Академический Документы
Профессиональный Документы
Культура Документы
1, Spring 2009
PLUS
WHY CHINA WILL
RECOVER FIRST
India:
Better or worse?
RESTAURANT REVIEW:
HANDCUFFS &
GOURMET
IN SINGAPORE
12
| Asia Equity Focus: Where
are we heading in 2009?
by Zoie Teng 10
| India’s Future Amid the Present Financial Crises by Nik Kumar
The emerging economy of India shows promising growth and a
What you need to know about positive economic outlook
investing in Asia’s equity markets
15
|Good News in Bad Econo-
my: the Philippine Economy
Remains Strong by Aaron
Shanghai, see p.19
INTERVIEWS
32
| Sitting Down with Professor
Jeremy Siegel, University of
Vasquez, New York University Pennsylvania by Kellen Xu,
The sun shines on this island University of Pennsylvania
economy The prominent author of the
classic “Stocks for the Long
TECHNOLOGY Run” discusses his view on
34
by Eugene Huang
Our technology correspondent | On Korea: Seo Young
SOURCE: CITY-PHOTO.ORG
20
| The Subprime Mortgage
Crisis and the Real Estate
Market in China by Professor
Discussing the widening gap be
tween rich and poor
36 | Internships Abroad:
Working in China
Peng Liu, Cornell University
Why China will be the first to
recover from the subprime
27
| Restaurant Review:
Doctor’s Orders by Wes Yiu
Eccentricity is taken to a whole
by David Hao, University of Toronto
Take a look at a summer intern’s
experience with an American pub-
mortgage crisis. new level in Singapore lisher in China
23
| Risks in China’s Real Estate
Market with Professor Peng
Liu, Cornell University
29
| Destination: Shikoku
by Joanne Ng, National
University of Singapore
37
| Hot Careers in China for Foreign
Graduates
by Alexandria Sun & Ray Wong
by Ivan Au & Jeremy Vasquez Experience the wonders of Shi- Two professors at Nanjing Uni-
Characteristics of China’s real koku, the smallest yet one of the versity discuss their thoughts
estate market that make it dif- most beautiful islands in Japan on the economy and future for
ferent from the rest students
editors’ letter
WELCOME to the inaugural issue of Business Asia, the first undergraduate-
run magazine in the nation focused on the changing business landscape in
Asia. Our mission is to deliver an informative yet interesting magazine that
will keep you updated with current events. Through Business Asia, we hope
to establish a forum for a new generation of global leaders. From a small idea
back in Fall 2008 to the actual magazine today, we owe our success to a team
of 19 dedicated students at Cornell- without their many nights of hard work
and valuable opinions, this magazine would not have been possible. For this
issue, we are distributing the magazines to Cornell, the University of Penn-
sylvania, NYU, UCLA and Boston University. We hope to expanding interna-
tionally as we move on to our next issue, tentatively launching in November,
2009.
We may be publishing our inaugural issue at the peak of the global financial
crisis, but we believe that this is the best time for students to understand its
ripple effect in Asia, an increasingly important player in the global market. The
theme of this issue comes in the form of a riddle: “Is Asia the Next Place
to Go?” We provide you with insights from enthusiastic students, prominent
professors and experienced alumni around the globe to help you consider this
question. This issue first briefly overviews the main political and economic
events that have taken place in Asia in the past quarter. Then, our dear reader,
you will witness how the crisis has affected China, Hong Kong, and India re-
spectively. The subsequent discussion of the Philippine market and a detailed
analysis of why China’s real estate market is positioned to recover first will
bring a ray of hope and prove the contrary. The lifestyle section will then take
you to Singapore and Japan while exposing a social problem in China. We also
have gleaned valuable insights from two prominent professors on what they
think about the Asian economy’s past, present and future. To wrap things up,
PHOTOGRAPHS COURTESY OF JUSTIN LEOW
we have compiled insider knowledge and little-known secrets about career op-
portunities in Asia. As you read through these articles, we hope to shed light
on the question that lingers on many minds.
From top: Alexandria Sun, Ivan Au Finally, we value YOUR opinion. After you fill out the survey on our website,
http://businessasia.weebly.com/, you will automatically get a chance to win
50% off any Kaplan course or a coupon from Miyake Japanese Restaurant as
a sign of our appreciation.
