telecommunication products

Aone hundred year survey on inflation published by The Economist two years ago contained one stunning fact. The only item of cost to have gone down in a hundred year time span was the cost of a transatlantic telephone call. The telecom sector, nonetheless, attracts the highest level of investment globally, despite the fact that telecommunication products pricing has fallen, thanks to technological innovation. The simple explanation for this apparent inconsistency is that the lowering of prices has spread telephony use by benefiting the customer and thus growing the industry. In this the telecom equipment regulator must work together with the consumer, for they are co-drivers of the industry, with the regulator controlling the wheel and the consumer the accelerator/brake pedals. Thus far the regulator has managed, hopefully, to remove vexatious issues by introducing a unified licensing regime. His next move, following similar progress in the US, would be to have number portability. This means that the consumer is able to retain his number even whilst switching carriers. At present he is loath to switch carriers, and suffers all the poor quality of service which all carriers invariably inflict, for fear of losing his number and having to inform all his contacts. The US Supreme Court has directed adoption of number portability and India should also follow. It is then that there would be true competition and it will be the consumer who will drive efficiency and grow the industry. Already, the falling rates for SMS, roaming and long distance charges are an indication that competition is working and driving the industry; the jigsaw would be complete with number portability. There are several technologies that are emerging, and which will once again throw challenges, for the technologies would cut across regulatory boundaries. The Techonology Quarterly review in The Economist (December 6) mentions ‘software designed radios’ which are radios that are reconfigurable using software. “A mobile phone based on smart radio technology might, for example, be able to switch between cellular standards used in different parts of the world,” says the report. One company has already demonstrated a chip, called the Sandblaster, capable of switching, through software, between CDMA and GSM, (and, in future, Wi-fi) and telephone instruments based on smart radio technology, would make this possible. The ensuing competition would be immensely beneficial to consumers, but would need number portability to make it effective. In macro economy news, the outlook remains positive. Forex reserves have hit $97.5 billion and would hit a century faster than most of the Indian batsmen. The CEO of Crisil expects several rating upgrades, and a doubling of debt issuances, to Rs 500 billion in the fiscal year to March 05. Interest rates, however, appear to have bottomed out, according to several CEOs. Foreign investment continues to pour in and drive the stock market, with the BSE Sensex gaining 184 points to end the week at 5,315. In corporate news of interest, Ranbaxy has announced a deal to acquire RPG Aventis, telecom products manufacturers. The company has a pipeline of 52 molecules which include 18 of the top 20 best selling molecules. The market continues to be in an up run and buying on dips, even small ones (buying fundamentally good shares in honestly managed companies at around 8 - 10 per cent below peak price is as good a strategy as any). The government has promised to drive economic reforms forward after recent electoral victories and if they live up to that promise (though that does not constitute a strong point for a politician) the market can only boom.

textiles manufacturers

China said it “strongly objected” to the new measures taken by the European Union against imports of Chinese textiles, calling the move a potential blow to the global clothing trade. “This departs from the spirit of free trade proposed by Europe and seriously violates the basic principles of the World Trade Organization,” commerce ministry spokesman Chong Quan said in a statement on the ministry’s website. The Chinese response came a day after the European Union unveiled “alert levels” for growth rates in Chinese clothing imports which will trigger investigations and informal consultations with China. “This will have a negative impact not just on Sino-European textile trade, but on global textile trade as a whole,” Chong said in the statement. Chong said China and the EU each have “complementary strengths” in the textiles manufacturers field, and that “common interests do exist” in the industry. “Any action that prevents the integration of the textile industry will cause damage to the common interests of China and the EU,” he said. “The two sides should seek to solve the problems they face through strengthened dialogue and cooperation,” he said. The EU action, and other parallel actions by the US, reflect a world coming to terms with the end on January 1 of a 31-year-old international textile import quota system. The expiry of the system has left producers in developed and developing countries bracing for a wave of imports from China, whose leather products manufacturers benefit from cheap labour and huge economies of scale. China has reacted angrily to the groundswell for protectionist measures in the West against its textile exports, insisting that it should not be penalised for having more competitive industries. “As a responsible member of the WTO, China has taken a series of active measures to ensure the smooth transition to an integrated textiles and leather products market,” said Chong. “We hope the EU fully understands the efforts made by the Chinese in this respect and cautiously handles the issue. The overall trade relationship between China and the EU shouldn’t be impacted by unilateral moves,” he said. According to the measures unveiled by the EU on Wednesday, the “alert levels” range from 10-100% growth over the 2004 trade volume, depending on the type of product. The system of “alert levels” means the EU, which is trying to build up strong commercial relations with China, is not going as far and as fast down the road to safeguards as a US investigation into Chinese textiles. The US garment industry on Wednesday demanded government action to curb 14 types of apparel exported from China as tensions over surging Chinese textile shipments escalated. The National Textile Association (NTA) said urgent measures were needed in addition to US government’s announcement this week that it has launched an investigation as a first step to slapping restrictions on the Chinese exports. The NTA filed petitions with government demanding restoration of textile quotas scrapped globally on January 1, claiming that textile and apparel imports from China had leapt by 63% since then. AFP

toys manufacturers

There’s trouble brewing in Toyland. The sixmonth ban on import of Chinese toys may be a welcome move for the Indian toy industry. It may also ensure ‘safer’ toys for our children, provided our own toys are put under the scanner too. But it would also mean depriving children — and harassed parents — of a big range of attractive and affordable toys. The weekly visits to the toy shops will get quite expensive and may eventually stop. Retailers say the ban will have little impact on market supply for now as the stocks of Chinese toys lying in warehouses of importers and wholesalers would easily last for the next five to six months. But if the ban is extended, Indian children may have to look to the west as our own toys are not as attractive. ‘‘The Indian toy industry is still not properly evolved. The price factor apart, Chinese toys are much more attractive and have a wider range compared to what is manufactured in the country. A blanket ban on all imports from China would only deprive children as toys suppliers made in Europe and US will prove too expensive,’’ said Satish Sundra, owner of Ram Chander and Sons, one of theoldest toy stores in the capital. Toy sellers claim that more than 70 per cent of the stocks of toy shops in the city comprises of Chinese toys. There are some Indian companies which give them competition in terms of quality and range but the Chinese toys are more cost-effective overall. ‘‘They sell more because they are cheaper and at the same time offer better quality and more variety than toys manufacturers India. Children like to get a new toy every week, and since the ‘Made in China’ variety is about 75% cheaper than the Indian counterparts, parents have taken well to them. Also, Indian manufacturers still can’t match the quality of these toys,’’ said Saurabh Kharbanda of Maya Sports, who have been in the trade for over 40 years. Though the real reason for the ban is still being debated, sources said this could be a move by the government to protect the Indian toy industry. Since the Chinese invasion, small Indian toy manufacturers have suffered as they hardly find any takers. The indigenous toy industry has come a long way since and a marked improvement is seen in Indian toys owing to competition. But retailers feel we still have a long way to go. toys manufacturers have welcomed the move. ‘‘It’s a step in the right direction. Chinese goods are substandard and have been a threat to the unorganised toy sector. The reason for this is that toy manufacturing was a small-scale sector in India till recently. The Chinese goods came in just when big investment started because of which the sector was never allowed to develop. It will get a breather now,’’ said Rajan Handa, owner of OK Play Toys. Industry sources feel that doubts of the west about the toxicity of Chinese toys are not baseless. According to reports, nearly 80 per cent of our toys are imported from China and a large chunk is non-branded. Their quality is highly suspect. But parents in India are still not as conscious about child safety as is the case in the US and Europe, due to which there is still a huge demand for Chinese products. So, are Indian toys safe? Said Rajesh Arora, general secretary of Toys Association of India: ‘‘India is now exporting toys to US and Europe, and our exports have shown a growth rate of about 20% per annum. This can’t happen without quality production. But toy making also happens in the unorganised sector, with little checks. We are trying to create awareness about that to make our toys safer.’’ A better solution, feels Sundra, would be to impose strict quality control at the customs to ensure only ‘‘safe’’ toys come in. ‘‘A blanket ban on Chinese toys is no solution,’’ he feels.

