Saturday, December 31, 2011

Will India Challenge China? Not yet.

Last month my wife and I took our first ever trip to India. Since that time I have struggled to put into words what I learned on our trip – not only about India, but also about China. Since today is the last day of 2011, I have determined that my latest thinking on this topic, however crudely formed at this point, is going up on the blog today.

India Gate, Delhi

So what does China have to do with India? More importantly, you may be asking, how could one hope to learn anything about China by visiting a completely different country?

Why India?

Aside from the fact that I thought India would be an interesting place to visit, I had begun to notice over the past year news stories, blog posts and twitter discussions about whether India would ever challenge China economically, militarily and/or diplomatically.

One book I read earlier in 2011 was Robert Kaplan's Monsoon, a fascinating historical approach to explaining why the Indian Ocean will become the world's most contested region, and how China and India are already competing for influence. (Kaplan also leads the reader to wonder a.) whether the US understands the importance of this region and b.) even if the US gets it, whether the US will have either the will or the ability to maintain its influence.)

The question of whether China's influence in the region will increase is no longer contested, but many people – including some long-time China watchers such as me – see India as a potentially credible rival to China. India has a large land mass, the world's second largest population and an economy that has consistently turned in upper-single digit economic growth for most of the past two decades. India and China also share a long and contested border, with both countries occupying lands claimed by the other, and as a result, the level of trust between the two has always been fairly low.

Regardless of whether India could become a credible rival, it is easy to see that many of the necessary ingredients for a rivalry are there. And given what I know about China – that it fully intends to return to its historical role as regional (if not global) hegemon – I wanted to see for myself whether India might truly be on the cusp of challenging China's ambitions.

So why might I have expected to learn anything about China while in India? Perhaps it is because China is the first country in which I ever spent significant time abroad. Ever since the mid-'90s, every other country I have visited has further illuminated my view of China.

Since 2000, when my employer sent me to Japan for a couple of years, I have viewed China slightly differently. To give but one small example, having been a waiter in college, I had always thought that service in China was poor because no one tipped in restaurants. After my first dinner in Japan, not only was I amazed by the friendly and efficient service, but also by the fact that the Japanese don't tip in restaurants either. There was clearly a much deeper cultural or sociological explanation for the disparity in service levels between China and Japan.

Will India challenge China?

So, back to the first burning question that drove me to India, the question of whether India will be a credible rival to China. The short answer to this question, I am disappointed to admit, is no – certainly not in the near future, and not without China self-destructing from the inside.

As thrilled as we were to have arrived at the clean new terminal of Delhi Airport, my wife and I were simply dumbstruck by the the poverty, filth and chaos we witnessed during the hour-long ride to our hotel. Delhi makes Beijing look clean and orderly by comparison (a fact that cannot have been lost on any Chinese leaders who have visited India). And while I reserved judgment on that first day, the remainder of the two weeks we spent in India further confirmed that India is not quite ready for prime time.

Chandni Chowk Bazaar

This is not to say that India has no hope at all, but a lot of what I saw on the ground, combined with what one may easily learn about politics in India by reading the news, leaves me to believe that India has much further to go if it ever hopes to catch up with China. I simply never imagined India's overall development gap with China would be so wide.

I also came away from India with a new level of appreciation and respect for the accomplishments of China. While I don't believe China's accomplishments excuse the lack of personal freedoms and rampant abuses of human rights, one cannot help but admire the speed with which China has pulled itself out of a deep hole of poverty.

Traveling in India and China

Traveling in China, while having improved quite a bit over the past two decades is still a bit of a grind, and in some areas it has become worse. When there were fewer people traveling by air back in the '90s, there were also far fewer unexplained flight delays than there are now.

That said, we found traveling in India to be even more difficult. Travel agencies and airline ticket offices tend to close on Sundays so if an emergency arises (say, for example, one gets food poisoning – don't ask me how I know about this) and you need to change your travel plans, just be sure it doesn't happen on a Sunday. (Apparently the planes do still fly on Sunday.)

Also, trains in India are apparently affected by fog. The day we left Delhi for Agra, our train was two hours late, which actually wasn't bad considering many trains were as much as six or seven hours late that day.

New Delhi Train Station

This connection between train travel and weather would not have occurred to me, but apparently train engineers in India need to have a certain distance of visibility before a train can travel. Having traveled on trains in China in all kinds of weather, I don't think this is the case there, though I could be wrong. I mean, if all trains follow their appointed schedules, and all trains are connected via radio to each other and to a central dispatch, avoiding collisions shouldn't be rocket science.

Of course, one can easily avoid the hassles of air and train travel by hiring a car and driver, but it can be quite expensive, particularly if it is arranged by your hotel, which (as we later realized) has no problem doubling the price of the car for their own profit.

Corruption

And in terms of scams and general corruption, I used to think the Chinese were masters at cheating foreigners, but they have nothing on the Indians I encountered on the tourist track. By comparison, the Chinese are rank amateurs. At every turn – particularly in north India, but less so in the south – we encountered people who, on the pretense of being friendly and inquisitive, wanted nothing more than to separate us from our money while providing nothing of value in return.

A market in central New Delhi. Where were all the women?

In all fairness, I must emphasize that these people were gathered in massive numbers around the areas frequented by tourists. Because we did not really experience the everyday lives of average Indian citizens, I cannot comment on whether such corruption affects their lives to a similar degree. However, if the many Bollywood movies I have watched are any indication, perhaps the corruption for the average Indian is just as bad though taking on different forms.

But you should go to India anyway...

While my post thus far has focused on some of our negative experiences in India, the truth is that my wife and I loved India. The amazing sights we saw, the outstanding food we ate, and the smart and honest people whom we encountered along the way combined to make the whole experience worthwhile.

If you have ever considered traveling to India just to see the sights, we can attest that it is absolutely worth the effort. (And this comes from a couple who have seen many of the amazing sights that China, Vietnam, Japan and California have to offer.) Though we were disappointed to find our view of the Taj Mahal completely obscured by pea-soup fog, this in no way diminished our experiences in seeing the Qutb Minar, Humayun's Tomb, the Red Fort, Agra Fort and the Amber Fort near Jaipur, among others.

The Taj Mahal (It's back there somewhere.)

We also experienced fantastic service aboard a kettuvallam boat on the backwaters of Kerala while dining on outstanding Kerala cuisine and learning about the lives of the people who farm and fish in the area. And probably our best experience was at a farm homestay near Kochi where we enjoyed the warm hospitality of a world-wise Syrian Christian family and engaging conversation around the family dinner table.

The crew on our kettuvallam cruise, Lake Vembanad, Kerala

All of this should come as no surprise to anyone who has traveled to more than a handful of foreign countries. The world is a big place, and every country has both its pluses and minuses. While I still have yet to visit most of the world's countries, in every country I have visited, I have discovered uniquenesses that make my travels worthwhile. And though India did not live up to my (unreasonable) expectations, I have no regrets for having visited, and I will most certainly return. (While I was able to touch the Taj Mahal, I still have yet to see it!)

Evolving views on India vs China

This has been a difficult blog post for me to write, if for no other reason than that I really, really wanted India to be the credible rival that China needs to have in Asia. Also, since returning from India, my wife and I both have found that our views are evolving as we continue to ruminate over our experiences there and compare them to our experiences elsewhere.

And I must also emphasize that this does not arise from a desire to “keep China down” as China's media often likes to claim whenever foreigners disagree with China's government. As I stated before, I have an even greater appreciation for China's accomplishments to date. Yet at the same time, it is somewhat unnerving to the free world that a big, powerful country such as China may have figured out a way to build prosperity without personal freedoms (note the emphasis on “may”). It makes many people uncomfortable that this kind of government aspires to regional hegemony and world leadership.

I would argue that no one really has a desire to “keep China down,” but that many do have a desire to keep authoritarianism down. If China were to demonstrate its concern for human rights, few would have a problem with its asserting influence around the world. (Though one might argue the same for the United States.)

And this is precisely why my hopes for India were so high. I very much wanted to see for myself that a democratically-led government could provide for its citizens both freedom and economic prosperity, and act as a counterweight to the other big country in the region that only wants to provide the latter. But what I saw is that, similar to America, India's prosperity is limited to a small sliver at the very top of society. The middle class experience stagnation while the poor are just trying to keep their heads above water.

It would be easy to blame democracy for the disparity between China and India, but I believe that is too simplistic of an answer. (Naturally, this is the lesson that China's leaders will choose to take from their own comparisons with India.) There are many other differences between China and India that cannot be ruled out as factors affecting the countries' trajectories of development.

The most obvious difference is demographic. Whereas China is quite homogeneous, India is a patchwork of ethnicities, religions and languages. Without going into too much detail, I can only say that it is a surprise to me that India has remained a cohesive unit since 1947. The fact that it didn't break into dozens of rival states is a testament of the determination of independent India's first leader Jawaharlal Nehru. Love him or hate him, one cannot deny that he laid the foundation for modern India – both good and bad.

Since this blog post is already far longer than most people will bother to read, I will end it here and simply note that my thinking on this topic is far from complete. Scholars far more brilliant than I have tackled this topic of comparative modernization, and have yet to produce anything more than hypotheses (some more plausible than others).

The one thing I know, however, is that I will most certainly spend time in both India and China again in the future. I see great value in understanding both countries and how their political systems affect the lives of real people.

Happy 2012, everyone!

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EDIT (4 Jan 2012)
Dan Harris at ChinaLawBlog, one of my favorite China blogs, linked to my India-China post and had some interesting comments of his own -- some of them way too kind, but also some valid criticism. Since his site generates a lot more traffic than mine, his post generated a lot more comments than mine (although I believe this post sets the all-time record for comments at ChinaBizGov.)

Check out Dan's post and also the comments that follow. Some people are critical of the fact that we would even compare China and India, but I think the fact that so many people took issue with this post tells me that there really is no consensus answer on this topic. There are a lot of great ideas and food for thought in the comments (along with the usual anonymous sniping from the sidelines).

If you're really interested, here's another related post on this topic that I came across today. It's written by someone with a great deal more experience in both China and India than me, and he includes a lot of facts and figures to back up his assertions.

Saturday, December 24, 2011

Electric Pickup Truck to Debut at 2012 Detroit Auto Show


Via Motors will introduce a new electric-powered full-size pickup truck, 4x4 SUV and cargo van at the 2012 North American International Auto Show in Detroit on Jan. 10. Making the introuduction will be Bob Lutz, former vice president of GM and called by some as the father of the Chevy Volt.

The powertrain in the new Via eREV (which stands for extended-range electric vehicle) will work similarly to the Volt's system. Lithium-ion batteries power the wheels for a full electric range of around 40 miles. When the batteries are low, a small onboard gas engine will start up and provide extended-range capability for the batteries, up to 400 miles using the onboard generator, averaging up to 100 mpg.

Japan Supply Chains Still Hampered by Thai Flooding


A poll shows 81 percent of production bases still producing less now than before floods
Many Japanese companies are still feeling the pinch of heavy flooding in Thailand because of supply chain disruptions, according to an emergency survey conducted by the Ministry of Economy, Trade and Industry (METI).

Nidec to cut reliance on Thai factories

Japanese motor maker Nidec Corp will reduce its reliance on Thai factories for hard-disk-drive motors by diversifying production bases to China and the Philippines, the Nikkei business daily reported.

Friday, December 23, 2011

Honda ditches flooded cars


The recent widespread flooding hit Honda especially hard, as both its plants in Ayutthaya were inundated.

Speculation has been rife that the flood-damaged cars may be repaired and sold locally or abroad as brand new.

The fear has been that the Japan-based manufacturer would send these cars back to the line for replacement of damaged parts, after which they would be delivered to customers.

Wednesday, December 21, 2011

Pontiac story

Have a read

What Every Marketer Can Learn From Saab's Crash And Burn

This week marked the dead end for Saab motor car company. And they should cause a deathly chill to run down the spine of any marketer who believes they can get by, just by getting by. Undifferentiated in a market filled with hundreds of cars to choose from, Saab sought to find its place in the world.

Wednesday, December 14, 2011

Hold on to your lugnuts! It's time for a Trade War!


The Wall Street Journal is reporting today that China is preparing to levy duties on certain autos imported from the US. This would be on top of the 25 percent duties that China is still allowed to levy under its WTO commitments.
China's Ministry of Commerce said in a statement late Wednesday that it will levy antidumping and antisubsidy duties on imports from the U.S. of some vehicles with engine capacities above 2.5 liters beginning on Thursday and lasting through the next two years. ...

The ministry said several U.S. companies, including General Motors Co., Chrysler Group LLC and the U.S. arm of Honda Motor Co., engage in dumping and subsidizing. The statement said the move would also affect cars made by the U.S. arms of Mercedes-Benz and BMW AG, though it said their level of dumping was smaller.
Note that China's Commerce Ministry singled out not only the traditional US automakers GM and Chrysler, but also the US arms of Honda, Mercedes and BMW.

While China could have plausibly argued that GM and Chrysler benefit from government subsidies due to the bailouts these two companies received, they instead chose to make this about all cars with engines larger than 2.5 liters made in the US (but not in Japan or Germany!).

Does anyone think the US Congress will choose to view this as any less than an attack on the livelihoods of American workers -- and in an election year no less? Of course, Congress cannot portray themselves as innocents in all of this as Congress has already singled out China's solar panel industry for US-imposed tariffs. Then again, Congress can point to China's currency...

And on and on it goes. One thing I learned in grad school about wars (the kind in which people shoot at each other) is that it is nearly impossible to identify who started it. No matter which incident one side points to, the other side can go further back in history to identify another.

If we look at this incident only with regard to China's auto industry, it is also easy to see a kind of pattern here. Back in 2009, when China launched the stimulus heard round the world, they chose to subsidize consumer purchases of vehicles with engines smaller than 1.6 liters.

Why 1.6 liters? Because the foreign automakers that were dominating China's auto market had very little to offer in the small car segment. That subsidy was intended to boost sales of Chinese-branded cars.

Of course, the foreign automakers didn't stand still. Many of them already had small cars in the pipeline, so they got them to market faster -- just in time for China to cancel the subsidy toward the end of 2010.

Why are the import duties now focused on 2.5 liters? Because this is an area in which the foreign automakers pretty much own the market. This effort to make these imports more expensive may ideally (from China's point-of-view) accomplish two things: 1) make Chinese consumers more likely to consider a less expensive Chinese-branded car, and 2) make foreign automakers consider moving more assembly of their larger models to China.

In reality China's new tariff may not accomplish either purpose. For one, the Chinese consumers who are more interested in these larger cars (as the WSJ article points out) are less price sensitive anyway. They are already interested in these large foreign brands because they perceive them to have higher quality. In addition, because the volume of these larger cars in China is still comparatively small, it is highly doubtful that much, if any, of their production would be moved to China. (Perhaps that second one is a straw man argument.)

So what does China really stand to gain? Not much, really. In the end, China will get the trade war that it has been warning us about for years, and its home-grown automakers will still face a quality gap with their foreign partners/competitors.

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In case you're wondering where the picture at the top came from:



Saturday, December 10, 2011

GM restarts talks with Proton Holdings to form JV


General Motors has reportedly begun talks with Malaysia’s largest carmaker, Proton Holdings, to set up a joint venture in the Southeast Asian country.

Bloomberg quotes two confidential sources familiar with the matter who say that current discussions revive negotiations that were abandoned in 2007. The talks are preliminary and may not lead to an agreement, the sources added.

An agreement would give GM the chance to expand car manufacturing in Southeast Asia beyond Thailand, deeply affected by the worst floods in the last 70 years. For Proton, the deal would provide access to GM technology that could make its products more competitive. Proton had unsuccessful alliance talks in the past with Volkswagen and Peugeot.

Toyota Lowers Annual Profit Forecast 54% After Thai Floods

Toyota Motor Corp., poised to lose its crown as the world's largest carmaker this year, cut its profit forecast 54 percent after Thailand's worst floods in almost 70 years disrupted output of Camry and Prius vehicles.

Tuesday, December 6, 2011

Swiss Re Sees Claims Costs Of $600 Mln From Thailand Flood

Swiss Reinsurance Co. (SSREY.PK: News , SWCEF.PK) on Tuesday estimated its claims costs from Thailand's severe flooding at $600 million. The estimates, net of retrocession and before tax, remains subject to significant uncertainty, as it is difficult to assess losses accurately due to the still higher water levels following intense rainfall, the Swiss reinsurer added. The company currently estimates the total insured market loss to be in the range of $8 billion to $11 billion.

Monday, December 5, 2011

THE STAR: Proton to produce Mitsubishi sedans soon


SUBANG JAYA: Proton expects to seal a joint venture agreement with Mitsubishi Motors Corp to produce Mitsubishi sedan models at its Tanjung Malim plant by year-end.

Its group managing director, Datuk Seri Syed Zainal Abidin, said under the agreement, Mitsubishi would make 60,000 units a year which were equivalent to 90 per cent of the plant's production capacity.

"The plant currently operates at between 56 and 58 per cent capacity," he told a media briefing after the announcement of the company's second quarter 2011's results here Tuesday.

BANGKOK POST: 11,000 jobless as 39 auto-parts firms shut down

Thirty-nine auto-parts manufacturers in deluged industrial estates have announced they have closed down, leaving 10,957 workers jobless, Labour Minister Padermchai Sasomsap says.


Most of the laid-off workers were migrants who had skills in the auto-making and electronic parts industries, he said yesterday.

However, they would get compensation and other benefits, while the ministry has more than 100,000 jobs available for them, said Mr Padermchai.

Wednesday, November 30, 2011

THE NATION: Honda cleared for vehicle imports


The Cabinet on Tuesday approved an 8-month waive on import tariffs on machinery and completely-built units (CBU) as well as components, Industry Ministry Wannarat Charnnukul said.

The temporary measure will stand from October 25 this year until June 30, 2012 and cover only imports to substitute lost production in the Kingdom, Wannarat added. Details on this would be determined by the Industrial Economics Department.

Though several assemblers are affected, only Honda Automobile (Thailand) Co Ltd is eligible for zero tariffs for the imports of vehicles, as floods completely shut down its plant operations in Rojana Industrial Park in Ayutthaya. The plant, with 240,000 annualised capacity, has been suspended since early October.


Thursday, November 24, 2011

PATTAYA MAIL: AFG looks at tomorrow, and the next year


DOC IAIN reporting for PATTAYA MAIL:

The Automotive Focus Group (AFG) held a very successful and popular mini-seminar entitled, “What’s up (and down) in the world today (and implications for Thailand)” given by the always erudite Chris Bruton from Dataconsult.

Wednesday, November 23, 2011

Flood damage exceeds 1 Trillion Baht


The Federation of Thai Industries expects the economic damage to be as high as Bt1.124 trillion, against government units' estimates of between Bt200-Bt300 billion.

At Bt1.124 trillion, that accounts for 10.50 per cent of the country’s gross domestic product (GDP).

Tanit Sorat, vice chairman of FTI, said that as the automotive industry was hard hit, output could be cut by 300,000 units. Due to severe damage to the automotive and electronics industries, Thailand’s export figure in October grew only 0.3 per cent, the lowest in two years. The FTI is of the view that the fourth-quarter export would contract 10 per cent due to the floods.

As Floods Recede, Toyota's Recovery Slowly Continues

Well worth reading from the guys at MOTLEY FOOL….

Blame flooding. In Thailand.

In a great example of the regional interconnections that drive global commerce nowadays, widespread floods in Thailand have disrupted production of key parts for several major automakers, throwing factories around the world off their paces. Honda and Toyota have taken particularly hard hits, but other major automakers have suffered significant losses as well -- and not all of them are based in Asia.

Thai auto production in Q4 likely to slump 44-55%: Kasikorn


BANGKOK, Nov 23 – Thailand’s auto production in the fourth quarter of this year is projected to shrink by 44-55 per cent year-on-year due to the recent flood crisis, Kasikorn Research Center (KRC) said on Wednesday.

The think tank forecasts that the country’s total auto production in the last quarter of 2011 will dip to 200,000-250,000 units, a 44-55 per cent decline.

Due to the significant drop, this year’s overall production was projected to fall 7-10 per cent to 1,485,000-1,535,000 units, dropping from 1,645,304 units last year.