Alexandria Sun
Ivan Au
CO-EDITOR-IN-CHIEFS
QUESTIONS? FEEDBACK? Email us at cornell.asia.business.forum@gmail.com
Business Overview
China’s Game Company Goes Public
APRIL
China to Combine Steel Companies ChangYou.com Ltd., Chinese online game
In order to help steel companies facing liquidity maker, gained $120 million after IPO on
shortages, the State Council of China approved a NASDAQ.
plan to combine steel companies.
ASEAN+3 Summit Cancelled After
Indonesia Vow for Anti-Corruption despite Bangkok Protest
Economic Difficulties After Thai soldiers and Pro-Thaksin protes-
Indonesia’s famous politician and current law tors clashed, ASEAN+3 Summit finance
maker Sarjan Taher was sentenced four and a half ministers’ meetings were cancelled.
years in prison after he was charged with receiving
bribes and swaying government policy in favor of Japan announces a record stimulus
lobbyists. package
Japan unveiled its latest economic stimulus
package containing a record Y15.4 trillion
($155 billion) in fresh spending and tax cuts
JANUARY
to tackle its worst recession since World War
II. Japan would issue more than 10 trillion
yen in new bonds to finance the package.
MARCH
Hilary Clinton Discusses Future US-China Eco-
nomic Relationship
The U.S. Secretary of State met with China’s Minister
of Foreign Affairs Yang Jiechi to discuss the future
of the U.S.-China relations.
China Rejects Coca-Cola’s Bid for Huiyuan Juice
Korean Exchange Rate Plummets Again Chinese government decided to reject Coca-Cola
The Korean Won exchange rate to U.S. Dollar has Company’s largest bid to purchase China’s juice
reached a record high of 1,500 won. maker Huiyuan. Both companies announced that
they “respected” the government’s decision.
Aluminum Corp. of China to Invest in Rio Tinto
Aluminum Corporation of China, China’s largest China’s Stimulus Plan May Change the World
aluminum producer also known as Chinalco, an- Economy
nounced an investment of $20 billion in debt-ridden Chinese Premier Wen Jiabao announced that the
Rio Tinto Group. government will add a record amount of funds in
FEBRUARY
W
ith T-shirts labeled “Lehman Fraud”, terest yield. As a result, more than 40,000 investors have
many victims of Lehman Brother’s mini- put 2.01 billion dollars into mini-bonds and other com-
bond incident have been chanting “Give plex derivative instruments. Yet when Lehman Brothers
me back my money” in Charter Park filed for bankruptcy protection on Sept.15 last year, the
and squatting outside government agencies. Though the collective worth of the minibond was of little existing
SOURCE: HTTP://WWW.FLICKR.COM/PHOTOS/JENNOBRYAN/3327343639
event has received widespread media coverage, the of- value.
ficial response to the victims’ outcry for justice has not
been so sympathetic. Victims, mainly composed of the UNFORTUNATE VICTIMS TAKE MATTER INTO
elderly, shed tears and protested in vain. THEIR OWN HANDS
To give a brief introduction: Lehman Brothers Sympathetic to victims’ difficulties, many local
minibond is a high-risk, credit-linked note—a form parties offered assistance, in particular, the Democratic
of credit derivative usually sold to corporate investors. Party in Hong Kong. The Democratic Party wanted
PHOTOGRAPH BY: JENNIFER O’BRYAN
However, in Hong Kong, it was sold to the general public to gather all the victims to file a class action lawsuit.
and has been put under the category of bond by various In March, the investors filed a class-action suit against
investment banks. Without much financial knowledge, HSBC and Bank of New York Mellon in hopes of re-
the general public was told that minibond is similar to covering some of their losses. However, the court de-
a low-risk bond and therefore, convinced that Lehman cided that they should start a civil ligation, which is more
minibond is as safe as time deposit but with a greater in- costly and risky. On the flip side, other parties criticized
INDIA’S FUTURE kets. While the crisis has rocked the world and left
few countries untouched, some nations have been
hit much harder than others. Ironically, it has been
AMIDST THE PRESENT the sophisticated western markets that have been
dealt the hardest blow, evidenced by the fact that
FINANCIAL CRISIS approximately 56% of the global write-offs and
write-downs by financial institutions have come
from the United States and only 8% have come
By Nik Kumar, Cornell University from Asia. Notably, the economy of India, a na-
tion with one of the world’s key emerging markets,
is still enjoying a growth rate of 7.1%. While India
has fallen victim to the tentacles of financial crisis,
The current financial meltdown has the growth is still substantial compared to other
rocked the world but some coun- ailing economies.