leather products manufacturers

China said it “strongly objected” to the new measures taken by the European Union against imports of Chinese textiles, calling the move a potential blow to the global clothing trade. “This departs from the spirit of free trade proposed by Europe and seriously violates the basic principles of the World Trade Organization,” commerce ministry spokesman Chong Quan said in a statement on the ministry’s website. The Chinese response came a day after the European Union unveiled “alert levels” for growth rates in Chinese clothing imports which will trigger investigations and informal consultations with China. “This will have a negative impact not just on Sino-European textile trade, but on global textile trade as a whole,” Chong said in the statement. Chong said China and the EU each have “complementary strengths” in the textiles manufacturers field, and that “common interests do exist” in the industry. “Any action that prevents the integration of the textile industry will cause damage to the common interests of China and the EU,” he said. “The two sides should seek to solve the problems they face through strengthened dialogue and cooperation,” he said. The EU action, and other parallel actions by the US, reflect a world coming to terms with the end on January 1 of a 31-year-old international textile import quota system. The expiry of the system has left producers in developed and developing countries bracing for a wave of imports from China, whose leather products manufacturers benefit from cheap labour and huge economies of scale. China has reacted angrily to the groundswell for protectionist measures in the West against its textile exports, insisting that it should not be penalised for having more competitive industries. “As a responsible member of the WTO, China has taken a series of active measures to ensure the smooth transition to an integrated textiles and leather products market,” said Chong. “We hope the EU fully understands the efforts made by the Chinese in this respect and cautiously handles the issue. The overall trade relationship between China and the EU shouldn’t be impacted by unilateral moves,” he said. According to the measures unveiled by the EU on Wednesday, the “alert levels” range from 10-100% growth over the 2004 trade volume, depending on the type of product. The system of “alert levels” means the EU, which is trying to build up strong commercial relations with China, is not going as far and as fast down the road to safeguards as a US investigation into Chinese textiles. The US garment industry on Wednesday demanded government action to curb 14 types of apparel exported from China as tensions over surging Chinese textile shipments escalated. The National Textile Association (NTA) said urgent measures were needed in addition to US government’s announcement this week that it has launched an investigation as a first step to slapping restrictions on the Chinese exports. The NTA filed petitions with government demanding restoration of textile quotas scrapped globally on January 1, claiming that textile and apparel imports from China had leapt by 63% since then. AFP

