Business Environment

An Arisan is an Indonesian form of Microinsurance. Financial groups in all sorts of combinations (men, women, rich, poor) are formed. While some groups focus on savings, others work to raise business capital quickly or offer microinsurance. A social motivation and welfare approach is dominant among group members.

2 Arisan goals are:

- provide coverage for all medical expenses, festivity expenses, educational expenses and business set-up costs, as well as death benefits -> especially for the less fortunate members of the same family

- create jobs through investment of premiums unto small business enterprises

1979 fire destoyed the Tanah Abagng traditional market in Jakarta. A consortium (Vereinigung) of insurers came together to share the risk of such catastrophes. This consortium became the Pasar Konsortium. Most of the policyholders are shopkeepers and are reasonably wealthy. The cooperation is based on the prociple of co-insurance. It includes fire insurance for building and construction, which is usually purchased by the owner of a traditional market.

Networks do not cover the costs and become reliant on donations.

1. Private ownership

2. Availability of production factors

3. Economic freedom

4. Legal protection of property rights

5. Political stability, rule of law, and regulative quality

6. Democracy

Leader: Mao Zedong

Economic progress in the first years. Nevertheless total failure of the "Great Leap forward".

Over 20 Million people die of hunger.

1966-69 Cultural Revolution: Movement to eliminate liberal elements and to impose socialist othodoxy. 7 Million people are sent to working camps for "reeducation". 

Economic liberalization

Leader: Deng Xiaoping

Deng Xiaoping leads China on a road to Economic Reforms and Openess. He becomes THE leader who turned China into the worlds fastest growing economie. "Socialism with Chinese Characteristics".

- Phasing out of collectivized agriculture

- Gradual liberalization of prices

- Increased autonomy for state enterprises

- Creation of a private sector

- Foundation of a diversified banking system and the development of a stock market

- Opening to foreign trade investment

Leader: Jiang Zemin

Massive economic growth since the 1990s. China is one of the main winners of globalization.

Since 2000 the third ranking industry worldwide in factory output.

By 2002 china has become the worlds work bench.

Sky-rocketing

Leader: Hu Jintao

Even more export driven growth

China heads the list of countries that are satisfied with the wy things are going at home. More than 70% of citizens express satisfaction with their national condition.

Middle class households typically have enough imcome to satisfy their primary needs (food, clothing, shelter), with some income left over for additional desired consumption and savings (2002: 4%, 2012: 31% -> 420 million people)

Positive: 

- Outstanding economic development. GDP increased more than 10 times 1978 to 2005

- Decline of poverty rate from 53% of population (1981) to 3% (2008)

- Rise as a major player in the global economy

Negative:

- Large disparities in per capita income between regions and social classes and the risk of social strife

- Rise of corruption and other economic crimes

- Environmental damage

Global player

Leaders: Xi JIngping (representing entrepeneurs & emerging middle class) & Li Keqiang (representing poorer inland provinces) in a delicate power sharing arangement.

1. Core technologies are imported
2. Imported technologies are absorbed during an initial phase of operation in the domestic market
3. The firms push up to the global technological frontier during a period of increased export discipline – first to the markets of developing countries and then to the global market. Master current technologies and the originate new ones (especially in the field of incremental innovation)
4. Consolidate domestic and global market position by pushing foreign competition aside.

Traditionally supporting large-scale high quality domestic infrastructure projects.

NEW: financing major public infrastructure deals in Sotheast Asia, Africa, Latin America, Russia a.o.

At the end of 2010 the CDB gave USD 687.8 billion in loans (more than twice as much as the World Bank)

General aim: Turn the country into a "manufacturing superpower" over the coming decadses.

Specific aim: Increase productivity rate and make China self-sufficient in targeted industries (automoitve, aviation, machinery, robotics, high-tech maritime and railway equipment, energy-saving vehicles, medical devices and information technology)

- Creation of publicly and privately funded innovation centers

- More private and public research subsidies

- Large and low-interest loans from state-owned investment funds and development banks

- Assistance in buying foreign competitiors

Short-term: Enonrmous demand increase for smart manufacturing products (industrial robots, smart sensors, wireless sensor networks and radio frequency indentification chips) = Great business opportunities for foreign firms. 

Long-term: Challenge for the economic primacy of the current leading economies and international corporations.

Oil exporters / high per capita income / small population 
Countries -> Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE

Oil exporters / lower per capita income / large populations

Countries -> Algeria, Iran, Iraq, Libya, Syria, Yemen, Egypt

Non-oil exporters / strongly integrated with the GCC economic area or dependent on foreign development assistance

Countries -> Djibouti, Jordan, Lebanon

Non-oil exporters / diversified economies strongly integrated with the Euro area

Countries -> Morocco, Tunisia, Israel

Argument 1: The price of primary products are more volatile (schwankend) than of manufactured goods. A huge natural resource sector increases the countries dependence on global market development and causes economic distress and social instability in case of a declining market price. "Growing with oil, slowing with oil".

Argument 2: The secure money flow can prevent the economy from investing in other sectors, thus not creating business and job opportunities outside the natural resource business.

Argument 3: The secure money flow can free governments from financial pressures and constraints, which, in other countries, would have induced governments to “good government” in order to receive the cooperation of the masses. (investment in our education à very expensive!)

Argument 4: Increased danger of foreign intervention due to the strategic importance of the country as a major oil supplier. Foreign intervantion often increases rather than decreases poor governance performance and thus political instability