tries are better geared to weather It is not difficult to see why India has fared
better in a time of crisis. The disintegration of the
the storm than others. The emerging financial markets in the West was a collapse of the
economy of India has unique business same complex financial systems that made them
characteristics and growth drivers for a fiscal titans, built as they were on unearned wealth
and high leverage ratios such as uncontrolled con-
promising recovery. sumer debt and rising asset values. As the Rus-
sian Prime Minister Vladimir Putin noted at the
World Economic Forum at Davos, “the explosion
of debt set the pace for rapidly growing personal
consumption standards, primarily in the industrial
world. We must openly admit that such growth was
not backed by a real potential. This amounted to
unearned wealth, a loan that will have to be paid by
future generations.” In contrast, the emerging mar-
kets in Asia, particularly India, have been hit, not
because of “unearned wealth,” but rather of its
role as a key exporter to the U.S. of service support
and label capital (Does outsourcing ring a bell?) As
demand from the Western nations shrinks, tour-
ism, textiles, information technology, and foreign
investment continue to suffer.
However, the fundamental financial prin-
L
INTRODUCTION sation topic. The Chinese Premier, Wen Jiabao, said
ast year was a disappointing year for every- in a keynote speech at the World Economic Forum
one. The U.S. housing market collapsed. The on January 25th, 2009 that “the current crisis has in-
bankruptcy of Lehman Brothers has prati- flicted a rather big impact on China’s economy.” He
cally destoryed investors’ confidence and financial expects the ongoing financial market turmoil will
market stability. Fears about further deterioration in continue in 2009, particularly in the first and second
the banking sector have also triggered intense dele- quarters. If the trading environment in Asia remains
veraging and unwinding processes, which left major negative, will there be a second wave of the global fi-
stock indexes in the global financial markets to plum- nancial crisis, as warned by the Hong Kong Monetary
met. For example, MSCI’s Asian Index fell 43 percent Chief Joseph Yam Chi-kwong? More importantly,
in 2008. As the U.S economy had its worst quarterly when will be the best time to invest in the Asian eq-
performance since 1982, contracting at a 3.8 percent uity markets and what are the most valuable invest-
rate in the fourth quarter of 2008, it is hard for me ments in these current market conditions?
to be bullish about the outlook of the financial sector
in 2009. ROAD TO 2009: BIGGEST CHALLENGE FOR
In Asia, the talk of the “worst recession” since ASIAN FINANCIAL MARKETS SINCE WWII
the Great Depression has become a popular conver- Banking businesses in Hong Kong look grim
too. The macroeconomic environ-
Asia outperforms U.S. and World since November 2007
PERCENT PERFORMANCE MSCI ASIA-PACIFIC EX-JAPAN MSCI WORLD
ment has considerably worsened.
S&P 500
30
The continuous net outflows from
25
the domestic equity markets weigh
SOURCE: THOMSON REUTEURS, NYTIMES
20
on heavy investors’ attitude towards
15 Asia’s financial markets. These mar-
10 ket uncertainties and liquidity con-
5 cerns have dragged the Hang Seng
0
Index down to around 10,700 to
11,550.
45.0%
be passed by the Congress. It is even more difficult to
HIGHLIGHTS OF U.S. $825 BILLION STIMULUS PACKAGE INTRODUCED BY HOUSE DEMOCRATS
$87B
gest banking operations have been cleaned up. Many RAILWAYS, HIGH-
investors now prefer to sit on cash amid market un- WAYS, AIRPORTS,
AND POWER GRIDS
TO STATES, certainty or are still nursing their wounds from last
INCLUDING MED- year’s market onslaught. These fears can make Asian
25.0%
$39B
RECONSTRUCTION
might last for a long time.
TO LOCAL SCHOOL
As Ben Bernake, the former Chairman of Fed-
eral Reserve Bank, cautioned, “fiscal stimulus alone
9.3%
DISTRICTS & PUBLIC RURAL DEVELOP-
COLLEGES
would likely not be enough to prompt a recovery in MENT AND
$30B
the economy”. Given the current difficult environ- INFRASTRUCTURE
ment, the equity markets in Asia are likely to be quite PROJECTS
8.8%
TO EXTEND HEALTH volatile in the next few months. However, I expect
INSURANCE COV- to see more upside potential in the China and Hong
ERAGE TO UNEM- Kong equity markets, taking into account the coun- ECOLOGY &
PLOYED try’s economic growth potential and the oversold lev- ENVIRONMENT
$12B
uncertainty.
BOTTOM LINE
While Baidu’s entire arsenal of new and excit-
ing products and services promises great potential
in the future to come, its alleged unethical business
practice may very well prove to be its greatest mis-
giving. What’s important is that the management at
Baidu come clean with their business practices and re-
gain the trust of both its investors and the public. So
long as this is fulfilled, who is to say that this Chinese
Dragon is not going to take the Virtual World over-
take Google as the biggest name in the digital realm in
the near future? BA
SOURCE, COMSCORE
BUSINESS ASIA••Spring
BUSINESSASIA Spring2009
2009••19
19
AUTHORS’ BIOGRAPHIES
In 1998,
fornia, Berkeley. Prof. Liu teaches real
estate and Securitization and other
China’s real estate market entered a Golden Era.
Structured Financial Products for newly After China cancelled its welfare housing distri-
created Minor of real estate at Cornell. bution system, housing sales has been soaring at an average annual growth
Professor Liu is affiliated with the Cen- rate of 23%. It was not a rare sight to see people lining up outside of a
ter for Real Estate Finance, Program in new apartment building with straight cash for down payment. As a result,
Real Estate, and the East Asia Program.
His primary research focuses on asset
the real estate industry has become an essential backbone of the Chinese
pricing and hedging in the real estate economy. Since the end of 2007 though, the housing market has encoun-
market. Prior to his career in academ- tered some problems along its path of glory. National housing sales have
ics, Prof. Liu worked in various indus- declined by 29% in 2008; in the ten largest cities such as Shanghai and Bei-
tries, including engineering, advertis- jing, housing sales further have shrunk by 50%. Statistics indicate that the
ing, consulting and hedge funds.
housing price has already begun to fall from its peak in November 2007.
For example, Vanke, the largest real estate developer in China with 2.34%
of market share, has seen its prices decline from RMB 1,040 per square
foot to RMB 720 per square foot.
Mr. Haibin Lin, Founder and Managing The severity of this adjustment has been reflected by the Real Estate
Director of Shanghai Foresight Invest-
ment Management Co. Ltd. The compa-
Industry Confidence Index. The index dipped during the third quarter
ny is a boutique real estate investment in 2008 as the land market experienced major volatility. Until the end of
bank, focusing on real estate invest- 2007, land price increased exponentially and available land was a rather rare
ment strategy, M&A and corporate fi- commodity in many cities. Today, there is only minimal participation in
nance. Before founding the company, land auctions. The second-half of 2008 witnessed large amounts of failed
Mr. Lin worked GIC Real estate, a Singa-
pore based real estate investment firm,
auctions from the lack of bidding, resulting in plunging land price.
and real estate development compa-
nies such as China Resources Land and II. WHILE THE CAUSE OF THIS ADJUSTMENT HAS NO DIRECT
Hutchison Whampoo. Mr. Lin received RELATIONSHIP WITH THE SUBPRIME MORTGAGE MARKET,
MBA from the Haas Business School at SUBPRIME MORTGAGES HAVE INSTIGATED GLOBAL ECO-
University of California and M.S. & B.S.
of civil engineering from Tsinghua Uni-
NOMIC VOLATILITY, INCREASING THE INTENSITY AND DE-
versity. GREE OF THE ADJUSTMENT IN CHINA’S REAL ESTATE MARKET
The financial real estate market in China is not equipped with the
infrastructure necessary to create subprime mortgages. First, the China’s
real estate financial products are extremely simple. ies will increase by 350 million, of which 240 million
Mortgages securitized by long term floating interest are new immigrants. Additionally, the number of
rate are the dominant product. There are no com- people per household continues to decline, further
plex mortgage products, and certainly not mortgage increasing the demand for housing. Another basic
backed derivatives. Furthermore, as property prices need is the unprecedented demand for improvement
continue to increase, the China Banking Regulatory in living standards. Despite the 10 years of devel-
Commission would continue to increase the amount opment, 75-80% of families in first and second tier
of down payment required by the bank and restrict cities currently still reside in welfare residences con-
the mortgage lending policy. Lastly, unlike the United structed by the government prior to 1998. Both of
States, China has maintained its benchmark interest these basic needs account for almost 80-90% of the
rate at 5% for the past few years. current residential demands, and are most likely to
In October 2007, China began to implement a persist into the future.
set of policies to restrain the rapid growth of the Fortunately, the high overall savings rate in
housing prices, initiating the current round of ad- China guarantees household spending. At the end
justments. Based on the timeline, the adjustments are of 2008, savings rate among the Chinese people
not related with the subprime mortgage crisis itself. reached RMB 22 trillion dollars, growing at 25.7%
Moreover, the main reasons behind the increase in compared to the same period last year, making up
prices are the soaring demand for housing and the 74% of China’s GDP in 2008.
skyrocketing stock prices due to a surplus of liquid- Lastly, while residential prices have increased
ity. rapidly in the past few years, disposable income per
Although subprime mortgages do not have any capita has also simultaneously increased. Yet, hous-
direct influences on the Chinese real estate market, ing affordability had only worsened between 2003
the subprime mortgages have severely affected the and 2005. But rest assured, since the gap is not con-
Chinese economy, thus starting a domino effect. The siderable, the housing affordability would quickly re-
weakened economy has caused demand for housing bound to the historical average within the next two
to shrink. On the flip side, the government intro- years of adjustments.
duced a new set of policies to stimulate the real es- Generally speaking, the Chinese housing mar-
tate market in October 2008. This policy may pos- ket is relatively healthy. Right now, the main disease
sibly speed up the volatility in the real estate industry. is the surplus of residential inventory that only time
itself would cure. Once the inventory returns to a
III. THE CHINA REAL ESTATE MARKET IS reasonable level, the rising momentum of housing
GENERALLY HEALTHIER THAN THE REST OF prices will be revived. Among the six largest cities,
THE WORLD, AND IS EXPECTED TO RECOV- five of them experienced an increase of 50% in resi-
ER WITHIN THE NEXT TWO YEARS dential inventory level compared to the same period
The basic need for housing is far from satisfied. last year. As a result, these inventories have strained
Due to urbanization and change in household struc- the cash flows for many developers, forcing devel-
tures, by 2025, the population residing in Chinese cit- opers to reduce prices. After prices reduce, the deal
flow will hopefully recover. The length of this adjustment process depends on the inventory of each city and is
predicted to take around half a year to a year and a half.
IV. AFTERTHOUGHTS
The current subprime mortgage crises will probably change the structure of China’s real estate investment
funds. Around 2005, a large amount of investment flowed into the real estate industry in China, one of the big four
emerging markets. In contrast, due to government regulations, there were almost no Chinese real estate investment
funds from mainland China as of 2005. Nonetheless, the number of Chinese real estate investment funds has been
steadily growing. Though international real estate investment funds entered the Chinese market in the early 90s,
most of them have remained relatively small in size and only a handful have become big market players, i.e. GIC
RE, Deutsche Bank, and Morgan Stanley. As of 2008, around 40 international investment funds were active in the
Chinese real estate markets. The foreign investors have been hit hard by the U.S. financial crisis, which has led many
companies to lower their prices or even abandon properties earlier purchased. Mass layoff has become a common
trend among these companies all the while China introduced new policies regarding investment funds, giving a
head start to investment funds with a strong background in China such as CITIC Capital and Everbright Alam. As
foreign-owned investment funds shrink and mainland China funds grow, we might be in the process of witnessing
the reshaping of China’s real estate investment funds industry. BA
Mortgage ceiling reduced to 70% for the second property and mortgages no longer pro-
MAY 2004 vided
JUNE 2006 Residential buyers are required to pay at least 30% of purchase price as down payment
OCTOBER 2007 PBoC and the China Banking Regulatory Commission have annouced to impose new
policy new real estate lending and credit policies aimed at quelling speculation through
mortgage controls. The policy will increase down payment requirements for second-
home purchasees to 40% from the current 30%, and raise mortgage rates to 1.1 times
the benchmark one-year lending rate on Sept, 27, 2007. Down payment rules for addi-
tional properties would be determined by individual commercial banks.
Risks in China’s
Housing MarkeT by Ivan Au & Jeremy Vasquez, Cornell University
In the long run, what are the underlying risks in China’s housing market? We sat down with
Professor Liu as he further explained the unique characteristics of this market.
Mainland China:
Home of 106 Billionaires
and More than 800
Million Poor By Christy Ai, Cornell University
ous,” said Deng Xiaoping, former But what about the rest of the History has shown us that
leader of the People’s Republic of population? There are more than 800 a wide income gap poses serious
China. And glorious it is, China million poor in the countryside, mak- dangers to society. Excessive in-
is home to more billionaires than ing a living off farming and other equality raises crime rate and stifles
anywhere else, except the United labor-intensive occupations. Farm- potential economic growth. Latin
States: 106 billionaires to date (in ing provides food but very little cash, America and the Philippines are
U.S. Dollar). Members of this elite and most farmers do not get social classic examples where growth has
circle in China buy body lotions security. Therefore, they must save been stymied by a high Gini ratio, a
that are more costly than gold of and budget carefully in case of emer- measure of inequality of the wealth
equivalent weight , dine at Japan’s gencies. Even worse, the weather can distribution. China’s Gini ratio is
Liao Li where 15 courses are served wreak havoc without notice in ad- currently almost on par with that
ARTWORK BY: MICHAEL KUO
with one-of-a-kind antique utensils vance. For example, this year’s snow- of Latin America’s – is it in danger
and finish the day with a hefty mil- fall destroyed almost 3,000 square of falling into the same trap?
lion-dollar bet at the Hong Kong miles of crops, leaving many families China has many inherent
Horseracing Club. One thing is for in desperate need of food and money. problems and inequality often
serves as the scapegoat. Rural pov- follow their path. 2006. Born in a modest household
erty in China is a real problem, in Northeastern China, she set up
and will continue to be a problem OPPORTUNITIES a waste-paper trading business in
whether the billionaires splurge on Though income inequality is Hong Kong and became the top ex-
$2,000 t-shirts or not. Unemploy- prevalent, social inequality in China porter of scrap paper. Through her
ment, central budget control, and has diminished considerably. Today, hard work, she has tripled her ma-
lack of social security are other women have fought their way to the jority share in Nine Dragon Paper
fundamental problems that many foreground, as evidenced by their to USD $10 billion this year.
blame inequality for. While no one increasing power in business. Two Currently, the rich in China are
can deny the link between wealth women lead the rich on the 2008 growing at a faster rate than their
inequality and social unrest, many Hurun’s List: Yang Huiyan, 26, and Western counterparts. Property de-
of China’s problems are fundamen- Zhang Yin, 50. velopment and manufacturing are
tal and based more on social class The majority shareholder of the two greatest contributors to
than wealth. property developer Country Gar- this recent surge in wealth, both of
Among other things, the rich dens, Yang Huiyan becomes the first which are primarily based in Guang-
have now realized the income in- Chinese to pass the USD $10 billion dong. However, while these busi-
equality is a nessmen
very realis- are mak-
tic part of life ing their
and may end The rich have now fortune in
up threaten- realized that in- Guang-
ing the social dong, we
stability and come inequality also need to
unity in Chi- is a real part of life see the flip
na. While they side of the
continue to and may end up coin. The
lavish them- threatening the minimum-
selves with waged,
L’Occitane en social stability and 70-hours a
Provence and unity of China. week, fac-
Mont Blanc, tory work-
some are be- ers are
ginning to sending
take social responsibility seriously. benchmark with her massive wealth their hard-earned money back to
In 2008, a total of USD $9.4 bil- of USD $17.5 billion in assets, mak- their impoverished homes in the
lion was contributed by the elite in ing her the richest woman in Asia. It’s country side and fighting an ageless
China to alleviate the problem of a classic rags to riches story but with battle against poverty.
unemployment within struggling a twist of inheritance. Her father For sure, the underdeveloped
families. The contributors include Yang Guoqiang started to acquire and loosely regulated economic en-
Yu Pengnian who contributed land at the bottom of the market in vironment in China presents plenty
FROM LEFT: THE DAILY MAIL, CHINA DIGITAL TIMES
USD $420 million to health and the mid 1990’s and worked his way opportunities for today’s sharp and
higher education and Zhu Mengyi up to almost 60% of Country Gar- ruthless young entrepreneurs who
who contributed USD $158 million den, whereupon he then transferred hope to become the next billion-
to poverty alleviation, health, and his shares to his daughter, Yang Hui- aire. But, will this generation help
education. They remember their yan. to close the gap between rich and
humble beginnings and are now Zhang Yin, the richest self- poor? The future of China will be
giving back to society. Hopefully, made woman in the world, is the largely dependant upon their deci-
their actions will inspire others to first woman to top the Hurun List in sions. BA
Doctor's Orders:
Check Out Aurum By Wes Yiu
“There are many things that make Singapore a popular food destination. These include the culture, the tastes, and the variety. In
an effort to keep pace with other hot-spots of delectable cuisine, Singapore enters the fray with its restaurant Aurum. In Latin, the
term Aurum means gold, giving the restaurant a hip and stylish feeling, geared towards attracting the young adults crowd. Once
you step inside, you will embark on an unforgettable journey, witnessing innovative ways that dinner can be prepared and served.”