Indian transport companies

Indian companies which engaged in oil-for-food transactions with the Saddam Hussein regime paid bribes to the former Iraqi ruler to get oil contracts. A probe conducted into their dealings with the Saddam regime by Enforcement Directorate (ED) shows that many Indian companies, including some big names belonging to both public and private sectors, paid bribes to the Saddam regime through a Baghdad-based transportation agents company owned by the ruling family. ED, however, has found the Indian companies prma facie ‘not guilty’ of wrongdoing. Though the probe into the companies is still going on, the evidence with ED suggests that they complied with RBI guidelines on both the oil they brought home and the commission they paid to agents to procure it. The finding takes on significance in view of the demand of CPM and SP to take action against the companies who did oil-for-food business with the Saddam regime. The probe, which is about to be wrapped up, brings out the readiness of Indian companies to step outside the box to get lucrative oil contracts. “These companies had either made surcharge payments through shipping liners, commission agents or directly to Allai transport company, owned by the Saddam Hussein family. In most of the cases, the alleged bribe went through Allai transportation services. The deals of all major companies have been investigated and the pattern remains the same,” ED sources said. “The alleged surcharge payments were shown by the companies as having paid commission to their agents which was duly conveyed to RBI after the deal was struck,” a senior source said. “There is prima facie no FEMA (Foreign Exchange Management Act) violation as the total money earned by these companies was brought into the country with due acknowledgment,” sources added. After showcause notices are issued to Natwar Singh and his kin, ED will begin cross-examination of representatives of the Indian transport companies on the Volcker allegations of surcharge payments. ED’s scope of investigation hinges on how the Indian companies paid surcharge money to Saddam Hussein. The findings may take the sting out of Left’s attack against government for alleged leniency towards corporates. On Saturday, CPM general secretary Prakash Karat had demanded a probe into the dealings of Indian companies with the Saddam regime. He found support from SP leader Amar Singh on Monday who attacked the government for not proceeding against the corporates. Sources, however, said that the companies may get a clean chit. The ED finding is sure to add to the angst of Natwar Singh. He has made no bones of his anger over being singled out as somebody whose oil-forfood dealings were not above board. SLIPPING ON OIL ED evidence suggests the firms complied with RBI guidelines on both the oil they brought home and the commission they paid to agents to procure it These firms had either made surcharge payments through shipping liners, commission agents or directly to Allai transport company, owned by the Saddam family The alleged surcharge payments were shown by the companies as having paid commission to their agents which was duly conveyed to RBI after the deal was struck No FEMA violation as the total money earned by these companies was brought into the country with due acknowledgment

Indian generic companies lash out at US pharma biggie

At a time when domestic generic medicines are helping the developed world to slash healthcare costs, big pharma has lashed out at indian manufactruers. The remarks made by chairman of one of the world’s largest companies, Sanofi Aventis, attacking domestic generic companies for exporting drugs, has created a furore. Infuriated, the industry has asked the government to step in and register their protest at an appropriate forum. Recently, Jean-Francois Dehecq, chairman of French firm Sanofi-Aventis, citing India as an example has criticised generic companies for exporting drugs rather than selling them locally. He’s been reported as saying in the media, “They make (drugs) cheaply and bring them to the North for people who can already pay. It is a scandal. They are exploiting people in the South. They should deal with their own countries first.” Indian Pharmaceutical Alliance secretary general, DG Shah, told Times of India: “This statement is indicative of the mindset of the big pharma that the third world nations should not look at them for access to medicine. It conveys a message to the trade negotiators that the developing countries like India, Brazil and Indonesia should not look at the West as a market for their generic products.” The industry has countered the charges saying that they are baseless. It has said in a letter to the commerce secretary that the domestic industry has not only made indian manufacturer self-sufficient for most of its medicines requirement but also emerged as a major source of supply for the developing countries. Such statements, if not challenged, hurt the interest of the domestic industry, it adds. One of the major generic manufacturers, Cipla’s joint MD Amar Lulla said “This (statement) reflects the insecurity of the big pharma towards India.” Generic drugs are copies of patented medicines and are sold in certain cases at even onetenth of the prices of the branded but offpatent drugs. The domestic industry wants to sensitise government to the attitude of the big pharma, whom it wants to “please through a trade related aspects of intellectual property rights plus IPR regime.” Sanofi-Aventis has two manufacturing units in India, both of which have been identified as global sourcing units, and its Indian operations recorded export revenues of 30% of its total sales in 2005

