Category: Industry

Almost all of us who have anything to do with pleasure boats, wonder how is the boat market going to be in the future? Where is it going from here? Do pleasure boats have any future? Will the trend of owning and selling boats be a larger market or smaller due to world’s economy. What will particularly happen in Asia? Which country will be the major boat market? China, India, Indonesia perhaps? Importantly what steps should be taken today, in order to create a better market in these countries.
In Hongkong, we are realizing the obvious saturation of boating market and almost all dealers and global manufacturers of boats are pointing towards China and India. Making these 2 countries the biggest potential boating markets.
Lets talk about China first and realize that in 2005 we had big hopes for the boating business in China, we thought that the boating industry would be huge by the year 2010. Well, we are in 2010 now and China clearly has not picked up to that level of prediction, so the market is still slower than what the lot of industry experts had predicted. The reason behind that is China’s rules and regulations in pleasure boat industry. Taxation and licensing rules are very unclear in China. The rules are different for different states in China and for new boats there is a 40% tax.

Infrastructure and development speed in China however, is fantastic. But there are very few pleasure boats that are floating on the waters of China. There are definitely buyers for a high end yachts, but the maintenance is still difficult and costly. People are prepared to pay to own a luxury yacht but they are not willing to put a lot of time, over spend on maintenance, pay high taxes and go through long procedures to acquire licenses. Some marina clubs in China are now assisting in providing necessary licenses for their members, but it is not cheap. Another way the Buyers handle this issue, is by simply keeping and using their boats in Hongkong. This obviously overcrowds HK’s marinas and does not help much to boost sales into China.

A way to overcome this issue and in order to create better regulations in future, is for brokers in Hong Kong to sell more low priced and good quality used boats into China. If dealers stop hunting for high end clients and direct more marketing towards the younger and median rich clientele, It will create a lot more pleasure boats in the waters of China. The market will surely respond. Forbes list of 2010 confirms that there are 64 billionaires in China, however, a point to note that there are over 900,000 people whose net worth is more than 10 million RMB. Majority of these people are younger than 39. Even a larger and younger population exist, who are up to 5 million RMB worth.

There are definitely more number of people who are willing to spend a small amount of money initially for a boating venture. Since boating lifestyle is not very common for China, the importance should be given to bringing more boats into China, which are not very expensive and are good in quality.
This can fill the marinas, force the management to grow and also provide decent opportunities for shipyards to work.
It will also force government to look into creating manageable regulations and taxing, and if the growth of this concept is healthy, this will undoubtedly create a friendlier and hassle free market for the high end yacht buyers. In any case, China will have a large boating market, but to make it earlier than later, depends on our actions today.
Lets talk about India.
One of the biggest advantages India has is that Indian mentality and lifestyle is very adaptable to western lifestyle. India adapts and accepts ideas, culture and products from the west very easily. High number of Indian population speaks in English. Almost everyone understands English. If you are a non-Indian company, you can easily find educated work force in India. It is also easy to set up a service centre and to train workers due to India’s language capabilities and educated population.
GDP growth of India is currently 7.2%, The country is ranking no.5 in the billionaires list and India currently holds approximately 200,000 millionaires with net worth of USD 1 million to 10 million, and a larger population of people that are worth slightly less. India’s upper middle class population is expected to grow about 10 times in the next 10-15 years.
But here are the set backs! India’s politics is a chaos, corruption exists in many sectors and things become inefficient.
Major concern is that the infrastructure growth is slow. Due to corruption and differences in political groups, it is difficult to commence any kind of infrastructure. The marina which was due to be built more than 5 years ago in south of India is still not ready. Therefore the speed of development of marinas is a lot slower than China. Boat owners still do not have berthing facilities in India.
On a positive note, being the world’s largest democracy the rules and regulations are flexible and with its plus points, if the luxury boat business does reach a good start like having few working marinas and few decent boats. Indian market for boats will see faster growth than of China’s boating market.
The dealers of boats in India also need to market cheaper and quality yachts for bigger clientele. More boat chartering businesses also can boost the industry in this initial stage.
I am also sure it wont be too long until I can have hassle free cruises in the waters of India and China.

by Baggy Sartape
For more info on boats www.asia-boating.com

President Barack Obama had a hard won victory on Saturday night (the 7-8th day of November 2009) when the landmark health care reform legislation (HR 3962) was passed with 220-215 votes. Now if everything goes the Obama way, then by the end of the year 09 Affordable Health Care for America Act would apply as a law impacting almost fifty million US lives. But what does this Act actually imply? How does it stand to impact an average US life? How does the Act affect the outsourcing industry at large? Through my article below I endeavor to answer these and many more questions.
Ab-initio we will refresh the fundamentals of federalism, stating the Roles, Duties, Nature, Scope and Restrictions on the government in a written federal constitution. Next we proceed to see whether the above attempt by the federal government to accede healthcare legislation is ultra-vires the powers granted by the US Constitution.

What is Federalism?

According to the traditional classification followed by the political scientists, constitutions are either unitary or federal. In a unitary constitution, the powers of the government are centralized in one government viz., the Central Government. In the federal constitution, on the contrary, there is a division of power between the federal and the state governments in a way that they are both inter-dependent and independent at the same time.
As we all know that Constitutions are organic documents which operate as fundamental law. The governments and their organs owe their origin to the constitution, derive their authority from the constitution and discharge their responsibilities within the framework of the constitution. The judiciary has the power to declare a law unconstitutional if the law is found to have contravened any provision of the constitution. The American Constitution is the oldest and a well praised example of federalism.

What are the powers granted by the US Constitution to the State Government?

Powers reserved for State Governments are:
Establishing local governments
Issuing licenses (driver, hunting, marriage, etc.)
Regulating intrastate commerce
Conducting elections
Ratifying amendments to the U.S. Constitution
Providing for public health and safety
Exercising powers which are neither delegated to the Federal Government nor were prohibited from the States by the Federal Constitution (residuary powers)
Framing other domestic law (for example, setting legal drinking and smoking ages etc.)

What are the powers granted by the US Constitution to the Federal Government?

Under the Constitution, powers reserved for the Federal Government are:
Printing of money
Declaration of war
Establishing the armed forces
Entering into treaties with foreign governments
Regulating commerce domestically and internationally
Establishing post offices and issuing postage
Making laws necessary to enforce the Constitution

What are the powers shared by Federal and State Government?

Under the Constitution, the shared, or “concurrent” powers are:
Setting up courts
Creating and collecting taxes
Building highways
Borrowing money
Making and enforcing laws
Chartering banks and corporations
Spending money for the betterment of the general welfare
Acquiring private property with appropriate compensation

What is the HR 3962 Act ?

The HR 3962 Act conceptualizes a new, voluntary, public, long-term care insurance program to help purchase services and support for people who have functional limitations. The Act endeavors to form a new national program to provide affordable coverage for those who cant get health insurance today because of pre-existing conditions. Under this, the insurance companies must spend 85 cents out of every premium dollar on medical services, thereby fostering the expansion of Medicaid and improving the Medicare. Under this, the young adults, till the age 26, are covered within their parents policies.

The Obama administration intends to attain this by creating mandates. As a self-sustaining public insurance option (that is financed not by tax dollars but by insurance premiums), this provides an alternative to and competes with private health insurance companies, on a level playing field. Additionally, the Act intends to eliminate the antitrust exemption for health insurers and medical malpractice insurers thereby fostering competition thus targeting the existing monopolies in the health insurance market. It aims to establish a new mandatory essential benefits package that shall become the minimum quality standard for employer plans, with the passage of time. The package places a cap for annual out-of-pocket spending, at a maximum of $5,000 per individual and $10,000 per family to prevent bankruptcies from medical expenses.

This Act requires the employers to either provide insurance to their employees or contribute to the cost of their coverage through the public plan/exchange, though the small businesses are exempted from this requirement.