Famous for the eccentricity of its food, Asia that one would be placed on if undergoing surgery.
is a paradise for gourmet diners who are seeking exotic The tables might give diners an ominous feeling that
tastes. In recent years, the presentation has also taken on they are about to “go under the knife.” Moreover,
an unconventional touch: the famous toilet restaurant in silver utensils are located in drawers in the operating
Taipei, the jail-themed brasserie in China and the hos- table— drawers that are usually reserved for scalpels
pital-themed eateries in Singapore. In an effort to keep and other surgical tools. Given the restaurant’s décor,
pace with other hot-spots of delectable cuisine, Singa- I cannot help but wonder if elderly patrons should
pore enters the fray with the restaurant Aurum – pairing walk in expecting to be given sponge baths by the staff.
food and medical surgeries. As you step inside, you will The restaurant is treading in dangerous, un-
embark on an unforgettable journey, witnessing revolu- charted waters with its extremely macabre theme. Sin-
tionary ways in which dinner can be prepared and served. gapore is known for its large Chinese population. As a
Once you step inside, you will immediately find person of Chinese lineage, I can say that Aurum’s ap-
the lavish restaurant stays true to its name.
In Latin, the term Aurum means gold, giv-
ing the restaurant a hip and stylish feeling,
which is geared towards attracting the young
adults. There is no shortage of gold in the
restaurant, from its wallpaper to its notice-
able gold-plated dining chairs that are actual
wheel-chairs. Yes, they are fully-functional and
PHOTOGRAPHS BY ROBERT STEINER
Destinations: Shikoku
By Joanne Ng, National University of Singapore
Often considered remote and lacking in attractions, Shikoku is
seldom on the list of places to visit among travellers to Japan. The
least populated and smallest of the country’s four main islands,
Shikoku is most famous for the pilgrimage trail of its 88 sacred
temples, but there’s much more to the island than that…
JAPANESE CUISINE
416 Eddy Street, Ithaca, NY 14850 | (607) 277-6767
32••BUSINESS
32 BUSINESSASIA Spring2009
ASIA••Spring 2009
of emergency measures because the JS: It’s my belief that the United weren’t very popular. People want
risk of a break-down in our finan- States, Europe, and Japan will have money where they can buy some-
cial systems is well past, very differ- to rely on capital from the develop- thing.
ent from September and October ing world, China, India, and other
of last year. countries in the coming decades. BA: On a more personal level, what
The aging population in the devel- has your career path been like?
BA: Do citizens in Asia need to oped countries will be looking to sell What words of wisdom do you
spend their savings to get out of the its bonds. The fast growing countries want to give to the distressed stu-
recession? will be saving and will be looking to dents looking for jobs?
buy the stocks and bonds. There will
JS: The consumers’ problem in the be a massive shift in capital from JS: I also wanted to be a teacher,
western countries is that they are developed countries to developing and I always loved economics. Al-
cutting back. As a result, Chinese countries. If developing countries though when I was very young, I
exports are falling. The only way do not buy our capital, it will be a thought I would be a math teacher.
to make up the difference is for the much bleaker future for the retirees I started studying economics much
Chinese government to help the in the developed countries. later. Don’t be discouraged by the
Chinese consumers to offset that current downturn. It’s tough to get
drop. BA: Do you think investors in Asia a job, but when you get one, you’ll
will be less likely to invest abroad get in at the bottom. Then, things
BA: Do you think the global power now? Where do you think people will be moving up, and you will be
structure will change after the re- should put their money? able to move up with those firms.
cession? Does China or India seem
more promising? JS: Stocks are down to favorable lev- BA: You mentioned that Milton
els in most countries in the world. Friedman was your role model, in
JS: I think it depends on how the All countries have been affected by what ways did he inspire you?
recovery evolves. Whichever coun- the world bear market. Some of
try recovers first will have the ad- them will be profitable in the future. JS: He was a great teacher, and he
vantage. I actually think Asia will be I see opportunities everywhere. showed me the importance of the
the first to recover. The long-term free market and how private initia-
trends are better for Asia. The U.S. BA: During March, China urged new tives and governments, though well
has taken a blow because of the monetary reserve to replace the dol- meaning, can mess things up badly.
