Of China, Korean Missile Defense and Makeup Sales

♠ Posted by Emmanuel in , at 7/28/2017 04:03:00 PM
AmorePacific owns several internationally well-known cosmetics brands--especially among PRC buyers.
Whew! That post title is a bit of a mess, but believe me (Trump-style) it is accurate. A few weeks ago, I discussed the potential economic hit to South Korea from deploying the US-sourced THAAD missile defense system. The PRC does not want South Korea to deploy it on the Korean peninsula out of concern that its advanced detection capabilities potentially compromise China's military defenses. I like to think that South Koreans are a sensible sort not prone to provoking the Chinese without any sane reason...but maybe nuclear annihilation at the hands of North Korean crazies is just cause? Some (Chinese) people are being irrational and unreasonable IMHO.

At any rate, aside from the company that provided the land for the deployment of THAAD--Lotte--another Korean firm has had its business activities negatively affected as well to a significant extent. AmorePacific is the umbrella group of several top Korean makeup brands, which are all the rage here in Asia. Let's just say a PRC embargo on all things Korean as a result of the THAAD deployment has hit AmorePacific's bottom line...like a missile attack, in fact:
AmorePacific Corp, South Korea's biggest cosmetic company, reported a 58 percent slump in operating profit in the second quarter on Wednesday, as the once investor-darling bore the brunt of diplomatic tensions with China that dampened demand from Chinese tourists.

Chinese visitors, the largest population of the total tourists to South Korea, fell 66 percent in June from a year earlier, resulting in a significant plunge in the number of customers to domestic duty-free shops. Since mid-March, Beijing has banned travel agencies from selling trips to South Korea following Seoul's decision to deploy a U.S. missile system to counter North Korean threats, despite China's objections.

"Cosmetic giants such as AmorePacific tend to rely on profits produced from duty-free stores," said Cho Yong-sun, an analyst at HMC Investment Securities.
The gist of it is that PRC package tours to Korean have been discouraged by the government, resulting in the droves of Chinese tourists buying makeup at Korean duty-free outlets to drop precipitously. While unfair in many respects, you do have to wonder why such a major cosmetics group is so dependent on a certain type of foreign visitor to account for so much of their revenues.

Amorepacific, diversification would be good for you. 
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Is Kaspersky Labs a Security Threat to the US?

♠ Posted by Emmanuel in , at 7/27/2017 04:03:00 PM
Is Kaspersky anti-spyware...or is it Russian government spyware? That's the question for US state & local gov't users.
Arguably one of the best-known Russian companies in the world is Kaspersky Labs, the maker of anti-spyware software. Cheekily, you may say that if anyone knows how to spy on others online, it's the Russians given that the US presidency is currently enmeshed in several investigations involving Russian meddling in the 2016 presidential elections. Forthcoming additional sanctions against Russia (among others) aside, however, the commercial implications of alleged Russian spying are limited.

Consider Kaspersky, though. Given its line of business and the country it hails from, it's become something of a hot potato for government procurement Stateside in the anti-spyware arena. Given that the putative head of the US federal government is the president, you may be amused to note that it's the federal government and not local or state governments who have provided guidance against buying Kaspersky's stuff. From the Washington Post:
The federal agency in charge of purchasing, the General Services Administration, this month removed Moscow-based Kaspersky Lab from its list of approved vendors. In doing so, the agency’s statement suggested a vulnerability exists in Kaspersky that could give the Russian government backdoor access to the systems it protects, though they offered no explanation or evidence of it. Kaspersky has strongly denied coordinating with the Russian government and has offered to cooperate with federal investigators.
This action has left state and local governments in a quandary whether to follow suit in avoiding Kaspersky-branded products which some believe may open a backdoor for Russian state spies into US government activities:
The GSA’s move on July 11 has left state and local governments to speculate about the risks of sticking with the company or abandoning taxpayer-funded contracts, sometimes at great cost. The lack of information from the GSA underscores a disconnect between local officials and the federal government about cybersecurity.
Interviews suggest that concerns in recent months from Congress and in the intelligence community about Kaspersky are not widely known among state and local officials, who are most likely to consider purchasing the Russian software. Those systems, while not necessarily protecting critical infrastructure, can be targeted by hackers because they provide access to troves of sensitive information.
Meanwhile accusations and denials are coming up think and fast among the company and its critics:
James Lewis, a cybersecurity expert at the Center for Strategic and International Studies in Washington, said “it’s difficult, if not impossible” for a company like Kaspersky to be headquartered in Moscow “if you don’t cooperate with the government and the intelligence services.”

Kaspersky has worked to protect its image since the GSA decision. It said this month that it would be willing to turn over its software source code to federal investigators.
The gist of it all is that there is no evidence that Kaspersky Labs is in cahoots with Russian spies, or even that there is an alleged "backdoor" for these spies to exploit. Unless proven otherwise, this instance really is as fine as you'll get of "guilt by association"--flimsy circumstantial evidence of [i] a Russian firm [ii] marketing anti-spyware or even [iii] operating in Moscow are enough to label it guilty as charged.