Arguments regarding Constitutionality of HR 3962

The legal fraternity is divided between two schools of thought about the constitutionality of the Act. First school believes that the Act is unconstitutional and places reliance on Articles I 8 and V of the US constitution and on Tenth Amendment. They claim that their argument is supported by the celebrated case of MARBURY v. MADISON, 5 U.S. 137 (1803) and some federalist opinions. The second school of thought places reliance on Article I 8 and the celebrated case of McCulloh v. Maryland, 4 Wheaton 316 (1819); Steward Machine Co. v. Davis, 301 U.S. 548 (1937); United States v. Butler, 297 U.S. 1 (1936) and some federalist opinions. An in-toto analysis of these school of thoughts would conclude that the true interpretation of the word general welfare in Article I 8 of the U.S. Constitution can only determine the constitutionality of an Act like HR 3962. Till date the court opinions have been more inclined towards Hamilton (Federalist 33, 83 etc.) and Story rather than Madison (Federalist 41, 45 etc.).
Simply put, when the government mandates welfare as a quid-pro-quo for premiums collected, such welfare translates to nothing but a tax liability for the country men. Such an attempt by the government to regulate insurance sector by masquerading as an industry player is inspired from socialism. I personally feel that socialism is a Marxian concept and may not go well in an economy with capitalist foundations. The good thing is that people all over the world should buy insurance; this however turns bad when the government forces people to do so.

What are the implications of HR 3962 on the Outsourcing industry?

The object clause to the Act states that it is meant to provide affordable, quality health care for all Americans and reduce the growth in health care spending.

In reality, the act is a victim of haste. Ideally if the intention of the Obama administration and the object clause of the Act were actually in-sync then the administration should have awaited a confirmed indication of the end-of-recession. The administration should have first looked at strengthening the fundamentals of the economy, by:
better regulating the existing insurance sector,
improving the US agrarian culture and making the country self sufficient regards its food requirements,
checking the cost-of-living index and
creating more jobs in the private sector.
But if the intention is to make more and more Americans dependant on Federal Government for basic requirements, then the attempt is bang on.

Impact on the outsourcing industry:

Prima-facie it may seem complex but there are clear indications for the outsourcing industry to benefit once the HR 3962 is implemented. The benefit roots from the fact that the employees will become expensive for the employers post this Acts applicability. Now given the very competitive market scenarios, thin profit margin and the inability of the employer to transfer this increased cost to the end consumer, the employer is forced to search for the less costly alternatives. It is needless to say here that the Act magnifies the already existing labor arbitrage opportunities internationally. To appreciate the existing labor arbitrage opportunities you can refer to my older blog post.

Overuse of nitrogen fertilizers which has led to deficiency of other macro nutrients in the soils of Vietnam has encouraged the government to support use of potash fertilizers in the country.

The consumption of fertilizers in Vietnam has been growing at a CAGR of 3.4% during 2006-2012 as the government struggles to fulfill the goal of food security for the growing population of the country. The fertilizer sector has been one of the most resilient sectors even during the economic downturn making it one of the most profitable sector for the fertilizer companies. The fertilizer industry of the country is concentrated with majority of the supply being done by two giants namely Petrovietnam Group and Vietnam National Chemical Group with most of the companies being affiliated to these two groups. Majority of the fertilizer firms in the country have focused on production of nitrogen and phosphate fertilizers. Nitrogen fertilizers contributed more than half of the overall consumption of fertilizers in the country in 2012.

However with the government now focusing on the concept of balanced fertilization, the consumption of potash fertilizers is expected to grow in the coming years 2013-2017. The consumption of potash fertilizers in expected to grow at a CAGR of 5.3% during 2012-2017 which would be the fastest growing as compared to the other macronutrients such as nitrogen and phosphate fertilizers thereby driving the growth of fertilizer industry in the country. The two major potash fertilizers used in the country are potassium chloride and NPK fertilizer both of which are exhibited to witness a favorable growth of 5.5% and 5.1% during 2012-1017.

-Majority of the potash fertilizers are imported in the country with the imports in the country growing at a CAGR of 8.2% during 2006-2012. The largest amount of potash imports was from Belarus in 2012 which reached 233,444.0 tons- – According to the research report -Vietnam Fertilizer Industry Outlook to 2017 – Government Initiatives to Enhance NPK Complex Fertilizer Growth’ by Ken Research.

Government funded initiatives such as Balanced Fertilization for better crops in Vietnam (BALCORP) would drive the growth of potash fertilizers in the country. The consumption of potash fertilizers would reach ~ thousand tons nutrients growing at a CAGR of 5.3% during 2012-2017.

The report provides detailed overview on the fertilizer market in Vietnam and help reader to identify the ongoing trends in the key segments of the industry and anticipated growth in future depending upon changing industry dynamics in coming years. The report will aid industry consultants, fertilizer companies and marketing companies and other stakeholders to align their market centric strategies accordi