brass hardware manufacturers

AFTER bearing the brunt of the economic downturn at the beginning of this decade, the technology sector looks as if it may be among the best positioned to benefit when the global economy recovers from the current recession. Of course, that’s partly because it’s not tech’s bubble that burst this time. Real estate and finance have that distinction. Yet tech companies also appear to have learned tough lessons from the Internet bust that have helped them manage through the latest slump. Many cut costs and made other hard choices early on, and now look poised to profit if corporate and consumer demand begin to climb. “Have we learned from previous mistakes? Absolutely,” says Niklas Savander, executive vice-president at phone giant Nokia. “Not everyone has managed perfectly, but I would say the tech industry has managed it better than others.” Investors are betting that’s the case. The techheavy Nasdaq has rallied in the past month and is up 5% for the year, while the Standard & Poor’s 500-stock index and Dow Jones industrial average are down. Shares in Cisco Systems, IBM, Research In Motion, and Apple have risen at least 10% in 2009. “Right now, the stocks are on the bargain table,” says Jerome I Dodson, CEO of Parnassus Investments. “If there is even a small increase in demand, I suspect that tech stocks will take off.” These could be misplaced hopes. If the economy continues to slide, tech companies won’t see much benefit from their belttightening and other moves. And the economic outlook remains cloudy. Tech retail sales, for example, slid 10% in March, according to government data, far worse than the 4.1% drop in February. “It’s still pretty ugly,” says Bill Whyman, senior managing director at International Strategy & Investment. CISCO’S INVENTORY VIGILANCE Tech companies have taken a number of steps to position themselves for a recovery. They’ve laid off workers, closed facilities, and outsourced even more of their production. Many companies have also hoarded cash for years, even in the face of investor complaints. Now as other companies scramble for financing, tech giants such as Cisco, Apple, IBM and Microsoft have billions on hand for acquisitions, research and development, and other long-term plans. Perhaps most important is how aggressively tech companies have managed production and inventories. Whyman figures that while hardware suppliers sales fell 5.8% from the third to fourth quarter of last year, inventories dropped even faster, by about 9%. It’s a sign tech companies quickly throttled back on making new PCs, mobile phones, and chips in anticipation of weak demand, saving themselves from having to write off excess inventory, as they had to do in years past. Take Cisco. In April 2001 the networking giant made one of the more painful confessions of the Internet bust: It had let so much networking gear pile up in inventory that it had to take a $2.5 billion charge for equipment no one would ever buy. Ever since, it’s been working to make sure such a thing never happened again. Supply chain chief Angel Mendez is grilled at monthly reviews by CEO John T. Chambers and other top brass, and Cisco has half the inventory it did in 2001 even though it is twice as big. “It didn’t take John eight years to start asking questions (about inventory levels),” says Mendez. “He asks about every eight minutes.” Nokia, Intel and others also slowed production last fall within weeks or even days of seeing demand slide. They brought supply chains—often involving dozens of companies—to near hibernation. A few shut down. David Yoffie, a vice-president at server maker Rackable Systems, sent an e-mail to hundreds of partners last November telling them to stop all production immediately. “Customers had hit the brakes hard,” he says. SMARTPHONES, THE SMART BET brass hardware manufacturer It takes more than a wary eye to pull off such feats. Robert B. Carter, chief information officer at FedEx, says high-tech and life sciences companies have “the most advanced supply chains of any industry,” thanks to investments in new technologies and talent. Just as Apple customers can go online to track exactly where their new iPhone is en route to their door, tech companies and their suppliers, brass hardware manufacturers, and distributors typically share the same real-time view of actual demand. That’s led to other innovations. In the past, companies only air-freighted goods when inventories of a hot product ran out. Now, that’s become quite common for small, light, high-end products. Although air mail is 10 times more expensive than shipping by boat, the products arrive in a day or two instead of three weeks, so they can be shipped after a customer places an order rather than in anticipation of demand. “If there is a spike in demand we can increase production. If not, we don’t overbuild,” says Liam Casey, CEO of PCH International, which helps Western companies produce and distribute products from China. Still, even the leanest companies need growth to turn investors’ heads. Research In Motion’s shares have risen more than 50% this year in part because of strong revenue growth in the latest quarter. And because it cut inventory so drastically, the outlook for both sales and profits is promising. Some big phone companies have no more BlackBerrys on hand for their subscribers, says Neil Mawston, an analyst at Strategy Analytics in London. “Because of the de-stocking, there’s going to be a restocking,” he says. Some see signs of better times in even the most savaged segments of tech. Take chips, where many companies took a huge hit by cutting production to less than 50% of capacity, vs 80% in flush times. BusinessWeekkey: