Showing hello: 15 ways people greet each other around the world

A tourist meets a local farmer in Chiang Mai, Thailand, offering a traditional “wai” greeting.  IMAGE: HUGH SITTON/CORBIS

There are a number of ways to say hello around the world, and just as many ways to show them.  These traditional greetings, ranging from region to region, have developed into cultural norms — often to show respect. Take a peek at this helpful infographic made by Two Little Fleas, showing us the different ways people from all over the globe greet one another. And if you’re planning a trip anytime soon, take notes so you’re not lost in translation.READ MORE

Bracing for Another Storm in Emerging Market

By Kevin Gallagher, Associate Professor of International Relations at Boston University. Triple Crisis

In 2012, Brazilian President Dilma Roussef scolded U.S. Federal Reserve Chairman Ben Bernanke’s monetary easing policies for creating a “monetary tsunami”: Financial flows to emerging markets that were appreciating currencies, causing asset bubbles, and generally exporting financial instability to the developing world.

Now, as growth increases in the United States and interest rates follow, the tide is turning in emerging markets. Many countries may be facing capital flight and exchange-rate depreciation that could lead to financial instability and weak growth for years to come.

The Brazilian president had a point. Until recently U.S. banks wouldn’t lend in the United States despite the unconventionally low interest rates. There was too little demand in the U.S. economy and emerging market prospects seemed more lucrative.

From 2009 to 2013, countries like Brazil, South Korea, Chile, Colombia, Indonesia, and Taiwan all had wide interest rate differentials with the United States and experienced massive surges of capital flows. The differential between Brazil and the U.S. was more than 10 percentage points for a while—a much better bet than the slow growth in the United States.

According to the latest estimates from the Bank for International Settlements (BIS), emerging markets now hold a staggering $2.6 trillion in international debt securities and $3.1 trillion in cross border loans—the majority in dollars.

Official figures put corporate issuance at close to $700 billion since the crisis, but the BIS reckons that the figure is closer to $1.2 trillion when counting offshore transactions designed to evade regulations.

Now the tide is turning. China’s economy is undergoing a structural transformation that necessitates slower growth and less reliance on primary commodities. Oil prices and the prices of other major commodities are stabilizing or on the decline. It should be no surprise then that many emerging-market growth forecasts are continually being revised downward. Meanwhile, growth and interest rates are picking up in the United States. The dollar gains strength; the value of emerging market currencies fall.

Some analysts predict that emerging-market and developing countries can weather the storm through floating exchange rates, the development of local bond markets, interest rate hikes, or by using some of their foreign exchange reserves. These tools are important, but may not be available or enough.

Floating exchange rates and resulting depreciation can cause the debt burden of firms and fiscal budgets to bloat overnight. Given that most of the capital inflows were in dollars, depreciating currencies mean that nations and firms will need to come up with ever-more local currency to pay debt—but in a lower growth environment.

What is more, most countries didn’t properly invest their commodity windfalls into increasing the competitiveness of their industries. Thus, exports may not pick up at all. An IMF study shows that while Latin America saw one of the biggest commodity windfalls in its history, it has the least to show for it in terms of savings or investment relative to other booms. What is more, the massive exchange rate appreciation that occurred as a result of the tsunami in short-term inflows made many industries uncompetitive and pulled them out of key global commodity chains.

Thus, weak currencies and more debt may be apt to lead to falling confidence rather than surges in exports that will help their countries adjust to the new shocks.

Local bond markets help, but most debt is indeed in dollars and most local debt is held by foreigners who are always the first to dump such debt for foreign shores. Interest rate hikes can also be dangerous. They are often not enough to reverse the flight to the U.S. and can choke off what little growth there is to be had in a downturn. Depleting foreign exchange reserves doesn’t always work, and non-Asian countries whose reserves are a function of the commodity boom will be reluctant to disperse such reserves in the wake of commodity price declines.

The problem is that too many countries failed to regulate during the boom and instead let capital flows storm into their countries to bloat balance sheets and currency values. They are left with increasing debt as currencies slide, and not enough competitiveness to benefit from currency depreciation. The result could be more financial instability that could further threaten prospects for growth and employment.

Emerging-market and developing countries may need to resort to regulating the outflow of capital alongside these other measures. Such moves have traditionally been shunned by international institutions and capital markets alike.

New research on the cutting edge of economics and by the IMF now justifies the regulation of capital outflows to prevent or mitigate a full-blown crisis. The IMF was bold in recommending the regulation of inflows during the surge, but has shied from noting the utility of regulating capital in flight. Worse, new U.S. trade agreements such as the Trans-Pacific Partnership have stripped out balance-of-payment exceptions that would have allowed nations to regulate capital.

If we have learned anything from the global financial crisis it is that nations need as many tools at their disposal to prevent and mitigate financial instability. Instability anywhere can lead to instability everywhere so let’s make sure all tools and hands are on deck.

Brazil’s Economy Seen in a Major Downturn – time to look beyond the BRICS?

Although so-called BRICS have still have massive expansion potential, entering those countries today is fraught with additional risk and the rewards for direct investors may be more elusive than ever.

Over the last 12 months the Broad Street Capital Group and Fluent In Foreign Business, have guided their clients to expand into a number of attractive new smaller emerging markets. So far the predictions have been dead on and we still continue to maintain that for those seeking interesting international opportunities, it’s time to look at the next wave of emerging smaller markets around the globe.

New Data Suggest Growth Weakened Over Past Two Quarters

Brazilian President Dilma Rousseff giving a speech on Monday Agence France-Presse/Getty Images

Brazilian data released Friday suggest economic growth has weakened over the past two quarters, illustrating how far a country once considered the darling of emerging-market investors has fallen.

The central bank’s economic activity index fell 1.35% in December from November, dented by a drop in industrial production and weak retail sales. Economists say the data mean the government is likely to declare that economic growth declined in the year’s last quarter after contracting 0.5% in the third period, suggesting the country had entered a technical recession.

Although preliminary data suggest the economy will grow again in the first quarter, a dip into a recession would be a major turnaround for an economy that grew 7.5% in 2010. As China’s growth has slowed and prices for commodities like the soy and iron ore that Brazil exports have cooled down, the country has found itself without an external engine for its economy.

Brazil’s economic performance today is a far cry from its emerging-market peers China and India, which are still growing strongly despite their slowdowns. The collective cooling of the markets has been an unexpected setback for many, particularly consumer companies that invested heavily in these countries in recent years, relying on them as a cushion as demand slowed in developed markets.

 Economists now expect Brazil’s economy to grow as little as 1.5% this year, less than the 2.3% estimated growth for 2013.

The contraction comes as President Dilma Rousseff gears up for a re-election year amid challenging economic conditions at home and abroad. Mass street protests over rising prices and poor public services racked the country in June and have continued on a smaller scale in the largest cities as the country is struggling with preparations to host the soccer World Cup this year.

“My company laid off 12 people last month. We’re almost closing our doors. A lot of stores here have already closed because people can’t make rent,” said Angela Marques, 39, manager of an electronics wholesaler in downtown Rio de Janeiro. She isn’t hopeful that the World Cup will turn things around.

Ms. Rousseff’s popularity has rebounded after falling sharply during the protests, which were sparked by a decision to raise bus fares. But the slowdown adds pressure on her administration, which won popularity by continuing her predecessor’s policies, including expanding social welfare and granting billions of dollars in loans through government banks, fueling consumption.

Consumption remains a growth driver, but even so, retail sales grew only 4% in 2013 from 2012. That is the worst performance since 2003, leading economists to believe Brazil will no longer be able to depend on consumption to drive growth.

Geraldo Mello, manager of a large mall in Brasilia called Brasilia Shopping, said sales grew 20% to 35% each year until 2008, but only 10% last year.

Consumers “accumulated debt with mortgages, new cars and other items and now their budget is tight.…They are insecure about the future, so they hold off on spending,” Mr. Mello said.

Investments are expected to disappoint as well. A recent survey by Brazil’s National Confederation of Industry showed that private investment intentions have fallen to the lowest level since 2010.

Meanwhile, government investment will be limited as Brasilia comes under pressure to cut spending and Brazilian banks tighten lending after a credit expansion in the past decade.

“Brazil will struggle to see growth of 2% this year,” said Robert Wood, a Brazil-focused economist with Economist Intelligence Unit in New York. “Consumption will be less of a driver for growth and there are no signs that investment is picking up.”

Bruno Roval, a São Paulo-based economist at BarclaysBARC.LN -1.33% said the latest data make it likely he will lower his outlook. “The negative influence will be carried over into 2014. We were expecting a GDP expansion of 1.9% But there is a real chance we will revise that downwards after the GDP results for 2013 and the fourth quarter are released at the end of February,” he said.

Industry has been one of the weakest points of the economy in recent years as output has stagnated, and Brazilian manufacturers have struggled to compete with international rivals.

“The ongoing situation in Argentina may have a substantial impact on Brazilian industry, as over three-quarters of Brazilian exports to Argentina are manufactured goods,” said economists at Nomura Securities in a note.

The silver lining for Brazil is that unemployment rates remain at record lows and wages are growing. Unemployment in six of Brazil’s largest metropolitan areas dropped to an average of 5.4% in 2013, from 5.5% in 2012, according to the Brazilian Institute of Geography and Statistics. Average monthly wages rose 1.8% in real terms.

But persistently high inflation continues to squeeze Brazilian consumers. Last week, Brazil said annual inflation in January was 5.59%, above the central bank’s target of 4.5. As a result, the central bank has gradually raise interest rates, a move that could slow growth even more. The central bank has raised its base interest rate to 10.5% from 7.25% in the past year.

“The main problem I see is not a cooling of the economy,” said Davi Alves, 24, the sous-chef of a high-end restaurant in São Paulo. “The problem I see is of high prices. Everything, from cars to homes, is expensive.”

—Rogerio Jelmayer, Paul Kiernan and Matthew Cowley contributed to this article.


U.S. Growth Picture Brightens as Exports Hit Record

Energy Boom Helps Narrow Trade Gap

WASHINGTON—A booming U.S. energy sector and rising overseas demand brightened the nation’s trade picture in November, sharply boosting estimates for economic growth in late 2013 and raising hopes for a stronger expansion this year.

U.S. exports rose to their highest level on record in November, a seasonally adjusted $194.86 billion, the Commerce Department said Tuesday. A drop in imports narrowed the trade gap to $34.25 billion, the smallest since late 2009.

The export gain “is an encouraging sign that the global economy is recovering along with the U.S.,” said Michael Soni, economist at BBVA Compass.

Domestically, the economy has been showing improvement beyond the trade situation. Companies have been hiring at a steady pace across a wide range of industries amid stronger consumer spending, builders trying to satisfy demand for new homes and rising manufacturing output.

Oakworks Inc., a maker of medical, massage and spa tables in New Freedom, Pa., added a second shift in the fall to meet rising demand, said Joe D’Antonio, vice president for international sales.

“That’s related to the fact that demand is increasing, and a good deal of that is from international markets,” he said, citing sales to India, China, Brazil, South Korea and elsewhere.

Oakworks, which has about 125 employees, saw its exports increase about 10% last year and is targeting a 20% to 25% gain for 2014. The company’s tables—a spa table can cost around $5,000 and a high-end medical table as much as $27,000—face competition from less-expensive products made overseas. But many buyers now appear willing to shell out more for higher-quality, higher-priced goods.

“Clearly that is a function of the economy getting better,” Mr. D’Antonio said. “And as a result people have a little more money to spend, to invest in quality. In the past if they didn’t have that money, quality might not be at the top of their list.”

The trade figures led many economists to sharply raise their forecasts for economic growth in the final quarter. Morgan StanleyMS -0.32% economists raised their estimate to an annualized 3.3% from an earlier forecast of a 2.4% pace. Macroeconomic Advisers boosted its fourth-quarter projection to a 3.5% rate from 2.6%.

Fourth-quarter growth at that pace, following a 4.1% annualized increase in the third quarter, would mark the fastest half-year growth stretch since the fourth quarter of 2011 and the first quarter of 2012.

The falling U.S. trade deficit in large part reflects rising domestic energy production. U.S. crude output has increased about 64% from five years ago, according to the U.S. Energy Information Administration. Drillers have unlocked vast amounts of oil from dense layers of rock, notably shale in Texas and North Dakota, giving refiners a closer, cheaper supply of crude.

At the same time, the U.S.’s thirst for petroleum fuels has stalled as vehicles become more efficient. As a result, refiners are shipping increasing quantities of diesel, gasoline and jet fuel to Europe and Latin America.

“Not only is the American energy boom underpinning export growth, it is reducing American demand for foreign oil,” said Jay Bryson, global economist at Wells Fargo.WFC -0.04%

Petroleum exports, not adjusted for inflation, rose to the highest level on record in November while imports fell to the lowest level since November 2010.

If recent trade trends continue, Mr. Bryson said net exports could add one percentage point to the pace of GDP growth in the fourth quarter. That would be the biggest contribution since the final quarter of 2010.

Rising domestic energy production also helps in other ways, by creating jobs, keeping a lid on gasoline costs and lowering production costs for energy-intensive firms. As a result, consumers have more to spend elsewhere and businesses are more competitive internationally.

But it isn’t yet clear that the momentum is sustainable. Economic growth has been choppy since the recession ended in June 2009, with consumers and businesses often jittery.

Some economists already are warning about runaway expectations. “I think 2014 will be better than 2013,” said Michael Moran, chief economist at Daiwa Capital Markets America. “But my view is we are not ready to break out into vigorous growth.”

One impediment has been weakness in Europe, Japan and some emerging markets, which had held back U.S. exporters during different parts of the recovery. Net exports made big contributions to the economy in 2008 and 2009, but more recently have made only modest additions or been a small drag on growth.

Still, the global economy has shown signs of stabilizing in recent months, leading to more orders for American petroleum and other industrial supplies, capital goods and autos.

U.S. exports are up 5.2% from a year earlier, led by rising sales to China, Mexico and Canada. U.S. exports to China from January through November rose 8.7% compared with the same period a year earlier. Exports to Canada, the nation’s largest trading partner, were up 2.5% in the same period.

Some companies have used overseas sales to offset a weak U.S. market for their products. “For the last two years, international sales have been good,” said Anthony Sexton, director of international sales at Kanawha Scales & Systems. “Not so much domestic.”

The Charleston, W.Va., manufacturer makes machinery to weigh and load commodities like coal, iron ore and potash onto railcars and trucks. Each system typically costs between $2 million and $8 million.

Last year was a tough one for U.S. coal production. But Kanawha’s international sales rose about 8% to 10%, with Colombia, Canada and India all big markets. “Kanawha has been exporting since the mid-1980s…to diversify, so we don’t live and die on the U.S. coal market,” Mr. Sexton said.

—Daniel Gilbert and Ben Lefebvre contributed to this article.

Write to Jeffrey Sparshott at

Cheaper Sugar Sends Candy Makers Abroad

Price Squeeze in U.S. Is Sticky for Confectioners

Despite a prolonged slide in domestic sugar prices, U.S. candy makers are expanding production in other countries as federal price supports and a global glut of the sweet stuff give an ever-greater advantage to foreign rivals.A 50% drop in U.S. sugar prices in the last two years hasn’t been enough to eliminate problems from a longtime price gap between domestic and foreign sugar.

On Friday, the U.S. sugar contract in the futures market settled at 22.28 cents a pound, or 14% higher than the benchmark global price.

Jelly Belly, whose facility in Fairfield, Calif., is shown above, is expandingits factory in Thailand. Bloomberg News
A Jelly Belly portrait of Marilyn Monroe. Associated Press

U.S. prices can’t fall much lower because of a federal government program that guarantees sugar processors a minimum price. The rest of the world also has a surfeit of sugar, but fewer price restrictions, and big growers like Brazil are expecting a record crop for the current season.

The squeeze explains why Atkinson Candy Co. has moved 80% of its peppermint-candy production to a factory in Guatemala that opened in 2010. That means it can sell bite-size Mint Twists to retailers for 10% to 20% less.

“It wasn’t like we did it for profit reasons. We did it for survival reasons,” said Eric Atkinson, president of the family-owned candy maker, based in Lufkin, Texas. “These are 60 jobs down there…that could be in the U.S.,” he added. “It’s a damn shame.”

Jelly Belly Candy Co. is finishing its second expansion of a factory in Thailand that was opened by the Fairfield, Calif., company in 2007. The sixth-generation family-owned firm sells about 20% of its jelly beans, made in flavors from buttered popcorn to very cherry, outside the U.S.

Sugar makes up about half of the ingredients and cost of a typical jelly bean, said Bob Simpson, Jelly Belly’s president and chief operating officer. Thailand is the world’s fourth-largest sugar producer and gives Jelly Belly access to cheaper sugar, labor and other raw materials than the candy maker has in the U.S.

“You can’t compete shipping finished U.S. goods” anymore, Mr. Simpson said. In the U.S., Jelly Belly has had to raise prices “several times” in the past 10 years due to high sugar prices.

Some U.S. candy makers blame the federal government’s sugar policy, set by Congress and administered by the Agriculture Department. Loans, marketing allotments and import restrictions guarantee a minimum price of about 21 cents a pound to domestic sugar processors. Sugar users say the protections inflate wholesale prices, hurt profit margins and sap the competitiveness of U.S. candy makers in the global market.

The price-support program’s defenders say it is an essential safety net for domestic sugar growers and processors besieged by record imports from Mexico. U.S. government-backed loans are the only option for some processors that need access to financing, according to the American Sugar Alliance, an industry group. Without the current U.S. sugar policy, 90% of the 142,000 sugar-growing and processing jobs in the U.S. would be in danger, the industry group estimates. The alliance also says that sugar makes up an extremely small percentage of the retail cost of candy and has little impact on U.S. jobs.

From 2000 to 2012, the average price of U.S. sugar was more than double the world-wide average, according to pricing data from the ICE Futures U.S. exchange, where both the U.S. and global contracts are traded, and the Agriculture Department.

Total U.S. confectionary-manufacturing employment sank 22% to about 55,000 jobs in 2011 from 1998, according to an analysis of U.S. Census Bureau data by The Wall Street Journal. The number of industry manufacturing locations fell 7.7% to about 1,600 in the same period.

Three candy-making jobs are lost for each sugar-growing and processing job saved by higher sugar prices, according to a Commerce Department report in 2006.

In a sign that candy makers are taking advantage of lower sugar prices elsewhere, the amount of sugar contained in imported products surged 33% from 2002 to 2012, according to the Agriculture Department.

For many types of candy, there is no substitute for sugar. The gap has caused some U.S. companies to abandon their longtime resistance to moving at least some production to cheaper countries.

Candy-cane maker Bobs Candies Inc. moved half of its manufacturing to Mexico between 2001 and 2002 from the family-owned company’s hometown of Albany, Ga. The remaining 250 jobs left after the company was sold in 2005 to Farley’s & Sathers Candy Co., now called Ferrara Candy Co. “No one cared if [the candy canes] were ‘made in the U.S.A.’ They just cared if they were cheaper,” said Greg McCormack, who ran Bobs Candies at the time. Eliminating candy-making jobs in the U.S. left “a bad taste in your mouth, but it was the medicine you had to take to stay in business.”

Financial pressures have grown because rising costs for labor, utilities, packaging, freight and health care in the U.S. make it impossible to lower candy prices when the cost of sugar drops, some candy makers said.

“There are years where we are at a great disadvantage to the world users of sugar when prices are rising,” said Pierson Bob Clair, president and chief executive of Brown & Haley, a Tacoma, Wash., candy maker that produces 55,000 pounds of Roca butter-crunch candy a day in the U.S. Mr. Clair said he would “lower the price of my products” if the sugar program was eliminated. Proposed legislation to overhaul the sugar program was narrowly defeated in the House and Senate earlier this year, and aides to lawmakers don’t see any changes in the coming farm bill.

Goetze’s Candy Co., a 118-year-old, family business in Baltimore that sells caramel candy under the Caramel Creams and Cow Tales brand names, would rather close its factory “before we move it out of the country,” said Mitchell Goetze, president and chief operating officer. Still, “when you’re selling a $1 bag of candy, it’s hard to be competitive and absorb these costs.”

Atkinson’s move to Guatemala didn’t affect production of brands such as the Chick-O-Stick and Coconut Long Boys because they contain less sugar than Mint Twists. They are still made in the U.S. But the individually wrapped peppermint candies, made with natural cane-sugar syrup and peppermint oil, are 60% sugar. Less than one-fourth of the candy maker’s total production has been moved outside the U.S., but the percentage being produced abroad is growing, said Mr. Atkinson. The foreign expansion, including a second shift just added at the factory in Guatemala, helps the company sell its products at lower prices that appeal to larger retailers.

“We would prefer to be able to make candy in the United States,” he said.

The Breakdown of the BRICs

We at Fluent In Foreign have been recommending to our readers to look beyond the BRICS for over a year. Now Bloomberg sums up latest market events, which fully validate our recommendations.

Bloomberg/Business Week

Is the decade-long BRIC dream over?

Bloomberg reports that capital flight from Brazil, Russia, India, and China has sent their bonds, currencies, and stocks down together for the first time since 2006.

Since 2003, when Goldman Sachs (GS) predicted this league of developing economies would join the ranks of the world’s biggest, the MSCI BRIC Index has returned about 227 percent; this year, however, it’s trailing the Standard & Poor’s 500-stock index by the most since 1998. From 2005 through last year, investors piled $52 billion into BRIC mutual funds, according to research firm EPFR. This year investors have yanked $13.9 billion from the category.

Anything BRIC seems to be struggling. Last quarter the MSCI BRIC Index fell 12 percent; BRIC government bonds lost an average of 0.6 percent, and their currencies fell 4.1 percent against the dollar. That’s the first time emerging-market stocks, bonds, and currencies have dropped together, according to data compiled Bloomberg going back seven years. China is looking at its weakest annual expansion in more than two decades. India’s current-account deficit has pushed the rupee to an all-time low. Oil’s drop has slowed Russia’s economy for five straight quarters, and Brazil is dealing with poor growth, rising inflation, and street protests.

“Every decade there’s a theme that captures investors’ imagination—the 1970s was about gold, 1980s was all about Japan, and 1990s was about technology companies,” Ruchir Sharma, the head of emerging markets at Morgan Stanley (MS) Investment Management, told Bloomberg News. “Last decade it was about the BRICs. That theme has basically run its course.”

“After years of strong growth, the BRICs are beginning to run into speed bumps,” International Monetary Fund Chief Economist Olivier Blanchard said at a Tuesday press conference.

The selloff could be overdone. The MSCI BRIC Index’s 17 percent drop this year has left it trading at 1.2 times net assets, a 36 percent discount to the MSCI All-Country World Index. This for a group of economies that represented 62 percent of global growth last year, compared with just 11 percent a decade ago.

U.S. government is helping push a different kind of export: rock music.

Uncle Sam Helps Indie-Rock Bands Drum Up Fans Abroad

As U.S. Sales Shrink, Small Labels Look Abroad for Revenue; Seeking Countries Where Listeners Still Pay for CDs

By HANNAH KARP, The Wall Street Journal

The federal government has helped American exporters sell telecommunication systems to Macedonia, tractors to Chad, and elevators to Japan.

Now, the U.S. government is helping push a different kind of export: rock music.


EFE/Zuma PressAmerican music’s share of the global market has waned to 27% from 38% since 1990.

For the first time, the U.S. government’s trade arm is stepping in to help the music business, funding trade missions to Brazil and Asia in recent months for the heads of a dozen independent music labels, which make up one-third of the U.S. music market and represent acts such as the Black Keys and Sonic Youth.

It is a departure for the International Trade Administration, which has been spending $2 million annually to boost exports for the past two decades under its Market Development Cooperator Program but has never before given one of its $300,000 grants to the music industry, instead favoring sectors like machinery, technology and engineering services.

Until last year the agency hadn’t received a music-industry application worthy of the award, an ITA spokesman said. Indeed, it hadn’t received an application at all.

“We need to find new revenue streams,” said Rich Bengloff, president of the American Association of Independent Music, whose idea it was to apply for the grant. He led the trips and arranged meetings with local distributors, mobile-phone carriers, booking agents and ad agencies. “We now need to adjust to a smaller monetization at home.”

Indie labels see big opportunities in Latin America and Asia—and visiting in person pays off, especially in markets such as Japan, where fans favor foreign artists that spend time in their country engaging with locals and making TV appearances.

Many of the independent label heads that visited Seoul, Shanghai and Hong Kong this fall as part of the ITA grant program have since signed foreign distribution and licensing deals that will generate hundreds of thousands of dollars a year, Mr. Bengloff said. The deals could represent as much as a quarter of a small independent label’s revenue, he said.


Alec Bemis, managing partner for the New York indie label Brassland, said as a result of a government-subsidized trade mission, he recently signed digital distribution deals in Korea and Hong Kong, began negotiations to license a song for an Hyundai Motors005380.SE +2.28% commercial and booked festival shows in Hong Kong and Taiwan that will pay five-figure fees.

Exports are part of a survival plan as the music industry struggles to adapt to sweeping transformations in technology. For independent labels, which lack the resources and reach of bigger labels, exports are even more crucial to growth. Moreover, American music’s share of the global market has waned to 27% from 38% since 1990.

U.S. music sales—both digital and physical—totaled $7.1 billion last year, according to the Recording Industry Association of America, down from $11.8 billion 10 years ago.

The music industry has been besieged by growing availability and quality of free music from YouTube, streaming services such as Spotify and Pandora, and illegal pirating. All of those things are pushing down prices of downloads and paid streaming subscriptions, shrinking domestic sales, Mr. Bengloff said.

While those forces are squeezing markets world-wide, the pressure has been far more pronounced in the U.S., where digital sales account for 58% of the music market, according to the International Federation of the Phonographic Industry. Germany, by contrast, buys only 19% of its music in digital format.

Japan, which was half the size of the U.S. market in 1990, could become the world’s No. 1 music market next year, analysts say, thanks to its robust appetite for records and CDs often packaged at premium prices with memorabilia. Digital music accounts for just 17% of Japanese music sales, according to IFPI.

Meantime, such countries as Australia, Canada, France and Britain have been far more pushing their music overseas, cutting into both the domestic and foreign market share of U.S. companies. Those governments have sponsored trade missions and marketing campaigns of their own.

The three major labels—Sony Corp.’s SNE +2.20% Sony Music Entertainment, Warner Music Group and Vivendi SA’s VIV.FR -0.79% Universal Music Group—are well entrenched in most foreign markets because their scale has allowed them to compete in small countries without much appetite for international tunes, said Mark Mulligan analyst at MIDiA Consulting.

But now the majors are focused on expanding their reach in Africa, aggressively signing and developing artists across the continent, which has a vibrant music scene but little musical infrastructure, Mr. Mulligan said. They are also competing to sign artists popular in countries where fans still pay for CDs. Universal, for example, said in April it was joining with Shawn “Jay-Z” Carter to distribute his Roc Nation label, in part because of the rapper’s global appeal.

Brassland’s Mr. Bemis, who returned from the mission to Brazil recently, says after comparing the record stores, club districts and facial expressions of locals at the mention of his bands, he thinks Brazil may prove to be even more lucrative than Asia. In Brazil, “lots of kids are into in Goth rock and hard-core, underground rock forms,” says Mr. Bemis, who spent a day strolling through a six-story São Paulo mall of tiny mom-and-pop shops devoted to rock music, posters and fashion.

Mr. Bemis didn’t ink any deals, but the market research, he says, was invaluable. “I thought, ‘Oh, this could work.'”

BRICS Nations Plan New Bank to Bypass World Bank, IMF

By Mike Cohen & Ilya Arkhipov –

Tomohiro Ohsumi/Bloomberg
The leaders of the so-called BRICS nations — Brazil, Russia, India, China and South Africa — are set to approve the establishment of a new development bank during an annual summit that starts today in the eastern South African city of Durban.

The biggest emerging markets are uniting to tackle under-development and currency volatility with plans to set up institutions that encroach on the roles of the World Bank and International Monetary Fund.

BRICS Nations Plan New Bank to Encroach on World Bank Turf

The leaders of the so-called BRICS nations — Brazil, Russia,IndiaChina and South Africa — are set to approve the establishment of a new development bank during an annual summit that began today in the eastern South African city of Durban, officials from all five nations say. They will also discuss pooling foreign-currency reserves to ward off balance of payments or currency crises.“The deepest rationale for the BRICS is almost certainly the creation of new Bretton Woods-type institutions that are inclined toward the developing world,” Martyn Davies, chief executive officer of Johannesburg-based Frontier Advisory, which provides research on emerging markets, said in a phone interview. “There’s a shift in power from the traditional to the emerging world. There is a lot of geo-political concern about this shift in the western world.”

The BRICS nations, which have combined foreign-currency reserves of $4.4 trillion and account for 43 percent of the world’s population, are seeking greater sway in global finance to match their rising economic power. They have called for an overhaul of management of the World Bank and IMF, which were created in Bretton Woods, New Hampshire, in 1944, and oppose the practice of their respective presidents being drawn from the U.S. and Europe.

Reform Needed

“We need to change the way business is conducted in the international financial institutions,” South African International Relations Minister Maite Nkoana-Mashabane said in a March 15 speech in Johannesburg. “They need to be reformed.”

The U.S. has failed to ratify a 2010 agreement to give more sway to emerging markets at the IMF, while it secured Jim Yong Kim, an American, as head of the World Bank last year over candidates from Nigeria and Colombia.

Finance ministers and central bank governors from the BRICS nations, who met in Durban today, agreed to set up currency crisis fund of about $100 billion, Brazilian Finance Minister Guido Mantega told reporters today. He didn’t give details of proposed funding for the new bank, which Brazil wants established by 2014. The nation’s leaders are due to sign a final accord tomorrow.

FDI Inflows

Goldman Sachs Asset Management Chairman Jim O’Neillcoined the BRIC term in 2001 to describe the four emerging powers he estimated would equal the U.S. in joint economic output by 2020. Brazil, Russia, India and China held their first summit four years ago and invited South Africa to join their ranks in December 2010.

Trade within the group surged to $282 billion last year from $27 billion in 2002 and may reach $500 billion by 2015, according to data from Brazil’s government. Foreign direct investment into BRICS nations reached $263 billion last year, accounting for 20 percent of global FDI flows, up from 6 percent in 2000, the United Nations Conference on Trade and Development said on its website yesterday.

“If they announce a BRICS bank it will be quite something,” O’Neill said in an e-mailed reply to questions on March 15. “At a minimum it symbolizes they can achieve something as political group and means lots of other things could follow in the future. It also means that they will have their own kind of special World Bank, which may aid infrastructure and trade projects.”

Currency Pool

While BRICS leaders may approve the creation of a development bank in principle at the summit, details on funding and operations may take longer to finalize.

Russia favors capping each side’s initial contribution at $10 billion, Mikhail Margelov, PresidentVladimir Putin’s envoy to Africa he said in a March 15 interview in Moscow.

“It will be some time before it will be feasible for this bank to start financing say, a railway project,” Simon Freemantle, an analyst at Standard Bank Group Ltd., Africa’s biggest lender, told reporters in Durban yesterday. “That is some way out.”

Interest rates near zero in the U.S., Japan and Europe have fueled foreign investors’ appetite for higher-yielding assets, driving up currencies from Brazil to Turkey. Brazil has warned of a global currency war as nations take reciprocal action to weaken their currencies and protect export industries.

African Leaders

Brazil’s real has gained 1.9 percent against the dollar since the beginning of the year, while South Africa’s rand has dropped 8.7 percent in the period.

For South Africa, which makes up just 2.5 percent of total gross domestic product in BRICS, the summit is a way to showcase its role as an investment gateway to Africa. President Jacob Zuma has invited 15 African heads of state, including Egypt’s Mohamed Mursi and Ethiopia’s Hailemariam Desalegn, for talks with the BRICS leaders at the summit. For most of the BRICS leaders, it’s also the first opportunity to meet Chinese President Xi Jinping after his appointment on March 17.

“We will discuss ways to revive global growth and ensure macroeconomic stability, as well as mechanisms and measures to promote investment in infrastructure and sustainable development,” Indian Prime Minister Manmohan Singh said in a statement yesterday.

To contact the reporters on this story: Mike Cohen in Cape Town at; Ilya Arkhipov in Moscow at

Double vision: Netflix changes its stripes for foreign markets

By: Sarah Treleaven
From: Business without Borders

A Q&A with the author of “Netflixed”

When Netflix introduced a DVD-by-mail program in 1998, it changed the way people consume entertainment. But now, in an increasingly digital world, Netflix faces a different landscape and increased competition. Gina Keating recently published Netflixed: The Epic Battle for America’s Eyeballs. In this interview with Business without Borders, Keating comments on the impact of leadership styles and why Netflix is finding it harder than expected to go abroad.


comments on the impact of leadership styles and why Netflix is finding it harder than expected to go abroad.

Reed Hastings
Netflix CEO, Reed Hastings
Photo: Getty Images

I understand that several people at Netflix refused to speak to you for this book. How does what you’ve written differ from the company’s preferred mythology?

It’s pretty different. The main thing is, when I started interviewing people about the history of the company, this name kept turning up: Mark Randolph. I had covered Netflix for eight years and this was very curious to me. It turns out that he was one of the main innovators of the consumer interface, of the idea of renting DVDs online. The idea that the concept behind Netflix was born when Reed Hastings got a late fee [from Blockbuster] is just wrong. Once I found out about that, it was not a happy thing for the company.

Why has Netflix, which once appeared so promising, been so volatile lately?

My thesis is that when Marc Randolph and Reed Hastings were both leading, the company had the perfect parents. Randolph was the big idea guy, the consumer-facing guy who loves people and wanted to put out a product people couldn’t resist. And in Hastings it had a guy who could take those ideas and optimize them for the Internet; he turned those ideas into code. That’s what made Netflix so powerful. When the company lost Randolph and his sensibility, the engineer took over and a lot of mistakes came from the lack of someone looking out for the customer.

Reed Hastings has been called America’s worst CEO, but you also call him a genius. What makes him such a polarizing leader?

First of all, Netflix is one of the most shorted stocks. Time after time, people have underestimated that model.  Hastings is a visionary, and he’s often three or four steps ahead of his peers, but there’s resistance to his ideas – not only in the media industry but also in the analyst community. The other part is that this guy just doesn’t care what anybody thinks about his leadership style or ideas for where the company should go. That’s threatening to people. He’s made mistakes, and one of those was pushing out a lot of the management team that held his hubris in check. That’s been a big problem since 2010.

What are Netflix’s key challenges now?

They have many. Carl Icahn buying so many shares is not, in my opinion, a positive thing. [Icahn is a billionaire and former corporate raider who in November purchased nearly 10% of Netflix’s shares] In my book, I talk about the effect Icahn had when he made a similar investment in Blockbuster and it completely took the company off track. I think he thinks that Netflix will be bought; if that doesn’t happen I’m a little concerned about how he plans to get out of that investment and still make money. It could be very harmful to Netflix. The second challenge is that the competitive landscape is much different than when they first started streaming. They have to compete for content against much bigger players. They’re going to have to be so nimble to stay afloat. I think that Icahn’s involvement in Blockbuster prevented them from responding in a quickly changing landscape.

Can you tell me a little about their international expansion? Have they had much luck moving into other markets?

They went into Canada first and that service grew incredibly quickly; they arrived just at the moment that Blockbuster was retreating there. Latin America has been a little more difficult because the consumption patterns, technology and markets are different. It’s a little more trouble than they were expecting. They just launched in Scandinavia and it’s been more costly than they anticipated. But they’re reaching a saturation point in the U.S. and they have no choice but to go overseas for growth.

How are the international markets different?

International markets have all been streaming-based and that’s part of what makes them so appealing to Reed Hastings. The international markets have become the paradigm for what Netflix will be — they’ll be able to go in and negotiate content based on streaming only. Hastings really envisioned that the television of the future would be a lot like an Internet application — and that’s really what Netflix is in every country but the U.S.

You’ve mentioned that one of Hastings’ biggest weaknesses is his difficulty understanding consumer response. Has that been an obstacle in trying to cater to other cultures?

I can’t really speak to that, but I can tell you how they make the decisions they make. They’re extremely data-driven and their data is excellent. The Netflix website collects behavioral data as people navigate it. So, for example, if you watch a whole bunch of TV episodes on a weekend, during a certain time of day, and you fast-forward through certain episodes or certain parts of the episode or stop and watch a certain actor a few times, the algorithms attached to that make assumptions about you that are so accurate that I don’t think the human brain can even process it. And that’s how they go about offering people certain movies. Hastings isn’t making these intuitive leaps about his international audience; he’s watching them. But he has 15 years worth of data on his U.S. customers and almost nothing on his international customers, so there will be a learning curve there.

How can Netflix be used as a model for anyone who seeks to drive a service online?

The main lesson from Netflix is that the technology has to serve the consumer. There is a remove from the consumer when you sell something on the Internet because they can’t see it, smell it or touch it. You have to come up with a very compelling offering driven by an emotional attachment to the company and the experience they create. Randolph understood that, and that’s part of the reason Netflix grew so fast. They took us on a journey to places we didn’t think we would go. How many people had previously watched a lot of Bollywood or anime or Chinese martial arts before Netflix came along?

Survey Ranks ‘World’s Most Unfriendliest’ Countries

by Libby Zay 

Have you ever been to a country that just seems to give tourists the cold shoulder? Now, there are some figures behind those unwelcome feelings; the World Economic Forum has put together a report that ranks countries based on how friendly they are to tourists.

The extensive analyses ranks 140 countries according to attractiveness and competitiveness in the travel and tourism industries. But one category, “attitude of population toward foreign visitors,” stands out.

According the data, Bolivia (pictured above) ranked as the most unfriendly country, scoring a 4.1 out of seven on a scale of “very unwelcome” (0) to “very welcome” (7).

Next on the list were Venezuela and the Russian Federation, followed by Kuwait, Latvia and Iran (perhaps when visiting one of these countries, you should try your best to not look like a tourist?).

On the opposite side of the scale were IcelandNew Zealand and Morocco, which were ranked the world’s most welcoming nations for visitors.

Tourism infrastructure, business travel appeal, sustainable development of natural resources and cultural resources were some of the key factors in the rankings. Data was compiled from an opinion survey, as well as hard data from private sources and national and international agencies and organizations such as the World Bank/International Finance Corporation and United Nations Educational, Scientific and Cultural Organization (UNESCO), among others.

The report also emphasized the need for continued development in the travel and tourism sector, pointing out that the industry currently accounts for one in 11 jobs worldwide.

All of the results of the survey can be found after the jump.

Attitude of population toward foreign visitors
(1 = very unwelcome; 7 = very welcome)


1. Iceland 6.8
2. New Zealand 6.8
3. Morocco 6.7
4. Macedonia, FYR 6.7
5. Austria 6.7
6. Senegal 6.7
7. Portugal 6.6
9. Ireland 6.6
10. Burkina Faso 6.6


1. Bolivia 4.1
2. Venezuela 4.5
3. Russian Federation 5.0
4. Kuwait 5.2
5. Latvia 5.2
6. Iran 5.2
7. Pakistan 5.3
8. Slovak Republic 5.5
9. Bulgaria 5.5
10. Mongolia 5.5

Have you ever visited somewhere where they didn’t exactly roll out the welcome mat? Alternatively, have you visited somewhere on the “unfriendly” list and had a great, welcoming experience? Let us know how your travel experiences compare with the survey’s ranking in the comments below.

[via CNN]

[Photo credit: Phil Whitehouse, Wikimedia Commons]

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