Thursday, November 10, 2011

Thai flood: Toyota, Mazda, MMC production restarting soon

Via Paul Tans Blog:


Auto production that was crippled by massive flooding in Thailand is beginning to get back on its feet. Some companies whose factories were spared by the water rush, but whose suppliers were affected, are restarting production soon, the Bangkok Post reports. They include Japanese giant Toyota, Mazda and Mitsubishi.
“We will try to start production as soon as possible, possibly on the 21st of this month, and then slowly increase our production capacity,” said Toyota president Akio Toyoda, who also plans to increase investment in the Land of Smiles. “Toyota expects to increase our investment here over time to develop the automotive industry,” he added.
Like General Motors’ Rayong plant, Toyota’s three Thai plants in Samut Prakan and Chachoengsao weren’t under water, but many suppliers and vendors were affected. Toyota, the biggest carmaker in Thailand, has delayed restarting operations three times already, but green light from suppliers this time around make Toyoda’s target date more achievable.
Over at Mitsubishi, they will restart production of Tritons and Pajero Sport SUVs on Monday at two factories that have full capacity of 1,000 units per day. MMC plans to recover production of 23,000 units lost from the combined impact of both the Japanese tsunami and Thai flood. Work was suspended at MMC’s two plants in Chon Buri on October 13.
Meanwhile, Mazda is ready to resume passenger car production with immediate delivery of Mazda2 and Mazda3 models. Both models are built at the AutoAlliance Thailand plant, a joint venture with Ford located in Rayong. The AAT facility wasn’t directly affected by the flood, allowing Mazda to source parts from China and Japan for the 2 and 3. However, production of the BT-50 pick-up truck will remain suspended since most parts are localised and Thailand is the main production hub for trucks.

Wednesday, November 9, 2011

Toyota to resume Thailand production Nov 21 after suspension due to flood


BANGKOK, Nov 10 - Japanese automaker Toyota Motor says it will resume production in Thailand Nov 21, one month after severe flooding forced it to suspend operations, Japan’s NHK reported Thursday.

Toyota’s three plants in Thailand’s Samut Prakan and Chachoengsao provinces, unaffected directly by the flooding, halted production Oct 10 due to supply chain disruptions after flooding hit industrial estates in Thailand’s central provinces.

139 Japanese listed firms sustain damage from Thai floods


TOKYO (Kyodo) -- A total of 215 plants in Thailand affiliated with 139 Japanese listed firms have been damaged by flooding there, a survey by a private research agency showed Wednesday.

Of the 139 companies, 81 were in the electronics business and 71 in the automotive business as many of them operate in more than one business sector, Tokyo Shoko Research said, indicating the engines of Japan's manufacturing industry have been heavily affected.

Honda’s dealers in Thailand may face bankruptcy


Thailand’s worst floods in half a century creates serious problems to the automotive industry.
A large number of Honda dealers across Thailand are becoming increasingly concerned for the future of their businesses, as most of them face disruptions.

Within Thailand, two Honda plants in the Rojana Industrial Park have been fully submerged since Oct. 6, Jessada Thongpak, an analyst with IHS Global Automotive, said in a report today. “It may take until late 2012 to rebuild both plants,” Thongpak said.

Saturday, November 5, 2011

China, without all the paranoia

I recently returned from a trip to Taiwan as part of an American Young Scholars' Delegation. Pretending that I could still qualify as “young,” I joined ten other American scholars as a guest of Taiwan's Ministry of Foreign Affairs (MOFA) for a week of meetings and sightseeing.

The purpose of this trip was for Taiwan to introduce itself to a handful of foreign scholars who previously had little contact with Taiwan, but who were interested to see the country up close. About half of our delegation were China scholars, with the rest having interest in aspects of Taiwan's culture, politics or society related to their own research.

As is my custom, on the first morning after the trans-Pacific flight, I hit the streets for a quick run and my first look at Taipei as the sun was rising. The area around our hotel in Taipei felt much like parts of Hong Kong or Shenzhen: green and well-swept.

Whenever I run in China, I am accustomed to being either stared at or ignored, but I was surprised when two different people greeted me during my first run in Taipei. One security guard enjoying a cigarette gave me a big wave and a deep-voiced “ni hao.” Another middle-aged Chinese man greeted me with broad smile, a nod and an enthusiastic “good morning!”.


In hindsight, I guess I shouldn't have been so surprised by the openness and friendliness of strangers on the streets in Taiwan. Our entire itinerary was intended to impart that impression. Everywhere we went, we were greeted with openness and a willingness to answer all but the most sensitive of questions. (I'll forgive the Deputy Minister of Defense for not fully answering Katherine's question about Taiwan's strategy for defending the Taiwan-held Jinmen [Kinmen] island against an attack by the mainland.)

And while no one chose to dwell on the negative aspects of Taiwan's politics, no one shied away from the facts that fistfights have occurred on the floor of the legislature in the past or that Taiwan's former president now serves a prison sentence for corruption. Indeed, on the day we visited the Legislative Yuan, there was a protest taking place on the street out front. No problem for us though: we just went around back. We learned that Taiwan has been continuously developing its own democratic system for the past two-plus decades, and that, despite the occasional chaos, despite the international isolation, and despite the ever-present threat of big, bad China next door, Taiwan's people have a say in how their lives are run.

Contrast this trip with, well, every trip I have ever taken to China. While the average Chinese citizen can be as open and friendly in private as the average citizen of Taiwan is on the street, there is a stark difference in the general atmosphere. (And I'm not just talking about China's awful pollution.)

Though it is hard to describe in concrete terms, there is a heaviness in China that one feels as soon as one steps off the plane – a sense that one must be careful about what he does, what he says and where he goes. (And any Chinese government official reading this is saying to himself, “well, of course! That's how it's supposed to work!”)

Despite months and months of trying desperately to get even the lowliest bureaucrat on the mainland to discuss China's auto industry with me during my field research a few years ago, out of over 100 interviews, I only managed to interview a single government official. (Though I did talk to several people who work in government-controlled “NGOs”.) And among those whom I did manage to interview, only a few were willing to delve very deeply into the political forces that have shaped China's industrial planning. Even some expatriates with whom I met were scared to talk openly with me. (One expat even demanded that I return his name card after the interview!)

Another surprise during our trip came in our visit to the American Institute in Taiwan (AIT), the de facto embassy of the United States in Taiwan. Having visited a few US consulates on the mainland, I thought I had an idea of what to expect, and indeed AIT had that familiar smell of an old church with a pot of coffee brewing somewhere. But our meeting with AIT officials (our Taiwan MOFA minder remained outside) revealed a surprising level of enthusiasm. In contrast with the bunker mentality I have encountered among bureaucrats at US consulates on the mainland, these folks made no attempt to conceal their enthusiasm, indeed, their advocacy, for Taiwan and all it stands for.

This is not to say that our entire trip was propaganda-free. After all, Taiwan, just like the mainland, also has an agenda. But unlike the mainland, that agenda doesn't include the continued rule of an unelected government, the stifling of free speech, the occupation of, or claim to, territories that do not wish to be a part of the larger whole.

What Taiwan wants is quite simple. They want the rest of the world to know how open and transparent their system is, how much freedom their people enjoy, and how much like the rest of the developed world Taiwan is. In short, the whole purpose of Taiwan's Ministry of Foreign Affairs is to run out the clock. To use a basketball analogy, the task of MOFA is to keep the ball in play, and to keep the other side from getting their hands on the ball. I think the best hope is that China will eventually change into something Taiwan wants to be a part of.

