Posts tagged ‘finance’


Finance is broken, and we still haven’t learned

26.01.2014

I posted this quotation from I Acknowledge on my Tumblr today:

The news that should have us all worried is: the derivatives market contains $700trn of these debts yet to implode.
   Global GDP stands at $69·4trn a year. This means that (primarily) Wall Street and the City of London have run up phantom paper debts of more than ten times of the annual earnings of the entire planet.

   It brings me back to one of the first things we ever wrote in the Medinge manifesto: ‘Finance is broken.’ Attempting to value companies using shares or financial statements can be a mugs’ game—and that was in 2002, before the market became so improbable.
   If only we knew how much worse things would get. And we thought, in the immediate post-9-11 period, that we would be learning the lesson about a Dow that was well overvalued. History has shown that we didn’t. And the most recent recession hasn’t corrected things: we’re still sitting on a time bomb.
   We wrote in the manifesto, ‘We believe money is a poor snapshot of human value. Brands, however, create value. The branding industry is about creating value for our customers. It makes more sense to measure the ingredients of branding and relationships.’
   It’s an ideal, and one with its own problems, too. But I know that part of the finance industry has failed us through its greed. I’m not too certain how their deeds and those of these British forgers differ, creating “wealth” backed by nothing.

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Posted in business, globalization, UK, USA | No Comments »


Small is beautiful, whether it’s a company or a country

07.04.2012

My friend Summer Rayne Oakes at Source4Style put me on to an article in The Guardian by Ilaria Pasquinelli, on how small firms drive innovation. If the fashion industry is to survive, she says, it must team up with the small players where innovation takes place, thanks to the visionaries who drive those firms.
   She’s right, of course:

The small scale allows companies to be flexible, this is crucial in order to adapt to very diverse market conditions and economic turbulence.
   In addition, small companies have no other option than to take risk in order to leave their mark, notably if they are start-ups. Small companies habitually lack financial resources though, and it is precisely here where larger organisations can decide to take on a calculated risk and allocate some of their funds, in order to outsource processes, products or development.

   Therefore, it’s important not just to foster the growth of small creative businesses, but entire networks where they can come into contact with the larger ones. And the successful cities of the 21st century are those that can do that through clusters, clever place branding, and a real understanding of what it takes to compete at a global level.
   We’re still largely hampered by politicians who cannot see past their own national boundaries or, at best, look at competing solely with a neighbouring nation, when that has not been the reality for at least 20 years.
   There are exceptions where companies themselves have done the environmental scanning and found organizations to collaborate with—such as the ones Ilaria mentions in her article. But there’s no practical reason other than a lack of vision that they are the exception rather than the rule.
   She gives three examples: Tesco collaborated with upcycle fashion brand, From Somewhere, to use textile waste, which has seen three collections produced; Levi’s is refitting vintage 501s with Reformation, so customers know their old jeans aren’t going to a landfill; and Worn Again, partnering with Virgin, Royal Mail and Eurostar, is making bags out of the likes of postal workers’ decommissioned storm jackets.
   The innovations, of course, need not be in fashion or even sustainability. Look back through the last generation of innovations and many have come from smaller companies that needed the right leg up. Google, too, was started in someone’s home.
   I’ve been pushing the “think global” aspect of my own businesses, as well as encouraging others, for a lot of the 25 years Jack Yan & Associates has existed. It’s why most of our ventures have looked outside our own borders for sales. When we went on to bulletin boards for the first time at the turn of the 1990s, it was like a godsend for a kid who marvelled at the telex machine at my Dad’s work. It’s second-nature for anyone my age and younger to see this planet as one that exists independently of national borders, whether for trade or for personal friendships.
   As this generation makes its mark, I am getting more excited—though I remain cautious of institutions that keep our thinking so locally focused because that is simply what the establishment is used to. Yet it’s having the courage to take the leap forward that will make this country great: small nations, like small companies, should be, and can be, hotbeds of innovation.
   Create those clusters, and create some wonderful champions—and the sort of independent thinking Kiwis are known for can go far beyond our borders.

