Showing posts with label CSR. Show all posts
Showing posts with label CSR. Show all posts

When McDonalds China Can't Serve Burgers...

♠ Posted by Emmanuel in ,, at 7/23/2014 01:30:00 AM's like Amazon without books to sell. A colleague in China posted the picture above to his social media account in the wake of Chinese food supplier Shanghai Husi being found to have relabeled the expiration date of its meat products. Upping the visibility and impact of its food safety violations, it sold these products to several major Western food chains. We usually believe that tampering with food products is common among PRC firms and not Western ones who would think more carefully about tarnishing their reputations for a bit more profit, but this instance depicts the opposite: Shanghai Husi is a subsidiary of the OSI Group of America, a private meat processing concern headquartered in Aurora, Illinois of Wayne's World fame. You can't get more American than that.

With an already lengthy history of food scares, there was no other option for the Chinese authorities other than to disrupt the food supply chain to these chains:
Authorities suspended operations at Shanghai Husi, a unit of Aurora, Illinois-based OSI Group, after the local Dragon TV channel reported on July 20 its workers repackaged and sold chicken and beef past the sell-by date. The probe may affect chains such as McDonald’s, Yum’s KFC and Pizza Hut, Papa John’s International Inc. (PZZA) and Burger King Worldwide Inc. (BKW), which said they had bought and have since removed items from the supplier.
Unfortunately, the Chinese government doesn't go scot-free here. As it turns out, they had already been looking into the firm's practices prior to the investigative show on Dragon TV running its feature on Shanghai Husi. How do we know this? Part of the show contained the interrogation of a Shangai Husi employee stating that these practices have been going on for years now:
An unnamed quality manager at Shanghai Husi’s factory said company executives approved the use of expired ingredients, a practice he said had been going on for a few years, according to Dragon TV’s taping of his interrogation by authorities. Two calls to OSI China’s main office in Shanghai weren’t answered. The Shanghai city government’s media office didn’t immediately respond to a request for comment.

Shanghai Husi’s case would be handed to police if crimes were suspected, according to the regulator. It also ordered probes into all other China food-production operations invested by the OSI Group, including in Shandong, Guangdong and Yunnan. 
Instead of taking action only after the show was aired, the authorities ought to have cracked down as soon as they confirmed these irregularities not only to bolster their reputations but also to ensure public safety. When I travel abroad, I usually think of McDonald's as a haven for clean and safe (if not necessarily healthy) food. After all these years, I guess I should rethink that.Apologies won't work now, unfortunately.

UPDATE: For what it's worth, TIME speculates that finding against this firm may be part of Chinese efforts to undermine foreign companies operating in the PRC:
We can speculate why that might be happening. The government could be trying to reel in a few “big fish” to try to scare smaller fry into better behavior. Officials might be attempting to win points with the public by appearing to address issues of great public concern like food safety without roiling any Chinese interests. And in the process, the Chinese government might believe it can aid Chinese companies in their competition with foreign firms by undercutting the reputation of international brands...

The Chinese government has a long history of attempting to tilt the local playing field in favor of its own firms. Foreign carmakers, though very successful in China, are still forced to manufacture in the country only through joint ventures with Chinese firms — a restriction most other emerging economies don’t impose. Reports from chambers of commerce accuse Chinese bureaucrats of routinely hampering the expansion of foreign business by taking a “go-slow” approach when issuing mandatory permits and licenses. 

Adios Sochi Grand Prix 2014, Russia World Cup 2018?

♠ Posted by Emmanuel in ,,, at 7/22/2014 01:30:00 AM
Geography is against Russia retaining these events without scrutiny.
This is not exactly a pleasant post to write given the circumstances, but it's something that will be the subject of discussion anyway in the coming months and perhaps years. First, as I wrote a few weeks ago, the first Russian Grand Prix is scheduled on the Formula One calendar for October 12. Even as its business elites are preparing for the worst as the full weight of Western sanctions passed (and yet to pass_ disrupt their abilities to conduct business abroad, Russian race organizers are adamant that show must go on:
Organizers insist Russia's first Formula One Grand Prix will go ahead as planned despite an airliner being shot down in the conflict zone in eastern Ukraine.

Malaysian Airlines Flight 17 from Amsterdam to Kuala Lumpur crashed Thursday in eastern Ukraine. All 298 people on board are believed to have been killed. Ukraine accused pro-Russian separatists of shooting the plane down, something the rebels deny.

The promoters of the Oct. 12 Russian Grand Prix in Sochi told The Associated Press in a statement Friday that "all the preparations are on track and run according to the schedule," and that "organisers are confident that the inaugural Russian Grand Prix will be comfortable for all."
All I can say is that the organizers of the Bahrain Grand Prix were making similar noises prior to the 2011 race being canceled against the backdrop of anti-monarchy protests during the Arab Spring. Self-evidently, the disorder in Sochi's case emanates not from internal turmoil--Chechnya is far away--but from the weight of disapproval from foreign powers-that-be. In motorsports, they reside in Great Britain.. As the graphic above indicates, 7 out of 11 Formula One constructors are headquartered in the UK (never mind that the car brands themselves are "foreign"; their F1 facilities are mainly in the Blighty. 

I am obviously not clairvoyant as to what the culpability of Russia is in the downing of Malaysia Airlines MH17. Nor do I know what Russia's response will be if and when an international body finds the weight of evidence implicates Russia. However, I do know this: if Russia is designated a "state sponsor of terrorism" or something similar that results in severed trade ties as UK Defence Minister Michael Fallon suggests, there is no chance whatsoever that the race will proceed as planned. It will be curtains for the race and much else that is Russian-invested in Europe. Aside from most of the teams being UK-headquartered, commercial sponsors scare easily.
* * * 
Tis sad talking about real generals instead of the Oranje Generaal, but we are where we are.
Next, consider the 2018 World Cup. Unlike the IOC with its Olympic events behind the Iron Curtain--the most memorable being the 1980 Summer Games in Moscow, USSR and the 1984 Winter in Sarajevo, Yugoslavia--there were never any FIFA World Cup events held behind the Iron Curtain. (See this interesting story behind IOC politics during the Cold War.) Obviously, large-scale disapproval of Russian involvement will also torpedo Russia hosting the next World Cup even if it's only 4 years away. Being designated a state sponsor of terror or being taken to the International Criminal Court and the like will scare any sensible commercial sponsor away. 

Russia has also rubbed one of football's powers the wrong way--the Netherlands. With a majority of the passengers aboard MH17 coming from the Netherlands [193/298], it has been deeply affected by current events. That said, the Netherlands also has significant commercial ties with Russia alike many other Western European countries. What to do, then? If Russian involvement is found, then trade ties will probably not be enough to quell Dutch frustrations. For obvious reasons, Dutch input will be crucial in forming the international response to Russia.
And while the disaster has touched so many here, the government is also mindful that Russia is the country’s third-largest trade partner and that business is growing, especially natural gas.
“We are a small country, dependent on our exports, and unlike the United States, we cannot always react from our moral high grounds,” [opposition leader Alexander] Pechtold said. “Still, if it is proven that the Russians have their fingerprints on this horrible event, we cannot look in the other direction.”
Also consider that the Dutch national team is one of football's most famous draws. In Yank-speak, the World Cup without the Netherlands participating is like the Lone Ranger without Tonto. (Sorry Dutch readers; if your team had won at least one World Cup final in three tries, I'd say the World Cup without the Netherlands is like the Simpsons without Bart.) As the worst-affected country, the Netherlands is not a pushover being a NATO member and fielding one of football's most recognizable squads in sporting terms. End result? You can safely conclude that the Dutch will play a significant role in determining the fate of the 2018 Russia World Cup.

UPDATE: The highly reliable Christian Science Monitor explains why EU sanctions will likely be shaped by the Dutch. Also notice how the Russia-aligned rebels are now providing passenger remains to the Dutch.

