Archive for March, 2011

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award winning commercials from Paris

Wednesday 30 March, 2011

The Alliance France hosted La Nuit de la Pub: Award-Winning Commercials featuring an evening of videos hosted by Anne Saint Dreux,  Director-Founder of  Maison de la Pub .  The House of Advertising or La Maison de la Pub is a global, international archive of advertising media. With a collection of 400,000 advertising films, (now 500K commercials, I believe) from the first commercial by the Lumière brothers (1897) to current advertising campaigns, it offers incomparable research material on French and international advertising. Its multimedia archives are designed for professionals, students and the public at large and provide materials for television programs, festivals and large exhibitions in France and abroad (from the website).

Our Master of Ceremonies from DraftFCB placed Chicago in the history of advertising right up there with New York & San Francisco as the founding home of J.Walter Thompson in 1864, Foote, Cone, & Belding in 1873, & Leo Burnett in 1935.

The original purpose of advertising was to simply inform the public, but it has now become much much more.  There is an inherent contradiction:  is the purpose of marketing strategy now just to manipulate minds?  Lever Brothers created the 1st commercial as we know it when they combined a ticket to the movies with Lumaire soap.  Over time, advertisers diversified their offers.  In the 1950’s & 1960’s, the golden age of advertising in France, comedy spiced it up as the thought transitioned from “reason to sympathy.”  The 1st oil crisis in 1974 encouraged consumers to conserve.  The 1980’s were the decade of “careless sympathy.”  In featuring cars, (the blind) Ray Charles was shown driving a Citroen in the desert of Utah.  In the 1990’s, as we were greeted with live images of war for the 1st time, advertising became soft, surreal, & discreet, & focused on inner values while at the same time appealing to the pleasure principle & showing off the libido.  Women then rebelled, as advertising has now become more friendly & perhaps a social mirror.  Advertising has become a weapon of mass creation.

Q&A

  • Advertising has become more democratic.  Now there is much more 2-way communications which engages consumers.
  • Advertising follows major trends world-wide, but France is different from the US in the nuances.  Now you can’t limit the conversation:  consumers can now provide feedback.
  • While consumers are now creating their own ads, advertising agencies aren’t abdicating their duties as professionals.  For every trend, there is a counter-trend.
  • The La Maison de la Pub has some radio advertising from the 1930’s-1950’s, but otherwise has mostly TV, video ads, but does focus on life beyond TV commercials.
  • The television series “Mad Men” has been a great success in it’s 1st year in France.
  • France is not necessarily more creative than anywhere else because advertising is subjective & the French do some lousy advertising too.  US advertising is typically more locally-oriented.  Because women & humor differ, the conversation might or might not be different from place-to-place.
  • Now conversations are in 2 ways between consumers & brand builders on the internet.  Commercials still must be observed in context to determine their relevance.
Advertisements
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invest in slovakia

Friday 25 March, 2011

Baker McKenzie invited us all over to consider investing in Slovakia.  Peter Burian, Ambassador of the Slovak Republik to the U.S. provided the welcoming greetings.  Martin Chren, Deputy Minister of Economy, offered more specific business background on the Slovak Republik.  The Slovak Republik lies in the heart of Europe, & is no longer the little brother of the Czech Republik.  The country implemented strong reforms in 2002 & has benefited from them since.  The transition from communism is over.  The Slovak Republik is a full member of NATO & the EU & the only country in the region which qualified to implement the Euro.  There are no limits on repatriation of profits from the Slovak Republik.  They seek to become the Singapore of Central/Eastern Europe.  The government is centrally focused, & perhaps leans a bit to the right.  It’s easy to hire & fire there.  All public contracts are published on the public internet, which deters corruption.

Ken Ryan of KPMG offered these tidbits:   The Slovak Republik is the #3 per capita producer of cars in the world.  The country has 4% GDP growth, (vs. 2% for Western Europe),  provides a bridge to the rest of the European Union, & has received $800B of foreign direct investment in the last 20 years, from 140 companies in the US, as well as elsewhere.  Labor costs are 1/3 of what they are in Western Europe, but will rise to 50% by 2020.  The Slovak Republik offers a secure & stable economic environment with attractive fiscal & tax incentives.

Robert Simoncic of Slovak Investment & Trade Development Agency made the following presentation which provided more detail on investing in the Slovak Republik: Sario- US Road show presentation .  You can reach markets of 600M people from the Slovak Republik.  The country’s credit ratings are positive.  A World Bank study ranked the Slovak Republik #1 in terms of ease of doing business in Central/Eastern Europe.  Low labor costs combined with high productivity leads to high profitability.  A 19% flat corporate income tax helps too.  The country is home to 33 ICT centers which employ 20k-this industry provided the greatest contribution to the state treasury.

George Babcoke took US Steel to the east of the country in Kosice 10 years ago.  They started with joint venture in 1998, which they bought out later.

Mike Wysong opened a sales office for  Johnson Controls in 1993 which ended up serving VW there in 1998.  They opened a Business Center there in 2007 with 800 employees, which will be rising to 1100 soon.

Jake Slegers, Executive Director of the AmCham in Bratislava, gave this presentation  AmCham presentation for Invest in Slovakia seminar .

The other presentations are available here:  http://www.tradeinvest.sk/ppt108/

Q&A

  • Slovakia is off the intellectual property watchlist & now protects IP well
  • Slovak Republik has a small stock exchange, but not the size of those in Vienna or Prag
  • Business plan competitions is 1 example of entrepreneurship programs developing there
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Chicago celebrates international women’s day

Tuesday 22 March, 2011

The Chicago Chapter of the Organization for Women in Trade invited me to  celebrate International Women’s Day, which was sponsored by the International Trade Club of Chicago, WorldChicago, & the Union League Club of Chicago.  The event opened with an expo/fair which included the following international organizations:

Following lunch, we heard from these speakers, our 2 foreign guests being hosted by World Chicago:

Nataliia Bondarieva, a Methodologist @ the Kyiv  Regional Center of Educational Quality Assessment in Ukraine.  She manages the External Independent Testing on Foreign Languages.  Nataliia positioned this day as a national holiday in her country which honors women between Valentines Day & Mothers Day.

Luise Amtsberg is a member of the German Parliament as a representative of the Alliance 90/The Greens Party.  Luise noted that despite this year being  the 100 year anniversary of International Women’s Day, women are still not treated equally with men, although the Greens bring them closer to equality in Germany.  There they have enacted controversial  quotas for women, but women are still underrepresented as members of boards of directors.  Since 51% of college graduates in Germany are women, they deserve 1/2 of the power & responsibility.  Luise continues to fight against discrimination not only against women, but also against homosexuals, & others.

As the keynote speaker, Deborah DeHaas, Vice Chairman & Midwest Regional Managing Partner for Deloitte LLP made the business case for equality & diversity.  Deb 1st acknowledged March is Women’s History Month, & that Women’s Day is a national holiday in 15 countries.  Aging of the world’s population will create a 6M person gap in replacing retirees.  58% of bachelors’ degrees & 60% of master’s degrees go to women.  In Europe, despite being 1/2 the workforce, women comprise only 11% of corporate executives.  Women start 41% of all businesses grow @ 2X the rate of all businesses.  Women control $20TR globally & influence 80% of all decisions.  Companies with women on their boards outperform competitors by 53% & earn an extra 10% Return on Equity.  While @ Arthur Andersen (RIP) in 1993, the firm only had 1 woman partner.  Deloitte has taken the lead with their Women’s Initiative.  1 important remaining issue is whether or not there is a pipeline of qualified potential women employees.

Q&A

  • women need access to mentors & sponsors to get recognition
  • education is still the highest priority
  • Ms. DeHaas role model was her own mom, who, while taking accounting courses @ Pitt many years ago, was handed a drop card (suggesting she drop the class) every class.

Chicago TV News personality Diann Burns acted as Master of Ceremonies.  To learn more about International Women’s Day around the world, check out this article in Today’s Chicago Woman magazine.

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central & eastern Europe business conference

Tuesday 15 March, 2011

The College of Business & Management @ Northeastern Illinois University sponsored the EAST-CENTRAL EUROPE INTERNATIONAL BUSINESS CONFERENCE , which featured speakers over from Poland & representatives from all over central & eastern Europe.  Here’s a quick summary of 2 days of presentations.

Professor Felicjan Bilok of the Czestochowa University of Technology took a look @ trade unions demise in Poland, whose membership dropped from 38% in 1999 to 16% in 2008, while other countries only dropped 1-8%.  Union strongholds still exist in state-owned-enterprises, (35%), & for mid-level staff & technicians (37%).  Employees @ privately owned companies are only 1% unionized.

Dr. Leszek Cichoblazinski, also of the Czestochowa University of Technology, followed up on the labor relations theme by discussing his experience in mediating labor disputes, which is obligatory in Poland before strikes.  He used the example of spilled hot coffee resulting in a global installation of machines (instead of kettles) which the local workers rejected because it offered less choice in types of coffee & tea.

Dr. Hamid Adbari of NEIU offered a review of the book The Next 100 Years & how it applies to countries throughout the world, which hinges on access to water.  The US, Poland, Turkey, & Mexico are up, while China (isolated, inaccessible, unstable coasts with no naval power), Japan (dependent, looking for labor), & Germany will fall down.

I had to head out for a flight out of town, so the rest is contributed by Dean S. Santopoalo, Development Coach with Focused In Leadership in Chicago.

Prof. Pawel Pietrasienski of the Warsaw School of Economics spoke of using ethnic chambers of commerce to establish trade relations and look to “train the trainer” and other programs to help companies learn how to work with international cultures and build relationships.

Atakan Arica of Arica International Corporation & Vice President of the Turkish American Chamber of Commerce asked “Why do we go overseas?”  To mitigate risks by approaching growth markets when others are down & gaining access to resources via joint ventures. But we should not expect people to do business the way we do.  Different levels of professionalism are evident in each region. Everyone has a different understanding of a business agreement and if you don’t have it on paper, it does not exist.

Michael L. Hetzel, President of Northern Galaxy Corporation noted that  America has lost some 2 million jobs to China, but what the news reporters have not mentioned is that China has lost 15 million jobs to other “lower cost” nations.  In 2010, there were 90,000 strikes in China, although they never received any news coverage.  Supply chain risks in overseas companies have to build inventory to compensate for the distance between manufacturing companies and their end markets, which says goodbye to J.I.T. The  industrialization challenge that China faces is a lack of infrastructure and that foreign markets need a local supply chain, which facilitates quicker production and time to market.

Martin J. Claessens of the U.S. Department of Commerce & Mary Roberts of the Illinois Department of Commerce and Economic Opportunity gave their pitches to use the government’s help in approaching foreign markets, so I won’t repeat those here.

Mona Pearl, Founder & COO of Beyond A Strategy encouraged people to understand the unpredictability of different cultures, and that many cultures have developed around limited resources and knowledge, specifically the eastern nations that were governed under communism.  If a centralized style of governance is all someone ever knew from generation to generation, that thinking will take generations to change.

Milomir Ognjanovic, Economic Advisor to Consulate General of Republic of Serbia stated that the war of the 1990’s made the Serbs very tough, and less tolerant for undisciplined and privileged cultures.  This inclusive and independent demeanor resulted in Serbia acquiring a high amount of natural resources and incurring no real debt.  Serbia has petitioned for acceptance into the EU in 2011, but by joining the EU, they’ll have to open their borders to others that they might not want to work with. This is not because they do not like others within the EU, but because of their independent, inclusive nature and violent recent history.

Dr . Robert Donnorummo of the University of Pittsburgh intimated that countries in southeast Europe have not been doing as well as central Europeans because Southeast Europeans are farther from their main consumer goods market, Germany.   Privatization is necessary for capitalism within the region but that it may not be enough.  There must be an infrastructure based on laws, knowledge of contract negotiations, terms and conditions, for relations to exist.   Russia produces 1/3 of all natural gas and oil in that region, and no matter how independent one may be from the other, there will always be a common thread between Eastern Europe and Russia.  Europe needs Russia’s oil and gas. Russia needs Europe’s money. As long as those needs exist, so will the concept of trade.

Thanks Dean!

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financial markets in Japan

Friday 11 March, 2011

It’s not without huge irony that’s not lost on me that it’s today that I post this on the day of 1 of Japan’s worst natural disasters.  I submit this today simply to inform people about a country which I think gets far too little press as 1 of the largest economies in the world.  Anyway, here’s my report on an event I attended a couple of weeks ago WHERE TO INVEST IN JAPAN IN 2011 which was sponsored by the Japan America Society featuring Dave Baeckelandt of  Segall Bryant & Hamil, Drew Edwards of Advisory Research Inc., & Nick Ronalds of FIA Asia. Here’s what they presented:  Where_to_Invest_in_Japan_2011 & Dave Baeckelandt expanded upon his presentation a bit here Baeckelandt_Invest Japan Talk 2011 Feb 24 . Ken G Kabira moderated the panel, which reconvened most of the principals I wrote about a couple of years ago here .

You can check out the presentations for most of what was said.  I’ll focus on Q&A here that’s not included in the presentations.

  • what are value stocks that become growth stocks changes quarterly
  • if you believe in leveraging emerging market’s growth, Japan gains access to them at better valuations, i.e. Japan is the largest trading partner with China, Malaysia, Indonesia, etc.  Japan’s margins are only 2.9% on domestic businesses, but 5.6% in Asia vs. 4.8% in the US.  Japan also leads the US, Germany, & the world in investment in R&D/GDP with a positive patent income balance since 2003.  It’s not losing it’s competitive advantage vs. these competitors because only 28% compete directly against products from these countries.
  • if the number of pages of information is any indication, there is more disclosure in Japan than in the US.  Starbucks IPO generated 50 pages of legalese in the US & 80 pages of a more detailed prospectus in Japan, including the names & addresses of shareholders.  This was helpful in evaluating a gambling machine opportunity which didn’t look as good after perusing some shady investors involved.  Comparing risk factors is still difficult despite tons of information available from industry associations.
  • private equity has been organized in Japan since the 1700’s when family organizations lent to help cash flow.  Collective investors serve as investor groups that invest in everything.  Conglomerates provide seed capital for some companies.  Keep an eye on Nomura & Carl Kay for more info.
  • Shinsei Bank provided the biggest private equity story of a distressed company that was acquired by foreign investors which created a backlash when it was flipped for a profit.  The next 10 years will be different from the last 10, exampled by Nippon Steel’s merger with Sumitomo, which will squeeze redundancies in a Japanese way.  Now that we’re in the 3rd generation of succession after World War II, we could see a wave of mergers.
  • Toyota is in it’s own interplanetary galaxy & has a corporate culture different from that of Honda.  Accidents happen even @ Toyota & they did get some bad PR advice, but their ability to learn is a positive.  Sony had a similar problem in growing so big so quickly, but was different when they failed to combine their content with technology when combating Apple & Samsung, which now outsells all Japanese electronics companies combined.
  • Acquiring innovation (& R&D) is important in M&A, but you have to question it’s ROI.
  • The CFO from Molex chimed in that while Japan’s value is now in hard assets & not as much in it’s brands, the market values on Chinese companies are based more than anything on their future prospects.
  • It’s possible to bump up valuations by listing on other exchanges, but governments are taking a look @ this.
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FT: Invest in Canada

Tuesday 8 March, 2011

The Financial Times hosted this event FT Global Investment Series:  Focus on Canada which shed a different light on America’s still largest trading partner.  After Bernard Simon’s (Canada correspondent for FT) opening remarks, Louis Lévesque introduced Canada’s unique opportunity:

  • stable banking system
  • economic growth
  • lowest cost of doing business
  • R&D
  • top export destination for 34 US states
  • bought 4X as much from the US as China
  • IL does $35B in trade with Canada
  • emerging markets are riskier than doing business in Canada
  • Research in Motion, the Blackberry company, is based in Waterloo, ON Canada.

Dennis Gartman, Editor and Publisher of  The Gartman Letter & former Chicago Board of Trade trader, extolled the virtues of investing in Canada, where his fund has its biggest holdings.  His general thrust was, Canada offers a lot of stuff, (such as lots of mineral resources & is the #1 supplier of crude oil to the US) but Canadians need to do a better job of selling them.  Canada has a highly educated productive workforce which consists of graduates of 13 quality universities.  Ports on the Atlantic & in Vancouver support exports.  Canada’s banks are more conservative, didn’t get caught up in real estate investments, & don’t have any “liars loans”, so their banking system is in better shape & are the best capitalized in the G8.  Canada’s political pendulum is swinging right as the comically leftward-leaning mayor of Toronto is out & the separatist movement in Quebec is non-existent.  As America “protected” its ports from foreign acquisition by companies from Dubai, the government in Saskatchewan protected their mines from foreign acquirers, perhaps stifling some investment as well.  Gartman then offered some suggestions to Canadians to help them market themselves better by playing to their strengths:

  • leverage the Canadian passport that is never disdained as the world’s friend
  • focus on mining
  • produce better quality food from agriculture
  • highlight technologies like RIM’s Blackberry
  • spotlight Canada’s educational/university system

Q&A

  • Premier Harper made a bad decision to tax income trusts
  • the volatility of the silver market is scary
  • the Canada-Europe Free Trade Agreement should be done soon
  • until unemployment reaches 8-8 1/2% in Canada, there is no reason to change interest rates-the Bank of Canada does not have the same mandate of other similar central banks which are tightening monetary policy, (except for China, India, & Indonesia)
  • Gartman does not recommend investing in China because he doesn’t trust their accounting

Panel discussion with Jason Gray(JG) of SunEdison Canada, Kevin Lynch (KL) of BMO Financial Group, Mark Mullins (MM) of Veras, Inc.

  • MM-with a balanced budget, no inflation, & low taxes, Canada is set to bloom
  • KL-Canada’s nice reputation is insufficient-it’s diversified well-managed financial system is a better brand as Canada now rates ahead of the US on many economic variables
  • JG-is pleased with their growth in Canada as Ontario is doing it
  • KL-Canada’s oil sands contribute to 5% of greenhouse gases, 1/60 of coal & is the most secure energy source
  • JG-Ontario has bold pockets of innovation in green energy while the US hasn’t grabbed hold

open Q&A

  • KL-generalizations about short-selling, pump & dump schemes, & Sarbox alternatives are dangerous.  Canada’s securities industry is viable & good.  MM-it’s well-regulated with a better division of power more closely aligned with the British system
  • KL-Canada is just as concerned about security in immigration as the US & there has been no change in policy.  Like the US, future population growth will come from immigration.  MM-Is Australia’s point system model better?  Canada seeks foreign students to become “ambassadors” for Canada.
  • MM-Although Canada’s manufacturing world share is declining, they’re not feeling that pain.  The relative strength of the loonie (C$) is sustainable as its relationship with relevant currencies like the OZ$ & Kiwi$ (Australian & New Zealand) currencies stays the same. KL-As long as demand in China & India for commodities remains strong, the loonie will remain strong, but Canada still needs to focus on innovation.  JG-the strong loonie does make it a struggle to export from Canada.  Northern Canadian tigers are taking advantage of the strong loonie in deals around the world.
  • JG-Ontario is investing in green energy, with the goal of getting off coal by 2014.  MM-Green energy is still relatively small, so there’s room for growth.  He wants less subsidies because you can’t base business models on subsidies.
  • KL-the US is Canada’s largest foreign direct investor while Canada is America’s #3 FDI contributor.  MM-the most Americans outside of America are in Calgary, Alberta, who have stayed, invested, & created a dynamic business culture.  JG-Canadian’s risk appetite differs.

Prof. of finance Raghuram Rajam, Univ. of Chicago Booth Business School didn’t talk about Canada much, other than to suggest Canadians focus on their strengths, openness & low taxes.   Just read his book Fault Lines:How Hidden Fractures Still Threaten the World Economy to get his take on the rest of the world today.