Taiwan has been effectively isolated in the world by China, but Taiwan's diplomats are doing the best they can to let the rest of the world know they exist and that they have a society worth preserving in its present state. And judging by some of the results, Taiwan's efforts are paying off. To cite but one example, the citizens of Taiwan now enjoy visa-free travel to 124 countries around the world compared to only 34 for citizens of the PRC. (I don't know how many countries US citizens can travel to visa-free, but I'm certain it's fewer than Taiwan's citizens enjoy.)

There are, of course, downsides to Taiwan's position. The question of whether Taiwan should declare de jure independence from China or adhere to the status quo dominates Taiwan's politics – to the extent that important domestic issues often fail to get the attention they deserve. National elections tend to be primarily about a candidate's position on cross-strait relations.

Also, there appears to be some confusion around identity in Taiwan, and this confusion revealed itself in some of the language used. What are the people who live on Taiwan supposed to call themselves? Are they Chinese? Are they Taiwanese? The former may be confused with citizens of the PRC. The latter may be confused with aboriginal people who lived on Taiwan for thousands of years before the mainlanders arrived with Chiang Kai-shek in 1949. One of our tour guides kept using the awkward-sounding term, “Taiwan people.”

When we visited the National Library, I noticed that their “Center for Chinese Studies” called itself “漢學研究中心”which could literally be translated, “center for the study of the Han people.” But again, this excludes the aboriginal people who have lived on Taiwan for millennia. And the Palace Museum (which is a must-see for anyone visiting Taiwan) contained mostly relics that had been transported from the mainland, and a history timeline of dynasties presented as if it were Taiwan's own.

I have no suggestions for how Taiwan should address these issues, and in fact, I'm not certain that these issues are really all that important compared to the existential issue Taiwan faces with the ever-present threat of an angry mainland. And the mainland, whose Communist Party has painted itself into a corner with its irredentist claims to Taiwan, really has no way out but to persist with those claims.

Nor do I have any suggestions for the US in its Taiwan policy, other than to stay the course, maintain ambiguity and occasionally ensure that the security balance doesn't tip too far in the direction of the mainland. Taiwan doesn't want to give up its freedoms; China doesn't want to give up Taiwan; and the US doesn't want to see any of its aircraft carriers sent to the bottom of the Taiwan Strait.

The Chinese may often wonder why this tiny island of 23 million people is so important to the United States. After all, Taiwan hasn't really been a democracy for all that long, and the US has much greater problems to deal with in trying to extract itself from Afghanistan and in restoring growth to its own economy.

But having now been to Taiwan and seen with my own eyes what it is all about, I have a better understanding. In the end, America cannot help but admire and support a budding democracy trying its best to resist a bullying, autocratic overlord. A little over 200 years ago, that was us.

Toyota, Honda May Not Recover Output Until 2012 With Thai Flood


“They’ve certainly been really unlucky this year.”

Plans by Toyota Motor Corp. and Honda Motor Co. to run factories overtime to recoup production lost to parts shortages caused by Japan’s earthquake may be delayed until early 2012 because of flooding in Thailand.

Toyota, Asia’s biggest carmaker, is scaling back output in Japan for a third week and suspended overtime in North America for a second week as disruptions from the floods spread. Honda is temporarily eliminating overtime and running North American plants at half capacity until next week as Japan’s third-largest automaker assesses its inventory.

Wednesday, November 2, 2011

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Monday, October 31, 2011

BORNEO POST: Mukhriz offers two options to auto companies affected by Thai floods

Even Borneo feels the effects of the Thai flooding…

Mukhriz offers two options to auto companies affected by Thai floods

He said they could either use the existing capacity in Malaysia to support their factories in Thailand in order to complete their parts and components for overseas exports, or look at Malaysia as a base to manufacture more of these components.

“We understand that these companies must ensure that their operations are not affected by the floods but at the same time, we must be careful as we don’t want to be seen as taking advantage of our neighbour’s situation,” he said yesterday.
Mukhriz said the ministry had received enquiries from companies from all sectors including automotive that were affected by the Thai floods.

Thailand floods forcing Honda production cuts in Lincoln Read more: Anniston Star - Thailand floods forcing Honda production cuts in Lincoln


Honda’s plant in Lincoln will reduce production — but not employment — starting Wednesday due to parts shortages caused by recent flooding in Thailand.

Upper management at Honda Manufacturing of Alabama in Lincoln announced to employees today that production would be reduced by as much as 50 percent from Wednesday through Nov. 10, said Honda spokesman Mark Morrison in a phone interview. Also, production will cease completely on Nov. 11, he said.

Read more: Anniston Star - Thailand floods forcing Honda production cuts in Lincoln

THE NATION: Flood impacts remain ruinous

Honda Automobile (Thailand), while announcing that its motorcycle and power-part-manufacturing subsidiary would suspend operations only until Nov 4 Friday, said: "The company does not have a clear outlook for when vehicle production will resume, as its facilities remain flooded since October 8." The autoassembly plant in Rojana Industrial Park, Ayutthaya, was inundated on that date, but its parts suppliers were flooded four days before.
(…)
More than 400 Japanese auto manufacturers and electronics firms in six industrial parks north of Bangkok have been affected by the flood disaster.

Aon Report on Thai Floods Highlights ‘Extreme Human Suffering,’ Economic Loss’

Check this one out - a different kind of article on the Thai flooding.


Aon Benfield has published a highly detailed report on the ongoing floods in Thailand, from their meteorological beginnings – extremely heavy monsoon rains – to the widespread damage they have inflicted on one of East Asia’s most vibrant economies – $6.5 billion, and counting.

The report notes that “Thailand has declared a third of its provinces to be disaster zones as the country battles rising flood waters. The flooding situation is likely to continue for a few more weeks and has been bearing down on Bangkok over the past few days. The Thai capital sits on the bottom of a flood plain which has an average elevation of less than 2m (a little over 6 feet) above sea level.”

Read more here.

Vaidya Says Toyota, Honda Most Affected by Thai Floods

Vivek Vaidya, automotive and transportation director at researcher Frost & Sullivan, talks about the outlook for Japanese automakers. Honda Motor Co. fell the most in more than a week after the Nikkei newspaper reported the company may take six months to resume production in Thailand after its factory became flooded. Vaidya speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia."


Friday, October 28, 2011

Toyota readies plants for worst-case floods

CHACHOENGSAO : Although Toyota Motor Thailand says the worst-case scenario is unlikely, the country's largest automobile manufacturer is still preparing flood prevention plans for its three plants, two of which face flooding risks.

BANGKOK POST: Toyota: Water control first order


"A car has 20,000 to 30,000 parts, and production will not be complete if even one part is missing," he said.

The government should focus on the flood situation before talking about rehabilitation plans for businesses, says Toyota Motor Thailand (TMT).

"We want the government to solve the flooding first so we can assess the damage. This is affecting not only Thailand, but also [company operations in] Japan and the rest of the world too. Rehabilitation plans can come later," said President Kyoichi Tanada after a crisis meeting with industry permanent secretary Witoon Simachokdee.

The Industrial Estate Association earlier proposed that the government rehabilitate flood-hit industrial estates within 45 days, although Mr Tanada said that time line would differ for individual factories.

INAUTONEWS: Thailand Floods: The Automotive Industry Has Lost $13bn So Far


After the Japanese automakers, Ford announced that has suspended output in Thailand on parts-supply shortages, despite fears it may lose production of 30,000 vehicles.
“We are working closely with our affected suppliers to return to production as quickly as possible,” Lewis Booth, chief financial officer at the Dearborn, Michigan-based carmaker, said.
Toyota Motor Corp on Thursday said it would keep its Thai production suspended for a fourth week and reduce output in North America and South Africa.
Further, production from October 31 through November 5 will be adjusted based on an ongoing assessment of the parts supply situation at each individual production line the company said.
In addition, Toyota must now cut extra hours and weekend shifts at some plants from Indiana, West Virginia, Kentucky and Canada. These measures are meant to conserve parts as the company faced serious disruptions due to a shortage of parts imported from suppliers in Thailand.

Thailand floods stall automakers

CHECK OUT THE VIDEO INTERVIEW WITH MR TOYOTA ON THIS PAGE: RUNNING TOYOTA IN DIFFERENT TIMES

NEW YORK (CNNMoney) -- Still recovering from the Japanese earthquake, tsunami, and nuclear meltdown disaster, Asian automakers are now getting hit by another ecological nightmare: floods.


Toyota, whose production capacity in Thailand is over 550,000 vehicles per year, said in a statement Thursday that a production halt at three plants in Thailand, in place since October 10, will remain at least until November 5.

As a result of this supply disruption, Toyota will suspend production at several North American plants on Saturday and will suspend overtime at all North American assembly plants next week. Production at facilities in South Africa, Indonesia, the Philippines and Vietnam will also be slowed.

Honda said this week that floodwaters had entered one of its plants outside Bangkok that has an annual production capacity of 120,000 and has been closed since October 4.

"Due to the inability to access its facility, [Honda-Thailand] does not currently have a clear outlook for when production will resume," the company said.


REUTERS: Thai floods batter global electronics, auto supply chains


Floods affect auto production from Thailand to N.America


* Deep supply chain links cut costs, but breaks prove expensive

BANGKOK/TOKYO, Oct 28 (Reuters) - Manufacturers of car parts are worst hit in Thailand and face a bleak key holiday selling season due to massive floods, which have shut down production.

Japanese car makers that had just started to recover from the March earthquake and tsunami that disrupted their supply chains are now facing shortages of key parts made in Thailand, a key manufacturing base in Southeast Asia.

Companies including Toyota Motor Co and Honda Motor Co have already curtailed production at plants as far away as North America because their Thai suppliers are under water.


CARS AND SANDBAGS

Toyota Motor officials in Thailand said the company had shifted ready-made parts used to produce pick-up trucks and modified pick-up trucks to its Gateway City facility in Thailand's Chachoengsao province.

The facility there is 44 meters above sea level, said Vudhigorn Suriyachantananont, senior vice president of Toyota Motor Thailand.

Wall of sandbags are protecting the plant and "tools and machinery are sealed and stored in high places," he said.

Daihatsu Motor Co said on Friday it would reduce work to produce Toyota-badged cars at two Japanese factories next week due to a shortage of parts from Thailand.

Daihatsu, the minivehicle unit of Toyota, said it expects no impact from the Thai floods on its own minicar production in Japan and in Indonesia and Malaysia at least for November.

The Japanese government announced on Friday it would allow Japanese companies operating in Thailand to bring some Thai workers to Japan to make up for lost production.

Japan's trade ministry said the Thai workers would only be allowed in for six months and would not be allowed to bring their families.

Wednesday, October 26, 2011

DETROIT FREE PRESS: Thai flooding disrupts Japanese auto production


Toyota and other major automakers have begun scaling back production because of parts shortages from suppliers in flood-afflicted Thailand, just months after Japan’s own supply chains were decimated by a mammoth earthquake and tsunami.

The production woes stemming from Thailand’s worst flooding in five decades — which has wiped out hundreds of factories in recent weeks — come just as Toyota and others bounce back from the March 11 quake disaster that destroyed autos parts suppliers in Japan’s northeastern Tohoku region and upended car production around the world.

REED TRADEX: Metalex postponed to 21–24 December 2011

Letter from REED TRADEX in it's entirety:


Dear Exhibitors, delegates, participants and supporters of METALEX,
Reed Tradex has been monitoring the on-going flood situation in Thailand and updating ourselves daily regarding the vulnerability of Bangkok being affected in the coming weeks. We have consulted with many individuals and groups in order to assess what should be done in the best interest of all our local and foreign exhibitors, delegates, visitors and supporters.
Although efforts at draining floodwater and rectification measures by authorities have been in place to minimize the impact, the situation remains difficult to predict.  While the central business district as well as the exhibition venue remain unaffected for now, it is generally accepted that the water overflow could eventually disrupt movement around Bangkok and the outlying areas.  This would inevitably mean that the scheduled timing of the event in 16-19 November 2011 is no longer appropriate as we place any risk of inconvenience and safety of all our participants as the foremost priority. 
In order that all our exhibitors, visitors and service providers can have peace of mind and prepare with more certainty for the upcoming METALEX 2011, Reed Tradex would like to announce the postponement of METALEX 2011 to a new period which is Wednesday 21 to Saturday 24 December 2011. The exhibition venue remains at BITEC, Bangkok. We feel this decision will allow us and our contractors to continue to deliver a high quality event with standards that all of you have become accustomed to at every METALEX.
We do realize that these dates are very close to Christmas and especially for our Western exhibitors, we understand these may not be the best of dates and for that we do sincerely apologize. Unfortunately, given the scale of METALEX, the venue is not able to provide other alternatives when all 6 halls are available.
What we will do is to try and ensure, if you are intending to leave earlier to be home in time for Christmas, that we try to get you to see as many of your key customers as possible in the first 2 days of the show. Additionally, we will be happy to provide support in stand manning for those without local staff, distributors or partners to manage their stands.
 We hope to get your understanding as we promise to work very hard to make the best of such exceptional circumstances. Our offices, both in Thailand and our international sales offices and agents will be ready to offer any assistance you may require.
The Thai resilience is well known and we are confident that investors and manufacturers would recover soon from this disruptive period.  METALEX (21 to 24 Dec 2011) will also continue to function as a major platform for the industry community to interact face-to-face. And we are committed through this leading event to work even harder to be part of the solution to bring the manufacturing industry back to normal production soonest possible.
For more information, please contact our sales representative in charge of your account or email metalex@reedtradex.co.th
Chainarong Limpkittisin
Managing Director
Reed Tradex Co., Ltd.

Tuesday, October 25, 2011

NZ HERALD: Thai floods swamp flow of utes


Toyota New Zealand just took orders for 300 top-selling Hilux utes - but now is struggling to supply the one-tonne vehicles as factories which supply parts to its plants in Thailand are flooded.