I personally find Kaspersky cumbersome so I don't use it. However, you'd think there would have to be a higher burden of proof to conclusively order its discontinuance of use in US government offices than what has been provided thus far.
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Twin Peaks Revival and Critiquing Anti-Globalization

♠ Posted by Emmanuel in at 7/18/2017 05:26:00 PM
Dr. Amp throws the finger [x2!] at global capitalism.
After embarking on a fairly lengthy discussion of how Donald Trump should be a hero and not a hate figure of the anti-globalization movement amid violent protests at the recently-concluded G-20 meeting in Hambug, here is something a bit more lighthearted. I've been watching the return of the seminal show Twin Peaks to television after a 25+ year hiatus. Its off-kilter blend of melodrama, tragicomedy, horror, and science fiction has always been appealing to me.

However, what caught my attention in the context of anti-globalization was Dr. Jacoby--he of the different colored glasses--sliding further into madness in the revival. He's turned into some sort of crazed conspiracy theorist who goes by the name of Dr. Amp, selling sh_t shovels to dig ourselves out of the filth of modern life:


Instead of having to listen to the likes of Naomi Klein repeat the same old global corporate takeover shtick, why not have essentially the same message delivered in an entertaining way? I'd rather hear the Dr. Jacoby version any day...at least it's amusing in a self-deprecating (instead of self-important) manner. All the same, this satire points out the shortcomings of this genre of foolishness:
  1. Conspiracy - there are vast, unseen forces working against us in so many ways. Once more, the level of coordination implied usually is not demonstrable that there are several actors out just to get the rest of us.
  2. Logical inconsistency - going back to the point about Trump, anti-globalization arguments do not usually benefit from having parts that fit together. For instance, if globalization is providing employment to workers in poorer countries "stealing jobs", would they be "better off" if there were no global economic integration and everything consumed in rich countries was made in the US/Europe/Japan/ANZ, etc.? If anti-globalization activists are presumably concerned about the welfare of poor people (especially workers) elsewhere, then why deny them a living wage by "Making America Great Again" and reshoring virtually all manufacturing operations?
  3. Profit motive - Selling $29.99 "sh_t shovels" is the entire point of Dr. Jacoby's operations. Yes, he is interested in making money. If you were, say, Naomi Klein, and believed that your work contained the wisdom to right the wrongs caused by capitalism, then why not distribute it for free instead of charging us money and enriching some multi-billionaire like Amazon's Jeff Bezos?
Bottom line: As I've said before, most of these anti-globalization types are in it for the money too. The only difference between them and most of those whom they criticize is that they simply don't admit doing so by adopting self-righteous rhetoric.

Go ask Dr Amp.
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Shouldn't Anti-Globalization Activists [Heart] Trump?

♠ Posted by Emmanuel in at 7/07/2017 01:07:00 PM
G-20 Hamburg protests: why the hate for anti-globalization champion Trump?
For years, anti-globalization protesters have gone out to all sorts of notable economically-related gatherings worldwide, be they G-7, G-8 or G-20 summits; World Economic Forum gatherings; World Bank and IMF meetings; WTO ministerial conferences, and so on and so forth. The boilerplate accusation is that world leaders betray the interests of the common people in favor of a faceless global capitalist class. To this, the common people must stand up for what they believe in. So far, nothing is new here.

What's interesting with the emergence of Donald Trump in world politics is that he espouses much of the same rhetoric: the [American] working class has been hurt by globalization, and therefore globalization should be rolled back to protect the common people from the ravages of world trade. As such, it's always struck me how vehemently opposed anti-globalization campaigners are to Trump when he's actually done much more to stop further economic integration than all of them combined. From single-handedly dooming the Trans-Pacific Partnership to oblivion to refusing to agree that trade protectionism is to be avoided during economic summits, he should be the man of anti-globalization writer Naomi Klein's dreams. But alas, he is not. This Canadian who likes meddling in Yanks' affairs just cannot stop blathering about how awful Trump is. (It's a form of globalization I don't appreciate when some foreigner thinks she's "active" in US domestic politics.)

There are, of course, all sorts of wrinkles here. Coming from the left, the anti-globalization vision of eliminating world trade is complemented by replacing it with folks being self-sufficient in small, sustainable communities. Meanwhile, the Trumpian vision is instead a triumph of American industry making everything that those in the United States wish for and more--to the exclusion of considering everyone else's welfare. Another line of argument is that Trump is only masquerading as a champion of the working class and is actually globalizer in disguise.

Then you also have a panoply of leftist causes that are the exact opposite of what Trump champions. These include climate change, racial tolerance, and so on. But, if you really think about it, Trump may be the one who is *really* anti-globalization in outlook here if the criteria is sheer isolationism. Consider:
  • You don't want international cooperation on climate change since, well, it involves representatives of different nations discussing things. A global elite should not be dictating what the free peoples of the world do to their piece of the planet;
  • You don't want tolerance of other people with different creeds, colors, or races. If the opposite of "globalist" is "nationalist," then you cannot have a nation-state which when it is largely indistinguishable from all others.
Abhorrent as those ideas may be, they're arguably more consistent with extricating ourselves from the rest of the world. In this sense Trump is the true anti-globalist, whereas those championing all sorts of progressive causes are not, really.

If anti-globalization means going it alone no matter what everyone else thinks, Trump is its best representative.

Anti-globalization activists should therefore celebrate Trump's arrival, full stop, wherever in the world he shows up. The attention he brings to the cause is unrivaled--especially compared to a ragtag group of anarchists and flunky writers like Klein.
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After Trump Killed TPP, is Japan-EU FTA Imminent?

♠ Posted by Emmanuel in ,, at 7/05/2017 04:03:00 PM
EU Trade Commissioner Cecilia Malmstrom and Japanese Foreign Minister Fumio Kishida may have an FTA soon.
Given its recent efforts to join the ill-fated Trans-Pacific Partnership (TPP), Japan actually has an effective grand total of zero [0] FTAs involving more than one country. Yes, it does have one with ASEAN, but it's actually on top of a series of bilateral "economic partnership agreements" with each Southeast Asian member country (except for later accession countries Cambodia, Laos and Myanmar). TPP was to be Japan's first real foray into a plutilateral FTA, but Trump put paid to that.

Yet, emboldened by its adventure negotiating TPP and wanting more than the status quo, Japan is contemplating a deal with the EU. In fact, it may be inked as soon as tomorrow at a Japan-EU summit prior to the Hamburg G-20 gathering on Friday. The largest bugaboo with Japan and multilateral deals has always been agriculture. Why does Japan have so many bilateral deals with ASEAN member countries? It was largely to devise agricultural protections specific to each trading partner.

What's interesting about the mooted Japan-EU FTA are twofold: Once more, it would be Japan's first honest-to-goodness plutilateral FTA. Second, this deal would involve another entity known for agricultural protectionism in the EU. Is the latter an insurmountable obstacle? We will soon find out...
The European Union and Japan expect to commit to signing a free trade deal on Thursday, the EU said, in what both see as a push back against a feared U.S. turn toward protectionism under President Donald Trump.
Confirming on Tuesday that Japanese Prime Minister Shinzo Abe would meet heads of EU institutions in Brussels on the eve of a G20 summit with Trump and other world leaders in Germany, the European Council said: "Leaders are expected to announce a political agreement on the EU-Japan free trade agreement."
That would be short of a final accord ironing out all the commercial intricacies between two of the world's biggest economies and EU officials said on Tuesday that some key issues still needed to be settled before Thursday's EU-Japan summit.

However, confirming Abe's attendance is a sign of confidence that a deal will be ready for his signature and also puts pressure on trade negotiators to secure at least outline agreements on opening up each other's markets, including in the trickiest areas such as Japanese cars and European farm produce.
This Eurasian activity contrasts with the proclivities of a certain American stinker:
Both sides, having seen Trump pull back from free trade relationships, are keen to show they remain committed to removing barriers they say hamper growth.

"It is important for us to wave the flag of free trade in response to global moves toward protectionism by quickly concluding the free trade agreement with Europe," Abe told ministers at a meeting on Tuesday about the EU negotiations.

"This agreement is also important for our growth strategy. We will negotiate with all our energy until the very end to achieve the best deal for Japan."

Abe will meet European Council President Donald Tusk, who speaks for the 28 EU national leaders, and European Commission President Jean-Claude Juncker, the bloc's executive head.

Juncker's Trade Commissioner Cecilia Malmstrom was in Japan at the weekend and said after her talks that she was "quite confident" that a broad agreement could be announced on Thursday. EU officials had said that Abe would only visit Brussels if both sides were certain that the political agreement would be signed.

Malmstrom said: "You can do good, fair, transparent and sustainable trade agreements where you win and I win, and not the American view, which seems to be, 'You lose and I win'."
Abe, Tusk and Juncker will go on to Hamburg on Friday for the G20 summit
Take that, Trumpie! Europeans and Japanese do not take the trade realm as a winner-takes-all arena. As I mentioned, agriculture has been a sticking point for the Japanese negotiators:
European officials have been pushing for a reduction in Japanese tariffs on cheese and agriculture imports that are as high as 30 percent in return for phasing out tariffs on Japanese autos and auto parts.

This tradeoff initially met strong resistance, because some politicians want to protect Japan's dwindling dairy industry. However, Malmstrom expressed confidence that both sides have overcome this problem and can reach a deal.

"We've made meaningful progress, but there are still important points remaining," Kishida told reporters.
Some perspective is useful here. Actually, the Japan-EU deal has been under negotiation for nearly half a decade. My guess is that Trumpism was a spur to it. While the US has begun looking inward, many other countries still see free trade as beneficial. Although there are of course longstanding sticking points like the ever-bothersome agriculture, those committed will find a way to work around such obstacles. In order not to foster a wider climate of protectionism, some gesture was necessary.

So, here we are. By contrast, the Trump administration may announce steel tariffs hitting several G-20 countries in time for the Hamburg meeting. Same gathering; entirely different messages.
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