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Posted in branding, business, leadership, media, New Zealand, politics, Wellington | 1 Comment »


Endgame: Saab files for bankruptcy

19.12.2011

If you’re a car nut, then you won’t be mourning, too much, the passing of former Czech president Vaclev Hável. Or, for that matter, Kim Jong Il. It’s Saab that has finally died as it files for bankruptcy after GM, which still licenses key technologies to the Swedish firm, vetoed its sale to Zhejiang Youngman Lotus Automobile.
   GM has a JV with SAIC, the Shanghai automaker, and believes that if those technologies were to find their way into the hands of a small upstart Chinese rival, it wouldn’t be to its advantage. Saab, which had been teetering on collapse since March, when it first stopped production, decided to call in the receivers today.
   GM had issued a statement at the weekend, saying, ‘Saab’s various new alternative proposals are not meaningfully different from what was originally proposed to General Motors and rejected … Each proposal results either directly or indirectly in the transfer of control and/or ownership of the company in a manner that would be detrimental to GM and it shareholders. As such, GM cannot support any of these proposed alternatives.’
   Swedish Automobile, the parent company of Saab, responded, ‘After having received the recent position of GM on the contemplated transaction with Saab Automobile, Youngman informed Saab Automobile that the funding to continue and complete the reorganization of Saab Automobile could not be concluded.
   ‘The Board of Saab Automobile subsequently decided that the company without further funding will be insolvent and that filing bankruptcy is in the best interests of its creditors.’
   GM, in the two decades in which it owned Saab, failed to turn a profit with the brand. However, its parting gift, the new 9-5 saloon, was heralded by some fans as a return to form for the company. Hopes were high for it, and the 9-4X crossover, helping Saab back into a position of strength.
   It’s easy to do a post mortem now, but the failure could be levelled at GM’s misunderstanding of the Saab brand. It may have been sensible to shift Saab models on to Opel platforms for economies of scale, but, in doing so, the cars lost some of their character. The lowest point was when GM created a rebodied Subaru Impreza and called it the Saab 9-2X, which fooled few buyers—one has to remember that Saab buyers tended to be well educated. Saab never fitted well in a business which targeted the mainstream: its own cars were always bought by people who enjoyed their quirkiness and the fact they did not follow convention.
   GM only understood this when it was far too late, as the last two models demonstrated.
   When GM itself had to file for bankruptcy protection in the US in the late 2000s, Saab, Pontiac, and Saturn were the victims.
   When Saab was sold to Spyker, its boss Victor Muller invested heavily into the business to try to turn it around—but he, and other investors, would have lost tremendously today. Saab fans will likely remember Muller favourably—after all, he put his own money into the business and shared his supporters’ passion—but in a world where break-even points are at hundreds of thousands of units, Saab’s 30,000 in 2010 were never going to be enough. MG Rover Ltd. collapsed with 2004 sales of 115,000 in 2005.
   As hindsight is 20-20, Saab and Youngman might be accused of wishful thinking, believing it to be unencumbered by GM’s IP rights. However, the American business held the right of revocation over key licences that make up Saab’s 9-3, 9-4X and 9-5 models.
   It’s not the first time intellectual property has got in the way of car businesses. One of the most famous examples was BMW arranging with Rolls-Royce trade mark owner Vickers plc to license the brand for motor cars, as Volkswagen negotiated to buy the Rolls-Royce Motors business. And all Volkswagen really had to do to find this out was visit the Rolls-Royce website home page at the time: right at the bottom, stated clearly, was the message that the Rolls-Royce brand was licensed from Vickers plc.

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Posted in branding, business, cars, China, design, marketing, Sweden, USA | 3 Comments »


Occupy, the brand

27.11.2011

Serious! "Occupy Wall St"
VBlessNYC, under Attribution-NoDerivs 2.0 Generic

It was in the fourth quarter of the year that Occupy became a brand. Just capitalize it, and everyone knows what you mean. The original geographical indicator of Wall Street disappeared—to be fair, it began disappearing when similar protests began happening across the United States and then, the world—but I’ve only noticed in the last few weeks that the simple utterance of the word Occupy brought with it a multitude of values. That’s what a brand does: it’s shorthand or code for a range of associations.
   But what associations? If one believes some of the media, then Occupy is unfocused, with its protesters simply upset at the status quo. Others see it as an attack on the technocratic agenda and the multiple facets they possess, whether it’s the financial system being broken (something Chris Macrae brought up at my first Medinge meeting back in 2002) or corruption in politics.
   The truth, at least initially, was probably somewhere in between. I never believed Occupy was one where there was some “protester class” (at least one media outlet believed that), and that its members came from a cross-section of society, even if a few of the international protests brought out a few of the usual suspects from antiestablishment groups. It was clear, early on, certainly from the social networks that brought more direct news than the mainstream corporate media, that everyday people were involved. To me, the most poignant images were probably that of retired cop Capt Ray Lewis getting cuffed by the NYPD.
   However, there were so many conflicting emotions at Occupy that it would be hard to sum up just what people opposed. Maybe it was very hard to voice because there are so many parts to the system that they see is broken. I know when we did our post-Enron session at Medinge, we probably had three dozen Post-It notes on a whiteboard summarizing what we thought was wrong with the business system. They were then synthesized into eight points, not without some effort.
   As the protests wore on, the synthesis has taken place. It’s not an unusual phenomenon: gatherings of people can take time to figure out, through dialogue, what their common grounds are. Better doing it this way, codifying through dialogue, than having a set of values imposed on you from above: it’s a way to preserve authenticity in the movement. A good set of values that represents an organization, in a formal, corporate setting, is usually the result of in-depth research into staff, channel members and external audiences. In the branding world, especially with social networks empowering communications, it makes more sense to harness people’s thoughts through the technology we have at our disposal.
   It was interesting reading what Naomi Wolf had to say about Occupy in The Guardian. The crux of her article is not about brand whatsoever—she highlights potentially dangerous patterns as crackdowns take place and their implication for the US—but read on and she finds out there are certain things that Occupy wants through simply asking its supporters online:

  • get the money out of politics (e.g. ‘legislation to blunt the effect of the Citizens United ruling, which lets boundless sums enter the campaign process’);
  • ‘reform the banking system to prevent fraud and manipulation, with the most frequent item being to restore the Glass-Steagall Act … This law would correct the conditions for the recent crisis, as investment banks could not take risks for profit that create kale derivatives out of thin air, and wipe out the commercial and savings banks’;
  • ‘draft laws against the little-known loophole that currently allows members of Congress to pass legislation affecting Delaware-based corporations in which they themselves are investors.’

       No doubt there will be variations of these with Occupy movements in other parts of the planet.
       I don’t know Ms Wolf’s processes, or how academic this Q&A was, but perhaps that is not the question here. What we should realize is that the movement is taking a more defined shape, and the media’s contention that this is something unfocused is getting weaker by the day.

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    Posted in branding, business, culture, internet, media, politics, USA | 2 Comments »


    Today’s adventures with US dollars and New Zealand banks

    14.11.2011

    National Bank Asian Banking
    Above: I’m Asian, and I want banking. National Bank gets me again. (For that story, click here.)

    Out of the businesses I have, one is unincorporated, and it has a US dollar bank account based in New Zealand. Over the years, it’s been at numerous banks, and was at the ANZ.
       Until the ANZ began charging a deposit fee for foreign cheques. It seems that the ANZ does not understand the basic principle that a deposit is a loan by the customer to the bank. I would only accept such a fee if, when borrowing money from the bank, I can charge it a Jack Yan Is Good Looking and Humble fee, but, alas, the bank said it would not accept such a term, nor such an outrageously false name.
       So the account went over to the TSB, still my preferred bank by some margin, but it would have to be a term deposit—that was the rule back in 2006. However, I was advised that it could be turned into a call account, which sounded closer to what I had at the ANZ, but without the ridiculous deposit fee. That would work for me—plus I needed an account where I could deposit US dollars and not be a two-time loser on the exchange rate when depositing and withdrawing money because of using a Kiwi account as an intermediary.
       Unfortunately, the rules have changed. TSB will only open a new account for foreign currency for legal persons, and an unincorporated business is not a legal person. That’s fair enough, though it doesn’t help me. HSBC, for whom TSB acts agent, is in the same boat after I enquired there today about its market currency account. However, I should note that, unlike many other businesses, I had a competent person on the phone who could answer all my questions with only a total of one minute on hold.
       So, what are the alternatives? After visiting several banks, I don’t believe I have any answer.
       Kiwibank, a division of Johnny Foreigner Bank (2013) Ltd., did not know. The teller believed that I might be able to, but it was done over the phone, not in person. She was unsure how I could deposit cheques over the phone. I couldn’t find the slot on my phone where I could insert a cheque.
       The National Bank, a division of ANZ, still charges a deposit fee. I was shocked to learn that the fee has increased to NZ$15. I was pretty sure it was NZ$5 when I left the ANZ group. Stuff that. Enough horsing around.
       The BNZ, a subsidiary of yet another Australian bank, was unable to advise me whether I could open an account without my making an appointment.
       I have yet to try Westpac, where Lucire Ltd. has its account here, but Lucida turns me off. I may have to check them out next, but I would really prefer a New Zealand-owned bank. As I write this, I realize there’s also the Auckland Savings Bank, also owned offshore, but they may be able to accommodate me (goodness, a decade of Goldstein and it’s still not in my consideration set?). Might have to be a trip into Bay Road tomorrow.
       Where does John Key keep his $50 million? Maybe that’s where I should put these funds.

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    Posted in business, humour, New Zealand, USA, Wellington | No Comments »


    Taranaki food shop must be a front for international finance

    02.02.2011

    In the Fairfax Press today, this story: ‘Food shop protest “racist”’.
       From what I can make out from this story, New Plymouth District Councillor Sherril George (her address, telephone number and email are here) has been urging people to boycott a Waitara food outlet run by some folks of Cambodian ethnicity.
       This business, Town & Country Foods, says it has employed New Zealanders to get it up and running, some neighbouring businesses say it has brought extra custom to the street (though the Hot Bread Shop has seen its sales dip 50 per cent), yet Councillor George claims that it does not support ‘the local community’.
       Most Taranaki residents support the business, which is heartening. One person in the article says Councillor George has a personal vendetta and it’s to do with the extra competition her own food business faces.
       My concern is this quote which she provided to John Anthony:

    This is nothing to do with my shop. This is to do with the health of our town and the economy. I’m trying to make other small communities aware of what happens when these people move in. There are 14 food stores here in Waitara and one comes in here and kills it for everyone else.

       Now, I’m sure she knows that the owner is a gentleman called Hoyt Khuon, so what’s with that third sentence?
       Who are ‘these people’?
       Would the Councillor care to elaborate? She is, after all, getting called out and being labelled a racist by one person in the article, and I’m sure she’d like to deny that charge.
       From what I read in the article, Mr Khuon employed locals to set up his business and is employing locals to work in the business. I only know the story second-hand, but how is this ‘bleeding the town dry’ when it’s a local business, owned locally, and paying taxes locally? It’s not as though the profits are all being siphoned offshore.
       If that’s her problem, there are plenty of other businesses she needs to stand outside. Will she monitor the fruit juice aisles at New World and demand that no one buys Just Juice because it is Japanese-owned? Will she stop deliveries of Wattie’s products to Waitara because of its ownership by H. J. Heinz of Pennsylvania? Will she stop giving quotes to the Fairfax Press because it is Australian-owned? There are bigger businesses she needs to take on if she is truly concerned about the health of her ‘town and the economy’.
       For years, I’ve been voting with my dollar on how I spend, so the argument about supporting New Zealand businesses resonates with me—and Town & Country appears to be a legitimate New Zealand-registered, tax-paying business.
       Unless she provides the Taranaki and, now, the New Zealand public with how Mr Khuon’s business is a front for international financial traffic, her arguments appear deeply unconvincing—and only lend weight to the charge of racism that one resident has levelled at her.

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    Posted in business, culture, media, New Zealand, politics | 4 Comments »


    Learned misbehaviours

    17.01.2010

    Jack Yan at Proton Business School, IndorePreparing for one of my Swedish speeches, I came across this, which I delivered in India in December 2008:

    If you ever get to read Michael Lewis’s writings about the US financial industry, you’ll learn that a lot of people within there do not know what they are doing or why they are doing it. There is just a series of coded behaviours and no one remembers the reasons behind it …
       If you can separate what is being done because of learned behaviours—or should I say misbehaviours—and what is being done because the principles are correct, you have already come a long way in dealing with international business.
       The only way to break the cycle is to communicate with people, and get them as passionate about your brand as you are about it. Because you might just discover that despite more entrenched companies operating in your industry, they may well be helmed by management who do not care or do not remember just what their brands stand for.

       This is exactly where ‘having council experience’ has got Wellington. It is a crash course in learning misbehaviours. And the more you learn, the less relevant you become to Wellingtonians as a representative of the city.
       This is why I am heading over (on my own money, I should add): to get even more world-class examples and create even more networks should I be elected mayor.

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    Posted in branding, business, culture, India, New Zealand, politics, Wellington | 3 Comments »