Of all of the commercial databases,

Oracle is the least secure.

�a�&\EHU�VHFXULW\�H[SHUW�'DYLG�/LWFK¿HOG��commenting on Ellison’s remark in an email

to Reuters

Center for Strategy, Enterprise & Intelligence provides expertise in strategy and management, enterprise development, intelligence, Internet and media.

For subscriptions, research, and advisory services, please e-mail report@censeisolutions.com or call/fax +63-2-5311182. Links to online material on public

websites are current as of the week prior to the publication date, but might be removed without warning. Publishers of linked content should e-mail us or

contact us by fax if they do not wish their websites to be linked to our material in the future.

February 4, 2014

To the best of our knowledge,

an Oracle database hasn’t been

broken into for a couple of decades

by anybody.

~ Larry Ellison, founding CEO of Internet

equipment behemoth Oracle, on cyber-

snooping concerns

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graphics, and words in blue

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or call/fax us at +632-5311182.

you gotta see this36supergraphic16

perspective02

Strategic Analysis and Research by the

&(17(5�)25�675$7(*<��(17(535,6(��,17(//,*(1&(

16

cenSEI: . +

8KVUXZ

03 Rich Countries Are Set toTake the Driver’s SeatDeveloped countries will steer the world

economy upward this year, while emerging

economies deal with speed bumps

ECONOMY

11 Deal and No DealA quick look at the World Trade

Organization’s new accord

09 A Soft Landing for China?7KH�ZRUOG¶V�1R����HFRQRP\�DIWHU�$PHULFD�and Europe grapples with its shift from

investment-led to consumption-led growth

13 ASEAN Stays on the FenceAmid overlapping territorial claims on the

high seas, the Association of Southeast Asian

1DWLRQV�QDYLJDWHV�D�WULFN\�PLGGOH�FRXUVH

GEOPOLITICS

216WLOO�3XQJ�$ZD\)LIW\�\HDUV�VLQFH�WKH�8�6��6XUJHRQ�*HQHUDO¶V�landmark report on tobacco, more people

are smoking than ever — and dying from it

HEALTH

37 $�'UDJ�RQ�*URZWKOxfam tells the 2014 World Economic

Forum in Davos, Switzerland, one big

reason to uplift the poor: inequaliity is

squeezing economies

SOCIETY

27 Your Fridge’s OnlineThe Internet of Things, predicts one expert,

may roll out big this year, even as others

warn of unpredictable consequences

TECHNOLOGY

23 When Painkillers KillCiting possible liver damage from over-

dosage, U.S. authorities move to limit how

much acetaminophen may be put in a pill

29 :RZHG�DW�WKH������&RQVXPHU�(OHFWURQLFV�6KRZOur show-and-tell of the most interesting

new gadgets at the annual Las Vegas dazzler

33 Asia Goes PhabletSales of smartphone-tablet hybrids have

surged phenomenally since their largely

ignored launch two years ago

body lab26

19 Hershey Buys a Shanghai Candy KingThe global chocolate

giant hopes to feed

a growing Chinese

appetite for chocolate

Going Against the GrainSome business leaders advise us to

be open to making mistakes and

bending the rules now and then

17 BUSINESS

2

:NK�cenSEI�8KVUXZ �����February 4, 2014

Galloping Into 2014A Joyful New Year to all, in both the Western calendar beginning on the 1st of January, and the East Asian one, JDOORSLQJ�LQ�RQ�WKH���VW�XQGHU�WKH�QHZ�PRRQ¶V�GDUN�JD]H��$QG�ZLWK�WKH�¿UVW�GD\�RI�WKH�QH[W������D�QHZ�DSSURDFK�WR�WKH�making of The CenSEI Report.

As the item-packed Contents page shows, there are many more articles in the issue, covering a wide range of topics, from last December’s World Trade Organization accord forged in Bali, Indonesia, to the Perspective on how business is hit by Thailand’s political turmoil, reaching a high point with the February 2 parliamentary elections.

The shorter but more varied articles are written as part of the business model recasting by the Center for Strategy, Enterprise & Intelligence. The new thrust envisions a website- and app-based service providing strategic monitoring, assessment and action recommendations on major events within a day after they hit the headlines.

7KH�%ULH¿QJ�1RWHV�LQ�WKH�LVVXH��DOO�VDQV�E\OLQH��ZHUH�VHOHFWHG��UHVHDUFKHG��DQDO\]HG�DQG�ZULWWHQ�ZLWKLQ�D�GD\�RU�VR�RI�the topic developments. At the same time, CenSEI analysts and editors made sure that any prognoses and prescriptions put forward would be valid for the coming weeks or months, not just a few days.

7KXV��$PHULFDQ�FKRFRODWH�JLDQW�+HUVKH\¶V�DFTXLVLWLRQ�RI�D�&KLQHVH�FRQIHFWLRQHU\�LV�VHHQ�LQ�WKH�FRQWH[W�RI�WKH�JOREDO�multinational’s market strategy for China, plus the lessons it holds for other top consumer brands looking to enter or H[SDQG�LQ�WKH�ELOOLRQ�VWURQJ�QDWLRQ�DV�LW�UDPSV�XS�FRQVXPHU�VSHQGLQJ�DV�WKH�PDLQ�GULYH�RI�HFRQRPLF�JURZWK�

World and national economic prospects are, of course, a staple of end-year and New Year reports. However, along with year-ahead prognoses in the Economy section, a Society article spotlights a longstanding trend underscored in the recent years of global economic malaise: The grossly unequal distribution of global wealth stunts growth, hitting the assets and enterprises of the wealthy.

Plainly, as the world rides into 2014 and beyond, both haves and have-nots are on the same steed. And like Asian nations in the Geopolitics report on South China Sea tensions, we all have to learn how to share and work for the good of all. The alternative would be the debacle of everyone.

perspective

$IWHU�ORQJ�WXUPRLO��¶LQYHVWRUV�PD\�VKLIW�WR�RWKHU�FRXQWULHV�·�warns a Toyota executive Wochit

The continuing political crisis in Thailand has already cost life and limb, shut down government ministries, and forced a parliamentary election scheduled for February 2, and a state of emergency in the capital.

Now, business is feeling the heat from the picket lines, including global industry giants which have manufactured cars, electronics, appliances, and other goods out of the kingdom for decades. Here are laments from the executive suite, and wise or wild guesses on where the political battles are headed.

,W·V�WHUULEOH��,W·V�ZRUVH�WKDQ�HYHU��:H�FDQ·W�VHH�DQ�HQG�WR�LW�~ Virat Jaturaphutphitak, vice president of the Association of Thai Travel Agents, speaking to Associated Press (AP)

The perception from foreign clients is pretty bad. 7KH\�GRQ·W�ZDQW�WR�FRPH� Business stops and is put on hold.a�7KLQDZDW�%XNKDPDQD��PDQDJLQJ�SDUWQHU�LQ�%DQJNRN�ZLWK�8�6��ODZ�ÀUP�%DNHU��0F.HQ]LH�/WG�� also to AP

Assuming the political woes go on, foreign investors may decide to shift to other countries like Indonesia, 9LHWQDP�DQG�0\DQPDU�a�.\RLFKL�7DQDGD��SUHVLGHQW�RI�7R\RWD�0RWRU·V�7KDL�VXEVLGLDU\� quoted by Reuters

This is a good time for buyers to discover new destinations, especially those in the provinces bordering the Greater 0HNRQJ�6XEUHJLRQ�FRXQWULHV�RI�&DPERGLD��/DR�3'5��DQG�0\DQPDU�����Travel trade buyers see the evolving political situation as a temporary phenomena. There is tremendous sympathy and VXSSRUW�IRU�WKH�RUGLQDU\�7KDL�SHRSOH��HVSHFLDOO\�WKH�PDQ\�UDQN�DQG�ÀOH�SHRSOH�ZKR�ZRUN�LQ�LW��,�ZDV�YHU\�HQFRXUDJHG�E\�the feedback from everyone that once everything returns to normal, Thailand will back in full strength.~ Tourism Authority of Thailand Governor Thawatchai Arunyik, addressing ASEAN Tourism Forum LQ�.XFKLQJ��6DUDZDN��0DOD\VLD��RQ�-DQXDU\���

Thailand proves that south-east Asia is a region to watch. Decades of prosperity have created the conditions for political transformation – for better and for worse.a�6WUDWIRU�JHRSROLWLFDO�DQDO\VW�5REHUW�.DSODQ� reprinted in realclearworld.com

,W·V�YHU\�GLIÀFXOW�EHFDXVH�HDFK�VLGH�VHHPV�OLNH�they cannot pull back even one step.a�9LFKDWH�7DQWLZDQLFK��VHQLRU�YLFH�SUHVLGHQW�RI�EHHU�PDNHU�7KDL�%HYHUDJH�3&/� in AP report

On February 2, we will completely shut down Bangkok. Roads will be turned into pedestrian walkways and people will not have to go to vote.

~ Anti-government protest leader Stump Thaugsuban campaigning for election boycott, reported in The Nation newspaper

Thailand is a divided nation. This can be easily observed daily on the streets of Bangkok. The challenge is that the division is profound and will not easily be mended.

a�0RUWRQ�$EUDPRZLW]� ZULWLQJ�LQ�:DVKLQJWRQ·V�The National Interest

7KDLODQG·V�&ULVLV�,V�8QVHWWOLQJ�%XVLQHVV

Bummed in the Boardroom

Looking at the Bright Side

Tough Road Back from the Brink

4

:NK�cenSEI�8KVUXZ �����February 4, 2014

3

&217(176�����(&2120<����*(232/,7,&6�����%86,1(66�����+($/7+�����7(&+12/2*<�����62&,(7<��������������������

�����*/2%$/�(&2120,&�287/22.��7+(�5,&+�:25/'�*(76�5($'<�72�/($'�7+(�:$<

2014 Global

Economic Outlook

675$7(*<�32,1767KH�,QWHUQDWLRQDO�0RQHWDU\�)XQG�VD\V�JURZWK�ZLOO�EH�GULYHQ�E\�DGYDQFHG�HFRQRPLHV��DV�JOREDO�growth is expected to rise to 3.6% in 2014 from 2.9% in 2013

The U.S. economy is expected to get stronger in 2014, paced by strong performances from the manufacturing and construction sectors

7KH�HXUR�]RQH·V�SUHGLFWHG�SRVLWLYH�JURZWK�DIWHU�\HDUV�RI�GHFOLQH�LV�D�JRRG�VLJQ��EXW�H[SHUWV�VD\�LW�ZRQ·W�EH�HQRXJK�WR�HDVH�LWV�KLJK�XQHPSOR\PHQW

3ROLF\�FKDQJHV�DUH�QHHGHG�IRU�&KLQD�WR�HYDGH�WKH�PLGGOH�LQFRPH�WUDS��VXFK�DV�LQFUHDVLQJ�productivity and addressing its growing credit problem

As emerging economies lose steam,

it looks like the more advanced

economies will be driving

growth in 2014.

$FFRUGLQJ�WR�WKH�,QWHUQDWLRQDO�0RQHWDU\�)XQG¶V�World Economic Outlook (WEO) report, released

in October, the drivers of growth are shifting to

the advanced economies as “China and a growing

number of emerging market economies are coming

R�F\FOLFDO�SHDNV�´�:KLOH�JURZWK�UDWHV�RI�HPHUJLQJ�economies are expected to remain above those of

WKH�DGYDQFHG�HFRQRPLHV��¿JXUHV�ZLOO�EH�EHORZ�WKH�levels seen in recent years because of cyclical and

structural reasons, the report says.

7KH�,0)�IRUHFDVWV�JOREDO�JURZWK�LQ������WR�DFFHOHUDWH�WR�������IURP�WKH�SURMHFWHG�DYHUDJH�RI������LQ�������

5LFKDUG�%��+RH\��FKLHI�HFRQRPLVW�DW�%1<�0HOORQ��says, in a 1RYHPEHU������DUWLFOH, that the

acceleration in global

growth should be led by

the developed world as it

recovers from past economic

ZHDNQHVV��+RH\�QRWHV�WKDW�the four main causes for faster

growth should be: past and ongoing

PRQHWDU\�HDVLQJ��UHGXFHG�¿VFDO�GUDJ��moderation in the post-crisis de-

leveraging of the private sector, and

moderate energy prices, given the

expansion of new sources of energy,

particularly in the United States.

A key theme for 2014, he suggests, is that

aggressively easy monetary policy in most

developed countries is expected to support an

acceleration of global economic growth.

As advanced economies recover, they ZLOO�SXOO�WKH�HPHUJLQJ�PDUNHWV��1DULPDQ�%HKUDYHVK��FKLHI�HFRQRPLVW�DW�JOREDO�PDUNHW�DQG�economic information provider ,+6, says, in a video

presentation, that as advanced economies begin to

UHFRYHU��WKH\�ZLOO�³SXOO´�ZLWK�WKHP�WKH�HPHUJLQJ�ZRUOG��ZKLFK�ZLOO�EHQH¿W�IURP�H[SRUW�OHG�JURZWK��

+RZHYHU��%HKUDYHVK�QRWHV�XQHPSOR\PHQW�LQ�WKH�developed world, such as the United States and

Europe, will remain high mostly because growth

ZLOO�EH�³IDLUO\�VOXJJLVK�´�7KH�JRRG�QHZV��he says, is that commodity prices will

UHPDLQ�ÀDW�LQ������DV�WKH\�KDYH�EHHQ�in the past year, which will reduce

LQÀDWLRQDU\�SUHVVXUHV�ZRUOGZLGH��0RUHRYHU��WKH�8�6�GROODU�will strengthen against most

currencies because U.S. growth

will be stronger than the growth

that will be experienced in Europe

and Japan.

0HDQZKLOH��*'3�JURZWK�LQ�HPHUJLQJ�and developing economies as a whole

LV�SURMHFWHG�WR�GURS�WR������LQ�������according to the &RQIHUHQFH�%RDUG’s

*OREDO�(FRQRPLF�2XWORRN�����, released

LQ�1RYHPEHU�ODVW�\HDU��&KLQD¶V�JURZWK�ZLOO�FRQWLQXH�WR�VORZ��LW�VD\V��IURP������LQ������WR����WKLV�\HDU��³DV�VWUXFWXUDO�DQG�SROLF\�challenges continue to weigh on China’s

HFRQRPLF�WUDQVIRUPDWLRQ�´�

Chief economist at IHS Nariman

Behravesh says as advanced

economies begin to recover,

they will pull the emerging markets

as well IHS

ECONOMY

The Rich World

Gets Ready to

Lead the Way

POINT & CLICK

Access online research via your

Internet connection by clicking

pictures, graphics, and words in blue

%\�0DULVKND�1RHOOH�0��&DEUHUD

6

:NK�cenSEI�8KVUXZ �����February 4, 2014

5

&217(176�����(&2120<����*(232/,7,&6�����%86,1(66�����+($/7+�����7(&+12/2*<�����62&,(7<��������������������

6WURQJHU�JURZWK�IRU�WKH�8�6��HFRQRP\�LV�H[SHFWHG��The U.S. economy is poised for

stronger growth in 2014, particularly with solid

growth in manufacturing and construction

VSHQGLQJ�DW�WKH�HQG�RI�������DFFRUGLQJ�WR�D

-DQ����$VVRFLDWHG�3UHVV�UHSRUW. Factory activity

in December, the report notes, stayed near a

2½-year high.

“Americans are buying more cars and homes,

increasing demand for steel, furniture and

RWKHU�PDQXIDFWXUHG�JRRGV�´�LW�VD\V��DGGLQJ�WKDW��³0DQXIDFWXUHUV�KDYH�ERRVWHG�KLULQJ�WR�meet that demand and may add jobs at a

KHDOWKLHU�SDFH�WKLV�\HDU�´���

Academic economists and former policy makers

believe U.S. economic growth will accelerate in

2014, according to a Jan. 4 piece�LQ�%ORRPEHUJ��+DUYDUG�SURIHVVRU�0DUWLQ�)HOGVWHLQ�VD\V�WKDW�with appropriate policies, there is no reason for

pessimism about the future of the U.S. economy.

,Q�WKH�UHSRUW��-3�0RUJDQ�&KDVH��&R��SUHGLFWV�WKH�HFRQRP\�ZLOO�H[SDQG������IURP�LWV�HDUOLHU�HVWLPDWH�RI������DQG�IDVWHU�WKDQ�WKH������LW�FDOFXODWHV�IRU�������)RUPHU�,0)�FKLHI�HFRQRPLVW�.HQQHWK�5RJR �also notes in the report that the U.S. is faring

better than most other industrial nations in getting

back to its pre-crisis output per capita.

Euro zone will barely reach potential JURZWK��The euro zone, however, is not out of the

ZRRGV�\HW��(FRQRPLVW�1RXULHO�5RXELQL�EHOLHYHV�that the global growth will pick up modestly in

2014 for advanced and emerging economies. In his

'HF�����SLHFH�LQ�3URMHFW�6\QGLFDWH��5RXELQL�SUHGLFWV�that most advanced economies, including the euro

]RQH�DQG�WKH�8QLWHG�.LQJGRP��³ZLOO�EDUHO\�UHDFK�SRWHQWLDO�JURZWK��RU�ZLOO�UHPDLQ�EHORZ�LW�´��

Further, while the euro zone’s tail risks (low-probability,

high-impact shocks) are lower, fundamental problems

in the euro zone remain unresolved, Roubini adds. Low

potential growth, high unemployment, rising levels of

public debt, and extremely tight credit rationing due

to the banks’ ongoing de-leveraging are some of the

challenges confronting the region.

�����*/2%$/�(&2120,&�287/22.��7+(�5,&+�:25/'�*(76�5($'<�72�/($'�7+(�:$<

Emerging markets will capture just over half of world GDP by 2025

DIStrIButIoN of WorlD GDP IN 2000, 2012, aND 2025

US

Europe

Other mature

China

India

Latin America

Other emerging

Global Economic Outlook 2014, The Conference Board

2000 2012

2025

Emerging markets constituted almost half of world Gross 'RPHVWLF�3URGXFW�LQ������from about one-third in 2000, as shown in the following FKDUW��IURP�WKH�&RQIHUHQFH�%RDUG·V�*OREDO�(FRQRPLF�Outlook 2014 report. The shift is expected to continue in the next decade, albeit at a much slower pace. By 2025, it notes, emerging markets will capture just over half of world *'3��ZLWK�&KLQD�EHFRPLQJ�WKH�largest economy in the world. (XURSH·V�FRQWULEXWLRQ�WR�ZRUOG�*'3�LV�H[SHFWHG�WR�FRPSULVH�18% in 2025, down from 26% LQ�������&KLQD·V�VKDUH��RQ�the other hand, will comprise ����IURP�D�PHUH����LQ�������DV�WKH�8QLWHG�6WDWHV·�VKDUH�LV�tipped to decline to 18% from 23% in 2000.

+H�QRWHV��³,QGHHG��WKHUH�LV�D�ORRPLQJ�ULVN�RI�secular stagnation in many advanced economies,

RZLQJ�WR�WKH�DGYHUVH�HHFW�RQ�SURGXFWLYLW\�JURZWK�of years of underinvestment in human and physical

capital. And the structural reforms that these

economies need to boost their potential growth will

EH�LPSOHPHQWHG�WRR�VORZO\�´�

In a December piece posted on the Council of Foreign

Relations site, international economics expert Robert

.DKQ�VD\V�HXUR�DUHD�JURZWK�LV�RQ�WUDFN�WR�UHDFK����in 2014 after two years of decline. Still, the problem

with this forecast, he notes, is that growth at this level

LV�LQVXFLHQW�WR�UHGXFH�KLJK�OHYHOV�RI�XQHPSOR\PHQW��A critical threat to Europe’s future is that youth

XQHPSOR\PHQW�DYHUDJHV�QHDUO\�����IRU�WKH�HXUR�]RQH�DQG�H[FHHGV�����LQ�VRPH�FRXQWULHV����

“Continued bank deleveraging, an uncertain global

growth outlook that will restrain exports, excessively

tight macroeconomic policies, and an incomplete

framework for monetary union provide powerful

KHDGZLQGV�WR�UHFRYHU\�´�.DKQ�VD\V���

7KH�FKDOOHQJH��.DKQ�UHLWHUDWHV��LV�WR�UHVWRUH�JURZWK�EHIRUH�WKH�PDUNHWV�ORVH�FRQ¿GHQFH�LQ�WKH�UHIRUP�process. European leaders, he adds, will have to make

a better case for economic and political union or risk

another crisis in 2014.

2QH�PDMRU�XQFHUWDLQW\��&KLQD��1HYHUWKHOHVV��if there is one major uncertainty about the future of

the global economy, it’s China, according to investor

and philanthropist *HRUJH�6RURV in a Jan. 2 article

LQ�3URMHFW�6\QGLFDWH��+H�HYHQ�QRWHV�WKDW�WKHUH�DUH�³HHULH�UHVHPEODQFHV´�ZLWK�WKH�SUHYDLOLQJ�¿QDQFLDO�conditions in the U.S. before the crash of 2008.

³7KH�JURZWK�PRGHO�UHVSRQVLEOH�IRU�LWV�UDSLG�ULVH�´�KH�VD\V��³KDV�UXQ�RXW�RI�VWHDP�´�6RURV�SRLQWV�RXW�WKDW�WKH�model relied on repression of the household sector in

order to drive the growth of exports and investments.

%HFDXVH�RI�WKLV��KH�VD\V��WKH�KRXVHKROG�VHFWRU�KDV�VKUXQN�WR�����RI�*'3�DQG�LWV�IRUFHG�VDYLQJV�DUH�QR�ORQJHU�VXFLHQW�WR�¿QDQFH�WKH�FXUUHQW�JURZWK�PRGHO��leading to an exponential rise in the use of various

IRUPV�RI�GHEW�¿QDQFLQJ���

8

:NK�cenSEI�8KVUXZ �����February 4, 2014

7

&217(176�����(&2120<����*(232/,7,&6�����%86,1(66�����+($/7+�����7(&+12/2*<�����62&,(7<��������������������

PRUH�HFLHQW�XUEDQL]DWLRQ�SURFHVV��DOORZLQJ�WKH�HFRQRP\�WR�EHQH¿W�IURP�WKH�PDVVLYH�VXSSO\�of labor still trapped in low-productivity rural

activities or smaller cities and increasing the role of

SULYDWH�¿UPV��ZKRVH�LQYHVWPHQW�UHWXUQV�DUH�WZLFH�DV�KLJK�DV�VWDWH�RZQHG�HQWHUSULVHV�´�

Emerging markets with fewer ZHDNQHVVHV�ZLOO�GR�EHWWHU� As for

the emerging economies, Roubini notes that

emerging markets with fewer macroeconomic,

SROLF\��DQG�¿QDQFLDO�ZHDNQHVVHV�ZLOO�SHUIRUP�EHWWHU�WKLV�\HDU��7KLV�LQFOXGHV�6RXWK�.RUHD��WKH�3KLOLSSLQHV��0DOD\VLD��DQG�RWKHU�$VLDQ�LQGXVWULDO�H[SRUWHUV��3RODQG�DQG�Czech Republic in Europe; Chile,

3HUX��&RORPELD��DQG�0H[LFR�LQ�/DWLQ�$PHULFD��.HQ\D�and Rwanda in Africa; and

WKH�*XOI�RLO�H[SRUWLQJ�economies.

Roubini suggests emerging

economies will grow faster

LQ������DW�QHDUO\����\HDU�on year. This is because

brisker recovery from the

advanced economies will boost

imports from these emerging

PDUNHWV��0RUHRYHU��DV�PDQ\�emerging economies continue

to urbanize and industrialize,

their rising middle classes will

spur consumer demand for goods

DQG�VHUYLFHV��1HYHUWKHOHVV��VRPH�markets will remain fragile this

year, namely India, Indonesia,

%UD]LO��7XUNH\��6RXWK�$IULFD��

+XQJDU\��8NUDLQH��$UJHQWLQD��DQG�9HQH]XHOD��³RZLQJ�WR�ODUJH�H[WHUQDO�DQG�¿VFDO�GH¿FLWV��VORZLQJ�JURZWK��EHORZ�WDUJHW�LQÀDWLRQ��DQG�HOHFWLRQ�UHODWHG�SROLWLFDO�WHQVLRQV�´

*ROGPDQ�6DFKV¶�FKLHI�PDUNHWV�HFRQRPLVW Dominic Wilson says, in a December video,

that the emerging world on average is expected

to perform better in 2014 than in the previous year,

ZLWK�VLJQL¿FDQW�YDULDWLRQ�DFURVV�WKDW�JURXS��0RVW�RI�the progress, he says, will come from the external

environment, particularly with the improved status

RI�WKH�GHYHORSHG�PDUNHWV��+HQFH��SODFHV�ZKHUH�WKH�economic performance is likely to improve are

those which have more exposure to the

developed markets, as in exports.

Emerging Asian economies are

H[SHFWHG�WR�JURZ������SHU�\HDU�from 2014 to 2018, according

to the 2014 Economic Outlook

for Southeast Asia, China

and India of the Organization

for Economic Co-operation

and Development (OECD)

Development Centre��%XWWUHVVHG�by robust domestic demand,

strong infrastructure spending, and

implementation of structural reforms,

Indonesia is projected to enjoy an

DYHUDJH�DQQXDO�JURZWK�UDWH�RI����LQ���������DQG�WKH�3KLOLSSLQHV�ZLWK�D�UDWH�RI�������0HDQZKLOH��$VVRFLDWLRQ�RI�6RXWKHDVW�$VLDQ�1DWLRQV��$6($1)

countries which are projected to grow

at a robust pace include: Cambodia

��������/DRV���������0\DQPDU���������DQG�9LHWQDP���������

Signs that the

third-biggest

economy is losing

steam are showing.

In December,

growth in China’s

services industries

slowed, mirroring

a slowdown in

manufacturing.

A -DQ����5HXWHUV�report says that

+6%&¶V�3XUFKDVLQJ�0DQDJHUV¶�,QGH[��30,���DV�FRPSLOHG�E\�0DUNLW�(FRQRPLFV��dropped to 50.9 in

December, its lowest

since August 2011.

30, is an indicator of

the economic health

of the manufacturing

sector. Also cited in

the report is a similar

survey conducted by

&KLQD¶V�1DWLRQDO�%XUHDX�RI�6WDWLVWLFV��ZKLFK�UHYHDOHG�a slowdown in service-sector growth to a four-month

ORZ�RI�������+RZHYHU��¿QGLQJV�IURP�WKH�WZR�VXUYH\V�remained above the 50-point level, which is the

dividing line between expansion and contraction, the

report notes.

The�%RVWRQ�&RQVXOWLQJ�*URXS��%&*���IRU�LWV�SDUW��remains optimistic about China’s future. In a

1RYHPEHU�DUWLFOH�SXEOLVKHG�LQ�%ORRPEHUJ¶V�7KH�*ULG��VHQLRU�SDUWQHU�DQG�IHOORZ�RI�%&*�0LFKDHO�-��Silverstein says the Chinese economy “is destined

WR�FRQWLQXH�JURZLQJ�DW�D�UDSLG�FOLS�´�7KH�FRQVXOWLQJ�

¿UP�H[SHFWV�&KLQD¶V�leaders to ignite the capital

economy with major

infrastructure investments

that support urban

development. Further,

reforms in its one-child

policy will substantially

increase birthrates,

contributing up to two

million new children to the

2014 economy, he notes.

Can China avoid the middle-income trap? ,Q�1RYHPEHU��WKH�7KLUG�3OHQXP�RI�WKH�&KLQHVH�&RPPXQLVW�3DUW\¶V�&HQWUDO�Committee laid out a

bold policy framework

in order to achieve a

sustainable growth path.

In the Council of Foreign

Relations piece, <XNRQ�+XDQJ, senior associate

in the Asia program of the Carnegie Endowment

IRU�,QWHUQDWLRQDO�3HDFH, says these policy changes

are essential if China is to evade the middle-income

WUDS��+H�EHOLHYHV�WKDW�IRU�&KLQD�WR�PDLQWDLQ�JURZWK�RI����IRU�WKH�UHVW�RI�WKH�GHFDGH��LW�PXVW�³DGGUHVV�LWV�JURZLQJ�GHEW�SUREOHP�DQG�VLJQL¿FDQWO\�LQFUHDVH�SURGXFWLYLW\�´�

+XDQJ�VD\V�&KLQD¶V�SDVW�UHOLDQFH�RQ�LQFUHDVLQJ�investment rates and ready access to low-cost

labor is no longer plausible. Instead, he notes,

“The two most promising areas of productivity-

boosting reform are those that will facilitate a

Chief markets economist Dominic

Wilson says the emerging world is

expected to perform better this year than

in 2013 with the improved conditions

in the developed economies

Goldman Sachs

�����*/2%$/�(&2120,&�287/22.��7+(�5,&+�:25/'�*(76�5($'<�72�/($'�7+(�:$<

A survey by China’s National

Bureau of Statistics

revealed a VORZGRZQ�LQ�

service-sector JURZWK�WR�D�IRXU�

PRQWK�ORZ�

1 3 5

2 4 R

10

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9

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China’s Economic Growth in 2014:

As reported in Reuters on Jan. 20, China’s

HFRQRP\�JUHZ�E\������LQ�������EDUHO\�averting a 14-year low, prompting some to

predict continuing deceleration ahead.

$FFRUGLQJ�WR�WKH�5HXWHUV�GLVSDWFK��&KLQD¶V������economic growth rate matched that of 2012, and was just

VOLJKWO\�DERYH�PDUNHW�H[SHFWDWLRQV�RI������JURZWK��:KLOH�capital formation accounted for 54 percent of economic

JURZWK�LQ�������WKH�FRXQWU\¶V�¿[HG�DVVHW�LQYHVWPHQWV¶�JURZWK�UDWH�RI�������ZDV�WKH�VPDOOHVW�LQFUHDVH�LQ�DW�OHDVW����\HDUV�DQG�VOLJKWO\�XQGHU�IRUHFDVWV�RI�������JURZWK��

7KH�FRXQWU\¶V�QHW�H[SRUWV�UHSRUWHGO\�GHWUDFWHG������IURP�overall growth, as evidenced by factory output growth

VORZLQJ�WR�D�¿YH�PRQWK�ORZ�LQ�'HFHPEHU��VWHHO�RXWSXW�continuing to drop for a third consecutive month, and oil

FRQVXPSWLRQ�ULVLQJ�DW�LWV�VORZHVW�UDWH�LQ�¿YH�\HDUV�

According to the Reuters report, China is aiming to

restructure its economy by reducing government

LQWHUYHQWLRQ�LQ�¿QDQFLDO�PDUNHWV��DQG�E\�SURPRWLQJ�domestic consumption in lieu of investments and

H[SRUWV��7KH�UHSRUW�FLWHV�WKH�DVVHVVPHQW�RI�0D�-LDQWDQJ��

head of China’s statistics bureau, that a trend of

ambitious investment by local Chinese governments –

LQFXUULQJ����WULOOLRQ�ZRUWK�RI�GHEW±�ZDV�DW�WKH�IRUHIURQW�of China’s investment drive, and must now be checked.

Ambitious investment by local Chinese governments that

KDYH�UDFNHG�XS�VRPH����WULOOLRQ�ZRUWK�RIGHEW�KDV�EHHQ�DW�the forefront of China’s investment drive in recent years,

D�WUHQG�WKDWPXVW�EH�FKHFNHG��VDLG�0D�-LDQWDQJ��KHDG�RI�China’s statistics bureau.

In a Financial Times blog post (registration required),

)7¶V�HPHUJLQJ�PDUNHWV�HGLWRU�-DPHV�.\QJH�VD\V�WKHUH�LV�³QR�GRXEW´�WKDW�D�UH�EDODQFLQJ�DZD\�IURP�D�³KDELWXDO�RYHU�UHOLDQFH�RQ�LQYHVWPHQW´�DQG�WRZDUG�GRPHVWLF�consumption, is underway.

$FFRUGLQJ�WR�.\QJH��WKH�WHUWLDU\�VHFWRU��UHWDLO�VDOHV��UHDO�estate, and other services) eclipsed the secondary sector

(including industry and construction businesses) in both

JURZWK�UDWH�DQG�DEVROXWH�VL]H�LQ�������IRU�WKH�¿UVW�WLPH�HYHU��ULGLQJ�DQ������JURZWK�UDWH�WR�DFFRXQW�IRU�����RI�the economy, which outperformed the secondary sector’s

�����JURZWK�DQG�����VKDUH�RI�WKH�HFRQRP\�

+H�DOVR�QRWHV�WKDW�WKH������XUEDQ�GLVSRVDEOH�LQFRPH�JURZWK�UDWH�LV�ORZHU�WKDQ�����¶V������JURZWK�UDWH��EXW�balances that with “clear indication that spending power

at the lower end of the income pyramid is turning more

UREXVW�´�FLWLQJ�D������ULVH�LQ�UXUDO�QHW�LQFRPHV�LQ�������DORQJ�ZLWK�D�����ULVH�LQ�PLJUDQWV¶�DYHUDJH�PRQWKO\�ZDJHV�

Another blog post, this one by Carlos Tejada in the Wall Street Journal’s China in Real Time Report,

wonders, however, how much China’s consumers

actually contributed to the country’s economic growth in

������EDVHG�RQ�WKH�FRQFHUQ�RI�/RXLV�.XLMV��DQ�HFRQRPLVW�IURP�WKH�5R\DO�%DQN�RI�6FRWODQG�*URXS��%DVHG�RQ�D�review of quarterly national accounts and household

VXUYH\�GDWD��LQ�WKH�DEVHQFH�RI�RFLDO�GDWD��.XLMV�SUHGLFWV�that the share of household consumption in gross

GRPHVWLF�SURGXFW�PLJKW�KDYH�IDOOHQ�LQ������±�IURP�����LQ������DQG�������LQ������±�EHFDXVH�WKH�ÀRRG�RI�FUHGLW�LQ������ZKHQ�JURZWK�VORZHG�ZHQW�WR�ELJ�VWDWH�OHG�SURMHFWV��which boosted the share of investment.

For all the cautious optimism of some over the Chinese

government’s good intentions, however, others warn of

the dangers of its postponing the inevitable by continuing

its stimulus spending.

A Quartz dispatch E\�*Z\QQ�*XLOIRUG�DWWULEXWHV�WKH������JURZWK�UDWH�WR�D�KXJH�VXUJH�LQ�JRYHUQPHQW�OHQGLQJ�in the second half of the year, and warns that the

government might have to continue spending and

keep credit growth booming in order to maintain the

current pace of economic growth. The consequences

of that could be more government investment in

infrastructure and businesses taking on more debt (the

FRXQWU\�DOUHDG\�VHWV�DVLGH�����RI�*'3�IRU�LQWHUHVW�RQ�existing debts, we’re reminded), all of which will lead to

much lower growth in the future.

The sooner the government recognizes the necessity of

fundamental reforms and consequent lower growth in the

LQWHULP��WKH�EHWWHU�WKH�RXWFRPH��*XLOIRUG�DGYLVHV�

675$7(*<�32,176&KLQD·V�����������HFRQRPLF�JURZWK�UDWH�ZDV�MXVW�DERYH�WKH�JRYHUQPHQW·V�WDUJHW�RI�������but it was achieved by loosening credit, not stronger-than-expected economic performance

While some see a long-awaited re-balancing away from investment and toward domestic consumption, others are not so sure this is happening fast enough

7KH�QDWLRQDO�JRYHUQPHQW·V�DWWHPSWV�WR�FXUE�LQIUDVWUXFWXUH�LQYHVWPHQW�FRXOG�EH�XQGHUPLQHG�by local governments trying to jack up local growh rates

&+,1$·6�(&2120,&�*52:7+�,1�������+$/)�63(('�$+($'"

Half-Speed Ahead?

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Internet connection by clicking pictures,

graphics, and words in blue

A %XVLQHVVZHHN�SRVW by Dexter Roberts focuses on

concerns over China’s local-government debt – 17.9

WULOOLRQ�\XDQ��86������WULOOLRQ��DV�RI�-XQH��XS�����VLQFH�������:KLOH�RQO\�����RI�ORFDO�JRYHUQPHQW�borrowing came from bank loans – down from

����LQ������±�WKH�EDODQFH�FRPHV�IURP�ORFDOO\�LVVXHG�bonds and the country’s barely regulated shadow

banking network.

The post reports that localities have been authorized to

LVVXH�VSHFLDO�ERQGV�WR�KHOS�SD\�R�GHEW�GXH�WKLV�\HDU��while other measures are being considered to help local

governments, including a local-property tax, resource

and consumption taxes, and a shift of some local

government expenses to the national government. The

RVKRRW�RI�DOO�WKHVH�HRUWV��KRZHYHU�QHFHVVDU\��FRXOG�EH�D�GURS�LQ�JURZWK�WR����RU�OHVV��DFFRUGLQJ�WR�DQDO\VWV�at *.�'UDJRQRPLFV.

A 1LNNHL�$VLDQ�5HYLHZ�UHSRUW warns that China’s

economic growth is masking troubling regional trends,

with imbalances due to over-investment and income

disparities actually worsening. According to the report,

“Although the central government hopes to shake the

dependence on investment, local governments are

scrambling to build new housing developments to jack

XS�WKHLU�JURZWK�UDWHV�´�

7KH�UHSRUW�FLWHV�D�FRQVWUXFWLRQ�ERRP�LQ�*XL\DQJ�FLW\��LQ�*XL]KRX�SURYLQFH��RQH�RI�WKH�FRXQWU\¶V�SRRUHVW�UHJLRQV��1HZ�FRQGRPLQLXP�DQG�VN\VFUDSHU�developments there will result in homes that can

accommodate 5 million people, which would exceed

*XL\DQJ¶V�SRSXODWLRQ�RI���PLOOLRQ��7KH�FXUUHQW�occupancy rate, according to a local worker quoted in

WKH�UHSRUW��LV�DERXW��������

0HDQZKLOH��FRQFHUQV�RYHU�&KLQD¶V�GLVDSSRLQWLQJ�PDQXIDFWXULQJ�GDWD�ZHUH�UHÀHFWHG�LQ�VWRFN�PDUNHWV�LQ�both 1HZ�<RUN�and Japan, as documented in separate

-DQ�����5HXWHUV�UHSRUWV��

12

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11

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Another agriculture-related issue was “WDUL�TXRWD�administration�³�L�H���KRZ�D�VSHFL¿F�W\SH�RI�LPSRUW�quota is to be handled, as in re-allocated among other

traders, when the quota is persistently

XQGHU�¿OOHG��$FFRUGLQJ�WR�WKH�:72��PHPEHUV�agreed on a combination of consultation and providing

information in these instances, with six countries

reserving the right to opt out

of the system after six years.

Other agreements held over

IURP�WKH�:72¶V�*HQHYD�summit in 2009 included

strong political statements

pledging to keep low

export subsidies and

other measures with

VLPLODU�HHFW, and to

improve market access

for cotton products from

least developed countries

and provide development

assistance for production in

those countries.

%XW�WKH�VLQJXODU�DFKLHYHPHQW�of a unanimous accord

among 159 members

notwithstanding, some

analysts think the major

actual accomplishment of the

accord was in buying time

for a broader agreement WR�EH�QHJRWLDWHG�DQG�UDWL¿HG��DV�UHSRUWHG�RQ�WKH�%ORRPEHUJ�1HZV�VLWH��

Looking at the accord from another perspective,

WKH�%ORRPEHUJ�1HZV�UHSRUW�SURYLGHG�D�UHDFWLRQ�IURP�5RPDLQ�%HQLFFKLR��Oxfam senior policy

DGYLVHU��³7KH�%DOL�SDFNDJH�LV�KDUGO\�JRLQJ�WR�PDNH�D�GLHUHQFH�IRU�SRRU�FRXQWULHV��EXW�DW�OHDVW�LW�NHHSV�WKH�negotiations on food security alive ... negotiators now

KDYH�WR�¿QG�D�ORQJ�WHUP�VROXWLRQ�WR�FKDQJH�WKH�ULJJHG�rules that stand in the way of developing countries’

IRRG�VHFXULW\�SROLFLHV�´�

As posted on the Oxfam site��%HQLFFKLR�DOVR�characterized the trade facilitation agreement as

³QR�JDPH�FKDQJHU�IRU�WKH�SRRU´�H[SODLQLQJ�WKDW�“(I)ts gains have been grossly

overestimated, while the

costs of implementation for

poorer countries were

FRPSOHWHO\�LJQRUHG�´

And his reaction to the

statements pledging to

help least-developed

countries was particularly

SRLQWHG��³7KH�/'&�VSHFL¿F�decisions are unlikely to

PDNH�DQ�HFRQRPLF�GLHUHQFH�for poor countries. It is all

best endeavor language,

which is the trade negotiators

HTXLYDOHQW�RI�FURVVLQJ�¿QJHUV�EHKLQG�\RXU�EDFN�´�

+DYLQJ�VDLG�DOO�WKDW��WKH�world isn’t holding its

breath waiting for a

comprehensive trade

agreement to emerge from

the WTO, what with major

regional trade pacts being negotiated between the

United States and Europe (Trans-Atlantic Trade and

,QYHVWPHQW�3DUWQHUVKLS��DQG�3DFL¿F�5LP�QDWLRQV�(7UDQV�3DFL¿F�3DUWQHUVKLS).

The Council on Foreign Relations provides an

analysis RI�KRZ�DOO�WKHVH�GHYHORSPHQWV�PLJKW�¿W�LQ�D�ZRUOG�ZKHUH�GLHUHQW�UHJLRQDO�JURXSV�SXUVXH�WUDGH�liberalization at their own pace.

:72·6�),567�$&&25'��.((3�7$/.,1*

³7KH�/'&�VSHFL¿F�GHFLVLRQV�DUH�����

all best endeavor ODQJXDJH��ZKLFK�

is the trade negotiators

equivalent of FURVVLQJ�¿QJHUV�

EHKLQG�\RXU�EDFN�´�

��5RPDLQ�%HQLFFKLROxfam senior policy adviser

OLG�k�>ajkl�9[[gj\2�C]]h�LYdcaf_

The World Trade Organization

(WTO��ZUDSSHG�XS�LWV�%DOL��Indonesia meeting on

Dec. 7 with its 159 member-nations agreeing to

a unanimous trade-liberalization accord��LWV�¿UVW�multilateral agreement in its 18-year history, as

UHSRUWHG�LQ�%ORRPEHUJ�%XVLQHVVZHHN�

The %DOL�3DFNDJH, as the WTO refers to the

accord, is highlighted by agreements on trade

facilitation that promise to cut red tape and speed

up port clearances, as well as issues related to

trade facilitation, and food security in developing

countries and cotton and a number of other

provisions for least developed countries.

The trade-facilitation decision involves speeding

up customs procedures to promote clarity,

HFLHQF\�DQG�WUDQVSDUHQF\��DV�ZHOO�DV�SURYLGLQJ�assistance to developing and least-developed

countries in updating their infrastructure

DQG�WUDLQLQJ�WKHLU�FXVWRPV�RFLDOV��7KH�:72�estimates that between $400 billion to $1 trillion

will be added to the world economy by reducing

WUDGH�FRVWV�E\�����WR������

The agreement on food security, as the WTO

put it, focused largely on shielding public

food-stockholding programs in developing

countries from legal challenges. As reported

LQ�%ORRPEHUJ�%XVLQHVVZHHN��WKH�DJUHHPHQW�boiled down to a compromise between the

United States and India, where India and other

developing countries would not have to classify

public spending on food-security stockpiles as

agricultural subsidies, as long as crop surpluses

GR�QRW�¿QG�WKHLU�ZD\�WR�ZRUOG�PDUNHWV�DQG�thereby distort world trade. The WTO regards

this as an interim solution, and has set up a

program for producing a permanent solution in

four years.

STRATEGY POINTS7KH�:RUOG�7UDGH�2UJDQL]DWLRQ�KDV�FRPH�XS�ZLWK�LWV�ÀUVW�HYHU�PXOWLODWHUDO�agreement, but a closer review reveals WKDW�JOREDO�WUDGH�OLEHUDOL]DWLRQ�LV�VWLOO�YHU\�much a work in progress

Interim agreements and continuing pledges aside, the major accomplishment of the accord might have been in buying time for a broader agreement to be negotiated without scuttling progress already achieved

$�SURPLQHQW�KXPDQLWDULDQ�RUJDQL]DWLRQ�says the accord is “no game changer for the poor”

POINT & CLICK

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Internet connection by clicking

pictures, graphics, and words in blue

14

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13

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Between Chinese and Southeast

Asian Territorial Claims,

ASEAN Tries to Stay

Squarely in the Middle

675$7(*<�32,176,Q�%HLMLQJ·V�UHFHQW�PRYHV�LQ�WKH�(DVW�&KLQD�6HD�DLU�GHIHQVH�]RQH�DQG�+DLQDQ·V�ÀVKLQJ�ODZ��WKH�ELJ�TXHVWLRQ�LV�$6($1·V�SRVLWLRQ

While the Philippines pushed for a tough line WRZDUG�&KLQD��WKH����QDWLRQ�JURXSLQJ�FDOOHG�for “self-restraint” instead

.H\�WR�$6($1·V�HYROYLQJ�SRVLWLRQ�LV�0\DQPDU·V�FKDLUPDQVKLS�LQ�������ZKLFK�ZLOO�likely preserve neutrality

+ainan Island’s implementation this

month of its law requiring foreign vessels

WR�JHW�SHUPLVVLRQ�WR�¿VK�LQ�WKH�ZDWHUV�LW�administers, has put the Association of Southeast

$VLDQ�1DWLRQV�RQ�WKH�VSRW��3UHGLFWDEO\��WKH�3KLOLSSLQHV�DQG�9LHWQDP�condemned the move,

while the United States and Japan expressed

grave concern��%XW�WKH�UHDO�TXHVWLRQ�LV�UHDOO\�KRZ

$6($1 as a group will react.

7KH�DQVZHU�VR�IDU�FDPH�DW�WKH�$6($1�)RUHLJQ�0LQLVWHUV�0HHWLQJ�LQ�%DJDQ��0\DQPDU��RQ�-DQXDU\�17-19. The 10-nation grouping did not cite the

+DLQDQ�¿VKLQJ�ODZ��EXW�PHUHO\�³UHDUPHG�WKH�importance of maintaining peace and stability,

maritime security, freedom of navigation and

RYHUÀLJKW�´�DFFRUGLQJ�WR�6LQJDSRUH¶V Channel

1HZV�$VLD��7KH�UHWUHDW�DOVR�XUJHG�³VHOI�UHVWUDLQW´�rather than an adversarial stance against any state.

0DQLOD�XUJHV�$6($1�VROLGDULW\��3KLOLSSLQH�Foreign Secretary Albert del Rosario tried to

get his fellow ministers to echo his strong line

DJDLQVW�WKH�¿VKLQJ�UXOH��As reported by Rappler,

the former ambassador to Washington told his

counterparts at the meeting: “We are gravely

concerned by this new regulation ... This

development escalates tensions, unnecessarily

complicates the situation in the South China

Sea, and threatens the peace and stability of the

UHJLRQ�´�$OVR�FULWLFL]LQJ�%HLMLQJ¶V�GHFODUDWLRQ�RI�DQ�$LU�'HIHQVH�,GHQWL¿FDWLRQ�=RQH��$',=� in the East

&KLQD�6HD��GHO�5RVDULR�XUJHG�³UHJLRQDO�VROLGDULW\´�DPRQJ�$6($1�PHPEHUV�

4XRWLQJ�D�'HSDUWPHQW�RI�)RUHLJQ�$DLUV�VWDWHPHQW��3KLOLSSLQH�QHZV�UHSRUWV�SRUWUD\HG�WKH�PHHWLQJ�DV�HFKRLQJ�0DQLOD¶V�VWDQFH�YLV�D�YLV�%HLMLQJ��³$6($1�DLUV�FRQFHUQ�RYHU�QHZ�&KLQD�VHD�ODZ�´�headlined top daily The Philippine Star,

ZKLFK�WKH�*0$�1HZV�repeated on its website.

%(7:((1�&+,1(6(�$1'�6287+($67�$6,$1�7(55,725,$/�&/$,06��$6($1�75,(6�72�67$<�648$5(/<�,1�7+(�0,''/(�

GEOPOLITICS

“On the regional and

international issues,

the foreign ministers

stressed the importance

RI�XSKROGLQJ�$6($1¶V�centrality in the evolving

regional architecture in

addressing the issues

of common interest of

$6($1�´�WKH�')$�UHSRUW�said in language similar

to the $6($1�-DSDQ�Commemorative Summit

communique in December.

“The ministers also

discussed ways to

further contribute to

the peace, stability and

prosperity of the region

DQG�EH\RQG�´�GHO�5RVDULR¶V�agency added.

Myanmar plays honest EURNHU��,Q�IDFW��$6($1�appeared to take a neutral

stance toward contentious

issues in the South China

Sea. Indeed, this year’s

$6($1�FKDLU��0\DQPDU��RHUHG�WR�PHGLDWH�between fellow member

nations and China. “Our

friendly relationship with

China and membership

RI�$6($1�PHDQV�ZH�can have good relations

with both sides and be

impartial and friendly to

DOO�SDUWLHV�FRQFHUQHG�´�deputy information

minister and presidential

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CenSEI Map based on “Governing the South China Sea,” by David rosenberg, Harvard Asia Quarterly

16

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15

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VSRNHVSHUVRQ�<H�+WXW�told The Irrawaddy publication.

Until its democratic

reforms starting in

early 2011 thawed

ties with the West,

0\DQPDU�ZDV�JUHDWO\�dependent on its close

economic relationship

with China, calling each

other paukphaw, or

siblings, in the majority

%XUPHVH�WRQJXH��

%DFN�LQ�������0\DQPDU�SDVVHG�XS�LWV�WXUQ�WR�FKDLU�the grouping, fearful of being snubbed by Western

nations unhappy with its ruling junta.

1RZ��XQGHU�UHIRUPLVW�3UHVLGHQW�Thein Sein, the

country is keen to show its diplomatic mettle as

$6($1�FKDLU��$PRQJ�RWKHU�DJHQGD��LW�KRSHV�WR�¿QDOO\�ZRUN�RXW�D�binding Code of Conduct (COC)

WR�XSJUDGH�WKH�1RYHPEHU������$6($1�&KLQD�Declaration governing activities in the South China

6HD��:KHWKHU�WKDW�HOXVLYH�DFFRUG�ZLOO�¿QDOO\�EH�IRUJHG��RQH�WKLQJ�LV�FHUWDLQ��0\DQPDU�ZLOO�KDYH�WR�play honest broker, making sure to take no sides

in disputes with China, if the latter is to be nudged

toward productive COC talks.

6XPV�XS�'U��6XEKDVK�.DSLOD�RI�WKH�South Asia

$QDO\VLV�*URXS think tank in his paper, “South China

6HD�DQG�$6($1�&KDLUPDQVKLS�´�SRVWHG�-DQXDU\����³0\DQPDU¶V�JUHDWHVW�FKDOOHQJH�ZRXOG�EH�WR�HQVXUH�WKDW�&KLQD�GXULQJ�0\DQPDU¶V�FKDUJH�LV�QRW�WHPSWHG�WR�WUDQVJUHVV�RQ�$6($1�VHFXULW\�LQ�WKH�6RXWK�&KLQD�6HD��QRU�GRHV�0\DQPDU�FDYH�LQ�WR�&KLQHVH�SUHVVXUHV�RQ�WKDW�LVVXH��0\DQPDU�ZRXOG�EH�H[SHFWHG�E\�LWV�IHOORZ�$6($1�QDWLRQV�WKDW�LW�VWHHUV�WKH�FRXUVH�RI�

events in a manner that

China becomes motivated for

DFFRPPRGDWLRQ�RI�$6($1�sensitivities on issues of

DOC and COC and accepts

PXOWLODWHUDO�QHJRWLDWLRQV�´

&KLQD·V�FKDUP�RIIHQVLYH��:LWK�$6($1�VWD\LQJ�QHXWUDO��UHVLVWLQJ�0DQLOD¶V�SXVK�IRU�a tough stance on the South

&KLQD�6HD��%HLMLQJ�VHHPV�WR�EH�UHDSLQJ�WKH�LQWHQGHG�EHQH¿WV�RI�LWV�HRUWV�WR�EXLOG�UHODWLRQV�with Southeast Asia. Late last

\HDU��&KLQHVH�3UHVLGHQW�;L�-LQSLQJ�DQG�3UHPLHU�/L�.HTLDQJ�SUHVVHG�WKH�ÀHVK�DQG�ODLG�RXW�WKH�ODUJHVVH�LQ�$6($1�FDSLWDOV�

%HLMLQJ¶V�ERVVHV�WDONHG�RI�ERRVWLQJ�WUDGH�ZLWK�WKH�region one and a half times, to $1 trillion by 2020,

and pledged to work toward joining the Regional

&RPSUHKHQVLYH�(FRQRPLF�3DUWQHUVKLS��5&(3��WUDGH�JURXS��3UHVLGHQW�;L�IXUWKHU�ÀRDWHG�WKH�LGHD�RI�DQ�Asian infrastructure bank to fund projects, probably

prompting Japan to come up with its own $20-billion

package of grants and loans for 2014-18.

3HUKDSV�HYHQ�PRUH�FUXFLDO�WKDQ�WKH�FRQWHVW�EHWZHHQ�&KLQD�DQG�-DSDQ�WR�ZRR�$6($1��WKH�JURXSLQJ�GRHV�not want a repeat of the open discord at the 2012

VXPPLW�LQ�3KQRP�3HQK��ZKHQ�&KLQD�DOO\�&DPERGLD�FODVKHG�ZLWK�8�6��EDFNHG�3KLOLSSLQHV��

7KDW�PHDQV�UHDUPLQJ�WKH�EORF¶V�GHFDGHV�ROG�SROLF\�of being friends with the big powers in the region. “In

LWV�QHDUO\�¿YH�GHFDGH�KLVWRU\��$6($1�KDV�H[FHOOHG�LQ�FRSLQJ�ZLWK�WKH�86�&KLQD�FRQIURQWDWLRQ�´�UHFRXQWV�.DYL�&KRQJNLWWDYRUQ�RI�Thailand’s The Nation daily.

*RRG�WKLQJ��EHFDXVH�WKHUH�ZLOO�EH�D�QHHG�IRU�PRUH�RI�the same this year and beyond.

0\DQPDU�ZLOO�KDYH�to play honest

broker, making sure

to take no sides

in disputes with

China, if the latter

is to be nudged

toward productive

COC talks.

'ULYH�\RXU�ORFDO�EDULVWD�FUD]\� From the artists at 3RS�&KDUW�/DE comes “The &RPSHQGLRXV�&RIIHH�&KDUW,” which offers a one-stop guide to just about every cup of coffee you might imagine, and what it takes to make LW��IURP�WKH�W\SH�RI�JULQG�\RX·OO�QHHG��IURP�ÀQH�to extra course) and the production method (steeping, pouring, steeping in a vacuum, to pressure-cooking in a vacuum) to the DGGLWLRQDO�LQJUHGLHQWV�DQG�WKH�ÀQDO�SURGXFW��:H·UH�SDUWLDO�WR�PHGLXP�JURXQG�UXQ�WKURXJK�a French press, and topped off with a splash of milk and a dash of sugar, but of course, your tastes might differ. The actual 24“x 18” print will cost $28, and comes with a selection RI�ÀQLVKLQJ�RSWLRQV�LI�\RX�ZDQW�something for hanging on your wall, but if you just want to brush up on your coffee choices from WLPH�WR�WLPH��LW·OO�MXVW�FRVW�\RXU�LQWHUQHW�connection to look.

supergraphic%(7:((1�&+,1(6(�$1'�6287+($67�$6,$1�7(55,725,$/�&/$,06��$6($1�75,(6�72�67$<�648$5(/<�,1�7+(�0,''/(�

18

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17

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STRATEGY POINTS,Q�D�%%&�UHSRUW��VHYHUDO�/LQNHG,Q�,QÁXHQFHUV�VKDUHG�WKHLU�WKRXJKWV�RQ�abandoning fear of making a mistake and taking a chance at bending the rules at work

Doing things that go against conventional wisdom can translate into gains in business

In a Jan. 10 article SRVWHG�RQ�WKH�%%&¶V�VLWH��VHYHUDO�/LQNHG,Q�,QÀXHQFHUV�shared their thoughts on what it

means to abandon the fear of making

a mistake and how taking a chance by bending the

rules can bring about fresh, new rules. Launched

LQ�������WKH�/LQNHG,Q�,QÀXHQFHU�SURJUDP�DOORZV�/LQNHG,Q�XVHUV�WR�IROORZ�NH\�¿JXUHV�IURP�D�YDULHW\�RI�sectors and read their blog posts across the network,

according to an October 2012 report in TechCrunch.

)RU�LQVWDQFH��*DU\�9D\QHUFKXN��FKLHI�H[HFXWLYHand co-founder of 9D\QHU�0HGLD, shares, “There is

more value in my continuing to test and be smart

than there would be if I were crippled by the fear of

GRLQJ�WKH�ZURQJ�WKLQJ�´�9D\QHU�VD\V�LQ�KLV�-DQ����post��+H�SRLQWV�RXW�WKDW�KH�FDQ�DOZD\V�DSRORJL]H�if he feels he did something wrong.

6RPHWLPHV��³VWUDWHJLF�VORSSLQHVV´�FDQ�ZRUN�ZKHQ�you are trying to impress someone, rather than

going for the time-tested rules of communication,

FRXUWHV\��DQG�SURIHVVLRQDOLVP��.HYLQ�5RRVH��ZULWHU�for New York Magazine, in a Jan. 8 post, cites the

casual response of Snapchat founder Evan Spiegel

WR�DQ�H�PDLO�VHQW�WR�KLP�E\�)DFHERRN�&(2�0DUN�=XFNHUEHUJ��,Q�D�VKRUW�PHVVDJH�VHQW�WR�6SLHJHO¶V�SHUVRQDO�H�PDLO��=XFNHUEHUJ�SUDLVHG�WKH�FRPSDQ\��FDOOHG�KLPVHOI�³D�ELJ�IDQ�´�DQG�VDLG�KH�ZRXOG�OLNH�WR�meet with him in the Facebook headquarters.

0RVW�H[SHULHQFHG�SURIHVVLRQDOV�ZRXOG�SUREDEO\�DGYLVH�Spiegel, Roose writes, to calm down, reply with a

courteous e-mail, praise him in return, and arrange to

PHHW�=XFNHUEHUJ�DW�KLV�HDUOLHVW�FRQYHQLHQFH��,QVWHDG��Spiegel, whose photo-disappearing app was not yet a

KRXVHKROG�QDPH��VHQW�WKLV�UHVSRQVH�ZLWK�KLV�L3KRQH��

“Thanks :) would be happy to meet—I’ll let you know when I make it

up to the Bay Area”

Doing the wrong things at work can lead to success

³%\�RQH�XSSLQJ�=XFNHUEHUJ¶V�EUHH]\��LQIRUPDO�style in his reply, Spiegel positioned himself

DV�WKH�&(2¶V�HTXDO�´�5RRVH�VD\V��³$QG�,¶G�EHW�that Facebook’s subsequent pursuit of Snapchat –

WKH�VRFLDO�QHWZRUN�RHUHG����ELOOLRQ�IRU�WKH�DSS�ODVW�\HDU��DQ�RHU�6QDSFKDW�UHIXVHG�±�LV�partially related to the fact that Spiegel played

hard to get, and dialed down his enthusiasm

IURP�WKH�VWDUW�´�KH�FRQWLQXHV�

In a January article in Inc., Steve Cody, co-

founder and managing partner of marketing

¿UP�3HSSHUFRPP, cites his experience when his

company was starting out. Instead of viewing big

competitors as enemies, he says, view them as

VRXUFH�RI�EXVLQHVV��%HFDXVH�&RG\�NQHZ�KLV�¿UP�was not a threat to the giants in the industry, he

decided to invite the CEOs of those big companies

for a drink and ask them to send him any prospect

that was “either too small for them or that they

SHUFHLYHG�WR�EH�D�FRQÀLFW�´�,Q�UHVSRQVH��&RG\�relates, “Several large competitors did just that

and ended up sending me hundreds of thousands

RI�GROODUV�LQ�QHZ�EXVLQHVV�´�

In business, doing the wrong things, whether

intentional or accidental, has the potential to turn

into gains. We’ve seen leaders thrive by being

unorthodox, such as the late Apple founder Steve

-REV�DQG�WKH�9LUJLQ�*URXS¶V�5LFKDUG�%UDQVRQ. In

an October 2012 feature in Entrepreneur about

%UDQVRQ¶V�XQFRQYHQWLRQDO�EXVLQHVV�DSSURDFK��KLV�KDQGV�R�PDQDJHPHQW�VW\OH�PHDQV�DOORZLQJ�SHRSOH�WR�PDNH�PLVWDNHV��+H�ORRNV�IRU�DQ�DUHD�RI�OLIH�WKDW�QHHGV�WR�EH�LPSURYHG�DQG�WKHQ�¿QGV�³EULOOLDQW´�SHRSOH�WR�UXQ�LW��³�*�LYH�WKHP�D�ORW�RI�freedom to make mistakes and don’t second-guess

WKHP�DOO�WKH�WLPH�´�LV�SDUW�RI�%UDQVRQ¶V�DGYLFH��DORQJ�ZLWK�SXWWLQJ�\RXU�HPSOR\HHV¶�KDSSLQHVV�¿UVW�E\�SD\LQJ�DWWHQWLRQ�WR�DOO�RI�WKH�GHWDLOV�WKDW�DHFW�an employee’s work.

'2,1*�7+(�:521*�7+,1*6�$7�:25.�&$1�/($'�72�68&&(66

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BUSINESS

20

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Feeding China’sChocolate Taste

675$7(*<�32,1768�6��EDVHG�+HUVKH\�&R��HQWHUV�LQWR�DQ�agreement to buy Shanghai Golden 0RQNH\�IRU������PLOOLRQ��%ORRPEHUJ�Businessweek reports

The move comes as foreign companies compete to develop products catering to WKH�WDVWHV�RI�WKH�&KLQHVH�PDUNHW�

Any foreign company looking to invest in &KLQD�PXVW�OHDUQ�WR�UHDG�WKH�PDUNHW�ZHOO�and adapt quickly or risk failure

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graphics, and words in blue

)((',1*�&+,1$·6�&+2&2/$7(�7$67(

United States candy maker�+HUVKH\�&R� has

agreed to buy 6KDQJKDL�*ROGHQ�0RQNH\�)RRG�*URXS�&R��/WG� in its bid to expand its presence

LQ�WKH�&KLQD�PDUNHW��UHSRUWV�%ORRPEHUJ�%XVLQHVVZHHN�LQ�D�Dec. 19 story. The purchase, the

report says, has an enterprise value of $584 million,

with the company’s Dutch unit paying $498 million

LQ�FDVK�DQG�DVVXPLQJ�����PLOOLRQ�LQ�GHEW��7KH�GHDO�will give the maker of +HUVKH\¶V�.LVVHV�and Reese’s

assortment�RI�FKRFRODWH�SHDQXW�EXWWHU�FDQGLHV�����RI�6KDQJKDL�*ROGHQ�0RQNH\¶V�VWRFN�LQ�DQ�LQLWLDO�VWDJH�to be completed in mid-2014, and the remainder will

be purchased by the Dutch subsidiary in 2015.

The move makes sense, given China’s fast-growing

FRQVXPHU�PDUNHW��0RUHRYHU��WKH�FRXQWU\¶V�FKRFRODWH�market is largely untapped, according to a Dec. 17

Quartz article�RQ�WKH�FXUUHQW�JOREDO�FKRFRODWH�GH¿FLW��,W�QRWHV�WKDW�ZKLOH�WKH�$VLD�3DFL¿F�UHJLRQ�KRXVHV�more than half of the world’s population, it accounts

IRU�EDUHO\�����RI�JOREDO�FKRFRODWH�FRQVXPSWLRQ��Still, in 2010, China became the second-biggest

confectionery market in Asia with $9.5 billion in

sales, according to a 2012 report from Agriculture

and Agri-Food Canada. Data from Euromonitor 2011

cited in the report reveals total confectionery sales

JUHZ�IURP������ELOOLRQ�LQ�������)XUWKHU��FKRFRODWH�is expected to be the fastest-growing confectionery

VHFWRU�LQ�&KLQD�WKURXJK��������

A -XQH������.30*�UHSRUW suggests that while the

global market for chocolate is still dominated by

:HVWHUQ�(XURSH�DQG�1RUWK�$PHULFD��HPHUJLQJ�PDUNHWV�³FOHDUO\�UHSUHVHQW�WKH�IXWXUH�´�7KH�%5,&�HFRQRPLHV�±�%UD]LO��5XVVLD��,QGLD��DQG�&KLQD�±�DFFRXQWHG�IRU�����RI�JOREDO�FRQIHFWLRQHU\�UHWDLO�growth in 2011, according to the report.

“Other emerging economies with youthful

populations and an acquisitive middle class are

likely to develop a taste for chocolate and, as

their disposable incomes grow, they will represent

LPSRUWDQW�WDUJHW�PDUNHWV�´�LW�QRWHV��

According to a�'HF�����%%&�UHSRUW��+HUVKH\¶V�acquisition marks one of the company’s largest

SXUFKDVHV��0RUHRYHU��LW�FRPHV�DV�IRUHLJQ�FRPSDQLHV�compete to develop new products that cater to the

tastes of the Chinese market, the report points out.

³7KH�VWUHQJWK�RI�6*0¶V�FRQIHFWLRQHU\�SRUWIROLR�DQG�overall distribution capabilities, especially within the

traditional trade, is an opportunity for us to

OHYHUDJH�VFDOH�WR�PDNH�WKH�LFRQLF�EUDQGV�RI�+HUVKH\�DQG�6*0�HYHQ�PRUH�SRZHUIXO�´�+HUVKH\�SUHVLGHQW�DQG�FKLHI�H[HFXWLYH�-RKQ�%LOEUH\�LV�TXRWHG�DV�VD\LQJ�in the article.

Any foreign

company looking to

enter China must

learn to read the

local market well

and adapt quickly to

its unique needs and

characteristics or

risk failure.

A 6HSWHPEHU������piece in *OREDO3RVW looks at four of

the biggest U.S.

companies that

failed to conquer

China’s market.

)RU�LQVWDQFH��+RPH�Depot, Atlanta-

based provider of

power tools and

building materials,

entered China

thinking that the

GR�LW�\RXUVHOI��',<��

ethic would be just as popular as it was in the States.

,W�DFTXLUHG�D�ORFDO�¿UP�DQG�VWRFNHG�LWV����VWRUHV��EXW�DIWHU�VL[�\HDUV��LW�VKXW�LWV�UHPDLQLQJ�VWRUHV�DQG�¿UHG�850 workers.

6HYHUDO�IDFWRUV�OHG�WR�+RPH�'HSRW¶V�IDLOXUH��2QH�is that it came late to China, just when growth was

slowing down. Another is that it tried to bring the

$PHULFDQ�QRWLRQ�RI�',<�WR�D�PDUNHW�ZKHUH�ODERU�LV�VR�cheap, people tend to hire a handyman than do the

repairs themselves.

2QOLQH�DXFWLRQLQJ�VLWH�H%D\�HQWHUHG�WKH�&KLQHVH�market by buying a local company called Eachnet

and switching it to

WKH�H%D\�SODWIRUP�in 2004. Two years

later, they shut down

their portal, as local

competitor Taobao

went on to capture

����RI�WKH�ORFDO�market share, says

WKH�*OREDO3RVW�SLHFH��7KH�SUREOHP"�H%D\�failed to incorporate

a mechanism to

SURYLGH�³JXDQ[L�´�RU�social connections—an

important component

of local business

deals and government

contracts. Taobao,

on the other hand,

allowed prospective

buyers and sellers

to chat over instant

messaging, thereby

establishing personal

connections between

the parties.

China became the second-biggest confectionery market in asia with almost $9.5 billion in sales, according to a 2012 report from agriculture and agri-food Canada, citing data from Euromonitor, 2011

Consumer Trends: Confectionery in China, Agriculture and Agri-Food Canada, March 2012

Source: World Health Organization

22

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HEALTH

TOBACCO’S BIGGERAND DEADLIERCLOUD OF SMOKEBLANKETS EARTH

675$7(*<�32,176A landmark report of the U.S. Surgeon General on the effects of smoking on health marked its 50th anniversary on January 11

&LJDUHWWH�VPRNLQJ�FRQWLQXHV�WR�EH�OLQNHG�to deadly diseases, such as lung, liver, and colorectal cancers

7KH�:RUOG�+HDOWK�2UJDQL]DWLRQ�VD\V�QHDUO\�six million people die every year because of the “tobacco epidemic,” and 80% of the ZRUOG·V�RQH�ELOOLRQ�VPRNHUV�OLYH�LQ�ORZ��DQG�middle-income countries

On January 11, a landmark

report of the United

6WDWHV�6XUJHRQ�*HQHUDO on

smoking and its detrimental

HHFWV�RQ�KHDOWK�PDUNHG�LWV���WK�DQQLYHUVDU\��$V�recounted in a Jan. 4 report in The Seattle Times,

RQ�-DQ������������8�6��6XUJHRQ�*HQHUDO�/XWKHU�Terry released an “emphatic and authoritative

report that said smoking causes illness and

death—and the government should do something

DERXW�LW�´�

In the decades that followed, warning labels were

placed on cigarette packs, cigarette commercials

were banned, and taxes were raised to keep people

from smoking. While the smoking rate in the

8�6��KDV�GURSSHG�WR������WKDW�SHUFHQWDJH�VWLOO�WUDQVODWHV�WR����PLOOLRQ�VPRNHUV��0RUHRYHU��VRPH�experts predict Americans will continue to light up

for decades to come.

A study published in January in the Journal of the American Medical Association��-$0$��VKRZV�WKDW�EHWZHHQ������������DQ�HVWLPDWHG�17.7 million deaths were related to smoking.

1HYHUWKHOHVV��WREDFFR�FRQWURO�ZDV�HVWLPDWHG�WR�

be associated with avoidance of 8 million premature

deaths and an extended mean lifespan of 19-20

\HDUV��WKH�VWXG\�¿QGV��

Fifty years after the U.S. surgeon-general linked

cigarette smoking to deadly diseases, his successors

continue to add to the list of health problems related

to tobacco use, according to a Jan. 17 report in The Washington Post. In a recently released report,

$FWLQJ�6XUJHRQ�*HQHUDO�%RULV�'��/XVKQLDN�IRXQG�smoking is a cause of liver cancer and colorectal

cancer. In addition, it was found that smoking is

a cause of Type 2 diabetes mellitus, age-related

macular degeneration, erectile dysfunction, and

rheumatoid arthritis. It can, likewise, impair the

immune system, worsen asthma, and cause cleft

lips and palates in fetuses. Exposure to secondhand

smoke, meanwhile, can cause strokes.

Smokers today, the report adds, have a much higher

risk of developing lung cancers than did smokers

LQ�WKH�����V��7KLV�LV�SUREDEO\�GXH�WR�WKH�FKDQJHV�in the design and composition of cigarettes over

WLPH��DFFRUGLQJ�WR�¿QGLQJV�LQ�WKH�QHZ�UHSRUW��2I�WKH�¿QGLQJV��/XVKQLDN�ZULWHV��³7KH�FRQFOXVLRQV�from these reports have evolved from a few causal

DVVRFLDWLRQV�LQ������WR�D�UREXVW�ERG\�RI�HYLGHQFH�documenting health consequences both from active

smoking and exposure to secondhand smoke across

D�UDQJH�RI�GLVHDVHV�DQG�RUJDQ�V\VWHPV�´�

According to a fact sheet�IURP�WKH�:RUOG�+HDOWK�Organization, the tobacco epidemic is the biggest

public-health threats, killing nearly six million

SHRSOH�\HDUO\��:KDW¶V�PRUH������RI�WKH�ZRUOG¶V�RQH�billion smokers live in low- and middle-income

countries. Further, consumption of tobacco products

is increasing globally, though it is decreasing in

some high-income and upper middle-income

FRXQWULHV��8QFKHFNHG��WKH�:+2�SRLQWV�RXW��WREDFFR�related deaths could increase to eight million per

\HDU�E\�������

In a graphic IURP�WKH�:+2��$VLD��$XVWUDOLD�DQG�the Far East are by far the largest consumers

(2,715 billion cigarettes), followed by the Americas

(745 billion), Eastern Europe and Former Soviet

(FRQRPLHV������ELOOLRQ��DQG�:HVWHUQ�(XURSH������ELOOLRQ���$V�IRU�WKH�WRS�¿YH�FRXQWULHV��&KLQD�OHDGV�ZLWK�������ELOOLRQ�FLJDUHWWHV��IROORZHG�E\�WKH�8�6��ZLWK�����ELOOLRQ��-DSDQ�����ELOOLRQ��5XVVLD�����billion, and Indonesia 215 billion.

602.,1*�'($'/,(5��025(�:,'(635($'�7+$1�(9(5

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Painkillers: U.S. FDAto Limit the Amount ofAcetaminophen inYour Prescription Pills

675$7(*<�32,176Acetaminophen, a popular ingredient in prescription and over-the-counter painkillers, has been linked to liver damage when taken in excessive amounts

7KH�8�6��)RRG�DQG�'UXJ�$GPLQLVWUDWLRQ�is moving to limit the acetaminophen content in prescription drugs to 325 mg per dose

7KH�DFWLRQ�DULVHV�EHFDXVH�RI�WKH�)'$·V�concern that acetaminophen is also available in over-the-counter remedies, and as such, can be taken in doses that exceed its recommended daily dose

A -DQ�����&11�GLVSDWFK

reports that the United

States’ Food and Drug

Administration (FDA) is

preparing to start withdrawing

its approval of combination

prescription painkillers

that contain more than its

UHFRPPHQGHG�����PJ�RI�acetaminophen per dose.

$FFRUGLQJ�WR�WKH�&11�UHSRUW��the FDA says that there is no

GDWD�VKRZLQJ�WKDW�EHQH¿WV�IURP�taking more than that amount

outweighs the risk of liver

damage from taking too much

acetaminophen. The FDA’s

maximum recommended daily

dose of acetaminophen is

4,000 milligrams.

³0DQ\�FRQVXPHUV�DUH�RIWHQ�unaware that many products

(both prescription and

over-the-counter) contain

acetaminophen, making it easy

WR�DFFLGHQWDOO\�WDNH�WRR�PXFK�´�WKH�&11�UHSRUW�TXRWHG�WKH�FDA as saying in a statement.

7KH�&11�UHSRUW�TXDOL¿HV�WKDW�the FDA warning covers only

prescription medication, and

not over-the-counter drugs,

which the FDA says it will

address in the future.

3$,1.,//(56��8�6��)'$�72�/,0,7�7+(�$02817�2)�$&(7$0,123+(1�,1�<285�35(6&5,37,21�3,//6

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graphics, and words in blue

Graphics data from Drugs. com

26

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body lab

A Jan. 9 ScienceDaily dispatch reports that a recent study has FRQQHFWHG�SK\VLFDO�ÀWQHVV�LQ�young men to a reduced risk of heart attack later in life. The study by researchers from 6ZHGHQ·V�Umea University, ZKR�DQDO\]HG�GDWD�IURP�RYHU���������6ZHGLVK�PHQ�ZKR�underwent medical examination at the age of 18 as part of their conscription into national service from 1969 to 1984, found that PHQ�ZKR�ZHUH�SK\VLFDOO\�ÀW�DW�18 had a 35% lower risk of premature heart attack.

The study, which was published in the European Heart Journal, also found that men who were ÀW�EXW�RWKHUZLVH�RYHUZHLJKW�RU�obese in their teens had a higher

risk of heart attack than that of PHQ�ZKR�ZHUH�XQÀW�EXW�OHDQ��7KH�study involved monitoring the men for an average of 34 years, until they suffered a heart attack or died, or until Jan. 1, 2011, ZKLFKHYHU�FDPH�ÀUVW��

´:KLOH�EHLQJ�SK\VLFDOO\�ÀW�DW�WKH�end of your teens can reduce WKH�ULVN�RI�KHDUW�DWWDFN��ÀWQHVV�alone does not appear to fully compensate for the risks with being overweight or obese. In other words, having a normal weight is more important than being in good physical shape, EXW�LW�LV�HYHQ�EHWWHU�WR�EH�ERWK�ÀW�and have a normal weight,” one of the lead researchers, Peter Nordström, was quoted as saying in the dispatch.

At the same time, however, Nordstrom acknowledged that while the study established D�FRUUHODWLRQ�EHWZHHQ�ÀWQHVV�and reduced heart-attack risk, LW�FRXOGQ·W�HVWDEOLVK�ZKHWKHU�D�KLJKHU�OHYHO�RI�SK\VLFDO�ÀWQHVV�might reduce heart-attack risk correspondingly, explaining that WKH�UHODWLRQVKLS�EHWZHHQ�ÀWQHVV�and heart disease was complex.

Nonetheless, according to him, “As far as we know, this is the ÀUVW�UHDO�PDMRU�VWXG\�WKDW�H[SORUHV�the relationship between physical ÀWQHVV�LQ�WHHQDJHUV�DQG�WKH�ULVNof heart attack later in life …these results and these types of study are important for the planning of preventative public health programs.”

If nothing else, the beginning of the year, for fairly obvious reasons, is a time when we believe anything is possible. 6R�LW·V�WKH�EHVW�WLPH�QRW�MXVW�IRU�1HZ�<HDU·V�UHVROXWLRQV��ZKHWKHU�RU�QRW�WKH\·UH�DFWXDOO\�NHSW��EXW�for bold predictions about the year ahead, whether or not they actually come to pass.

,W·V�LQ�WKLV�FRQWH[W�WKDW�ZH�YLHZ�the 'HF�����&RPSXWHUZRUOG�dispatch regarding the bio-printing company Organovo·V�expectation that it will come XS�ZLWK�WKH�ZRUOG·V�ÀUVW�SULQWHG�organ – a human liver – in 2014, based on its advances in printing out liver tissue and maintaining its viability.

Video from taiwanese animation site tomoNews uS explains the liver-tissue printing process utilized by bio-printing

Another reason to encourage

healthy habit s in your children

�1:;<����8:16<-,�7:/)6�16�����? 7KH�GLVSDWFK�TXDOLÀHV�WKDW�VDLG�promised organ will be “for research use only and will be used in the laboratory for medical studies and drug research,” and that future implantable organs still have to undergo rigorous government review before being approved for clinical purposes. Nonetheless, it says that a bio-printed liver would be “a watershed moment for the bio-printing industry and medicine because LW�SURYHV��'�SULQWHG�tissue can be kept alive long enough to test the effects of drugs on it or implant it in a human body where it can further develop.”

According to the dispatch, even if

bio-printed organs for transplants might still be off by a decade or more, the creation of human organ tissue still holds the prospect IRU�UHYROXWLRQL]LQJ�PHGLFLQH��LI�only because this would allow pharmaceutical companies to test drugs on human organs with better accuracy than they might get using animal organs.

According to the report, the development comes

on the heels of a 2011 FDA request that

manufacturers limit the amount of

acetaminophen in prescription drugs by

January 2014, with which more than half of the

PDQXIDFWXUHUV�FRPSOLHG��1RQHWKHOHVV��VRPH�prescription drugs with higher doses remain on

the market.

7KH�UHSRUW�TXRWHV�WKH�8�6��1DWLRQDO�,QVWLWXWHV�RI�+HDOWK¶V�0HGOLQH�3OXV¶�primer on acetaminophen

overdose in reporting that “Acetaminophen

overdose is one of the most common poisonings

ZRUOGZLGH�´�7KH�SULPHU�DOVR�FRQWDLQV�LQIRUPDWLRQ�on possible symptoms and treatment of

acetaminophen overdose, which can lead to liver

failure and death in a few days if left untreated.

A September dispatch from news-aggregation

site 1HZVHU reported that in the decade from

2001-2010, over 150 Americans a year have

died of acetaminophen overdose, based on

¿JXUHV�IURP�WKH�GDWDEDVH�RI�WKH�8�6��&HQWHUV�IRU�'LVHDVH�&RQWURO�DQG�3UHYHQWLRQ�0XOWLSOH�Cause of Death presented in an investigation

FRQGXFWHG�E\�WKH�QRQ�SUR¿W��LQYHVWLJDWLYH�journalism site 3UR3XEOLFD.

7KH�3UR3XEOLFD�LQYHVWLJDWLRQ�IRFXVHV�RQ�DSSDUHQW�FDA foot-dragging over the regulation of

acetaminophen since the 1970s, in the face of

UHVLVWDQFH�IURP�0F1HLO�&RQVXPHU�+HDOWKFDUH��WKH�GLYLVLRQ�RI�-RKQVRQ��-RKQVRQ�WKDW�PDQXIDFWXUHV�Tylenol, the U.S. leader in acetaminophen sales.

:HE0'¶V�0HGLFLQH1HW�FRP site provides its own

acetaminophen primer, which provides more

detailed dosing and drug-interaction information.

100

150

50

1312005

1352003

1362004

1432002

1442001

1662010

1742008

1672006

1822007

1892009

no. of deathyear

1,567Number of people who

have died from 2001 through 2010 from

inadvertently taking too much acetaminophen

1,567Number of people

who have died from 2001 through 2010 from inadvertently

taking too much acetaminophen

Accidental Deaths by Acetaminophen Poisoning

3$,1.,//(56��8�6��)'$�72�/,0,7�7+(�$02817�2)�$&(7$0,123+(1�,1�<285�35(6&5,37,21�3,//6

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27

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TECHNOLOGY

STRATEGY POINTSSome see 2014 as the year of the Internet of things—everyday physical objects becoming capable of sending out data and receiving input over the Internet

Challenges that must be addressed will involve security issues, as well as the development of technical infrastructure to accommodate the myriad of devices that are expected to be connected to the Internet

Companies would do well to think about their products and services with innovation trends in mind, whether or not they see themselves as being in the business of cutting-edge technology

In the ¿UVW of a three-part series in Quartz in

December, &KULVWRSKHU�0LPV says 2014 is the

year of the Internet of things—a trend wherein

everyday physical objects become capable of

Internet connectivity, thus enabling users to control

and interact with them remotely, largely through

smartphones.

$FFRUGLQJ�WR�0LPV��ZKDW�ZLOO�PDNH������GLHUHQW�IURP�SUHYLRXV�\HDUV�WDJJHG�DV�7+(�\HDU�RI�WKH�

Internet of things is that connecting a device to

the Internet has become cheaper and relatively

easier. Companies like Qualcomm, Intel, and Texas

Instruments, he says, have created inexpensive and

SRZHU�HFLHQW�FKLSV�WKDW�HQDEOH�REMHFWV�WR�FRQQHFW�to the Internet via Wi-Fi or to a mobile phone using

%OXHWRRWK�WHFKQRORJ\��7KH�HPHUJHQFH�RI�FKHDSHU��wireless chips, coupled with the prevalence of

smartphones, means that “technology companies

PD\�KDYH�¿QDOO\�IRXQG�D�ZD\�WR�IRLVW�WKH�LQWHUQHW�RI�

The Internet of ThingsWill 2014 be the year it takes off?

things onto more people, whether they want it there

RU�QRW�´�)URP�WKHUH��FRPSDQLHV�DUH�SUHSDULQJ�WR�FDVK�in on the opportunity to sell energy-saving or home-

security applications, he reports.

Interestingly, 0F.LQVH\��&RPSDQ\ included

the Internet of things as one of the disruptive

technologies that will shape lifestyles, businesses,

and the global economy. According to its 0D\������report, more than 9 billion devices around the

world are currently connected to the Internet and

that number is expected to increase dramatically

in the next decade, with estimates ranging from 50

billion devices to one trillion. The Internet of things

will impact businesses not only in the products and

VHUYLFHV�GLUHFWO\�DHFWHG�E\�WKH�WUHQG��EXW�DOVR�LQ�WKH�way companies manage and monitor all the “moving

SDUWV´�LQ�WKH�EXVLQHVV��

5HVHDUFK�DQG�DGYLVRU\�¿UP�*DUWQHU observes, in

this October press release, that the Internet of

WKLQJV��LW�VD\V��KDV�H[SDQGHG�IURP�3&V�DQG�PRELOH�GHYLFHV�WR�HQWHUSULVH�DVVHWV�VXFK�DV�¿HOG�HTXLSPHQW��and consumer items such as cars and television.

+RZHYHU��LW�DOVR�SRLQWV�RXW�WKDW�³PRVW�HQWHUSULVHV�and technology vendors have yet to explore the

possibilities of an expanded Internet and are not

RSHUDWLRQDOO\�RU�RUJDQL]DWLRQDOO\�UHDG\�´�

A Jan. 7 post by technology journalist %LOO�6Q\GHU in CIO.com points out some of the problems about

the Internet of things, such as supplying billions of

QHZ�,3�DGGUHVVHV�DQG�PRYLQJ�GDWD�WR�DQG�IUR�DPRQJ�billions of devices. “The demands of streaming

video and other bandwidth-hungry applications

DUH�DOUHDG\�MDPPLQJ�QHWZRUNV�´�KH�VD\V��³:KDW�KDSSHQV�ZKHQ�\RXU�UHIULJHUDWRU�LV�VRDNLQJ�XS��*�EDQGZLGWK�DV�ZHOO"´

And then there’s the issue of security in systems

where computing is embedded into the hardware

itself. A -DQ����SLHFH in Wired posits that the security

challenges that come with the Internet of things will

be worse than the ones experienced in the mid-1990s.

During that time, software and operating systems

were riddled with vulnerabilities, companies tried

to keep these vulnerabilities secret, security updates

were not released quickly, and, when updates were

UHOHDVHG��WKH\�ZHUH�GLFXOW�IRU�RUGLQDU\�XVHUV�WR�install. This time around, the computers in routers

DQG�PRGHPV�DUH�PXFK�PRUH�SRZHUIXO�WKDQ�WKH�3&V�in the mid-1990s, all sorts of consumer devices will

be connected to the Internet, and, more importantly,

“the industries producing these devices are even

OHVV�FDSDEOH�RI�¿[LQJ�WKH�SUREOHP�WKDQ�WKH�3&�DQG�VRIWZDUH�LQGXVWULHV�ZHUH�´�LW�QRWHV��

“Security researches are gradually raising

warnings that the Internet of Things will increase,

by multitudes, the number of things that can

EH�KDFNHG�DQG�DWWDFNHG�´�D�December report in

Computerworld India says. As cited in the report,

FRPSXWHU�VHFXULW\�¿UP�6\PDQWHF�VDLG�LQ�D�news

release that it has discovered a Linux worm that

“appears to be engineered to target the ‘Internet of

WKLQJV�¶´�,W�QRWHV�WKH�ZRUP�LV�FDSDEOH�RI�DWWDFNLQJ�D�range of small, Internet-enabled devices in addition

to traditional computers.

Whether or not one is in the business of cutting-

edge technology, it will bode well for companies to

think about their products and services with these

LQQRYDWLRQ�WUHQGV�LQ�PLQG��&RPSDQLHV�VXFK�DV�*(��for instance, are already considering the “smartening

of their appliances for the coming era of smart

KRPHV�WR�EH�D�VHOOLQJ�SRLQW�WR�FRQVXPHUV�´�DV�0LPV�VD\V�LQ�KLV�DUWLFOH��7KH�FKDOOHQJH�IRU�¿UPV�LV�WR�reimagine what can products and services can be

created or reconstructed in an era of ubiquitous

connectivity and greater democratization of new

technology, keeping in mind that no creation comes

without its challenges.

POINT & CLICK

Access online research via your

Internet connection by clicking

pictures, graphics, and words in blue

7+(�&22/(67�*$'*(76�&20,1*�285�:$<�,1������$1'�%(<21'

The coolest gadgets coming our way in 2014 and beyond

30

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29

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POINT & CLICK

Access online research via your

Internet connection by clicking

pictures, graphics, and words in blue

STRATEGY POINTS7KH�DQQXDO�,QWHUQDWLRQDO�&RQVXPHU�(OHFWURQLFV�6KRZ��&(6��SURYLGHV�WKH�SXEOLF�ZLWK�SUHYLHZV�RI�ZKDW·V�in store for the rest of the year and possibly beyond

$W�WKLV�\HDU·V�&(6��GDWD�VHFXULW\�DQG�the intrusiveness of technology were cited as major issues

From January 7-10, 2014, the International

Consumer Electronics Show (CES) was held

LQ�/DV�9HJDV��1HYDGD��)URP�VPDUW�KRPHV�WR�ZHDUDEOH�¿WQHVV�WUDFNHUV�DQG�GULYHUOHVV�FDUV��WKH�annual event gives consumers a glimpse of the future

RI�WHFKQRORJ\��+HUH¶V�ZKDW�WKH�WHFK�ZRUOG�KDV�LQ�VWRUH�for us in 2014 and beyond.

Smartwatch

As speculation of Apple coming

out with an iWatch circulated last

year, many wondered about the

EHQH¿WV�RI�VXFK�D�WHFKQRORJ\�WR�mainstream consumers, instead of

just the early adopters. While Samsung and Sony

came out with their own smartwatches, the technology

was far from mature, a -DQ�����SLHFH�in Forbes QRWHV��1HYHUWKHOHVV��WKH�UHSRUW�GLVFXVVHV�WKH�¿YH�smartwatches that debuted at this year’s CES, which

“represent the best breed or notable improvement in

WHFKQRORJ\�RU�GHVLJQ�´�

Departing from the plastic case and basic strap

of its predecessor, for instance, the 3HEEOH�6WHHO�³XSJUDGHV�WKH�DHVWKHWLF�GHVLJQ�RI�WKH�RULJLQDO�3HEEOH�E\�RHULQJ�WKUHH�WRQQHDX�VKDSHG�VWHHO�PHWDO�FDVHV�PDWFKHG�WR�D�OHDWKHU�VWUDS�RU�PHWDO�EUDFHOHW�´�3HEEOH�DOVR�LQWURGXFHG�D�3HEEOH�$SS�6WRUH��ZKLFK�DOORZV�companies to submit and consumers to download

applications for the smartwatch.

Unlike other smartwatches that relay information

YLD�%OXHWRRWK�IURP�RQH¶V�SKRQH��WKH�Omate

TrueSmart directly connects to the mobile

SKRQH�SURYLGHU�XVLQJ�D�EXLOW�LQ�6,0�FDUG��allowing the user to make and receive calls from the

device itself. Another smartwatch mentioned in the

report is the 0HWD:DWFK, which “promises a more

elegant connection with one’s smartphone that allows

people to simply glance at their watch to know

basic information rather than having to pull out

WKHLU�SKRQH�´�

Fitness gadgets

A watch called the Wellograph is

an “activity tracker, a heart rate

monitor and a running watch in

RQH�´�GHOLYHULQJ�OLYH�LQIRUPDWLRQ�about the wearer’s activity on its

interface, according to the company’s site. With the

integrated heart-rate sensor, the Wellograph

reveals the quality of the wearer’s activities.

,QIRUPDWLRQ�DERXW�WKH�ZHDUHU¶V�SXOVH��¿WQHVV��workouts, steps, or if he has been sitting for too long

is made available.

The /*�/LIHEDQG�LV�D�¿WQHVV�EDQG�ZLWK�D�VZLSH�friendly OLED touch screen that shows data about

the wearer’s physical activity and calories burned,

says a -DQ����UHSRUt in Engadget. In addition, the

GHYLFH�IURP�WKH�6RXWK�.RUHDQ�EUDQG�SDLUV�XS�ZLWK�Android and Apple iOS devices to get incoming calls

DQG�WH[W�PHVVDJHV��+RZHYHU��WR�EH�DEOH�WR�PD[LPL]H�WKH�GHYLFH��RQH�FDQ�DOVR�SXUFKDVH�WKH�+HDUW�5DWH�0RQLWRU�HDUSKRQHV��ZKLFK�FDQ�WUDFN�KHDUWEHDWV�E\�measuring signals from the inner ear. The report says

no release date for

either item has

been revealed.

Japanese electronics

giant Sony presented

a new wearable

¿WQHVV�WUDFNLQJ�device called the

Sony Smartband.

A -DQ�����SLHFH in

Android Authority

says the Smartband actively communicates with

other devices through the LifeLong app, which

records not only data related to physical activities,

but also entertainment information like what songs

WKH�ZHDUHU�ZDV�OLVWHQLQJ�WR�DW�VSHFL¿F�WLPHV��7KH�idea, the report says, is to help the wearer make

improvements in his workouts, such as knowing

which songs were playing during his best time

in a run.

The Lumo Lift, meanwhile, is a wearable device

that buzzes when the wearer is not sitting up

straight, says a Jan. 8 report in Time. The wearer

attaches the device on his clothes with a magnet,

and the sensors on the device will alert the user if

he starts buckling. A gentle buzz will remind him to

VWUDLJKWHQ�XS��0RUHRYHU��WKH�/XPR�/LIW�FRPSDQLRQ�app also counts the number of steps the user takes

and reminds him to exercise more when needed.

Smart homes

As major companies make

gadgets more compatible,

smart home appliances could

become more common,

according to a Jan. 10 article in MIT Technology Review. It further says that “a deluge of Internet-

ready home

devices and

DSSOLDQFHV´�ZDV�launched at CES.

0DQ\�RI�WKH�devices appear to

be easy to use and

can be combined

into larger systems

that gives the user

control through

his smartphone.

Goji Smart lock gives users

complete control over access to

their home through a

mobile phone Goji

7+(�&22/(67�*$'*(76�&20,1*�285�:$<�,1������$1'�%(<21' 32

:NK�cenSEI�8KVUXZ �����February 4, 2014

31

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7KH�*RML�6PDUW�/RFN��IRU�LQVWDQFH��JLYHV�FRPSOHWH�control over access to the user’s home using a mobile

phone, according to the company’s site. It has the

ability to send the homeowner real-time picture

alerts via text or email of the individuals accessing his

KRPH��*RML�DOVR�SURYLGHV�EDFNXS�NH\V�DQG����KRXU�support in case the owner loses his phone, as shown

in a video posted on its site.

Samsung Electronics, for its part, announced its

6DPVXQJ�6PDUW�+RPH�DW�WKLV�\HDU¶V�&(6��LQ�D�January press release��³6DPVXQJ�6PDUW�+RPH¶V�unique functionality enables users to control

and manage their home devices through a single

application by connecting personal and home

devices—from refrigerators and washing machines

to Smart TVs, digital cameras, smartphones and

HYHQ�WKH�ZHDUDEOH�GHYLFH�*$/$;<�*HDU²WKURXJK�DQ�LQWHJUDWHG�SODWIRUP�DQG�VHUYHU�´�LW�VD\V�

7KH�[���E\�6OHHS�1XPEHU�LV�D�VPDUW�EHG�WKDW�SDFNV�a variety of sensors to monitor the user’s sleeping

habits, movement, heart rate, and breathing rate,

according to a Jan. 7 report in Engadget. The bed has

two sections and “each of which are independently

adjustable, so that once the bed knows your sleeping

patterns, it can suggest ways you might want to

FKDQJH��VD\��WKH�KHDG�LQFOLQH�´�,W�DOVR�KDV�D�3DUWQHU�Snore feature, which allows one to raise other’s

KHDGUHVW�WR�KHOS�HDVH�VQRULQJ��7KH�[���RHUV�VLPSOH�voice commands, and an under-the-bed light acts as

a path light for when the user gets up in the middle of

the night.

Televisions

:KLOH�WKH��'�79�GLGQ¶W�TXLWH�FDWFK�RQ�with the consumers, perhaps the ultra

KLJK�GH¿QLWLRQ�RQHV�ZLOO��$W�WKLV�\HDU¶V�CES, it’s all about curved televisions

DQG��N��WKH�XOWUD�KLJK�GH¿QLWLRQ�

screens that pack in four times the resolution of

FXUUHQW�+'�WHOHYLVLRQV��VD\V�D�-DQ����&11�UHSRUW. According to television makers, curved screens can

RHU�D�EHWWHU�YLHZLQJ�H[SHULHQFH�E\�UHGXFLQJ�JODUH�and improving visibility for people sitting to the sides

of the TV, the report says.

7DNH��IRU�LQVWDQFH��WKH�/*�����LQFK�FXUYHG��N�79���According to a Jan. 7 post�LQ�0DVKDEOH��WKLV�KXJH�TV is built with LCD technology, rather than the

ÀH[LEOH�2/('�GLVSOD\��,W�DOVR�FRPHV�ZLWK�D�KHIW\�SULFH�WDJ�RI����������6WLOO��WKH�UHSRUW�QRWHV��³>,W�LV@�one of the most impressive feats of consumer display

WHFKQRORJ\�ZH¶YH�HYHU�VHHQ�´�$QRWKHU�FRQWHQGHU�LQ�WKH��N�79�PDUNHW�LV�6DPVXQJ¶V�����LQFK�XOWUD�+'�TV, which was launched in December, according to a

story in Engadget.

1RQHWKHOHVV��ZKDW�VWRRG�RXW�LV�&DOLIRUQLD�EDVHG�+'79�FRPSDQ\�Vizio, a Jan. 9 story�LQ�0DVKDEOH�suggests. Vizio’s massive 120-inch TV was the biggest

RHULQJ�DW�&(6�DQG��ZLWK�WKH�HQWU\�RI�LWV�3�VHULHV��WKH�company will be able to deliver 4k content for just

$999 with a 50-inch model.

Cars. $XWRPDNHUV�%0:�DQG�$XGL�unveiled their latest driverless

car technology and conducted

demonstration drives, reports

&11�LQ�D�Jan. 9 story��%0:��it says, added its highly active assist technology

WR�D�PRGL¿HG���6HULHV�&RXSH��0RUHRYHU��WKH�FDU�uses steering, breaking, and throttle to control

acceleration, deceleration, and direction on very

small, exact amounts. A video SRVWHG�LQ�%0:¶V�VLWH�shows the car in action.

Audi, meanwhile, presented its Sport Quattro

Laserlight concept car at CES, but its real

advancement this year, the report notes, is the

compact zFAS car

computer. “In the

IXWXUH��WKH�1YLGLD�powered system

could be used for key

automated-driving

WDVNV�OLNH�WUDF�VLJQ�recognition, departure

lane warnings and

SHGHVWULDQ�VSRWWLQJ�´�says the report.

For cars to be able to

park themselves, a

company called Valeo

has been working

to embed cars with

sensors, cameras, and

a laser scanner, Time

reports in a Jan. 7

story. While there is

a park-assist feature

in newer car models,

this technology can

allow the user to get

out of the vehicle

DQG�ZDWFK�LW�¿QG�itself a parking lot.

Alternatively, the user

can pull up an app on

his smartphone and

tell the car to come

and fetch him. In an

interview with Valeo

engineer Sam Azuz

mentioned in the

report, the technology

could work in a

QRUPDO��UXQ�R�WKH�mill parking lot, but

the video shows the BMW 2 Series Coupe in action BMW

Data security and the intrusiveness of technology were cited as major technology issues in the near future Quartz

the car would drive itself

very slowly.

In a video discussion

moderated by Quartz

HGLWRU�LQ�FKLHI�.HYLQ�Delaney among

technology journalists,

LQFOXGLQJ�.DUD�6ZLVKHU�of Re/Code, Farhad

0DQMRR�RI�The Wall Street Journal, and Christopher

0LPV�RI�4XDUW]��LW�ZDV�revealed that the trends

for this year include more

self-aware and connected

cars, smart homes, and

wearables that are able

to quantify a person’s

data, with the smartphone

acting as the controller for

all these gadgets.

As was also pointed out,

the challenge given all

these new devices is their

ability to communicate

with one another. For

now, there is little

incentive for companies

to develop products

that will work well with

other devices, as in

the case of Apple and

Android platforms. In

the end, data security

and the intrusiveness of

technology were cited as

major issues in the world

of technology in 2014.

34

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33

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PHABLETSARE HERETO STAY ASSHIPMENTSSKYROCKET

STRATEGY POINTSPhablet shipments are expected to rise to 120 million units by 2018, up from 20 million units shipped in 2013, Juniper Research says

Increased preference for large screen devices is seen in emerging markets VXFK�DV�&KLQD�DQG�,QGLD�

Phablets are eating into the tablet market, according to market analysis ÀUP�,'&

The smartphone-tablet

hybrid known as the

phablet is here to stay.

As cited in a TechCrunch dispatch, a Juniper

Research report says there were 20 million

SKDEOHWV�VKLSSHG�LQ�������DQG�SUHGLFWV�WKDW�phablet shipments will increase to 120 million

units in 2018.

.RUHDQ�HOHFWURQLFV�JLDQW�6DPVXQJ�YDOLGDWHG�the trend, the TechCrunch report says, with the

VXFFHVV�RI�LWV�*DOD[\�1RWH�VHULHV��7KH�¿UVW�*DOD[\�1RWH�ZDV�ODXQFKHG�LQ�������DQG�WKH�FRPSDQ\�VROG���PLOOLRQ�XQLWV�LQ�WKH�¿UVW�IRXU�PRQWKV��7KH�*DOD[\�1RWH����WKH�ODWHVW�UHOHDVH�RI�WKH�GHYLFH¶V�iteration, sold 5 million units in one week.

Other companies have since followed suit and

released their own phablets. According to a Jan.

21 feature�RQ�WKH�8�.��EDVHG�JDGJHW�ZHEVLWH�3RFNHW�OLQW, phones have become devices

designed to give users the ultimate experience

in entertainment and productivity. The feature

JLYHV�D�UXQGRZQ�RI�WKH�³EHVW�SKDEOHWV´�LQ�������ZKLFK�LQFOXGHV�6DPVXQJ¶V�*DOD[\�1RWH�VHULHV��DV�ZHOO�DV�WKH�+7&�2QH�0D[��6DPVXQJ�*DOD[\�0HJD��+XDZHL�$VFHQG�0DWH��2SSR�1���6RQ\�;SHULD�=�8OWUD��DQG�1RNLD�/XPLD������

An $SULO������UHSRUW from global research and

analysis provider Strategy Analytics reveals

consumers surveyed in the second half of 2012

were increasingly attracted to larger screens,

ranging from 4.2 to 4.7 inches, with the most

preferred size being 4.5 inches.

,Q�,QGLD��SKDEOHWV�DFFRXQWHG�IRU�����RI�smartphone shipments in the second quarter

RI�������DFFRUGLQJ�WR�WKH�International Data

Corporation (IDC), a global research and analysis

¿UP��$FFRUGLQJ�WR�LWV�August press release,

YHQGRUV�VKLSSHG�D�WRWDO�RI�����PLOOLRQ�XQLWV�LQ�WKH�VHFRQG�TXDUWHU�RI������IURP����PLOOLRQ�XQLWV�LQ�WKH�VDPH�SHULRG�LQ�������7KH�VKDUH�RI�WKH����WR������LQFK�VFUHHQ�VL]H�smartphones has risen steadily, growing 17

times year-on-year.

“The key for growth in this market, as with

most emerging markets, is a low-priced

phone equipped with a large screen and dual

6,0�VORWV�´�VD\V�.LUDQMHHW�.DXU��,'&�VHQLRU�market analyst.

:LWK�SKDEOHWV�JDLQLQJ�JURXQG��*RRJOH¶V�Android operating system seems to be

EHQH¿WLQJ�DV�ZHOO��$FFRUGLQJ�WR�WKH�,'&�:RUOGZLGH�4XDUWHUO\�0RELOH�3KRQH�7UDFNHU��$QGURLG�SXVKHG�SDVW�����PDUNHW�VKDUH�LQ�WKH�WKLUG�TXDUWHU�RI������IRU�WKH�¿UVW�time in its short history, in a 1RYHPEHU�SUHVV�release��3URJUDP�GLUHFWRU�5\DQ�5HLWK�VD\V��“Almost all successful Android vendors have

added one or more 5-7-inch phablets to their

SURGXFW�SRUWIROLRV�´

,Q�WKH�WKLUG�TXDUWHU�RI�������KH�DGGV��SKDEOHW�VKLSPHQWV�DFFRXQWHG�IRU�����RI�WKH�smartphone market. “We believe the absence

of a large-screen device may have contributed

to Apple’s inability to grow share in the third

TXDUWHU�´�5HLWK�QRWHV��

0RUHRYHU��$QGURLG��DORQJ�ZLWK�WKH�Windows platform, made strides in the past

third quarter, mostly because both platforms

have a selection of devices that are priced

ORZ�HQRXJK�IRU�WKH�PDVV�PDUNHW�WR�DRUG��Research manager Ramon Llamas points out

that it is the mass market driving the entire

market forward.

3+$%/(76�$5(�+(5(�72�67$<�$6�6+,30(176�6.<52&.(7

an article from u.K.-based gadget website Pocket-lint gives a rundown of the best phablets to buy in 2014

POINT & CLICK

Access online research via your

Internet connection by clicking pictures,

graphics, and words in blue

36

:NK�cenSEI�8KVUXZ �����February 4, 2014

35

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To boost its lagging share in China, the world’s

biggest mobile market, Apple will be selling the

L3KRQH�WKURXJK�&KLQD�0RELOH�LQ�DQ�HRUW�WR�UHDFK�WKH�WHOHFRP�FRPSDQ\¶V�����PLOOLRQ�XVHUV��DFFRUGLQJ�WR�D�-DQ�����%ORRPEHUJ�%XVLQHVVZHHN�UHSRUW.

+RZHYHU��WKH�WHFK�JLDQW�LV�IDFLQJ�FKDOOHQJHV��DV�PDQ\�consumers prefer to have one large-screen device for

checking e-mails, browsing the Web, and watching

videos. In the report, Forrester Research’s principal

DQDO\VW�DQG�FRXQWU\�PDQDJHU�LQ�&KLQD��%U\DQ�:DQJ��VD\V�WKDW�����RI�DOO�GHYLFHV�XVLQJ�WKH�$QGURLG�platform sold this year through Chinese carriers will

have screens measuring at least 5 inches.

3KDEOHWV�DUH�DOVR�HDWLQJ�LQWR�RWKHU�PDUNHWV��DV�shipments of the device overtook those of portable

3&V�DQG�WDEOHWV�LQ�$VLD�3DFL¿F��H[FOXGLQJ�-DSDQ��LQ�WKH�VHFRQG�TXDUWHU�RI�������DFFRUGLQJ�WR�DQRWKHU�August press release from IDC. It says device vendors

shipped 25.2 million phablets in the second quarter

RI�������FRPSDUHG�WR������PLOOLRQ�WDEOHWV�DQG������SRUWDEOH�3&V��6HQLRU�UHVHDUFK�PDQDJHU�0HOLVVD�&KDX�says the phablet trend was initially driven by mature

PDUNHWV��VXFK�DV�6RXWK�.RUHD��+RQJ�.RQJ��DQG�6LQJDSRUH��+RZHYHU��HPHUJLQJ�PDUNHWV�OLNH�&KLQD�and India are contributing to the device’s popularity,

as well, particularly with low-cost local players.

*URZWK�RI�WKH�WDEOHW�PDUNHW�KDV�WDNHQ�D�KLW�SDUWO\�due to the cannibalization of phablets. In emerging

markets where many consumers do not have the

budget to buy both a phone and a tablet, the phablet

VHHPV�WR�EH�WKH�PRVW�¿WWLQJ�FKRLFH���

Phablets overtake tablet and portable PC shipments LQ�$VLD�3DFLÀF��H[FOXGLQJ�-DSDQ�

Phablets are also eating into other markets, such as portable PCs and tablets IDC

L9CAF?�L@=�@A?@�9F<�L@=�DGO�

JG9<K

The news aggregation site ViralNova provides us with an assortment of photo essays from around the Internet, covering things the site owner regards as “must see.” This time out, ZH·UH�SUHVHQWLQJ�D�SDLU�RI�UHFHQW�9LUDO1RYD�posts – built around photo presentations from the Imgur image archive site – that we think make the grade. Just think of them as the travel SKRWRV�IURP�RWKHU�SHRSOH·V�YDFDWLRQV�WKDW�\RX�might actually want to see.

:KDWHYHU�\RX�GR��GRQ·W�ORRN�GRZQ� A Jan. 6 post SUHVHQWV�D�WUHN�XS�&KLQD·V�0W��Hua Shan, just outside the city ;L·DQ, capital RI�6KDDQ[L�SURYLQFH�LQ�FHQWUDO�&KLQD��$V�WKH�photos show, the steep “Heavenly Stairs” at the base of the mountain is only the beginning RI�D�FOLPE�WKDW·V�GHÀQLWHO\�QRW�IRU�WKH�IDLQW�RI�KHDUW��:DUQLQJ��(YHQ�IURP�WKH�VDIH�YDQWDJH�SRLQW�RI�D�FRPSXWHU�VFUHHQ��LI�\RX·UH�H[WUHPHO\�acrophobic, you might still get queasy just from looking at some of these photos.

$�PHPRULDO�LQ�WKH�6DKDUD�'HVHUW��The second presentation is the story of an unusual symbol that FDQ�EH�VHHQ�IURP�*RRJOH�0DSV�DQG�*RRJOH�(DUWK��The symbol turns out to be a memorial for the ����YLFWLPV�RI�WKH�6HSWHPEHU�������GHVWUXFWLRQ�RI�French airline UTA (Union des Transports Aeriens) )OLJKW������ZKLFK�FUDVKHG�LQ�WKH�6DKDUD�'HVHUW�following the explosion of a suitcase bomb that had EHHQ�VPXJJOHG�RQ�ERDUG�E\�/LE\DQ�WHUURULVWV��

The presentation features pictures taken over WKH�WZR�PRQWKV�²�0D\�DQG�-XQH�������²�WKDW�WKH�YLFWLPV·�IDPLOLHV�ZRUNHG�ZLWK�DUHD�UHVLGHQWV�WR�fashion the memorial based on wreckage from the VLWH��L�H�������EURNHQ�PLUURUV�HQFLUFOLQJ�WKH�HGJH�RI�the memorial, and the starboard wing of the plane, on which is mounted the roster of the crew and SDVVHQJHUV�RI�WKDW�IDWHIXO�ÁLJKW�

a steep set of stairs carved out of Mt. Hua Shan marks the start of a trek that gets more thrilling as you progress.

ViralNova, Imgur

ViralNova, Imgur

The memorial for the victims of UTA Flight 772, as VHHQ�IURP�*RRJOH�0DSV�DQG�*RRJOH�(DUWK�

you gotta see this3+$%/(76�$5(�+(5(�72�67$<�$6�6+,30(176�6.<52&.(7

SOCIETY 38

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37

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When One Percent Owns Half The World

675$7(*<�32,176According to a humanitarian RUJDQL]DWLRQ·V�UHVHDUFK�����RI�WKH�ZRUOG·V�SRSXODWLRQ�RZQV�DOPRVW�KDOI�WKH�ZRUOG·V�ZHDOWK��DQG�VHYHQ�RXW�of 10 people live in countries where economic inequality has increased since 1980

If left unaddressed, this trend toward extreme income inequality could lead to “opportunity capture,” heightened social tensions, and increased risk of societal breakdown

It explained: “Instead of

moving forward together,

people are increasingly

separated by economic and

political power, inevitably

heightening social tensions

and increasing the risk

RI�VRFLHWDO�EUHDNGRZQ�´�Supporting that thesis,

Oxfam’s own survey in six

FRXQWULHV�±�6SDLQ��%UD]LO��India, South Africa, the

8QLWHG�.LQJGRP��DQG�WKH�United States – indicated

a majority agreeing with

the view that “laws and

regulations are now

GHVLJQHG�WR�EHQH¿W�WKH�ULFK�´�

Oxfam’s suggestions for

the 2014 World Economic

Forum included a pledge

among its well-heeled

participants to not dodge

taxes and to disclose

investments in companies

and trusts in which they

DUH�WKH�XOWLPDWH�EHQH¿FLDO�owners, among other things.

It also proposed national

policies to strengthen the

political representation of

the poor and middle classes

in order to achieve greater

equity. That includes a

global goal to end extreme

economic inequality in each

country, as well as stronger

regulation of markets to

promote sustainable and

equitable growth.

Source: “Working for the Few – Political capture and income inequality,” 2[IDP�%ULHÀQJ�3DSHU������2[IDP�,QWHUQDWLRQDO��-DQXDU\���������

As the planet’s rich and powerful

prepared to gather in Davos,

Switzerland, for the 2014 World

Economic Forum last week, a global humanitarian

organization sounded the general alarm about

a centuries-old concern for them to urgently

address: haves and have-nots.

,Q�D�VXPPDU\�RI�LWV�EULH¿QJ�SDSHU�³Working

IRU�WKH�)HZ�±�3ROLWLFDO�FDSWXUH�DQG�LQFRPH�inequality�´�2[IDP�SURYLGHG�¿JXUHV�RQ�ULVLQJ�wealth concentration in the hands of a few and its

impact on the world, including:

��-XVW�RQH�SHUFHQW�RI�WKH�SODQHW¶V�SRSXODWLRQ�now own almost half of global wealth

��7KH�DVVHWV�RI�WKH�ULFKHVW�RQH�SHUFHQW�WRWDOV������WULOOLRQ�²����WLPHV�WKH�FRPELQHG�ZHDOWK�of the bottom half of the world’s population

��7KH����ULFKHVW�LQGLYLGXDOV�RZQ�DV�PXFK�DV�that bottom half

��6HYHQ�RXW�RI����SHRSOH�OLYH�LQ�FRXQWULHV�ZKHUH�economic inequality has increased since 1980

��,Q�WKH�VDPH�SHULRG��WKH�ULFKHVW�RQH�SHUFHQW�increased their share of national income in 24

RI�WKH����FRXQWULHV�IRU�ZKLFK�2[IDP�KDV�GDWD�

Oxfam warned that this extreme wealth

concentration threatens to exclude millions

from receiving the bounties of their hard work.

Left unchecked, the report added, this trend

ZRXOG�OHDG�WR�³RSSRUWXQLW\�FDSWXUH�´�ZKHUH�FKLOGUHQ�RI�WKH�ULFK�HQMR\�VXFK�EHQH¿WV�DV�the lowest tax rates, the best educational

opportunities, and the best health care,

perpetuating a cycle of economic inequality.

¶$�VLJQLÀFDQW�WKUHDW�· The Oxfam paper called

the massive concentration of economic resources

LQ�WKH�KDQGV�RI�IHZHU�SHRSOH�³D�VLJQL¿FDQW�WKUHDW�WR�LQFOXVLYH�SROLWLFDO�DQG�HFRQRPLF�V\VWHPV�´�

tHE SuPEr-rICH GEt EVEN rICHEr

the percentage increase in share of income of the richest one percent

the share of national income going to the richest one percent

:+(1�21(�3(5&(17�2:16�+$/)�7+(�:25/'

POINT & CLICK

Access online research via your

Internet connection by clicking pictures,

graphics, and words in blue

40

:NK�cenSEI�8KVUXZ �����February 4, 2014

39

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&RPSDULQJ�LQHTXDOLW\� For another look at

global income inequality, the *OREDO3RVW�VLWH¶V������special report series on “7KH�*UHDW�'LYLGH�±�JOREDO�income inequality and its cost�´�WULHV�WR�EULQJ�WKH�message down to earth for Americans by comparing

income inequality in their country with the situation

in other nations.

The interactive feature matches income-distribution

¿JXUHV�RI�PDMRU�8�6��PHWURSROLWDQ�DUHDV�ZLWK�counterpart cities elsewhere in the world, like

%ULGJHSRUW��&RQQHFWLFXW��DQG�%DQJNRN��7KDLODQG��ERWK�ZLWK�RYHU����SRYHUW\�LQFLGHQFH���DQG�:DVKLQJWRQ��'�&���DQG�0RVFRZ��5XVVLD��������DQG��������respectively). Video essays accompany the data.

The series also includes dispatches from

FRUUHVSRQGHQWV�LQ�GLHUHQW�FLWLHV�DQG�FRXQWULHV�RQ�KRZ�LQFRPH�LQHTXDOLW\�SOD\V�RXW�DFURVV�GLHUHQW�dimensions – education, race, immigration, health

care, government, labor and natural resources. Its

U.S.-oriented perspective notwithstanding, the report’s

scope and breadth make for recommended reading.

)URP�NQRZLQJ�WR�GRLQJ� Of course, the real

task is to go from knowing about inequality

to doing something about it. And in case the

VXHULQJ�RI�WKH�SRRU�LVQ¶W�HQRXJK�PRWLYDWLRQ�IRU�PRUH�HJDOLWDULDQ�SROLFLHV��D�)HEUXDU\������8QLWHG�1DWLRQV�SDSHU�RQ�addressing inequalities

DV�GULYHUV�RI�FRQÀLFW adds a threat against the

rich: social disparities fuel unrest

and violence.

7KH�SDSHU�IURP�WKH�8�1��3HDFHEXLOGLQJ�6XSSRUW�2FH�concludes: “There is considerable

FRQVHQVXV�DPRQJ�GLHUHQW�policy communities that not

only providing social services,

but also and crucially ensuring

fair access to them among

GLHUHQW�JURXSV�LQ�VRFLHW\��LV�D�NH\�SULRULW\�IRU�FRQÀLFW�prevention, violence reduction

DQG�VXVWDLQDEOH�SHDFHEXLOGLQJ�´

A further reason for the rich to

share and uplift comes from a

2002 paper from Eric Thorbecke

and Chutatong Charumilind, then

ZLWK�&RUQHOO�8QLYHUVLW\��3XEOLVKHG�in the World Development

journal, “Economic Inequality

and Its Socioeconomic Impact´�argues that wealth disparities

drag down growth, with economic

models on page 1481 summing up

the theories backing the thesis.

So listen up, Davos: If you want

continued global expansion, not

to mention peace and harmony,

share the wealth.

Graphic from “Economic Inequality and Its Socioeconomic Impact,” World Development,�9RO������1R���������

:+(1�21(�3(5&(17�2:16�+$/)�7+(�:25/'

uNIfIED

High initial inequality of income

High saving

High physical capital accumulation

Higher economic growth

/RZHU�econmic growth

/RZHU�KXPDQ�FDSLWDO�accumulation (Under investment in human

capital market imperfections)

/DWHU�VWDJH�RI�HFRQRPLF�GHYHORSPHQW��+XPDQ�FDSLWDO�

accumulation becomes a prime engine for growth due to capital-

skill complementarity

Early stage economic GHYHORSPHQW��

Physical capital accumulation is a prime engine for

growth

HOW INEQUITY HURTS GROWTH(FRQRPLF�0RGHOV�%DVHG�RQ�&ODVVLFDO��0RGHUQ�DQG�8QL¿HG�7KHRULHV

High economic growth /RZHU�HFRQRPLF�JURZWK Positive effect on growth

ClaSSICal MoDErN

High initial inequality of

income

High initial inequality of income

High rent seeking activities

/HVV�VHFXUH�property

rights

Social tension and political

instability

Increased uncertainty

/RZHU�investment

Poor median voter

Greater income equity

Greater income share

to middle class

Strong negative effect on fertility

Great demand for redistribution

Higher taxation

Greater distortion

High aggregate

saving (The rich

has a higher marginal

propensity to save than

the poor.)

High capital accumulation