zurich has become a very popular work place for expats from Germany, England, USA and even India. But I am sure they will leave as quickly as they arrived once the economy turns sour. Many expats are strong spenders as they had well-paid jobs. So there absence will be felt from night life to shopping and apartments.

Lamborghini on the go

 

Picture: Take your pick of second hand Lamborghinis

I recently talked to a Lamborghini dealer and I was very surprised to learn that about 80 percent of all Lamborghini, Bentley and Rolls Royce buyers buy the car spontaneously. Apparently they walk into the showroom, look at the cars on display and then buy them right there and then. But I have the feeling that these spontaneous purchases might become rarer during the current recession as credit gets scarcer. I read that for example three quarter of all BWM were leased. I just hope that all those former Lamborghini drivers will not switch to the ingenious Swiss car rental system Mobility that I am using!

Smart beats Mercedes

For the first time in its over-hyped history the Smart car is producing a profit while the famous Mercedes cars are shunned. What happened? According to an article in the German weekly newspaper Die Zeit one third of all inhabitants in Paris and Tokyo do not own a car anymore. With the German car industry grinding slowly to a halt and sales dropping fast, the oil-price peak and the financial crisis are bringing the ‘bigger, faster, better’ trend in car-manufacturing to a painful end. The newest buzz-word in car-manufacturing is downsizing, or small is beautiful. Car manufacturers worldwide are now hell-bent on producing small but homely cars that feature woollen and cotton interiors instead of leather and shiny wood.

Read more here: http://www.zeit.de/2008/46/DOS-Autos

The downturn is here (and there)

Picture: It is time to switch vehicles!

With the credit-crisis in full blown and house-prices in the USA depressed, one wonders when the ‘real’ economy, aka everyone, will be affected. The first signs are here that it is already happening. Not only are US house-prices at rock-bottom, luxury goods are on sale too. I was told that Swiss luxury watches can be bought in the USA with a 30% discount or more. But also in Switzerland, home to thousands of bankers, one can see the first signs of a weakening economy. I recently went into an Audi dealership and looked a flashy R8 sports car. The windscreen said ‘sold’ but the dealer insisted that one could work out a deal. Rumors in Zurich are abound that Porsches are on the block with a big mark-down as bankers are getting laid off and bonuses will be miniscule this year (just check your Bloomberg). Let’s see what happens to the market for pricey apartments and penthouses once the thousands of well-paid expats leave Zurich. Or maybe the Russians will save the Swiss (Putin apparently comes on holiday to the Swiss alps).

Picture: We are prepared for the downturn!

Social entrepreneurism on the raise

Picture: Disadvantaged Indian women working as road workers.

Very poor and disadvantaged people are unwelcome customers and shunned by most companies: they do not get electricity, credit, house loans, healthcare or else. If they are lucky they receive benefits from the government or emergency aid by NGOs, and that’s about it. Really?

A few years ago an economic professor, Mr. Mohamed Usus, in Bangladesh started an experiment in giving loans to very poor Bangladeshi women for their small businesses. The loans were small ranging from around 50-100$ and they had to be repaid by 2$ a month. Mr. Yunnus was surprised to learn that the loans were diligently repaid by the poor ladies even though everyone told him beforehand that they will not be repaid. He then started without government aid Grameen Bank which gives out loans to very poor people. He started to give loans for sewing machines and finally loans for houses, as many houses are used by farmers also as storage. The bank has grown rapidly over the last few years and it is completely self-financed as it charges an interest. So far it has built 600’000 houses in Bangladesh for 300$ a piece and over 25 percent of all Bangladeshi households have received a loan from Grameen Bank. Mr.Yunnus is a social entrepreneur.

But what is a social entrepreneurs? They are people who have a vision of how to make the world a better place and use business models to make them real. Most often everyone else will tell them that their idea is not feasible, that the poor people will not pay for their services but despite the odds they prevail. The businesses range from selling solar panels in Brazil, providing mobile phones in India to establishing a help line in India, as David Bornstein, author of the book How to change the world told the audience at the Gottlieb Duttweiler Institute in Rüschlikon.

Social entrepreneurs are not traditional NGOs as they do not raise funds for re-distribution. They use marketing to spread their idea and charge for their services and products. They compete for ideas and are not protected by the government. They tend to be small and nimble organizations and are working hard to become self-sustaining. Grassroots social entrepreneurs bridge the gap between big charities, the government and business. They compete for ideas and are exposed to market forces. No wonder that efficiency is familiar concept to them!

Or check out my friend's website http://www.myimpact.ch/

Read more on David Bornstein’s website: http://www.howtochangetheworld.org/

From development aid to social entrepreneurism and accountability

In Singapore I met Desmond Lum, Vice President of Fortis Philantrophy Services, who helps NGOs to manage their finances and investments in a world where donation from governments are running thin and more creative ways of generating funds are needed. Desmond not only helps NGO’s to sustainable manage their assets but also teaches them the language of business and finance, the language spoken by their donors. Desmond told me that he experiences a shift from purely dolling out money to charities to nurturing grassroots business activities, dubbed as social entrepreunerism. In my view social entrepreunerism is the future of aid and development work because it helps not only people to help themselves but allows for better monitoring of the outcome of development aid. This is because the success or failure of a business can be easily monitored by simple controlling and parameters as sales, costs and profits. For the first time an aid dollar can be transparently and quantitatively attributed to the outcome of aid activities; aid efficiency and effectiveness can be easily monitored and projects compared in quantitative terms. This will also be required by future better educated and more demanding donors. The central paradigm in development aid will in the near future be centered on nurturing economic activity and applying the tested and tried tools of modern business management. So Desmond betters teaches more NGOs the lingo of finance and business.

Blinding neon lights in Asia

Neon lighting can be found in homes, offices, restaurants, shops and government buildings. It is ubiquitous in the whole of South-East Asia and its cool and blinding light constantly irritates me. I always wonder why not warmer or cosier light is used. A friend of mine, Kob, said that her father installed neon lighting in her travel agency because he want the office to be bright and therefore welcoming to clients. As one drives through the countryside of South-East Asia one often sees that after sunset villages become gloomily dark and neon light is in fact a stark contrast to the darkness and probably very welcomed by the inhabitants. Maybe there is also a development pattern in lighting from darkness to neon light to ambient light?

Wages in China, Thailand and Vietnam compared

According to CEIC; Mercer and The Economist wages in Thailand and Vietnam are lower than China. An average salary for unskilled labor in China is about 2’000$, a bit less in Thailand and a bit more than 1’000$ in Vietnam. Whereas skilled labor in China earns on average about 7’000$, 6’000$ in Thailand and only a bit more than 3’000$ in Vietnam. These number support anecdotal evidence about raising wages in China.