Strategic focus defines China

William Burns CIA Director was sharp when he said: “China is the only country with both the intent to re-shape international order and increasingly the economic, diplomatic, military and technological power to do so.” Here comes the reasoning:

1. US has geostrategic overreach where the marginal utility moves on southerly direction. China, on the other hand has geoeconomics overreach where marginal utility moves on northerly direction.

2. US drives largest part of foreign income from service sector that employs fewer people while China drives largest forex from manufacturing sector employing more people.

3. Manufacturing products coming out of America has overall medium to high quality whereas China adopts two-pronged quality dimension with high quality for the domestic market, priced high too and medium to low quality for exported products done deliberately so that America is not affected in total sales. Yet the bugbear is Chinese goods are a lot cheaper than US products.

4. Orientation of US industries tend to favour the market, shareholders and  highly paid executives thereby neglecting suppliers, staff and  people at large. China concentrates upon the stakeholders within and without. Moreover, middle class in USA numbers about 65 million people whereas China has almost ten times that number.

5. As regards to product portfolio for exports both countries use dual matrix of military and civilian uses. In the case of US products intended for civilian use has technology at the lower realm and military related products at the higher spectrum. On the contrary, China employs high-tech for civilian use sold within China while price quoted for exported items for both civilian and limitary uses is purposely kept at the fraction of the price quoted by US exporters.

6. American companies shifted their entire plants to China for using Chinese cheap labour while China invests in high-tech industries abroad especially in America led west gaining a foothold in the market and enhancing techno savviness.

7. Overall growth and benefits accrued via economic progress that is frittered into the general public is estimated to be around 10% of the population in United States while this figure in the case of China is about 30% and still ticking!

In sum, business strategy of the state and the private sector in China takes into considerations of the domestic economy as well as geoeconomics equally. No wonder Nicholas Burns had the gumption to say that China has the ability to usher in the new international order!

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

 

 

Turkish nuke energy business strategy, a critique

Depending on fossil fuel for energy needs bedevils Turkey. One alternative is to prospect for nuclear energy. The bottom line is how her business strategy on this option fares amidst geoeconomics. Here is my critique:

According to statista.com source of energy generation in Turkey is skewed towards the use of fossil fuel, gas and coal. Here is a brief sketch giving sources and the percentage of its use:

Natural gas 22.86

Coal 20.89

Hydro 20.34

Lignite (Brown Coal) 13.75

Wind 10.64

Solar 5.14

Geo-thermal 3.39

Bio & Waste 2.88

Ostensibly coal as the source totals 34.64% something that causes worry in the admin circle. Although Turkey is the eleventh largest producer of coal she imports about 39.3 million metric tons. There again import of natural gas as a single item ranks first.

Moving over to nuke energy is seen as a viable option. In May 2010 Turkey signed with Rosatom of Russia for the first such plant to be built in Akkuyu in Mersin Province. In April 2014 the plant commended feeding material and would be operative fully before the end of 2025. The four reactors within the plant is expected to produce 35,000 GWh per annum roughly about ten percent of the current demand.

Second plant is being negotiated with Rosatom to be located in Sinop in the Black Sea Coast similar to the one in Akkuyu. In May 2014 Alparsian Bayraktar announced Turkey’s intention to go for the third plant in Thrace Region with an output of 329 GWh of energy. This time Turkey is seeking Chinese support in the construction of the third plant.

Overall output from all three plants would satisfy about quarter of the energy needs by 2040. Hence the dependence upon fossil fuel, gas and other thermal energy sources cannot be totally eliminated. By the way, total energy demand that stands around 320,000 GWh per annum today is expected to at least multiply by two times in ten years’ time.

Even though the business strategy of opting for nuke energy is workable in terms of domestic compulsions, the international arena might present several road blocks in terms of geoeconomics. America for example suggests construction of large-scale nuclear power plants with small modular reactors (SMR). Ostensibly America is not taking kindly towards the Russian grip on Turkish Nuke energy generation. Besides adding salt to the wound America is petrified as regards to the recent discussion on nuclear energy entente cordiale between China and Turkey.

Erdogan is deft at playing one against the other. He can jolly well ask America to give Turkey a plant at subsidised cost. That way he can turn out to be a magician who balances all three balls:  Russia, China and America in the game of geoeconomics power play!

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

Erdogan dribbles, yet fails to score

Psyche of global leaders differ a lot, of course.  But in the case of Turkish leader Erdogan there is something remarkable. As a soccer enthusiast he has mastered the skill of dribbling the ball, but has failed to score any major goal so far except aggrandising himself as the uncrowned sultan. Geoeconomics is out there staring at him!

Perennially Turkey remains at the cross road. Ottomans made use of this bridge between west and east to last centuries as an empire. In fact, historically Ottoman motto was Devlet-i Ebed-müddet. "The Eternal State". Lasting from circa 1285 – 1923 AD, indisputably it lasted more than any known empire in history.

Today Turkey is just a middle rung power in military sense but displays awfully sorry figure in geoeconomics. According to Statista.com her GDP is USD 905 Billion ranking her as the 19^th largest economy. Debt hovering around USD 232 Billion divided by the current population of 95 million means a single citizen carries USD 2. 522 million debt on his shoulder.  Exports as a percentage of GDP is just below 23%. And the number of registered business enterprises amounting to 3.80 million have done little to uplift export figures.

Erdogan is swaying between NATO as solid military set up and toiling with the idea of joining SCO a near military group. Similarly he continues to have the desire of joining EU after signing Customs Union agreement with EU in 1995. Moreover, she was even officially recognised as a candidate for full membership on 12 December 1999. Yet no goal scored. Now Erdogan is fiddling with the idea of joining BRICS Alliance.

Domestic economy in shambles along with misadventures in Syria, Iraq not to mention suppressing Kurds in the south eastern part, Erdogan has not come out with an idea of solving problems within and outside its borders with neighbours. One consolation he has is the Iranian frontier remaining peaceful forever.

Turkey under the tutorship of Erdogan has shown no specific direction in its foreign policy. A colossal tragedy occurred on 24 November 2015, when Turkish Air Force F-16 fighter jet shot down a Russian Sukhoi Su-24M attack aircraft near the Syria–Turkey border. A knee–jerk response or action of revenge whichever the case may be Turkey found herself caught in the cleft stick when NATO declined to get involved. Putin kept his cool while insiders in the Erdogan cabinet urged him to reconcile with Putin, the latter was magnanimous on deciding to put the horrific incident behind.

Dribbling without any ending Erdogan listened to Barak Obama by sending his war dogs across Syria, which still smothering in hot fire. Ironically it was Barak Obama who engineered coup to oust Erdogan from power. Once again it was Putin who tipped Erdogan about the unfolding coup d’état.

Pressing situation around weighing over him Erdogan has to decide to stop dribbling and try to make at-least one goal before he hands over the baton to his successor. What is the goal to be? My take is, Erdogan must take his cabinet into confidence to move in the direction where geoeconomics is heading to: away from the west towards the east!

 

Cheers!

  

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist