The search for growth: Telcos' key expansion strategies

Asia's incumbent telecommunication providers are in trouble. Fixed line operations hardly grow or even decline. Wireless business is hitting the wall rather sooner than later.

The article, published in Telecom Asia, contains a great analysis on possible future growth - and it can be said that companies don't change quickly, somebody else might eat their rice, so to say.

So, what are the challenges? Telcos are experiencing the impact of five dynamics:

* Fixed and, to a lesser extent, wireless markets are at saturation point

* New technology like IP and VoIP are eroding margins

* Competition is increasing in scale and intensity

* The lack of a strategy beyond broadband

* The loss of wireline voice traffic to mobile operators.

What is needed now is a change of mindset on side of the carriers. They have to simply realise that growth in traditional sectors won't come back. An different understanding of market dynamics is needed.

Telecom Asia's own survey found some likely areas:

1.) "notably broadband and triple play,
2.) wholesaling and managed services, and
3.) innovative mobile services.

"Some of these are quite niche, and some haven't yet taken in the market. But one thing is that each is a result of focusing on and chasing down the needs of particular customer segments. In the new era, the customer rules."

The article is a bit lengthy for the casual reader, but provides great insides for those really wanting to know what can be done.

Challenge here overall? Speed and agility. As we said before, if you don't change fast and constant, someone else will eat the rice for you first. If you are unlucky, the plate is empty before you realise it!

Broadband penetration set to increase in Malaysia

Malaysia is far, far behind other countries in terms of usage of broadband. If the usage of broadband is any indication for future success of a country, the future looks kind of bleak for this aspiring country in Southeast Asia, although, apparently, penetration rose to about 2% currently from a negligible basis a few years back. This is set to change, if all goes according to Energy, Water and Communications Minister Datuk Seri Dr Lim Keng Yaik, as the government introduced a National Broadband Plan. It is envisioned that peentration will grow to 10% by 2008.

Support will be given by the government.

- Special tax incentives special tax relief for small and medium-scale industries and facilitating access to affordable financing facilities for Internet service providers (ISPs).

- By 2006, about 900 government departments would benefit from improved bandwidth throughout the 84,000 broadband connections.

- On completion of the SchoolNet programme this year, five million schoolchildren in all 10,000 schools will benefit from broadband access. They will be able to access educational content, applications and collaborative learning developed earlier under the Smart School project.

- Research institutions and public universities will have 74,000 broadband connections to gain access and collaborate with research and development institutions locally and internationally.

- About 4,000 hospitals and clinics were expected to be fully wired with broadband infrastructure by the end of 2006, and broadband connections would be provided to 800 libraries nationwide.

A good start - let's hope that this continues. However, what is also needed is an increased speed of the connection, and the ususual thing - execution, execution, execution. How often is it that people complain to editors of newspapers about frustratingly long waiting periods for their connections to be installed, or other handicapping problems.

Maxis and RIM Announce Plans to offer BlackBerry in Malaysia

Be available 24 hour a day, 7 days a week - we came one step closer. Maxis Communications and Research in Motion (RIM) with its famous BlackBery Wireless platform explore the potential for an alliance that would lead to the launch of the BlackBerry in Malaysia.

The debut of BlackBerry will pave the way for Maxis to offer its customers a single, integrated handheld for all their data and voice needs. BlackBerry will be the latest addition to Maxis Mobile Office Solutions.

"BlackBerry can provide customers with access to a broad range of applications including email, phone, intranet, Internet, SMS and personal information management applications operating over Maxis' GSM and GPRS network."

The alliance will allow Maxis to get a stronger foothold in the corporate market, which will become increasingly important as the mobile segment of the consumer market is closing in to saturation.

China

Some rocking numbers from China as reported in yesterday’s Asian Wall Street Journal (Sept. 27, 2004).

An Edward Gresser, who is a spokesperson at the Progressive Policy Institute in Washington, estimates that foreign companies opened as many as 60,000 factories in China from 2000 through 2003.

The country took in US$53.3 billion in foreign direct investment in 2003, compared to US$40 billion in the US. China exported goods to the rest of the world worth US$438 billion, and services totaling US$44 billion.

It is now the largest supplier of a variety of products ranging from computer keyboards to bicycles, bras and neckties.

Who can stop this juggernaut – no, wrong question. Who will profit from this machine most, as it races ahead to become the world’s largest economy in just a few decades.

Japan schools track students with RFID

We reported about it back in July - Japanese schools were playing with the idea to use RFID tags to track the movements of children, to secure there safety in a increasingly difficult school environment in Japan. Now, some schools go ahead with the idea and the children take it easy - in tech-crazed Japan, that is just something seen as "cool".

It works in a way that students carry chips that have tiny antennae and that can be traced by radio, with some of the kids attaching the tags to their backpacks. The chips send signals to receivers at school gates. A computer in the system shows when a student enters or leaves.

The method is not yet mainstream - the school that the Boston Herald reports from, is a public elementary school in Iwamura town, located about 170 miles west of Tokyo. But expect it elsewhere soon as well.

The last battleground of advertising

A new book has been published by Juliet B. Schor, called The Stepford Kids and has been reviewed in a recent BusinessWeek. It is about the stealth marketing strategies of companies to reach younger and younger cohorts of children in schools. Okay, the book apparently talks about marketing in schools in the US, but it can as well be happening in Asian schools. Or is happening already in magazines such as K-Zone. A magazine for younger age groups, full of advertising and marketing messages.

In the US, more and more people are tuning out of traditional advertising. It just doesn't work - people switch channel on TV, or program their TiVo in a way that they don't need to watch advertisement anymore. They are used to check on products before they buy them - they check offline and buy online. They blog about products if they like them and criticise companies that don't follow certain humanitarian requirements - look at the campaigns against sweatshops in Asia.

To counter the trend, companies try to improve their own marketing skills - psychological profiling is in - just talk about "neuromarketing". In effect, all that has been researched about products has been researched and companies benchmarked themselves so enormously that they look alike and produce products that are very much alike.

Now, companies try to reach the younger demographic groups under the motto, if you cannot get them young, you won't get them at all.

As BusinessWeek writes: "The walls of many sports stadiums are smothered in corporate logos. Most lunchrooms could double as fast-food courts. And classroom TV monitors flash a regular stream of racy video-game, movie, and fast-food ads along with the TV news shows that get piped to 40% of U.S. teens. Corporations have even made "huge inroads" in the curriculum, thanks to the free materials they send to schools. Among the things grade-schoolers have been taught: that fossil fuels may pose few environmental problems and that alternative energy is costly and unattainable, in the words of Exxon's Energy Cube curriculum. They've also learned that the "earth could benefit rather than be harmed from increased carbon dioxide" from materials provided by the American Coal Foundation."

This can be bad but shouldn't be forbidden - it cannot be forbidden. In fact, there is an opportunity for school curriculum to teach children about the pro and cons of products. About responsible usage of fossil fuel. About sweatshops in Asia. About the damage, that sugar can cause. About the importance of brushing teeth.

So don't forbid it, but use it responsibly.

Samsung and Sony's Brand Experience Plazas

This is just beautiful. The great giants of electronic stuff dazzle their customers. Sadly, not (yet?) in Asia.

Samsung has set up its Brand Plaza earlier this year - we reported. It is 10,000 square-feet large and, amazingly, doesn't intend to sell, but basically wants to showcast its products - current and future products. "Many of the hundreds of products on display—including a fascinating lineup of video- and photo-enabled cell phones—aren't available today in the United States. Other unavailable products were also on display, including a revamped 50-inch DLP (digital light processing) projector, notebook computers and a high-tech refrigerator and dryer."

However, to entice future customers it allows them to rent the products: "By simply plunking down a credit card, visitors can borrow a camera for a few days to record their New York experiences. Samsung also offers kiosks where, after they return the cameras, visitors can burn videos onto DVD to take home.

The store also offers MP3 downloads via the Napster service, and free ring-tone downloads to cell phones."

This is pure free price culture and contrast the competitive attempts of Sony. The company, in its 1,000 square-feet Qalia showroom, the company exhibits its "ultra-high end components, easy-to-use interfaces and super-inflated prices. For this it has hired a staff of luxury goods experts to provide personal demonstrations of the luxury digital products to well-heeled customers."

It shows how differently the two giants market their products. While consumers get used to Samsung products, visitors to Sony's showroom may feel the awe. If they will buy it at a later is the question - but if you need specialised salespeople to sell it, you might capture the high-end market, but not the "normal" consumer.

The power of new media

Not many would know singer Andre Hazes who died yesterday at the age of 53 and was reported on the radio at 11.45 AM.

What, however is interesting is the overall development that followed the news.

First of all, his website, andrehazes.nl, reported high traffic (11,000 visitors at noon vs. 150 on a normal day), as did websites like condoleance.nl, where visitors can leave messages: More than 50,000 people have left wishes.

Secondly, mobile phone calls were up 10 percent, according to telecom operator KPN. And at noon, SMS (text messaging) traffic doubled.

What is so interesting? It shows that the world of communication is changing rapidly - away from the traditional news, which is when newspaper publish at a regular schedule to be bought early in the morning, or the hourly news on radio and television. All it needs is an interesting trigger and once a tipping point is reached, the message spreads dramatically. Just a pity that still, not many companies recognise this tremendous power, and if they realise it, they frequently use it wrongly and bombard the consumer with useless advertisements.

Samsung hiring

It is nice to grow as a company and one of the nicest problems to have is to have so much work that one needs to hire a lot of people.

Samsung in Korea is in that shoes - the company is to hire more than 18.000 new employees this year, including 8,060 college graduated recruits, 7,200 manufacturing workers, and 2,800 experienced employees from former career backgrounds.

As a company of that nature, we also don't believe that the company has problems finding great employees - a great company is, most of the time, more flooded with resumes than other companies. Okay, they might have challenges facing some challenges, but this is minor compared to companies that are less branded, or less successful, or both

The Power of Blogs

Wired Magazine is running quite an interesting article about the power of blogs on the media. The background of the story is President Bush's background regarding his time served in the military.

It apparently happened when some one writer at Wired "clicked through cable TV channels the other night looking for something (anything) to watch" and came across "two guys sparring over "Memogate." Had CBS News' twangy elder, Dan Rather, fallen for phony memos that purported to show that President George W. Bush received preferential treatment and failed to fulfill his National Guard duty some 30 years ago?

Keeping with cable news custom, one guest was there to attack CBS, the other to defend Rather. Unfortunately, the writer only caught the tail end of their prickly exchange.

But when the CBS apologist was asked about the role bloggers played in propelling the story to national scandal, he dismissed them as little more than journalist-wannabes, sitting in their underwear in front of their PCs, typing whatever thoughts/opinions/rants they had between trips to the refrigerator. "

The story behind that all was that "on Sept. 9, Dan Rather, moonlighting on 60 Minutes II, claimed that then-Lt. Bush grabbed a coveted spot in the Texas Air National Guard by leaping past hundreds of applicants on a waiting list, and, once there, failed to meet minimum performance standards.

Rather relied heavily on copies of documents signed by Col. Jerry B. Killian, Bush's National Guard commander. Of particular note was an Aug. 19, 1973, memo in which Killian complained of pressure to "sugarcoat" a Bush performance review after the future president skipped a required flight physical."

Apparently, bloggers immediately reported about possible mistakes on the memo - saying that the memo is written in Times Roman - something only introduced later by Microsoft, or a superscripted "th" character after numbers like 19; the fact that memos listed a post office box and not a valid street address; the use of certain nonstandard National Guard abbreviations."

Well, Dan Rather dismissed the story and the bloggers as professional rumuor mill and that bloggers might not have the right motivation.

Anyway - the story didn't die down. Bloggers functioned as media control, checking the accuracy of a document that would have become way more important in course of the presidential elections. In fact, they functioned as a balance of power to a pretty centralised media coverage. And that is good - it shows that there is another sphere that is under attack by a fast changing, still evolving and uncontrollable medium - the internet and the millions of people out there that make themselves heard.
The interesting piece is that

We make money not art

A bit of a scary news - a service called The Mobile Snoop Service has been developed that lets fellow snoopers look into each other's mobile phones - read their messages, view their images and listen in to their conversations - if they are open enough to let you do this.

We wonder who would do this, and what would be the application? Question also - could this be the entry point to hacking into mobile phones?

Research on the social impact of mobile telecommunications

Mobile communications is changing our life in ways we haven't foreseen. Just to imagine, that this revolution is still relatively new - we are just sitting at the beginning of the journey and so much more to come!

Now, more and more research seems to come up looking into changes created through these technologies. Back in August, we talked about the fact that Americans are different from the rest of the world when we introduced a study conducted by Intel. The most recent was from Synovate, a market research agency that wrote in one of their studies about the impact of technology on family life.

Now, the Australian Mobile Telecommunications Association (AMTA) publishes results of a 3 year study that was conducted with the Australian Social Science Academy (ASSA). The objective was to look into the social impact of the mobile phone on the Australian society and examines ways for potential research to go forward (what?? They researched three years to find out areas to look into?? - okay!)

But basically, the project discussion paper groups issues into four thematic sections that can be researched:

- the structure of social groups and the impact of the mobile phone;
- work, home and leisure;
- social innovations in a digital context;
- patterns of use of the mobile phone.

The paper can be found at the link provided after sending an e-mail to someone in charge - we haven't received it yet, so may be there is more to it..

Interactive car service offered by telco in Malaysia

Malaysia's smallest mobile telecommunications company, Digi.com has introduced a WAP service that allows its customers seek and purchase cars faster, simpler and more convenient.

According to the New Straits Times, "customers will be able to search and even view images of more than 1,700 used cars available in the database that is updated weekly, simply by logging into the portal and keying in the car manufacturer and model according to their preference."

It appears to be a big opportunity since about 40,000 cars are sold in Malaysia each month. The service would be even greater if subscribers would be able to specify not only their requirements after logging in and conducting the search by themselves. Instead how interactive could it be if they specify their "wishlist" once, and the service would automatically inform them, if there is a car that fits their choice. The question is also if it wouldn't be better if the list is updated daily, and not weekly, since a consumer might want to look for cars now - anytime, anywhere -, and not, when the company is updating the system. But may be this is coming soon.

New PlayStation2 is slimmed down

A couple of newspapers report it today (one is the Asian Wall Street Journal, however, hey have a subscription version only), namely that Sony is going to launch a slimmed down version of its bestseller PS2 in November - so ready for the Christmas period.

The new console, which weighs just 900 grams, less than half the current model has also been trimmed down to just 2.8 cm - the current model is 7.8 cm.

Broadband access in Singapore

We are following up up on two stories that we had recently, namely the fascinating story in a recent Fortune magazine about the supremacy of Korea in broadband (http://asiabusinessconsulting.blogspot.com/2004/09/korea-to-surpass-us-in-digital.html), something, that the country also wants to develop way further and increase the speed of the internet 50 times by 2010 (http://asiabusinessconsulting.blogspot.com/2004/09/internet-to-be-50-times-faster-by-2010.html).

Singapore in Southeast Asia, however, the tiny country of 4.5 million, is also holding up in broadband development. Almost 40 per cent of the households hooked up to the internet via broadband technology - and the government intends to develop ways to penetration rates further by developing alternative broadband technologies that would give faster and cheaper services.

Global phishing scams

A new survey by Symantec found that Australia's share in phishing attacks increased to 4.8 per cent of all attacks, up from 2.6 per cent in the six months to the end of December 2003, while the share of the US dropped from 58 per cent to 37 per cent. Symantec counted a "huge increase" in the number of automated bot network attacks in the same period.

Bot networks use small applications installed on infected machines to launch other attacks and the number of monitored bots rose from 2000 daily to more than 30,000 daily. What is interesting is that although home users were often blamed in other studies for the large number of security-compromised machines available to hackers and criminals, the study found malicious code was also emanating from 40 per cent of Fortune 500 companies.

Over the first half of the year, the number of monitored bots rose from 2000 daily to more than 30,000 daily, with occasional peaks of more than 75,000 daily, Symantec reported. The numbers are interesting and show a growing menace - however, it should also be considered that Symantec has a clear interest in pushing the issue, since they also sell progams to protect computers.

Nevertheless, it is alway good to be careful and by far too many people still provide personal information to "online" strangers - never talk to strangers, our advise!!

Beijing's first SMS novel to be made into film

We reported earlier that a novel called Outside the Fortress Besieged was delivered via SMS, on a daily basis, in China. The total was a 4,200-character, 60-chapter novel (http://asiabusinessconsulting.blogspot.com/2004/07/novels-in-sms-style.html).

Now, a Tawain-based company called Bestis Technologies bought the film rights for the novel. The film will consist of 30 to 40 segments and should be able to be viewed on cellphones.

Interesting idea - we just wonder if it will work this way. It sounds like the story will be sliced in many pieces. While it of course depends on the circumstances, how and where it is watched - in traffic jams, or waiting somewhere for something, the question is how someone keep the tension up for the viewers, if the different sequences are so extremely short.

But then, everything is possible.

Cutting edge services moves to India

Outsourcing of lower value parts of the value chain is become a common nominator amongst companies, but apparently, start ups begin to move the pieces they outsource up the value chain.

"The start-ups have their top managers and sales teams in the US, but design products in India, where hi-tech engineers earn a third of the wages of their US counterparts."

The article continues saying that "While the 1800 firms in India's technology capital have focused on lower-value services such as call centres and software coding, companies are now tapping low-cost expertise in a corporate global village where location is not important. "Companies don't have passports," Indian venture capitalist Abhay Havaldar declares bluntly.

The new hybrid firms have already spawned new consultant jargon, such as "right-shoring", "any-shoring" and "smart-sourcing" -- all signs that they now care more about what they do than where they do it."

When was the last time you upgraded your skill to stay employable?

Cool English via radio and SMS

To learn English is one of hottest topics in China and language courses are all around. Many employees take courses after work, and many are supported by their companies. Here comes the next superpower, because many countries in the region thought that their skills in English would offer some protection. But it is time to wake up. It is a goal that over the next 8 years, 62% of Shanghai's population should speak English.

The article states that "With RTV China there now is a Chinese/German media company supporting this effort with a new campaign. What’s special about it is the approach, NOT to teach boring school English but cool slang and trend talk about topics ranging from dating to sports and travel in a radio program called “Talk da Talk”. The radio program is only part of a true cross-media campaign, which is unique not only in China. The campaign also includes the “Slang of the Day” via SMS, as well as video and audio MMS. It is further enhanced by cooperation between radio stations, magazines, book publishers and SMS providers of China telecom all over China."

Cool - is our comment at Asia Business Consulting

Mobile Learning Attracts High School Students

Finally - instead of banning electronic tools or looking at them as something that isn't quite right in the school room and for learning, high school students in Korea can prepare for the college entrance exam by using personal gadgets to study instead of textbooks on the bus or subway.

A leading online education firm will launch services providing lectures via personal multimedia player (PMP) through a business alliance. The gadget is an all-in-one handheld device, which allows users to view full-motion video, listen to MP3 music, record voice messages in real time, view still images and play games. Playing games? Does sound a bit similar to the one story we ran earlier about a school in the US that promoted wireless work in a school and where the article depicted a kid clearly playing Solitaire (http://asiabusinessconsulting.blogspot.com/2004/09/us-school-promotes-wireless-work-in.html). But, well, there are games that can be played in the school to promote a variety of skills as well, of course, so don't let us be negative here.

In addition to this service, educational electronic books are also hitting store shelves. Domestic electronic bookmaker Booktopia came out with an e-book, which contains 15-volume books, seven for humanity majors and the other eight for science and engineering students.

And the school bags will be less heavy - when are other countries taking over this service?

SMS threat probe in Malaysia

The police in Malaysia is investigating death threats, poison pen e-mails and text messages to prominent local artistes that were sent via SMS or e-mails.

It is easy to press the "send" button on a computer, or on a handphone. It will be more difficult to identify the culprits if they were smart - using mobile phones that don't belong to them, and which are disposed after using them for a one time event.

It is more difficult to get them when they send an e-mail from a cybercafe - but here, frequently, registration of users is required. So once the police identifies the cybercafe via the ID of a webaddress, they are already pretty close.

People think that they can get away in the cyberage, by assuming identities and using webased mail accounts such as offered by Yahoo or Hotmail. But with web security ever increasing, such beliefs are naive, at best.

Update, September 28, 2004

The Star (Malaysia) reports (http://thestar.com.my/news/story.asp?file=/2004/9/28/nation/8995174&sec=nation) that a private college lecturer has been arrested in connection with the hate mail sent to popular singer Siti Nurhaliza after police successfully traced the address and the origin of the e-mails.

As we said "naive" - nobody can run away!

Competition between China and Korea heats up

We all know that China forces countries and companies demand a lot of actions from countries. If a country is supplying basic commodities, such as steel, their growth is somewhat assured for the time being. A recent Fortune Magazine article (September 27, 2004) outlined its positive effect on Brazil.

However, if a country is just sitting atop of China in the value chain, the country might just bulldoze it away. The motorcycle industry in Indonesia is a good example of this.

Korea, the broadband wonderchild of this decade is feeling the heat and this is what the article wonderfully outlines. It shows that while Korean companies cashed in on the growth by expanding into the mainland, this is also a double-edged sword.

Economists are quoted in the article saying that "High-tech electronic parts, semiconductors and wireless communication equipment comprise nearly 40 percent of Korea's export basket, and an international Chinese onslaught in those fields could leave Korean companies battered. The fears have only gotten worse with the latest projections by influential private think tank Samsung Economic Research Institute, which has forecast that although overall exports this year will gain 30 percent from the level of 2003, there will be a slowdown in growth for exports of high-tech products - because of a low-price offensive by China."

Competition heats up in all sectors that Korea dominated and where the country demonstrated export savvy - steel, shipbuilding, electronics and semiconductors.

There is much more in this very interesting article, so if you find the time, read it, as this shapes future events in Asia.

Chinese Webportals form alliance

Sina, Sohu and Netease have formed an alliance to improve the development of the wireless internet in China.

They promised to implement China's internet laws and regulation and ensure a healthy and credible development of the internet.

Will this happen? There is of course the danger that they will block out everything that is considered critical - the Chinese government is already blocking out internet access to sites that are critical political or religious in nature - in addition to the usual culprits of pornography.

Digital cameras means death for Kodak plant in Australia

The icon of photography, Kodak, long struggled to get into the digital business, but seems to get its focus lately. Suffering, however, are those plants and employees in the plant that depend on "normal" photography.

In Australia, the company now closes its Melbourne factory, forcing more than 600 staff out of work.

"One-third of Australian households would own a digital camera by the end of 2004, he said, while 3.5 million Australians would have a camera on their mobile phones.

Accordingly, demand for film and photographic paper had been falling by about 15 per cent over each of the past two years. "

At Last, China Targets Its Spammers

BusinessWeek has an article about China and spam. Okay, we realise that origin of spam are buried somewhere - just recently did we point to a study that mentioned the US as the main source of spam (http://asiabusinessconsulting.blogspot.com/2004_08_01_asiabusinessconsulting_archive.html ).

The truth is probably somewhere in between - spammers shift there operations and when the Chinese regulators start cracking down on them, they will move to a different place. And than, in a couple of weeks or months, we will mention that a different location has been identified as souce of spam.

Fact is that countries start looking more seriously at spam as disturbance. May be one can see this in relation to recent trends in Asia to clean up their house and become more business friendly and transparent. To be associated with spam might not necessarily support this image.

Wage differentials in Korea

Lots of numbers in the article copied below, but it shows that fulltime workers still earn more than part-timers - also it is not clear, if the part-timers also do freelancing.

Interesting to see as well is that women's salary increased much lesser than that of male, and is, overall, far below male fulltimers and part-timers. All this despite the fact, that women are the force to reckon with in the next couple of years as income earners, leaders and outperform men on nearly all criteria crucial to survive the job markets in the years to come.

Here is the article:
Wage Amount of Part-timers Peaks in Their Early Thirties
It is shown that although the amount of wages of full-time male workers steadily increased until the latter half of their forties, part-timers' wages peak in the first half of their thirties, and decreases continuously afterwards.
According to the Korea Labor Institute on Tuesday, the 2002 wage figures of full-time workers, with the wage standard of 20-24 year olds set at 100, increased continuously to 135, 186, 212, 215, and 226 respectively in the 25-29, 30-34, 35-39, 40-44, and 45-49 age groups. The figure finally decreased to 217 in the 50-54 year age group.

On the other hand, in case of the part-timers, the figure peaked at 190 in the 30-34 age group, and revealed a downward tendency by recording 182, 188, 169, and 178 separately in the 35-39, 40-44, 45-49, and 50-54 age groups.

In case of female full-timers, it was shown that each age group of 25-29, 30-34, 35-39, 40-44, and 45-49 respectively recorded 118, 133, 128, 123, and 117. With part-timers, 25-29 made 127, 30-34 made 98, 35-39 made 97, and 40-44 made 96.

“A very rigid wage system based on one’s service experience is still overwhelming in companies as a theory of deciding one’s wage level,” remarked the Korea Labor Institute, adding “A rapidly increased wage amount caused by the experience-based wage system is limited only to the internal sectors including the labor union and full-time workers of conglomerates. In case of sectors of outsiders and sectors that do not have any labor unions, the influence of the experience-based wage system have greatly weakened.”

Liberian lives Tom Hanks Movie "The Terminal"

But in this case, the man doesn't do it voluntarily or for a movie. It is a guy, only identified as "A", who arrived in Korea in December last year from Liberia. Liberia, at the West coast of Africa, is in turmoil, or civil war.

The guy left Korea to Switzerland, when illegal foreign residents had to be reported voluntarily. He returned to Korea, after Switzerland refused entry. Scared that he might be send back to Liberia, he destroyed his passport, what made him stateless. The Korean authorities contacted Liberia for identification, but, being a country in the state of war, administration is probably worse than imaginable.

So he leaves in the airport. What a nightmare!

How to deal with saturating markets

It was clear that this is coming. It is always coming - markets are saturating. This time, it is the mobile phone market that let mobile phone operators struggle to meet growth targets.

The interesting piece is then that companies mostly become more innovative in developing their customers - or they go out of the market, if they don't.

So now, in the mobile phone markets, companies start targeting the lower end of the market, with all its risk related to a lowered average revenue per users (ARPU). Stock analysts look for that, and if ARPU declines, the company's shareprice frequently gets hammered.

However, technological developments impacting raw material prices allow companies to lower prices of handset that even the poorest consumers might soon find themselves able to purchase one. We recently reported about one of such handsets in Korea.

CNN describes one persons as an example for such case: "On the outskirts of Beijing, Chen Zhenghua makes a living growing and selling vegetables. The 36-year-old takes home $83 a month -- modest wages for most -- but good enough for Chen to consider buying a mobile phone."

Now this relates to handsets - and is an incremental improvement that can easily be matched by any competitors. It becomes more interesting when business models are modified to suit the needs of poor customers.

Here, they describe using the text message as a virtual prepaid calling card. "The consumer sends a text message to a number saying they agree to pay, and in return receives a specific amount of airtime. This system is paperless and cheaper to operate than other prepaid services.

Normally mobile users need to buy credit card-style vouchers bearing an identification number that they key into their handsets to add airtime. Under the electronic system, operators do not have to print vouchers or be involved with distributing them. Therefore, they can afford to sell airtime in smaller amounts." Now this is innovative thinking, and apparently Smart Communications added 1.7 million subscribers and cut costs by more than US$5 million with such innovation - who says that low-end subscribers delude the subscription base of a company?

Sony-led group to acquire MGM for US$3 billion

Entertainment is rocking - Japan is rocking and Sony of Japan is leading the way. "A consortium led by Sony Corp. has agreed in principle to acquire famed Hollywood studio Metro-Goldwyn-Mayer Inc. for nearly US$3 billion, MGM said." This is major, since it means the farewell to an old symbol of the entertainment world, a further consolidation and a move by Sony to grow this future type of business.

Spending on education

The article describes the teacher/ pupil ratio for different countries, according to a newly published report by OECD.

According to the report, Japanese elementary schools had an average of 28.8 students per class, while France had 22.6, Germany 22.2 Australia 25.0 and Portugal, 19.1. The average number of students per classroom in Korea was 35.7 for elementary schools, the largest of all surveyed OECD countries.

The size for junior high was 37.1, far larger than the OECD average of 23.7.

The interesting number, so, is that Korea spent 8.2 percent of the gross domestic product on public education, higher than 7.1 percent spent last year.

It is higher than the OECD average at 5.6 percent, and compared to 6.1 percent in Canada, 5.3 in Germany, 7.3 percent in the United States. The high percentage derived from lofty private spending, with 41 percent of the entire education expenses paid for by parents or private education foundations and organizations. The remaining 59 percent came from the government.

Now, let's comment here. Education is the future and many countries have realised this. A higher percentage number does not necessarily translate into higher a higher total, since this is dependent on the overall size of GDP. But it is an indication of the focus of a country.

Talking about a teacher/ pupil ratio, a high ratio might not be positive, overall, but, and this is a big but, it also depends on the "art of teaching". Is it a team-based teaching or a memorising type - do pupils work together, or is the teacher just standing in front of them and they have to repeat and repeat and repeat until they get it? In addition, if the teacher is not capable, the smallest class won't get it. It is the level of engagement that the teacher is able to provide - so a small class can be extremely boring, while a big one can be an extremely good ground for learning.

Sony-led group to acquire MGM

Entertainment is rocking - Japan is rocking and Sony of Japan is leading the way.

"A consortium led by Sony Corp. has agreed in principle to acquire famed Hollywood studio Metro-Goldwyn-Mayer Inc. for nearly US$3 billion, MGM said."

This is major, since it means the farewell to a old symbol of the entertainment world, a further consolidation and a move by Sony to grow this future type of business.

Korea to surpass the US in digital supremacy

Well, finally it is out - Fortune Magazine in the September 20, 2004 edition points out that when one would take President Bush's comments about universal access to broadband as a key to success in the Information Age, than Korea with a broadband penetration of 70% vis-a-vis US 20% would rule the world.

This will be new to the US in many ways, especially when it comes from a reputable magazine such as Fortune.

The article brings another nice example about how backward the US is in this arena. It writes that "Americans might be praising the iTune music file downloading service that began only last year, but Koreans already ran file-sharing services that allow users to download TV shows and movies in just a few seconds".

Well, may be it is time to turn the world upside down - what is the most amazing fact in the whole history of Korea, so, is, that the country, about 50 years back, was one of the poorest countries in the world, with a GDP per-capita of around U$60 annually. And look at it now - it confirms that change is possible, but that determination and execution is everything.

Focus Focus Focus in Korean companies

Restructuring and change is always painful and a never ending process - in contrast to popular belief that says that once you have changed, you also have reached a plateau where you can rest for a while.

Over the last two weeks, we have reported a couple of times about Korea and those short descriptions also indicated that change is coming to Korea.

LG Electronics and Samsung Electronics realise the road ahead and start shedding business for which they don't see much of a future. LG subsequently wants to get it hands of the digital camera business - reasons for this are not mentioned, but a reason could be the growing pressure on the low end of the market from camera phones. In addition, LG also wants to get out of the electric pressure cooker business.

Samsung Electronics completed last week transferring household appliances production line at its Suwon plant involving washing machines and air conditioners, among others, to Gwangju Samsung Electronics. A subsidiary of Samsung Electronics, Gwangju Samsung Electronics is owned completely by its parent firm. Samsung Electronics intends to take charge of household appliance development and marketing and let its Gwangju subsidiary take care of production. The scheme is designed to boost profitability in household appliances, in which Samsung slightly falls behind LG Electronics.

Whatever it take - companies that take actions against the pain before the pain is being felt lead the market and are bound to continue riding the wave.

Grameen Bank gives mobile phones to beggars

This news fits nicely with the one we just published earlier about the professor in Japan, who blames mobile phones for the long decline of Japan (http://asiabusinessconsulting.blogspot.com/2004/09/its-mobile-phone-stupid.html)

In Banglades Grameen bank (http://www.grameen-info.org) , a bank for the very poor normally excluded from bank loans, now provides mobile phones to beggars. "Beggars would need to be a member of a Grameen Bank project to be eligible to get a mobile phone. Each mobile phone will cost them 8,500 taka (80 pounds), repayable over two years in interest-free instalments. They also are responsible for paying a subsidized monthly service charge of 152 taka."

The bank wouldn't stop them from begging, initially, but hopas that they would start developing business skills.

Who says that cell phones don't have an economic impact?

It's the mobile phone, stupid

A professor of economics at Kyoto University, who is also the director of the university's Institute of Economic Research has sent a letter to The Japan Times, analysing the decline of the Japanese economy from a variety of viewpoints.

His basic statement is that consumer demand is the main driver for the growth of the Japanese economy, and consumer demand wasn't stipulated enough to kick the economy out of recession over the last 13 or so years.

He outlines different reasons:

1.) "Japanese companies have failed to develop revolutionary consumer products that create substantial new demand instead of merely replacing existing products." as a consequence, demand from consumers is low.

This might be true, but another reason is that consumers don't want to consume if they are not certain of their own economic future. If I am threatened with unemployment, I don't want to spent. And in the end, Japan experienced deflation - which allowed consumers to wait until the next month with their purchase to check, if prices of a product have further declined - and so on.

2.) "Consumers tend to look for entertainment when they have enough of life's necessities. Movies, music, other forms of entertainment, sports and travel should attract more consumer spending. In today's Japan, services to provide entertainment are insufficient."

In this context, he also mentions the Internet as one of the culbrits that booksales are down. The professor fails to see that animation studios in Japan in their favourite Manga characters is taking the world by storm.

3.) "Television viewing has been on a downtrend, eroding the impact of television ads on consumer demand. As a result, fashion is losing its relevance. One factor is the deterioration in the quality of television programs, especially from private broadcasters."

Couldn't it be true that the decline of advertisement is caused by too much advertisement and the failure of the advertising industry to grasp how consumers learn about and purchase new products.

Finally, the professor manages to blame cell phones for the decline of the economy. Japanese telephone bills are too high, so they cannot buy items that would have a greater multiplier effect on other sectors in the economy. In addition, and since mobile phones are so small, their own multiplier effect is pretty limited.

Now, in the end, the professor writes that "Many young people addicted to cell-phone communications buy few books or even comics. They waste hours each day in text-message communications and Internet games with little time left over for other forms of enjoyment. The cell phone is the cause of the business slowdown as well as the erosion in young people's intelligence and scholastic abilities."

That tops it!!

Mobile satellite broadcasting ready for launch

Companies in Japan and Korea get ready to launch a new satellite broadcasting service that can send video and audio directly to devices such as mobile telephones, handheld terminals and in-car receivers.

The big question about this is of course, where do people watch TV on their mobile phones? It might be possible to see a business model in places like Japan, where commuting by train is time intensive.

Still it is a start, and with interactivity, great content, better screen resolutions and slightly bigger screens, certain segments in the population might take up the function.

Walk around - and stay healthy

Computers causing sickness - workers feel ill. They sit too long in front of the computer, their eyes are too close in front of the screen, the chairs they are sitting on are totally unsuitable. Probably also, that they simply work too much.

The problem will get worse with the rise of the mobile internet, only that we slouch over smaller screens, away from the office, but in a Starbucks. Could be?

A study conducted in Europe found just this. With the growth of the mobile economy, expect the rise of health supporting means.

Asia-Pacific ICT Sector Keeps Climbing

Material with global numbers from the ITU is always something worthwhile reporting about.

"The ITU Asia-Pacific Telecommunication Indicators 2004 report, issued at ITU TELECOM ASIA 2004 in Busan (Republic of Korea), found that growth rates for fixed lines, mobile subscribers and Internet users over the last few years have soared in a number of countries across the region. Mobile subscriber numbers rocketed by 31% per year between 2000-2003 to reach 560 million — overtaking North America as the world’s largest market. Numbers of fixed lines in the region also grew by 14% in the same period, surpassing the single digit growth rates seen in most other regions."

The report outlines that countries like Korea and Japan are leading countries in the ICT race - in fact, Japan is the country with the highest penetration of mobile Internet users. The number of Internet users in Asia Pacific grew by 38% annually from 2000 to 2003, but the report also states that there are huge disparities amongst the different countries - making Asia the most and the least connect region in the world.

There are also interesting broadband penetration numbers: Korea, with a broadband penetration of 23.3%, and Hong Kong, China — with a broadband penetration of 18% — top the global broadband league. They are closely followed by Taiwan, China (13.4%), and Japan (11.7%). Singapore is in 11th position at 10.1%.

Sharing content via mobile phones

It was clear that this would come, sooner or later and we are actually surprised that it only comes now.

South Korean mobile operator SK Telecom Co. Ltd. previewed a file-sharing application for cell phones this week that will let users swap files, including ring tones, music and videos over its 3G (third-generation) network.

They are presenting the application at the company's booth at the International Telecommunication Union (ITU) Telecom Asia 2004 conference and exhibition in Busan, South Korea.

They are not yet thinking about the implications for copyrighted material, and well, it is not clear if the service will be rolled out. Regarding this, they state that pricing and availability of these services has not yet been decided by SK Telecom. However it is clear that if someone has developed the ability to do this, others will quickly follow.

India, Indonesia in, Korea, Japan out

Telecommunications services in Korea and Japan are exciting for users - heavy offers, cheaper prices, great networks with no dropouts during calls. They are less exciting for those who actually operate in those markets - we are talking about companies that we actually love for their stellar performance - SK Telecom or NTT DoCoMo.

But to face the reality of slower growth, the companies need to reorient themselves - slower growth ahead is the daily marching order now. This means a lot of change for those companies since employees have to have a different mindset to cope with growth numbers far below 10% instead of growth above 10%. In South Korea, growth slowed to 3.9% last year, from 11% in 2002, as penetration rate hit 70%. Penetration rate in Japan is about 67%.

DoCoMo is trying to move subscribers to their new highspeed service and has laid out a related strategy which includes flat rate fees. So far this strategy appears to be successful since the company managed to beat KDDI in subscription growth for the first time in 8 months.

Investors start punishing the markets - and to move their money to places where growth more feasible - India and Indonesia. Bharti Telecommunications saw its shares rise 29% in 2004 with Indosat growing by 42%. This compares to sluggish performance of companies in Korea and Japan.

In India the Indian Cellular Association estimates that 60% of new handsets have monochrome screens. The government also expects mobile phone users to reach 100 million in 2005, up from just 35 million in June 2004. Penetration rates in both countries are still below 10%, leaving lots of room to grow.

Samsung shows 'world's first' hard drive phone

This is fantastic as it opens the way to developing handphones into computers. Samsung developed the first handset with a hard drive of 1.5 GB. Okay, the current price is US$800, and it is not yet there - to compete against an IPod.

The Samsung handset features an FM radio, 64-voice polyphonic ringtone support, a 240 x 320 display and TV output - again, preparing the way for the day when mobiles incorporate Microsoft Portable Media Center-style functionality.

But the set opens the way for more competition. Already, mobile phones get better digital cameras and start competing with lower end digital cameras. Next, prices will drop, when competition starts to develop similar capacities. And than, consumers will get a bigger hard drive and will be able to play their music like they can do on the IPod, watch TV (with all the limitations of a handset) and so on. A brand new world opens up.

Korea as talent developer?

Yesterday, we had the story about the 6 executives that wanted to leave LG Electronics to move to Pantech, another Korean company (but were “forced” back).

Hidden (no, not really) on page 2 of the Asian Wall Street Journal of yesterday (link needs subscription) was another story about a great employee in Korea. This time, we talk about Eric B. Kim, executive vice president of Samsung's global marketing operations, departs just as the South Korean company is finishing a review of ad agencies and preparing a new brand strategy. He is leaving for Intel to become their marketing chief.

This is actually good news for Korea, because it shows that its companies do something right – it the headhunter rings your phone, and tries to get people from your company to another, you are doing something very right. If they leave, however, you did something right earlier, but failed to keep it up. It is not money and a bigger paycheck that makes people leave (not always, for that matter). It is the culture in your company, and the career opportunity and growing responsibilities that give a company the edge. If you do things right in your employee’s careers, they don’t want to leave, as this would mean a step back from them.

Banning Solicitation of IT Talent

This is pretty heavy news. A Korean court ordered 6 researchers who left LG Electronics to move to a rival called Pantech not to move for one year. Pantech made it clear after the ruling that it will accept the resignation of newly hired six former LG workers in line with the court decision and rehire them next year. If the workers would start work earlier, they would be required to pay US$2,600 daily! Pantech apparently poached a few employees from LG before.

This is described as talent war - in Korea, there is an oversupply of IT job candidates at the entry level, but gaps in upper levels. The court stated that a company who is the victim of such practices would stand to lose out in the market place, as it is depleted of its talents.

Our question with regard to this is - what will the 6 employees do? They surely aren't too excited to go back to work in LG. They didn't like to work there in the first place - does anybody in LG believe that they will give everything to the company after such ruling? It looks more probable that they will sit their time out. Next - why did they leave in the first place? Okay, LG has a great climate to work in, but may be Pantech offered more? If LG would have been able to provide the employees with an environment that entices them to stay, not a single employee would have left in the first place.

So this is actually a lose-lose-lose situation. The employees lose, because they waste their time, Pantech loses, because they don't get the employees they desire and LG loses, because it has 6 disengaged and unhappy employees.

To power computers via solar energy

Being able to access the Internet is important not only for urban population but increasingly also for populations in the rural area. India is pretty advanced already with their small and cheap handheld computer called Simputer that allows farmers to access marketprices and cut out intermediaries by simultaneously receiving better prices.

Now, authorities in the Indian state of Uttar Pradesh are running a pilot project to use solar power to run computers in village schools – thus boosting the educational level of otherwise disadvantaged children. Costs to run the computers are shared between Uttar Pradesh Education for All Project Board and the Education for All Project.

Internet to Be 50 Times Faster by 2010

This is the kind of news that is just mind boggling. In Korea, the Ministry of Information and Communication (MIC) on Tuesday said it selected three consortiums for trial operations of the Broadband Convergence Network (BcN) services, or the Korean equivalent to the next-generation network.

As a result, Koreans will be able to access the internet at a speed of 100 MPS by 2010. The government will invest US$87 billion for this exercise.

George Bush, recently said, that the US were ranked ten in the worldwide broadband penetration, and that this is the wrong position for the US. However, while the US is beginning to run faster in order to change this ranking, Korea appears to be accelerating.

IPod shortage during Christmas period?

Nokia has delivery problems with its latest model in Europe, but now, there is at least one major retailer in Australia who is afraid of a potential shortage of Apple's IPod during the Christmas period.

As such, they forego promotions now, just to make sure, that Apple can actually deliver.

Mobile phone addiction

We wrote yesterday about the increasing penetration of mobile phones in Norway and the incredible usage of SMS in the global arena (http://asiabusinessconsulting.blogspot.com/2004_08_01_asiabusinessconsulting_archive.html#109393794403396274). And of course, where there is something that is not fully understood in all circles, there are groups that straight away warn about the usage of the Internet, or, as in this case, the potential addiction to mobile phones - frequently, a look at the source reveals the intention of the one publishing some findings. With regard to mobile phone addiction mentioned in this report, the Seoul National University Bundang Hospital conducted the study.

Anyway, we often wrote about the savvyness of Korea when it comes to the usage new technology - now there is this article that says that 26% of mobile phone users in high schools has "addictive symptoms bordering on paranoia. About 60% were constantly worried whenever their mobiles were turned off, feeling someone could have sent a text message without setting off the warning bell." A girl, 14 years old, is quoted as saying that "She checks for new messages or calls every minute. She sends about 20 or more text messages a day, even though her fingers often hurt."

What is more interesting, so, is the impact of group pressure on the youth, to frequently purchase new handphones. Some students apparently change handphones every 4 months, and while many state that they lost the phone as a reason to purchase a new one (47.6%), others switch to get the latest design (31.6%). The report also said 90% of students relied on their parents to pay their monthly bills and added that more than 60% were in constant conflict with their parents over excessive charges.

US school promotes wireless work in classroom

It would be great if all schools would be as openminded about new technology as a school in Rochester is doing it.

The school is actively providing and promoting the use of wireless technology, laptops and handheld computers, which contrasts with many efforts of other schools that restrict the use of such technology in school premises.

However, what is kind of funny, when you look at the article, is the smaller picture just below the top one - there is one kid playing solitaire - hmmm.