A ship that was to have left Thailand last week was supposed to have 220 Hilux utes on it, but only had 26 of the top-selling farm vehicles on board.

Car output loss put at 150,000 units in Oct-Nov


Auto production this month and next is expected to fall by about 150,000 units if major carmakers cannot resume operations soon, said Federation of Thai Industries (FTI) chairman Payungsak Chartsuthipol.

Though many car-assembly plants are not flooded, their parts suppliers are, so they have had to suspend production. However, they are seeking ways to source the parts from overseas suppliers so as to resume operations, said Suparat Sirisuwannangura, president of the FTI's Automotive Industry Club.

Thai Floods: Automotive industry down for at least one more week


Honda, probably the most affected automaker, on Tuesday said it has halted all its operations in Malaysia due to parts shortage caused by the floods in Thailand.
Supplies from Honda Automobile (Thailand) Co. Ltd and other major suppliers which supply to Honda Malaysia have been interrupted because of the floods.
The automaker has brought in 200 soldiers to secure its motorcycle plant in Bangkok, Thailand’s. Honda’s automotive factory in the Ayutthaya province has already overflowed, so the soldiers were brought in using personal ties to build a levy around a motorcycle facility.
Toyota stopped production at the three plants from October 10 as some suppliers were severely damaged by the nation’s worst flooding in decades, causing delays in supplying parts.

Monday, October 24, 2011

Fabrinet Reports Impact Due to Severe Flooding in Thailand

AFG Member Fabrinet affected by flooding:


Fabrinet (NYSE: FN), a provider of precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, today announced an update on the impacts of flooding in Thailand.

Fabrinet today announced that as of approximately 11:00PM Saturday night, Bangkok time, flood waters had infiltrated the offices and manufacturing floorspace at its Chokchai campus in Pathum Thani, Thailand. The manufacturing buildings at Chokchai, known as buildings 1 and 2, remain filled with water to a level of approximately 3.5 feet. Prior to the factory infiltration, the company took precautionary measures, where possible, to move or protect production and test equipment, inventory and tooling. The company has not yet been able to make a full assessment of the damage but believes it is unlikely that production would recommence at Chokchai for the remainder of the current quarter.

THE STAR: Severe Thai flooding forces Toyota, Honda, Isuzu and Ford to stop ops


PETALING JAYA: Just months after production of Japanese cars recovered following the massive earthquake and tsunami, Japanese marques in Thailand have been hit by a flood crisis that threatens to stall production once again.

Vehicle plants operated by Toyota, Honda, Isuzu and Ford in Thailand have been closed due to the crisis.

Many car and electronics manufacturers located in Ayutthaya province were affected by severe flooding.

Also, Malaysian companies such as Eng Teknologi Holdings Bhd said two of its subsidiaries operating in Ayutthaya had temporarily shut down their operations because of the floods. It believed the extent of the damage would be covered by insurance.

VW Likely to Overtake Toyota as Top Carmaker in 2011, GM to Remain Second

Volkswagen AG (VOW) will probably become the world’s biggest carmaker this year, vaulting past Toyota Motor Corp. (7203) and General Motors Co. (GM) on gains in emerging markets.

VW sales in China may rise almost 20 percent in 2011 and more than double in India, according to estimates at researcher J.D. Power & Associates. That’s a contrast to Toyota, which is suspending Southeast Asian plants because of floods in Thailand, months after an earthquake crippled production in Japan.

Industrial estates to be rehabilitated within 45 days after water recedes: Commerce Minister


Thailand’s seven industrial estates that were flooded will be rehabilitated within 45 days after floodwaters recede with government financial aid, Deputy Prime Minister/Commerce Minister Kittirat Na Ranong said Monday.

After meeting with engaged agencies and industrial entrepreneurs of the flooded industrial tracts—which comprise a significant portion of Thailand’s industrial capacity—the Factory Land, Saha Rattana Nakhon, Bang Pa-in, Rojana and Hi-Tech in the nearby central province of Ayutthaya, as well as the Bangkadi and Nava Nakorn estates in Pathum Thani.

Wednesday, October 19, 2011

Impact Of Thailand Floods On Automotive Industry And Supply Chain - Frost & Sullivan Analyst Comment


Click here for the whole article.

Analyst Comment by Vivek Vaidya, Vice President, APAC, Automotive & Transportation, and Vijay Rao, Research Manager, APAC, Automotive & Transportation

Thailand has been inundated with severe floods in its recent history, and the automotive sector which has an annual production capacity of about 2 million units in 2010, is one of the hardest hit industries. The recent inundation of floods in Thailand has not only had a major effect on local automotive production and supply chain disturbances but is also likely to have a short  term effect on the regional and global supply of automotive parts and vehicle exports.

Impact of the Flooding in Thailand - Current Situation: Halt of Automotive Production in Thailand Assembly Plants

Thailand is currently experiencing the worst flooding in the last five decades. 26 of the 90 provinces in Thailand have been affected by floods and automotive assembly plants and parts maker factories located mainly in and around Ayutthaya and Pathumthani provinces are suffering from it.
Japanese OEMs such as Toyota, Honda, Mitsubishi, Isuzu, Nissan and American OEMs such as GM and Auto Alliance (Ford and Mazda) have assembly locations in Thailand with a combined annual production capacity of approximately 1.7 million - 1.8 million units.

Monday, October 17, 2011

REUTERS: Thai floods cripple over 300 Japanese firms -JETRO


At least 300 Japanese companies have been affected by flooding in Thailand and it could be months before all are fully up and running again, the local head of the Japan External Trade Organisation (JETRO) said on Monday.

Floods have forced a series of huge industrial estates to close, the latest being the Nava Nakorn Industrial Zone in Pathum Thani province north of Bangkok, which has more than 270 plants employing 270,000 workers.

That is seriously hampering the work of Japanese firms that have made Thailand their manufacturing and export base for Southeast Asia, Setsuo Iuchi, the president of JETRO Thailand, told Reuters.

Thursday, October 13, 2011

Flood Map with English Navigation

Add caption

A legitimate beef with China

A leader in this week's Economist, concerning the US Senate's passage of a bill intended to punish China for currency manipulation, warns that, however right the Senate may be about currency manipulation, passage of the bill would risk an unnecessary trade war.

The Economist goes on to say that America does have "legitimate beefs with China, but this bill is the wrong way to address them. It is legally flawed, economically dangerous and unnecessary." If passed, China would surely have a legitimate claim against the US through the WTO, and would almost certainly retaliate with its own trade-limiting measures.

While I understand the value of this measure as a political tactic for Senators who are part of the most hated US Congress in history, the fact is that there are better ways for America to get what it wants (not that Congress even cares).

While the WTO mechanisms designed to facilitate open trade are slow to work, China recognizes them as legitimate and has generally adhered to their judgments in the past. Although, as The Economist admits, currency manipulation is not addressed in WTO rules, America indeed has "legitimate beefs" with China that could be addressed under the WTO. Yet, for some reason, the US Congress chooses to focus on currency, and the Obama administration apparently chooses to look the other way when it comes to some of China's real WTO violations.

While I haven't cataloged all of China's violations, I know that there are several going on in the auto industry that no one seems to think are worth calling China on. For example, a couple of key measures in China's WTO accession agreement forbid China from conditioning investment in China on technology transfer and local content requirement. (This agreement dates back to 2001, by the way, so it's nothing new.)

As for the tech transfer part of the rules, China's ability to apply pressure to foreign automakers to transfer technology in exchange for permission to expand in the country has been well-documented. (A couple of example articles are here and here.)

The latest attempt by the Chinese to adhere to the letter of the law while blatantly violating its spirit includes holding off on investment approval until the foreign company "voluntarily" offers to contribute technology toward establishing a Chinese brand with its (state-owned) Chinese partner. Peugeot's CEO was quoted by the Financial Times as saying that, cooperating on building a Chinese brand is now "part of the deal."

And the automakers involved in this attempted extortion have no incentive to complain about it for fear of losing their access, all the while knowing that their competitors are all doing the same thing.

Okay, you may say, perhaps China's violations in this case would be too difficult to prove under the WTO's mechanisms. After all, the foreign automakers all appear to be "voluntarily" contributing technology in these cases, and anyway, none of them is complaining. Perhaps.

Then how about a more obvious violation of the rules? In this case, it involves the imposition of illegal local content requirements.

This actually surfaced a few weeks ago, and I commented about it on twitter, but only my friend @alexwoods5 seemed to think it was an issue worth being concerned about. The issue in question arose from a recent Wikileaks cable in which an employee of Ford in China revealed to US diplomatic personnel that Ford's operation in China is subject to a 40 percent local content requirement. This is the relevant section:
¶9. (SBU) All of Ford's parts suppliers must meet the Chinese Government's rules of minimum 40 percent local content by value, Chuang explained.
Does that not sound like a local content requirement? Could this have been a condition for Ford's recent investment in new factories in China?

I even emailed an acquaintance of mine at Ford, twice, seeking some sort of explanation or confirmation. The fact that he has yet even to respond with a "no comment" tells me that this may be worth investigating.

But is the Obama administration investigating it? If not, why not?

I know that the administration, or at least certain individuals in it, understand that the currency bill passed by the Senate would do great harm to both global trade and to America's relationship with China. But if they want to avoid such unpleasantness, why not at least make an effort to make China follow the agreements it has signed?


Technology demand on the rise

As leading auto maker Isuzu and newcomer Chery announced the operations of their new assembly plants in Thailand to serve higher export demands and local consumption, auto and parts makers will certainly be in search for new technologies and innovations to handle upcoming production challenges and promote productivity.

Check out the advance info for AUTOMOTIVE MANUFACTURING 2012



Wednesday, October 12, 2011

BANGKOK POST: Ayutthaya HI-TECH Industrial estate on the cusp of inundation


Floodwater is close to the point of overflowing the earthen barrier protecting the Hi-Tech Industrial Estate in Bang Pa-in district of Ayutthaya.

Wall Street Journal: Floods Force Auto Makers in Thailand to Halt Production


Thailand's auto exporters are being hit by supply-chain disruptions following the worst flooding the country has seen in nearly half a century.

The Southeast Asian nation is a major production and export hub for global auto makers, including Toyota Motor Co., Ford Motor Co. and Honda Motor Co., and all three have now shut their plants in the country after weeks of worsening flooding overwhelmed a cluster of component plants in Ayutthaya, 67 kilometers, or 42 miles, north of Bangkok. Isuzu Motors Ltd. also halted production on Tuesday at its two Thai plants due to disruptions in parts supplies.

HONDA Factory inundated in Ayutthaya

Some helicopter footage from the HONDA Plant in Ayutthaya.

Tuesday, October 11, 2011

Bangkok Post: Ford among giants hurt by flood disruptions


US-based Ford Motor has become the latest casualty of severe flooding in Thailand, with its assembly plant in Rayong halting production for at least 48 hours because suppliers in Ayutthaya have been severely hit by floods.

The second-largest US automaker said yesterday that production was suspended at the AutoAlliance Thailand facility for the next 48 hours to make a full assessment of inventory and logistics continuity.

The company's production facilities in Rayong have not been affected by the floods.

"Vehicles produced at AAT have a very high local content," said Peter Fleet, the president of Ford Asean. "A significant number of our parts suppliers are located in Ayutthaya. That's why we have to stop production for 48 hours to check out the suppliers, although our factory has not been affected by the floods."

Thailand Flood Maps

Check out the 'official' flood maps:

http://flood.longdo.com/  and
http://flood.gistda.or.th/

Doesn't look good for Samut Prakan and Chonburi.


Cars submerged in floodwaters at a Honda factory outside Ayutthaya on October 11.


Amazing photo on MSNBC Photoblog

Isuzu: To Halt Production In Thailand Until Friday Due To Parts Shortages

Isuzu Motors Ltd said Tuesday that it will halt production at its two plants in Thailand due to a disruption in supplies of some parts after the flood in the country.
The Japanese truck maker will start halting operations at the two plants from the night shift on Tuesday and keep them idled until Friday, a spokesman at the company said.
Thailand is facing its worst flood in decades, with around 30 of its 77 provinces inundated and over 260 people killed so far.

Monday, October 10, 2011

Yingluck says city ill prepared for floods


Prime Minister Yingluck Shinawatra has admitted that Bangkok's flood prevention system has not been completed and her government is racing against time and the rising waters.

Racing sands of time Foreign and Thai students of Rangsit University shovel sand into bags to make a flood wall along Khlong Rangsit. The canal, which is fed by the Chao Phraya River, is threatening to inundate the university and Muang Ake housing estate in Pathum Thani’s Muang district. THITI WANNAMONTHA

In response to the situation, the Bangkok Metropolitan Administration (BMA) has set up nearly 200 shelters to cater for possible evacuations.


100,000 Ayutthaya factory jobs threatened


About 100,000 workers face losing their jobs because of the disastrous flooding in Ayutthaya province.

Damage to the industrial sector alone in Ayutthaya is valued at roughly 50 billion baht, said Phakorn Wangsirabat, who heads the Federation of Thai Industries in the province, yesterday.

More than 300 of 2,150 factories in Ayutthaya have been affected by floods. So far, Saharattananakorn Industrial Estate and Rojana Industrial Park have been inundated, while Hi-Tech Industrial Estate is at risk with the water level there now at 4 metres, said Mr Pakorn.

Floods cripple economy


Economic ripples from the nationwide flooding are reverberating, with rumours that some Japanese companies will relocate production facilities out of the country as some industrial estates are submerged and many more are threatened.

Distressed companies are pressing for government relief, which could come in the form of a delay to the Bt300 minimum wage as well as other financial assistance.


Sunday, October 9, 2011

Industrial estates sent reeling

Almost 200 factories including the plants of leading Japanese car manufacturer Honda and major electronics makers in Ayutthaya have been forced to close and evacuate workers.