poor performance of its aggressive lar, the current global reserve cur-
style of capitalism. That will dimin- rency. Mr Zhou, governor of the BA: Do you think Finance will still
ish the view of the U.S. However, if People’s Bank of China, said a new be Wharton’s No.1 concentration in
we recover quickly, the rest of the currency reserve system controlled terms of popularity after this finan-
world will see that we have a resil- by the International Monetary Fund cial turmoil?
ience that would maintain our po- could be more stable and economi-
sition the world’s economic leader. cally viable. What political and eco- JS: Oh, yes, I’ve been through two
There is no question in my mind nomic ramifications would occur if cycles like this before. There will be
that China and India will eventu- it did take place? a dip in the short run, but the econ-
ally have bigger economies than the omy and finance will come back.
United States. But the question is JS: We have already seen a slow ero- There is still a tremendous need for
how many years? Maybe 15, 20, or sion of the dollar as the internation- financial services. BA
30 years. But just in terms of popu- al reserve, which is being replaced by
lation, they will be big and together the euro and yen. I expect that trend
will be a very powerful economic to continue. However, I don’t be- Kellen Xu is a sophomore at the Wharton
force. lieve there will be a world currency School of Business at the University of Pennsyl-
that will replace currencies in use by vania, double majoring in Business and Psychol-
BA: Can you elaborate more on this the major economies in the world. ogy with special concentrations in Finance
global financial crisis? We have actually tried special draw- and Legal Studies.
ing rights many years ago, and they
BUSINESS ASIA••Spring
BUSINESSASIA Spring2009
2009••33
33
Interviews
BA: Business Asia || SYT: Mr. Seo Young-Tae By Seo Hyun Kim, Cornell University
BA: Hyundai Oil Bank has moved from deficit crisis to surplus. What do you think are the most important driving
forces behind your company’s success?
SYT: Here are some of the primary factors for success. We have changed our marketing policy from ‘market share-driven’
to ‘profitability-driven.’ That way, we can thoroughly focus on improving the bank’s profitability. We have also updated
the management system. For example, eight years ago, the system gave the team managers absolute authority. Since then,
we have reformed the system, and now employees can report directly to the Chief Executive Officer. Equally important,
we have changed the employee reward system. In the past, we calculated employee compensation based on their years of
work experience and status. That way, employees had little incentive to optimize their efficiency. Under the new system,
employees are rewarded based on their performance. We have also adopted ‘Action Learning’ (AL) techniques to motivate
the employees to voluntarily participate in innovations both in and outside of the company. For the last seven years, we
have researched and obtained 3,000 AL assignments, solved them and pocked more than 200 billion Korean Won. Lastly,
we have reformed our hierarchical culture. We are constantly moving towards a merit-based promotion system. This has
resulted in dramatic changes to Hyundai Oil Bank’s organizational culture.
BA: What is your company’s goal for the year 2009? How will your com-
pany overcome the global financial crisis? BA:Graduating seniors this year are
SYT: This year, our goal is to maximize cash flow and minimize risks. We hope having a hard time finding a job.
to have secure and sustained operation. Our company is now investing 3 trillion Any tips for them?
Won in facilities, and would like to maximize our spending power in order to SYT: No matter what happens, compa-
continue this project. In the short run, we are trying to minimize the total ex- nies can always recognize talents.That
ecutive cost to deal with the current financial crisis. Also, to make the company is the universal truth.Especially in times
more competitive for the future, our company is focusing on internal manage- of crisis, students should hone their
ment reforms and investment. fundamental skills to make them more
marketable. Stripping it to the bare
BA: What kind of actions do you think the Korean companies should take bones, effective communication skill
to deal with this financial crisis? and quantitative skills would always be
SYT: In an export-driven economy, a company’s best strategy should focus on desirable. Everything else is built upon
its survival. In order to do this, it should minimize unnecessary expenditures, these two. All crises have been over-
foster strong leadership skills, and focus on the company’s production capacity. come one way or another. Therefore,
In a time like this, we need to step back and look at the big picture. We need students should plan for their future
to focus on the company’s long-term competitiveness. Also, it’s important not beyond the immediate crisis by differ-
to be petrified. The companies still need to formulate and execute new busi- entiating themselves and preparing for
ness plans. Companies that are largely U.S. dependent are likely to be the most their long-term career goals. BA
vulnerable. Therefore, in the future, we need to expand our consumer base to
other markets, such as Asia, South America, and the Middle East.
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Business Asia
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