US Firing Squads From Mars, EU Pharma From Venus

♠ Posted by Emmanuel in ,, at 5/20/2014 02:00:00 AM
Having (ab)used the hackneyed Americans from Mars, Europeans from Venus trope already, I suppose giving it another go isn't bad. As I usually start my day, I perused the Yahoo! news items presented to me on the homepage, including an AP article about how the state of Utah may be bringing back the firing squad to execute death row inmates. The proximate cause of this seeming return to barbarity is especially interesting: For many, many years now, European countries have been trying to persuade the United States to stop the cruel and inhumane practice of handing down death sentences. As it turns out, though, many of the chemicals used to lethally inject death row inmates were sourced from EU pharmaceutical firms. Upon figuring this out, the aforementioned EU pharma concerns were aghast at how their products were being used--or at least the EU finding them complicit in American "human rights" violations punishable under European law. Faced with dwindling supplies from abroad, what are AmeriKillers supposed to do?
The ethical exploration of society’s ultimate sanction has been going on for decades. But it’s been complicated more recently with European pharmaceutical companies refusing to sell key lethal injection drugs to US death penalty states, on ethical concerns about capital punishment. Most other countries that still have the death penalty either hang or shoot their condemned, with only six countries, including the US, relying on lethal injections. (Three countries still behead.) One hundred forty countries ban the death penalty. But to some elected state officials, drug shortages and legal challenges have sparked a renewed focus on what is a humane execution.
The recent brouhaha over lethal injection was spurred when a new toxic cocktail did not work as intended as Clayton Lockett cursed and thrashed for a long while in Oklahoma before falling silent in a botched execution. The incident prompted much discussion, and I was pointed in the direction of an earlier Listverse feature detailing horrifically botched executions. These things tend to further exasperate Europeans from all ends of the political spectrum convinced of the barbarity of American practices. Talk about the road to hell being paved with good intentions, however, as the Yanks are going back to firing squads over the unavailability of EU-sourced chems:
For decades, Europe has done all it could to bring its anti-death penalty stance to the United States. We've seen international covenants and conventions, refusals to expedite in capital cases, good old-fashioned diplomacy, even EU briefs to the US supreme court. Nothing has worked. Until now. Over the last several years, Europe has found a way to export its rejection of capital punishment ... by refusing to export lethal injection drugs to the United States.

In the private sector, European pharmaceutical companies caught wind of the increasing reality that their products were being diverted to execution chambers, so they either imposed end-user agreements on buyers or stopped producing the drugs altogether. In the public sector, Britain responded by imposing export controls on drugs used for lethal injection and joined a chorus of countries calling for the European Commission to do the same, which it did.

When it comes to the death penalty, the United States today is what South Africa was in the 1980s. It is the subject of a targeted boycott of goods based on behavior that the rest of the world views as immoral. That's a mighty strange place to be for the self-declared leader of the free world.
As a God-fearing Catholic, I generally discourage the use of the death penalty. However, you may be surprised that this occasional America-basher will not automatically condemn this Stateside practice as an abomination (or compare it to apartheid-era South Africa). From a rational choice standpoint, keeping folks in jail isn't cheap, even more so those on death row. Searching the Internet, you will get an astonishing range of figures on how much it costs to jail "regular" inmates and their death row peers. What they share is being humongous to astronomical.

However, portraying shooting people as a the "cost-effective" solution is of course besides the point: Why do so many people end up in jail in the first place--especially those unfortunate enough to be born with the wrong skin color? As with many other seemingly barbaric practices, never forget that there are some who stand to profit from the entire enterprise. Sticking with EU pharma firms, I am content with the belief that most are genuinely appalled by the use of their drugs for this application and are thus willing to stick with EU guidelines proscribing their distribution for such use.

I'm not saying their practices are always ethical, but that's a story for another blog post...

Mickey in GulagWorld: Enter Disney Shanghai

♠ Posted by Emmanuel in ,, at 5/15/2014 02:00:00 AM
Wishing upon a CSR Death Star, you are.
I was originally going to entitle this post "Totalitarianism and Theme Parks" but I thought the better of it. Some of you will of course still complain that (a) there already a Disney park in China in Disneyland Hong Kong and that (b) jillions of Disney-licensed merchandise is already made in the PRC. So, it is too late to complain that China's authoritarianism fits poorly with Disney's family-friendly image. But I digress.

With holier-than-thou Hollywood types complaining about Brunei's human rights violations, the upcoming opening of a Disney park in mainland China should not go unnoticed. The interesting angle for me has always been the collision of Disney's commercialized and sanitized fairy-tale happy endings with real life's opposing penchant for messy, tabloid-nasty sad endings. The essential difference between Disney and China is that Disney is more concerned with the appearance of being one big, happy family whereas China is more concerned with acquiescence to a patriarchal leadership in the Communist Party. Are these two--illusion and patrimony--mutually exclusive? That is the question Disney Shanghai will face.

Actually, there already is a planned community which Disney has created that certainly does not always play host happy endings. Celebration, Florida (pop. 7,427) has been around for about a decade, and it's been an interesting social experiment:
Celebration isn’t perfect in the Stepford Wives, Truman Show way that it invokes with its Disney connection and emphasis on uniformity—there have actually been a few documented murders in Celebration and Potochney recalls clandestine drug use by teens like in any other town—but the residents have a palpable pride. It stems from a sense of connectivity and community that careful planning often provides, and that hopefully we can learn from and try to implement in less logically structured neighborhoods in the country.
So residents of Celebration kill each other and shoot up drugs like in any other American town. However, that it is still an all-American town means that few compare it to the Disney ideal. Do not expect the same treatment for Disney Shanghai. So many years on after it joined the WTO in 2011, we have hardly noticed Bill Clinton's liberal ideal that economic freedom will eventually cause Chinese residents to clamor for political freedom. Just think of the possibilities for protesters--I'm sure Disney itself is already building up its rhetorical defense for when the time comes:
  1. When You Wish Upon a Star - Jiminy Cricket tells us that it makes no difference who you are; anything your heart desires will come to you. However, what if you are the Uighurs or Tibetans wising for self-determination, or at least more political autonomy? Xinjiang province where the Uighurs live has been subject to Commmunist Party repopulation campaigns to make them a minority there. Same banana with the Tibetans who've been subject to their own repopulation efforts. Can you say "Chinese West Bank"?
  2. It's a Small World After All - this standard ride in all Disney theme park extols the virtue of respecting differences in a Kantian sense since "there's so much that we share." Aside from hardly being applicable to China's separatist movements, Chinese work camps or laogai do not seem to square with China being a small world after all. Why would you need to re-educate your people while hosting a theme park that lauds unity in diversity? 
  3. Circle of Life - this Elton John classic from The Lion King is a really memorable, upbeat tune. It too does not seem to jibe with a country that still implements a one-child policy whose violation by the poor and marginalized is likely to result in forced abortions.
I hardly think China will change the practices mentioned above to ensure Disney doesn't get a a bum rap helping enrich the folks who violate all sorts of trite, do-gooder sentiments expressed in song. Sometime ago I discussed money-grubbing American Yale University whitewashing concerns about freedom of speech to set up shop in Singapore, while the more circumspect British Warwick University decided against doing so. Americans, especially the commercial behemoth that is Disney, probably couldn't care less that the CSR concerns in China are far, far greater than those of Singapore for as long as they're not brought up. Again, the problem for Disney is that it is the world's leading purveyor of lachrymose sentiments about the goodness of this world while working closely with a regime that tries to keep 1.3 billion persons in line by almost any means necessary.

Indeed, why are there so many songs about rainbows when we kind of know what's on the "other side"? To paraphrase Elton John, I'm afraid I do not necessarily feel the love tonight--but I do see the commercial po$$ibilities. As the capitalists have pumped in another $800 million into this project, it should be quite a show. Mark your calendars for December 2015, and try not to feel so bad about radical levels of inequality in this self-styled "worker's paradise" of a country as you take photos with Gonzo, Princess Leia, Winnie the Pooh and heaven knows how many more characters Disney have already bought.

You may even want to try out to be a "cast member" who is contractually obliged to be perpetually cheery in that shallow and vacuous American way: just forget about the poor sods unable to afford a ticket into the Happiest Place on Earth. Really, it's a whole new world (after you get in the gates)--don't you dare close your eyes.

Leno, Branson & Brunei: On Boycotting Shari'a Law

♠ Posted by Emmanuel in ,,,,, at 5/11/2014 12:30:00 AM
Can Jay Leno and other white people "save" us foreign primitives from shari'a law?
Life is a series of endless annoyances you just wish would go away. This latest brouhaha started when big-chinned American funnyman Jay Leno publicized his boycott of the landmark Beverly Hills Hotel which is part of the Dorchester Collection hotel chain owned by the Sultan of Brunei. His recent implementation of shari'a law in Brunei has provoked an outcry among Western activists. Instead of blowing away, however, it's gotten worse as the glitterati have followed suit. The Hotel Bel Air which is also part of the Dorchester Collection has also been targeted. Not to be outdone, Sir Richard Branson decided to wade into the fray by prohibiting all Virgin employees from patronizing the sultan's properties--including the flagship Dorchester Hotel favored by the late Michael Jackson--citing "human rights violations."

I have four points:

(1) Ignorant Westerners living in their white people's worlds and applying their biased interpretations of morality on others is hardly unusual. Shari'a law with its--how shall we say--vivid punishments is a favorite target of Westerners since these include storing to death of adulterers and homosexuals. However, there is a not-insignificant difference between the literal interpretation of shari'a law and the punishments most commonly meted out. Take for instance, how shari'a is followed in the UAE:
Consider the courts' interpretation of family law. The UAE mandates that Sharia is used as the primary legal justification on matters involving family legal issues. But the UAE personal status law, which covers marriage, divorce and succession, also states in Article 1 that "the law shall apply to all UAE nationals except where non-Muslim UAE nationals have special rules relating to their specific creed or sect".

What's more, Article 1 adds that the law will apply to non-UAE nationals as well, unless they choose their own law. Elements of the nation's criminal code offer similar distinctions. For instance, payment of blood money in the event of a death or injury is allowed according to Sharia. Crimes such as the desertion of Islam, fornication, murder, theft, adultery and homosexuality - all crimes classified as "Al Hudud" in Arabic - are punishable by predetermined penalties (flogging and arm amputation among them). And yet some emirates have suspended Al Hudud provisions pursuant to their rulers' decrees and replaced the Sharia penalties with jail terms and fines as determined by the law according to each case respectively [my emphasis].
I am less concerned with the archaic punishments a literal interpretation of shari'a demands--the Old Testament is hardly more palatable in this respect to modern eyes. Rather, less concern should surround a country's legal system adopting aspects of shari'a law--usually the civil code--and  more with what punishments are actually meted out. Not having sentenced anyone to death by stoning for adultery yet--the sultan's brother, the dissipated wastrel Prince Jefri, should be first in line with his global philandering [1, 2]--Brunei still has the benefit of the doubt.

(2) If these Westerners were truly aghast at shari'a law in any way, shape or form, then their boycott should not only be confined to tiny Brunei. In the UK, it puzzles me why the Emiratis have not been subject to the sort of boycott the sultan has when Emiratis bankroll even more visible bits of the UK in the football clubs Arsenal (which plays at the Emirates Stadium) and Manchester City (which is owned by a member of Abu Dhabi's royal family). Doing so would bring football, the country's most-watched sport, to an absolute standstill since Manchester City looks likely to win this year's championship while Arsenal gains another Champions League berth. British royal warrants notwithstanding, Sir Richard Branson and his high society pals should also refrain from shopping at the world's most famous department store, Qatari owned Harrods. Similarly, Virgin Atlantic ought to stop flying out of Heathrow airport since it's part-owned by the Qataris.

In America, even the right-wingers at Breibart have a laundry list of other concerns that should be boycotted if shari'a law was to be avoided at all costs. Me, I'll stick to Jay Leno's other passion here--collecting automobiles. With so many big-engined exotic cars to fuel up in his garage, how sure is Jay Leno that his petrol has not been sourced from Kuwait, Saudi Arabia or another homosexual-hating hydrocarbon supplier? Last I checked, Saudi alone supplied 13% of US-consumed oil, likely making Leno a rather famous consumer of products originating from a shari'a law-abiding nation (20% come from the "Persian Gulf"). To be safe on the safe side, he should also sell all his Ferrari car(s) since the automaker has a longstanding commercial tie-up with Abu Dhabi, including a theme park.

(3) Implicitly, there is also this typically condescending Western conceit that they "know better" about the barbarity of others and have a responsibility to "save" us colored people from our despotic rulers. Did it ever occur to them that some Muslims actually prefer the implementation of shari'a law--especially in civil matters? It is not uncommon for even predominantly non-Islamic countries to bow to such wishes granting shari'a courts powers of interpretation over these matters.

From Political Science 101, there is this notion of political legitimacy. Jay Leno and others only focus on extreme punishments not usually meted out by shari'a courts. Would so many people--especially in non-Islamic countries--tolerate or even demand these courts if the decisions made were completely out of line with people's expectations? I do not believe so. Rather, most courts issue rulings that pass muster even in non-Islamic countries which sufficiently meet the expectations of Islamic and other communities. In other words, the operation of these courts passes the test of legitimacy. Granted, some rulings may be abhorrent to Western sensibilities, but consider first what citizens' expectations are of their legal systems. Just because rulings are made by "authoritarian" figures does not mean they are bereft of popular support. If Brunei's citizens want to turf Sultan Bolkiah over enacting shari'a law, then it's their call and not anyone else's.

(4) If Jay Leno, Richard Branson and all these busybody celebs were truly concerned with human rights violations, then they should focus less on a country which hasn't stoned a single offender to death but rather their own countries that actually commit human rights violations on a massive scale. The United States invades other countries on false pretenses resulting in tens of thousands of deaths and then leaves them worse off in the name of democracy and freedom. It also kills innocent people indiscriminately the world over via drone strikes in the name of the global war on terror.

Complain if you will with the interpretation of shari'a law, but at least there is due process. The United States reserves the right to indefinitely detain and Guantanamo Ghraib people without any legal recourse whatsoever, Americans included. Unlike a certain other government, Brunei's doesn't abduct persons in 50+ countries Boko Haram-style and torture them somewhere else. Speaking of excessive punishment, there is also the matter of the United States jailing a larger proportion of its own people than any other country on earth--especially African-Americans not lucky enough to be well-off, white activists who have all the time in the world to pick on things of limited consequence outside the Beverly Hills Hotel.

Following the Gandhian principle of "peaceful disobedience"--he's, like, big in Hollywood since his biopic won 8 Oscars--I suggest that Jay Leno and his followers stop paying taxes to the US government which inflicts death and misery worldwide on an unprecedented scale instead of picking on a country that *may* issue an inhumane punishment in the future. My guess is they won't because they pick targets that are easy to demagogue against.


Bottom line for these Western activists: As sung by the late Michael Jackson, if you want to make the world a better place, take a look at yourself and make that change.  Start with your own country since these holier-than-thou attitudes certainly don't impress us after years and years of American hypocrisy. It's "We the People," right? The IPE Zone does not suffer religious intolerance gladly  coming from Western left-wing or right-wing crusaders. They are too secure in their smug self-superiority. In the end, however, their differences are small since they share largely similar, narrow-minded whitebread views of the world.

To show you just how asinine these protests are, some desperately uninformed soul wearing designer shades [natch] in Leno's protest is seen urging Brunei to be excluded from the US-led Trans-Pacific Partnership (TPP) expansion negotiations. My dear, Brunei is a founding member of the TPP. Your country is merely trying to join it. Should your country press for what you suggest, it's far more likely that Brunei will "kick out" the United States. As many a blog post here will attest, Americans are this proud of parading their ignorance for all the world to see.

Conflict Minerals: Which Game Console is Most Violent?

♠ Posted by Emmanuel in , at 11/28/2013 07:52:00 AM
With the holiday season upon us and one semi-new (Nintendo) and two completely new (Microsoft and Sony) video game consoles on the market, consumer interest is . While you may be thinking of blasting away virtual opponents playing Call of Duty 107 or whatever version they have nowadays, pause for a moment and think of the more than 5 million persons estimated to have died in the Congo in various conflicts. For, many elements you find in consumer electronics--including video game consoles--are sourced from mineral-rich mines there: tantalum, tin and tungsten.

Instead of Call of Duty 107, Congo is home to true-to-life civil war, foreign invasions, warlords, child soldiers, sexual crimes and so on piled atop a humongous body count that is still increasing. To fund these endless wars, proceeds from minerals--"conflict minerals"--have picked up their share of the (bloody) tab. While there are monitoring mechanisms in place that allow consumer electronics firms to gauge their reliance on dodgy Congolese sources, compliance is oftentimes voluntary and thus subject to wide variation.

So, which then are the most peaceful and violent video game consoles in real life? Watchdog group Raise Hope for Congo ranks MNCs by the measures they use in ensuring their products do not contain conflict minerals. Note that scoring high or low does not necessarily mean that their products have a high or low proportion of Congo-sourced conflict minerals, but rather that its share cannot be accurately determined because they do not keep tabs.

Microsoft (X-Box One) is greenlighted with a score of 30, meaning it has "taken proactive steps to trace and audit their supply chains, pushed for some aspects of legislation, exercised leadership in industry-wide efforts, started to help Congo develop a clean trade." Sony (Playstation 4) scores a 27 having joined some global initiatives but has not yet traced its supply chain for links to Congolese conflict minerals. Worst of all, Nintendo (Wii U) score a big, fat 0. Despite the ostensibly more family-friendly nature of its games as opposed to the blood-and-gore soaked titles of the other consoles, it is the bottom of the barrel:

What would Bowser do? If you look at the list, American companies generally rank highest, South Korean ones are in the middle, and the Japanese fall towards the back of the pack. I would believe that it's a function of activism insofar as most of them operate in the United States. Why South Koreans are more receptive than the Japanese to such entreaties makes me wonder, though.

Still, you'd hope Nintendo did a better job on the CSR end given that they are not exactly setting the sales charts on fire.

Make a Killing? US FTAs and Big Tobacco

♠ Posted by Emmanuel in ,, at 9/26/2013 10:39:00 AM
There is a debate surrounding the pending Trans-Pacific Partnership expansion about whether participants' policies aimed at curbing tobacco use will be dismantled in the name of free trade. Large American tobacco companies--collectively known as "Big Tobacco"--have certainly not shied away from using texts of trade liberalization measures in faulting curbs to their unfettered access to emerging markets.  Outgoing New York Mayor Michael Bloomberg has been especially vocal about what he believes is a major assault on global health led by the United States.

As per current TPP drafts, some argue that negotiating LDCs will be made to relent on the sorts of public policies that have proven effective Stateside in reducing smoking:
The proposal put forward by the US Trade Representative (USTR) last week in Brunei would reduce prices for US tobacco in low- and middle-income countries and make it more difficult for these countries to enforce anti-tobacco policies like package warnings and advertising and marketing restrictions.   This proposal would impact the nine TPP countries – Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the United States -- six of these fall into the World Health Organization’s Western Pacific Region, which had the highest smoking rate among men in 2009. 

To put the implications of this proposal into perspective, consider these two points: Tobacco use caused 100 million deaths in the 20th century.  If current trends persist, it is projected to cause 1 billion deaths in the 21st century.  More than 80% of those future tobacco-related deaths will occur in low- and middle-income countries (LMICs). Tobacco use in the United States is steadily declining, due largely to widespread anti-tobacco campaigns and stringent anti-smoking policies – the same kinds of policies that the TPP will make difficult to enforce in developing countries.

So, why is the US effectively hindering the export of its good anti-tobacco policies to the LMICs that need them most?  A few key issues have risen to the surface during this debate. A “carve-out” for tobacco – where tobacco would simply be excluded from the terms of the TPP agreement – was proposed by Malaysia and makes sense. But the USTR worries that a carve-out would set a precedent that could be used to block a variety of other US exports on health grounds.
In other words, how exceptional is tobacco based on health grounds? The fear is that all sorts of products would be excluded by other countries and dilute the FTA. Left unresolved, the tobacco issue may even spoil TPP negotiations altogether:
The White House has tried to finesse the issue, recently proposing that the TPP agreement acknowledge tobacco as a health concern but otherwise treat it no differently from other products. That compromise has satisfied no one. Health advocates are furious that the White House dropped its previous proposal for a stronger tobacco control exception in the TPP agreement. The business community opposes any special treatment for tobacco. With that controversy spilling into the press and threatening the conclusion of the TPP talks—the Obama administration's signature international economic initiative [...]

As the tobacco industry's tactics on trade shifted, the controversy reignited. Tobacco companies began using trade and investment agreements to file legal challenges to block new cigarette labeling and advertising restrictions. Australia is fighting four different trade and investment cases against its cigarette packaging law. Similar cases have been filed against Norway and Uruguay and threatened against Togo. Investment disputes are expensive and the outcomes can be unpredictable. Many developing countries do not have the expertise or resources to fight. Even New Zealand and Canada backed away from planned tobacco regulations in the face of litigation threats.
 Thomas Bollyky of the CFR's suggestions in making a limited exception seem to make sense:
  • This exception must explicitly encompass the full range of tobacco control measures addressed under the Framework Convention on Tobacco Control and permitted under U.S. laws.
  • This exception should be limited to nondiscriminatory tobacco control measures. An exemption from legal challenge cannot serve as a pretext for TPP countries to favor domestic cigarette producers. This condition is consistent with overall U.S. trade policy and the terms of the 2001 U.S. executive order on tobacco and trade.
  • This exception must not include the cross-reference that exists in most U.S. trade agreements to the health exceptions in World Trade Organization agreements. Such references might inappropriately interfere with tobacco litigation already filed under those other agreements against Australia and other TPP countries.
My take is that fair warning is appropriate concerning the possible effects of cigarette smoking and ought not to be sacrificed to a distortion of the term "liberalization." Consumer interests are not well-served by hiding the facts about the health consequences of cigarette smoking and arguing otherwise is a sham. Smoke if you must, but do so while knowing the possible consequences.

Add this to the already lengthy list of obstacles to TPP. 

Cola's Final Frontier: Coke v Pepsi in Myanmar

♠ Posted by Emmanuel in ,, at 9/21/2013 02:19:00 PM
He thought he was the King of America
Where they pour Coca-Cola like vintage wine

In 1986 Elvis Costello penned the lyrics above to the first song of his album King of America, "Brilliant Mistake." I thought it was pretty crafty way back when, but even then, the snobbery against drinking carbonated beverages was their cultural unsophistication as Costello intoned. Nowadays, of course, we are more concerned with the unhealthy amounts of sugar and caffeine they contain. Such concerns have caused cola consumption to steadily fall Stateside since 2005, but it remains a highly saturated market with the average American drinking a whopping 714 8 oz servings of carbonated beverages in 2012.

Supersaturation of the home market has caused both Coca-Cola and Pepsi to take on a two-pronged strategy. The first is developing ostensibly healthier drinks. The second, of course, involves going abroad in search of new or undersaturated markets. Reflecting the latter concern, it is unsurprising that the current heads of these venerable American brands are foreign-born and that they gained their reputations by growing business abroad: India-born Indra Nooyi has been Pepsi CEO since 2006 and Turkey-born Muhtar Kent has been Coca-Cola CEO since 2009.

Together they have been duking it out in cola wars waged around the world in a battle for carbonated supremacy. Compared to the 714 colas each American consumes, there is room for much sales (and waistline) growth elsewhere. Nowhere is this competition as intense in Southeast Asia as Myanmar. Returning to this market for the first time since Eisenhower was president after decades-long US sanctions were lifted. Coke finds challenges and opportunities in equal measure. While Pepsi was first to re-enter Myanmar last year, it has had to up its pace in market development with the entry of Coke by signing new bottling agreements. Over a third of Pepsi revenues are now in the developing world. OTOH, Coke's Muhtar Kent compares Myanmar opening up to the world to the fall of the Berlin Wall, and fellow MNC Unilever likens it to "another Vietnam" in terms of possible future returns. (Should we be glad that "Vietnam" is now shorthand for promising new markets as opposed to unpromising battlefields?)

The stage is thus set for another battle royale for the hearts and waistlines of the Burmese consumer. (Coca-Cola counters with CSR efforts on the latter point, though.)  Indeed, the only ones losing out economically may be domestic firms that grew during the years of international isolation (see the clip above). Local firms are going into a cost-leadership strategy from what I can tell while ceding the foreigner / upscale segments to the MNCs. Either way, there may be no greater beverage grab of this magnitude to come for years unless North Korea opens to the world, too.

NPR has a very interesting write-up concerning Myanmar's isolation: Coca-Cola went back to its promotional strategies during the 1800s to account for ways to gain product attention in a "media dark" environment:
[Southeast Asia Marketing Director Shakir] Moin says he started to go back in the Coca-Cola archives. He was looking at how the company marketed its product before the internet, before TV, even before radio. Eventually he found his perfect model for Myanmar, place where nobody knew anything about Coke — Atlanta, 1886.

Back then the hot advertising trend was wall posters. Moin noticed that in the beginning, Coke didn't use the posters to talk about friends or happiness or style. It talked about what the product tasted like. It simply described it. Moin pulled out two words in particular that would form the core of his Myanmar campaign — "delicious, refreshing." Those two words from the 1800s are now on the Myanmar bottle, and on the billboards and fliers that advertise the product.

Moin pulled another trick from the early days of Coke. They offered free samples. Samples has brought people into the pharmacy soda counters in Atlanta in 1886, now free samples attract crowds at Buddhist festivals in Myanmar. It's a way to get people to taste the product, but just as importantly, it's a way to show off Coke at its best.

Can 'Impact Investing' Whitewash JP Morgan Malfeasance?

♠ Posted by Emmanuel in at 9/02/2013 05:46:00 AM
Financial services titan JP Morgan is many things to many people given its vast size. Bank regulators currently know it best for the nefarious activities of the so-called 'London Whale' whose losing bets have caused the firm billions of dollars in losses. There's also this new controversy over the House of Morgan hiring Chinese princelings or offspring of Chinese elites to curry favour among PRC movers and shakers. When you're as large as they are, you cannot but help attract attention

More recently, I came across someone from this same bank writing about 'impact investing' or socially aware investing. Now this idea has several similar terms. Some call it 'philanthrocapitalism' which is a mouthful. Regardless, the question is raised: given the scale of corporate malfeasance JP Morgan stands accused of--especially with the 'London Whale' brouhaha--does impact investing help whitewash bank malfeasance?
Attached to all this fervor is a fair amount of confusion about what impact investing actually represents.  Is it investment, philanthropy or both?  Simply put, impact investing is the deployment of capital with an expectation of financial return, where the success of the investment is also contingent upon achieving a stated social or environmental goal.  For example, at JPMorgan Chase we are committing capital—more than $50 million to date—to private equity funds that will deliver us an appropriate financial return while simultaneously improving livelihoods for underserved populations around the world.  If we are not successful in both ambitions, then we do not consider it a successful investment.  Impact investing, therefore, represents an innovative way for socially and environmentally-conscious individuals and organizations to invest their capital to improve their communities while earning a return that meets their financial objectives.

There is a central theme underpinning the potential of impact investing: the creation of economic value and social value are not necessarily mutually exclusive.  Market-based approaches to critical social and environmental challenges do exist or can be developed, and those interventions can attract private sector capital.  This provides a significantly larger, complementary source of capital alongside of philanthropic budgets and increasingly limited public sector resources.  Financeable interventions can satisfy a range of objectives—from mitigating climate change to creating jobs in agricultural communities to providing health care for underserved people—attracting a broad population of investors interested in creating change.
Obviously, $50 million is a drop in the bucket compared to the incidences of bank malfeasance JP Morgan is accused of. Still, it's a good start. What you'd like to see is for 'impact investing' to move more into mainstream banking activities, especially as it conducts more business in the developing world. That said, it is unlikely that bank regulators will call off their scrutiny of this bank. So no, this newer and more honourable ethos  has yet to filter down in the future. For now, it is whitewashing whose efficacy is limited by reams of bad press.

CSR: From 'Blood Diamonds' to 'Conflict Minerals'

♠ Posted by Emmanuel in , at 9/07/2012 11:22:00 AM
In 2006, there was a movie entitled "Blood Diamonds" starring Leonardo DiCaprio (before he became blubberized and American-sized) that brought popular attention to the titular cause. For those of you covering corporate social responsibility (CSR), the issues should be familiar: Repressive governments and militiamen have been accused of using proceeds from the mining of these diamonds to fund their bloody conflicts in Africa. Nowadays, the cause celebre is the Democratic Republic of Congo. 

As it turns out, diamonds are but one product of extractive industries which have been identified in funding African conflicts. The problem that many American firms perceive with proposed Securities and Exchange Commission (SEC) laws is that many of these other minerals are found in everyday products you find at the strip mall--the archetypal symbol of American consumerism: canned goods, lightbulbs, jewelry, MP3 players, flat-screen TVs and so on:
Big retailers including Target and Wal-Mart may largely escape a costly new rule that requires U.S.-listed companies to disclose whether their goods contain so-called conflict minerals that are blamed for fueling violence in central Africa. Retailers lobbied to be exempted from the requirement, which will affect manufacturers of a range of products, including smartphones, light bulbs and footwear.
The Securities and Exchange Commission had proposed an earlier version of the rule that would have applied to retailers carrying products sold under their own brand names (store brands alike Archer Farms at Target or Kirkland at Costco), but which are typically produced by outside contractors. On Wednesday, however, the SEC voted 3-2 to adopt a final rule that would exempt companies that don't exert direct control over the manufacture of such products.

The rule, which was mandated by the Dodd-Frank financial overhaul, have been a source of friction between the SEC and companies ever since the law was passed in 2010. Companies have said the requirement would be burdensome and expensive. Indeed, the SEC on Wednesday sharply raised its estimate of the rule's financial impact, saying it would cost companies a total of $3 billion to $4 billion upfront, plus more than $200 million a year. The SEC initially had said the cost of compliance would be just $71 million. It said it revised its estimate based on comments from the business community and others.The SEC estimates around 6,000 U.S. and foreign companies would have to comply with the conflict-minerals rule, which covers products containing tin, tantalum, tungsten and gold [my emphasis].
NGO Global Witness is naturally dismayed with the SEC ruling. It should be pointed out here that the conflict minerals law will need to be implemented eventually to meet OECD standards. The point of the law, of course, is to discourage funding ongoing conflicts instead of caving in to powerful retailer's associations:
Global Witness is disappointed that the rule will allow companies to describe the origin of their minerals as ‘undeterminable’ for a period of two years – or four years for small companies.

“The minerals trade is fuelling violent conflict and human rights abuses in the eastern DRC and delays in implementing the law postpone the moment at which companies take responsibility for the impact of their purchases, jeopardising efforts to stop minerals funding conflict, and seriously undermining the aim of the law. By allowing companies to say ‘I don’t know where my minerals are from’, the regulators are effectively inviting issuers to evade all of the substantive measures required by the law. The incentive for companies to plead ignorance will be overwhelming,” says Global Witness.

Meanwhile, SEC staff made it clear that the Organisation for Economic Cooperation and Devel- opment’s (OECD’s) five-step due diligence framework is the benchmark against which companies’ due diligence should be measured.
So this "grace period" may be one of obfuscation as dishonest firms simply say they cannot identify where their tin, tantalum, tungsten and gold comes from in cases where they do indeed come from conflict-ridden regions.That said, others even argue that the law may instead have the effect of depriving poor communities of their livelihoods due to overzealous policing.

Asshat Stripping: RBS' Fred Goodwin De-Knighted

♠ Posted by Emmanuel in , at 2/01/2012 10:14:00 AM
Pardon the title but I thought it appropriate for the subject matter. At any rate, here's something you don't see everyday. Typically, HM Queen Elizabeth knights not only those who've worked to improve social conditions in the Commonwealth alike Sir Bob Geldof and Sir Bono but also captains of industry. Of the latter we've had many Great British Industrialists who've been knighted--especially during the New Labour years. In 2004, one of those who were knighted was none other than the Royal Bank of Scotland's erstwhile agent of moral hazard, Fred Goodwin, for his 'services to banking." That was when New Labour was still in power and the neoliberal turn towards financialization of the British economy was still regarded as something favourable in the inner sanctums of the UK elite. It's taken some time, but it seems that the political winds in the growth-free UK have shifted enough to make this remarkable declaration come true. To be sure, it's been long-awaited one.

The winds of change are always blowing, and they just carried Fred away. I suppose that making the taxpayer foot a GBP 45.5 billion bailout (about $71.4B) can make even Her Majesty the multibillionaire several times over cringe. And of course there's the not-insignificant matter of putting the financial health of the nation into dire straits while placing one of its largest industries into disrepute.

The official announcement goes as follows:
It will soon be announced in the London Gazette that the Knighthood conferred upon Fred Goodwin as a Knight Bachelor has been cancelled and annulled. This decision, not normally publicised in advance, was taken on the advice of the Forfeiture Committee, which advised that Fred Goodwin had brought the honours system in to disrepute. The scale and severity of the impact of his actions as CEO of RBS made this an exceptional case.

In 2008 the Government had to provide £20bn of new equity to recapitalise RBS and ensure its survival and prevent the collapse of confidence in the British banking and payments system. Subsequent increases in Government capital have brought the total necessary injection of taxpayers' money in RBS to £45.5bn.

Both the Financial Services Authority and the Treasury Select Committee have investigated the reasons for this failure and its consequences. They are clear that the failure of RBS played an important role in the financial crisis of 2008-9 which, together with other macroeconomic factors, triggered the worst recession in the UK since the Second World War and imposed significant direct costs on British taxpayers and businesses. Fred Goodwin was the dominant decision maker at RBS at the time.
It's funny how the former Fred "The Shred" Goodwin who acquired his moniker for cost-cutting now has to pay the ultimate price in terms of honours by being himself asset stripped. He joins a not-so-illustrious list of others having this dubious distinction alike Comrade Bob Mugabe of chicken commercial fame and Romanian dictator Nicolae Ceausescu. Political misdeeds usually get you ejected more readily, but Sir Fred's business disaster was so huge as to be non-ignorable politically.

There's been a whiff of discontent--obviously from now old-line New Labour stalwarts--about the lynch mob quality of it all. Why pillory just Fred the Shred when there were so many others culpable in these financial misdeeds? I suppose it's to set an example. Then again, I'd personally prefer to have him hanged, drawn and quartered alike in the olden times--albeit for the modern high treason of the gravest sort of financial misdeed. Just as honours should go to the biggest contributors to the welfare of the Commonwealth, so too should they be removed from its most egregious offenders.

Unlike what some others say, it's not simply a boiling over of anti-business sentiment. There is a line that must be drawn when boundaries are crossed on the assumption of being too big too fail alike RBS during the global financial crisis. To those given more wealth or power on this earth comes more responsibility; that's all.

Indeed, it's a very British humiliation.

Comrade Bob Mugabe and the Dictator Fun Club

♠ Posted by Emmanuel in ,, at 1/08/2012 03:03:00 AM
I'm a bit tardy here (apologies), but better late than never. Name the chicken restaurant chain and I've probably patronized it before: Kentucky Fried Chicken, Chick Fil A, Kenny Rogers Roasters, El Pollo Loco and so forth. Nando's is in a unique position of being a very international chain that isn't American. As we learn, however, its cosmopolitan nature isn't always an advantage. I was flipping through a recent issue of the Economist when the TV advertisement of the South African chicken restaurant chain entitled 'Last Dictator Standing' came to my attention (I too have consumed their poultry products since they have many branches in England):
Insulting dictators ought to be safe, so long as you do not operate in the same country. Nando’s, a South African restaurant chain, forgot that with an ad showing a Robert Mugabe lookalike glumly alone at dinner (after many of his fellow despots had been deposed [and perhaps more importantly, dead]). He reminisces about happy days shooting water pistols with Muammar Qaddafi, playing in the sand with Saddam Hussein and riding a tank, “Titanic”-style, with Idi Amin. The ad was broadcast in South Africa, where Nando’s middle-class target audience found it hilarious. But Nando’s also has restaurants in Zimbabwe. Threats ensued. Fearing violence against its staff there, the ad was pulled.
To be more exact, political youth groups linked to Mugabe threatened to harm Nando's employees in Zimbabwean outlets. The ad was also broadcast not only in South Africa but throughout the continent via satellite TV. (You also can't insult the head of state in Zimbabwean law.) Still, the corporate social responsibility angle is quite obtuse given that the aggrieved party is not exactly an exemplar of good governance. With his penchant for hyperinflation in the economic realm and even more unpleasant things in the security one, Mugabe is not a sympathetic figure to say the least. That said, he has gradually become worse in true Anakin Skywalker - Darth Vader fashion.

My, er...enjoyment of this Nando's commercial compared to the more straightforward if even more politically incorrect dumb blonde ad is curtailed though despite its IR angle. There is this thing called the willing suspension of disbelief that is said to enable enjoyment of fiction. However, when the events being depicted vary too far from established facts, the cognitive dissonance becomes too severe to overcome.

And so it is with this ad to an extent. While I appreciate that singing karaoke is an Asian stereotype, it is chronologically impossible for Mugabe to have joined Chairman Mao in this activity as a fellow dictator. For, Comrade Bob only assumed power in 1980 when Mao died in 1976. The same qualifier holds for Idi Amin who was ousted in 1979. Besides, isn't Mao responsible for the Cultural Revolution which aimed to expunge harmful foreign influences alike karaoke? Even more surreal is having Comrade Bob play on a swing set with South African apartheid-era Prime Minister P.W. Botha [?!] Why would an erstwhile leader of the pan-African independence movement away from white rule be frolicking with one of its most odious proponents? I suppose it's what got the Zimbabwean pro-Mugabe crowd most in a frenzy about the ad more than anything else.

It's too bad Nando's isn't going to include Kim Il-Jong in a follow-up advert with all the controversy. Now that's a real contemporary of Comrade Bob's who's gone on to...I don't quite know where atheists of his sort go. Besides, why feature Chairman Mao instead of true contemporaries alike Zaire's Mobutu Sese Seko, the Philippines' Ferdinand Marcos, Chile's Augusto Pinochet or Panama's General Manuel Noriega--certainly recognizable figures to any international audience?

I guess the song gets it right, though:

Oh my friend we're older but no wiser
For in our hearts the dreams are still the same

BlackBerry's Latest Banishment Threat - Indonesia

♠ Posted by Emmanuel in ,, at 12/30/2011 06:03:00 AM
The sheer difficulty of cracking BlackBerry encryption has made several states wary of the Research In Motion service operating in their countries. As a compromise on national security-esque grounds, the Canadian firm RIM has located its servers within the countries that raise such concerns instead of at home--most famously the UAE:
Last year, the UAE threatened to suspend BlackBerry Messenger, email and web browser services unless RIM worked out a way to locate its encrypted computer servers in the country so the state could get access to email and other data -- the same access it says the United States, Russia and other states have.
That concession granted to some, it appears Indonesia is now complaining about how Singapore was made the location of RIM's Southeast Asia servers instead of the region's largest nation and largest user of the popular BlackBerry service. The mooted penalty for this betrayal of sorts is (once again) banning BlackBerry from operating in Indonesia. Via the Jakarta Post:
The Indonesian Telecommunication Regulation Body (BRTI) says that it may have to end the BlackBerry Messenger (BBM) service on all BlackBerry after the smartphone’s manufacturer, Research In Motion (RIM), opted to build a server in Singapore rather than in Indonesia.

“Because RIM has not been cooperative, it is possible that we will soon end BIS (BlackBerry Internet Service) and BBM service. BlackBerry therefore, would just be like other cellular phones,” BRTI member Heru Sutadi told The Jakarta Post on Friday.
The Indonesian government claims that, aside from the usual national security request, RIM indicated that it would build the server in Indonesia before its act of info-treachery:
In September, RIM made a commitment with the government to carry out four agreements by Dec. 31. One of the agreements called for the establishment of a server or a data center. Although the agreement did not specify where the server would be built, the government felt that RIM should make Indonesia a priority as it was home to the most BlackBerry users in Southeast Asia, far exceeding the number of users in Singapore.

The government’s insistence on having a server built in the country was mainly due to security reasons, Heru said. Currently, all data exchanged through the BIS and BBM is processed in Canada, the home of RIM, which makes it impossible for the government to monitor and protect data sent by its millions of Indonesian users.

“With the condition as it is now, we warn that the country’s users to be cautious about using BlackBerry because the data exchanged is not safe or cannot be guaranteed of its safety,” he said.
While the idea that Indonesian users are more at risk now that RIM servers are in Singapore than they were before when the servers were in Canada is risible, I remain a believer that information flows within a nation remain a state's prerogative despite insipid notions to the contrary. Insofar as we haven't moved past notions of state sovereignty to something akin to world government, firms must play by national rules for better or worse.

To be sure, the longstanding presence of active separatist movements and terrorist groups may make Indonesia more legitimately entitled in raising information security concerns. It's too bad that Indonesia appears to want punishing RIM for commercial reasons as well. But, it's a price you have to pay in a world where extraterritoriality does not apply.

CSR in Iran? My Way or the Huawei (Router Mfg)

♠ Posted by Emmanuel in ,, at 12/12/2011 10:52:00 AM
There's an interesting article in the WSJ on the recent pullback of Chinese router manufacturer Huawei from doing business with Iran. Given the perceived willingness of Chinese firms to go where Western MNCs dare not roam due to limitations on investing in certain bogey nations alike (yes) Iran, Myanmar and North Korea, this occurrence is eye-opening at the very least. That is, are even Chinese corporations (with government ties, no less) subject to international pressure regarding Iran's alleged nuclear programme, human rights abuses and so forth?
Chinese telecommunications- equipment maker Huawei Technologies Co. said it will scale back its business in Iran, where the company provides services to government-controlled telecom operators, following reports that Iranian police were using mobile-network technology to track down and arrest dissidents.

Shenzhen-based Huawei will "voluntarily restrict its business development there by no longer seeking new customers and limiting its business activities with existing customers," according to a statement Friday on the company's website. It said the company was making the move due to the "increasingly complex situation in Iran." Company spokesmen declined to elaborate.

The action follows a front-page Wall Street Journal article in October that documented how Huawei's business grew in Iran following a pullback by Western companies after the government's bloody crackdown on its citizens two years ago. Iranian human-rights groups outside Iran say there are dozens of documented cases in which dissidents were traced and arrested through the government's ability to track the location of their cellphones—technology for which Huawei has provided support.

Activists hailed the company's decision, noting it was the first time a major Chinese company had decided to scale back its business in Iran. Until now, Iran has viewed its partnership with Chinese companies as a solid alternative to Western contracts.

"This is a significant milestone," said Mark Wallace, president of United Against Nuclear Iran and a former U.S. ambassador to the United Nations. "For the first time a major Chinese business is pulling back from Iran in the face of mounting international scorn for Iran's brutal regime." The New York-based group had been pressuring Huawei to leave Iran and had been communicating privately with the company for several weeks.

A spokesman for the U.S. State Department said it welcomed Huawei's announcement, adding that the U.S. "calls on all firms to exercise vigilance when doing business with Iran and ensure that any business does not contribute to the Government of Iran's ability to repress its own people."
That's all very well and good, but did the bleeding hearts brigade really persuade Huawei to curtail its activities selling routers to Iran that could help their government identify particularly vocal denizens--or is something else? Well, the article goes on to strongly suggest the latter possibility:
Executives at Huawei's highest levels have been discussing for months whether to scale back in Iran, according to people familiar with the matter. Those discussions gained in intensity in recent weeks, particularly after the Journal article, several people said...

Some Huawei executives in Shenzhen see operations in Iran as jeopardizing expansion opportunities in the U.S. and Europe, where the Chinese company has faced skepticism over its compliance procedures and dealings with countries that have pariah regimes. That was a driving factor behind the decision to dial back operations in Iran, a person familiar with the matter said. The Chinese company has held talks with consultants, lawyers and lobbyists from the U.S. on the issue.
Huawei is probably dialling back operations after finding out that Iran is not as lucrative an opportunity as once thought--or is already an exhausted one. As Jessie J sang, the Chinese don't need so much Iranian (money, money) at this point in time. There's also the matter of Huawei trying to establish a better reputation for itself independent of PRC state policy to consider and all of that protectionist "security"-related BS. Insofar as Huawei perceives US and European markets as being larger opportunities than doing business with Iran, well, let the human rights activists think they're having their "way."

I for one don't buy this story--though I have no qualms about using Huawei's routers instead of Cisco's and saving money in the process.

CSR: Milton Friedman Would OK Both Jobs & Gates

♠ Posted by Emmanuel in at 11/03/2011 05:21:00 PM
There's a much-read article taken from Harvard Business Review by Maxwell Vessel circulating on the Businessweek website. He argues that while the late, great Apple chief Steve Jobs and his Microsoft counterpart were both admirable business leaders, Bill Gates deserves to be idolized more for his subsequent philanthropic work after leaving day-to-day operations at MS:
As much as I love Apple, Inc, I would happily give up my iPhone to put food on the plates of starving children. Steve Jobs turned his company into a decade long leader in the truly new space of mobile computing. Bill Gates decided to eliminate malaria. Who do you think we should be putting up on a pedestal for our children to emulate?
To those familiar with the CSR literature, there is a false argument in place here that is exacerbated by the quotation above. Let me explain. Even the arch-critic of CSR Milton Friedman did not disapprove of do-gooding. Rather, he thought that devoting time and effort to worthwhile causes should be separate from the regular business of doing business:
[H]ow much cost is he justi­fied in imposing on his stockholders, customers and employees for this social purpose? What is his appropriate share and what is the appropri­ate share of others?

And, whether he wants to or not, can he get away with spending his stockholders', cus­tomers' or employees' money? Will not the stockholders fire him? (Either the present ones or those who take over when his actions in the name of social responsibility have re­duced the corporation's profits and the price of its stock.) His customers and his employees can desert him for other producers and em­ployers less scrupulous in exercising their so­cial responsibilities.
The important thing to remember, dear readers, is that neither Steve Jobs' Apple nor Bill Gates' Microsoft for that matter have devoted the bulk of their companies' activities to social causes per se. activity. While both Apple and Microsoft do conduct CSR-related activities--supplier audits for labour and environmental standards, for instance--that is pretty much par for the course among their peers. The purpose is primarily defensive in avoiding Nike-and-sweatshops-like entanglements.

Rather, what does set Bill Gates apart is that he devoted his post-Microsoft work to funding socially beneficial initiatives alike coming to terms with HIV/AIDS, tuberculosis and malaria. In a Friedman-friendly way, he did not plow Microsoft's retained earnings into philanthropic ventures. They instead conducted using his own funds (along with those of other fellow billionaires, it should be added) and on his own time. Here's Friedman again:
Of course, the corporate executive is also a person in his own right. As a person, he may have many other responsibilities that he rec­ognizes or assumes voluntarily–to his family, his conscience, his feelings of charity, his church, his clubs, his city, his country. He may feel impelled by these responsibilities to de­vote part of his income to causes he regards as worthy, to refuse to work for particular corporations, even to leave his job, for example, to join his country's armed forces.

If we wish, we may refer to some of these responsibilities as "social responsibilities." But in these respects he is acting as a principal, not an agent; he is spending his own money or time or energy, not the money of his employers or the time or energy he has contracted to devote to their purposes. If these are "social responsibili­ties," they are the social responsibilities of in­dividuals, not of business.
In essence, Milton Friedman would have approved of both Steve Jobs and Bill Gates. Yes, Microsoft's stock has not done as spectacularly well as Apple's in recent years, but hey, it's not as if Gates still runs the show there. Returning to the first quote above from the article's author, it is thus far-fetched to assume that buying Microsoft products instead of iDevices will better serve the cause of saving the world. Again, separate MS (the company) from Bill Gates (the philanthropist). In Friedman's terms, investing in Apple stock should even prove to be the more humanitarian action insofar as it would provide a socially responsible citizen with more capital to do good deeds--hopefully as a principal and not just as an agent.

Clare Short, New Mining Transparency (EITI) Chair

♠ Posted by Emmanuel in , at 10/18/2011 02:32:00 PM
Here's a worthwhile initiative I may not have mentioned yet that should nevertheless gain more attention for the work it does. I suppose that it's only fitting that an initiative that was launched by Tony Blair (in 2002) should now be chaired by none other than his bete noire Clare Short. If you remember, Clare Short was the international development secretary (head of DfID) from when New Labour took the reins of power in 1997 to May 2003 when she resigned this post to indicate her disgust over UK participation in the Iraq invasion. Those were some days; dare I say when Brits still used to dream about the future.

In the meantime, let it not be said that the Extractive Industries Transparency Initiative (EITI) has been less than active. Devised to help follow the money in mineral-rich countries--it is hoped that doing so will help reduce chances for corruption and channel revenues to more productive purposes. That is, to reduce the resource curse so common to countries blessed with abundant resources.

Something promising is that mining firms are actually calling for EITI to monitor activities in countries where they have mining operations--a phenomenon similar to that in any number of other industries such as tea production (the Ethical Tea Partnership). Here is a snippet from a recent interview of Clare Short:

In your own work with international development issues, you have occasionally been a severe critic of extractive industries in developing countries. Can you now say that there are positive signs of a genuine will among oil and mining companies to change their behaviour and to be more open in their dealings – especially when working amid the weaker regulatory environments of developing countries?

There are many places where resource extraction has not delivered adequate benefits to local people. It remains true that resource-rich countries on average have more poverty than comparable non-resource rich countries.

A growing number of companies have woken up to the reality that in order to succeed in the long term, transparency is the way to go. They have learned the hard way about the risk involved in operating in countries where there is little trust and also the risk of corrupt practices which breach their domestic law. To mitigate these risks, and because they know that it is the right thing to do, companies are now working with governments and civil society in organisations such as EITI. In several countries, it is the extractive companies that are calling upon the national governments to act more transparently, and to implement the EITI standard.

I’m encouraged by the number of companies that are supporting EITI. I hope that this is a reflection of a desire to be part of the solution. But there are still many companies that do not really favour transparency and are only willing to permit very limited reporting, and maybe see the EITI as a fig leaf rather than a route to full transparency. Of course, governments can require fuller reporting, and some are doing so.

It's me here again. Also note that while EITI may not receive much press notice in North America, it is being widely implemented, with 35 countries signing up to it and a dozen having already being declared EITI-compliant...

Would you expect EITI compliance to become a global standard any time soon?

With 35 countries implementing the EITI [standard] and more joining, EITI is making good progress towards becoming a global standard. It is critical that countries don’t just stop at compliance: they can use the EITI platform to debate wider issues affecting their country. That might be bidding, contracting, operating, allocating or spending. It might be that the reports can go deeper to list payment-by-payment, or physical volumes or sales. It might be that the principles can be applied to other sectors – for example, forestry, fisheries or agriculture. We are seeing innovations in countries that really want to use the EITI as a route to better management of the whole of their extractive sector, thus improving the benefits of the sector to the citizens of their countries. To me, that is even more important than being a global standard.

One hopes this tough, principled Brummie politician is just what the EITI needs to move its programmes forward.

Big Pharma v India: The Glivec Case Revisited

♠ Posted by Emmanuel in ,,, at 9/06/2011 12:01:00 AM
Ooh, this makes me angry. Very early four years ago, I posted about Swiss pharmaceutical giant Novartis going up against Indian firms manufacturing generic versions of the leukaemia drug Glivec (Gleevec in the US). Perhaps presciently, I parenthetically added "to be continued." Well, it's about time we revisited this story.

This row concerns the Indian Patent Office not honouring Novartis' wish to extend its patent on the drug for another twenty years by introducing incremental innovations. As is the case with many so-called blockbuster drugs, pharmaceutical firms often try to forestall dramatic drops in sales when patents expire and generics or low-priced copies enter the market. A common ploy is to make incremental changes to try and extend the life of these patents. Further, they claim this practice is acceptable under WTO TRIPS. The point of contention in Indian courts is that the efficacy of newer formulations of Glivec may not necessarily be substantial enough to warrant patent extension. Nevertheless, Novartis has been pressing India hard on this particular case for obvious reasons: aside from being a huge potential market, India is also one of the world's largest producers of generics.

Hence the battle rages on. The latest news is that Novartis' appeal against Indian patent law will be ruled on shortly. Just as before, Medicin Sans Frontieres (Doctors Without Borders) is particularly wary since its global supply of generic versions of the leukemia drug would be under threat if Novartis succeeds. From Agence-France Presse:
Supply of cheap copycat drugs for the developing world could be blocked if Swiss pharmaceutical giant Novartis wins a challenge to India’s patent law, medical charity MSF said on Monday. The warning came as India’s Supreme Court was due Tuesday to hear more arguments in an appeal by Novartis seeking patent protection for its leukaemia drug Glivec in a case watched closely by the global pharmaceutical industry.

“If the patent law challenge is successful, it would have a devastating impact on access to affordable medicines across the developing world,” said Leena Menghaney, India representative of Medecins Sans Frontieres (MSF). Novartis is “trying to shut down the pharmacy of the developing world,” she said.

The Supreme Court case is the final act in a legal battle between Novartis and patient groups which has stretched over six years in India, where local firms produce generic versions of branded drugs for a fraction of their price. Pharmaceutical companies argue that protecting patents are crucial to stimulating the research and development of new drugs.

Novartis’ challenge goes to the heart of India’s patent act, which says a new patent cannot be granted for an old drug unless changes make it significantly more effective. Novartis said it could not make any immediate comment. But in the past the drug maker has insisted so-called “incremental innovations” should be patentable and India’s refusal breaches World Trade Organization (WTO) obligations [i.e., Trade-Related Intellectual Property Rights or TRIPS].

MSF buys 80 percent of its generic AIDS drugs from India, and the humanitarian organisation said it is currently keeping 170,000 people in 19 countries alive through the treatment. “We couldn’t afford to treat them all without these generic drugs,” said Joanna Keenan, spokesman for the Geneva-based charity.
I have outlined above why this case is one Novartis wishes to pursue because of the importance of India to the future of the pharmaceutical trade. I also think that Novartis perceives the negative publicity from this case as being outweighed by the "litmus test" nature of its outcome. Do not forget that in ongoing negotiations for the EU-India FTA, one of the main sticking points is access to affordable medicines. Hopefully the latter won't be so eager to complete a deal that it caves in on this issue for there will be substantial implications for other LDCs' supplies because of India's status as a major source of generics. All the same, I think that these attempts to circumvent compulsory licensing LDCs can rightfully avail of and jam up various countries' legal systems reflect badly on Big Pharma.

If the nature of this case is heard by a wider audience, I am sure the public outcry would make the likes of Novartis give in once and for all. With so much at stake and less-than-stellar media coverage, though, I think these firms have decided to take their chances.

Also see the "NGO Open letter over Novartis’ persistent legal actions in India" for a better understanding of the civil society standpoint.