Sunday, April 8, 2007

The world is flat for Burberry

Whether you accept it for its virtue or reject it for its evil deed, the world is flat because of the present level of improvement in transportation and communication, making goods, services and information travelling freely around the world. There are profound changes and the human kind has to learn to adapt to it. When the world is not flat, by the laws of physics, such resources could only flow between terrain. That means there are powers aggregated at certain high locations, making free flow of resources difficult.

Now that the world is flattened in the sense of modern technology on speed and movement, we can expect resources to be distributed evenly around the world. For the sociologists, it is a world of sharing and everything is available to everybody. All men on earth are equal and we equally share the fruits of the world and also the demise.

Things are not that simple. There are tribes living in the terrain with their livelihood protected by the uneven ground. There are major forces against the flattening of the world. First, some people fight back fiercely for their survival as their niche of existence is being destroyed when resources flow in. Second, some people with vested interest build fences around their territories to prevent their resources from flowing out and other resources from flowing in. As the wheel of change progresses, such barriers are being taken down. Important things that need to be done now are the protection of people from being hurt along the way.

In the span of just a few days, I read from BBC news the continued flattening process. Extract of two articles are appended below. The first one is the free trade agreement between USA and South Korea, and the second one on the closure of the Burberry factory in Wales owing to offshoring.

Korean farmers put up a fight around the world to protest against the trade agreements of WTO. Korean rice market is threatened by the import of USA rice product. However, imported rice is cheaper and the Korean population benefit from such imported product. Similarly, imported beef is also cheaper than local beef. On the other hand, unrestricted export of Korean cars, TV sets and mobile phones will bring expansion to Korean economy. The choice of a flat world is obvious. The buffer now introduced is that rice tariffs are retained for the time being. It may buy some time for the Korean rice farmers to adapt to the change.

While people have sympathy on the Korean farmers, UK citizens are dealt a blow by the flattening. The 60 years old Burberry factory in Wales closed down in March, making 300 workers out of a job. The production is moved to factories in Spain, Poland, Portugal and China. Burberry is a famous British garment brand. The product is quite up-market and pricey. Quality and tradition are prime considerations. Not too long ago in the colonial days, Hong Kong people were still fascinated by products of Britain, and Burberry is the garment of choice for the middle class. Now Burberry yields to the reality and moves to locations of cheaper production cost, comfortably accommodating the risk to its prestigious brand name, quality and British tradition. This means the world is flattened to the extent that not only materials and labour are freely available everywhere; but the craftmanship and quality assurance can be adequately maintained; and brand names are going international. Chinese goods used to be considered substandard some years ago. Now international brands are setting up production plants in China. They do not risk their products. These international companies have the confidence in product quality, and will take sufficient steps to ensure it. As a result, the flat world also enables the transfer of corporate governance and quality control along with technology transfer.

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BBC Monday, 2 April 2007

US and S Korea agree trade deal

The US and South Korea have reached a free trade agreement after 10 months of intensive talks. The deal, which requires legislative approval, is the largest the US has signed since the 1992 North American Free Trade Agreement. Both countries were keen to reach an agreement, believing it will boost trade and economic growth. However, rice imports will not be included in the deal after Seoul objected to opening up its market. Fears that Korean farmers could be harmed by the abolition of rice tariffs led to nationwide protests against trade liberalization over the past few months.

Key elements of the deal - Cars: Korean firms such as Hyundai and Kia will get more access to US consumers. Technology: Korean TV manufacturers and mobile phone firms may benefit from lower taxes. Agriculture: The deal could hit Korean farmers as duties on imported beef are scrapped. But rice imports are excluded

The chief US negotiator said he was disappointed that rice had been excluded from the eventual deal but added he thought further liberalization would take place over time. "At the end of the day I think we resolved that the benefits to be gained from this FTA were so substantial that it was a deal that was worth doing," said Karan Bhatia. South Korean trade minister Kim Hyun-chong described the agreement as the "most important event" between the two countries since their signing of a military alliance in 1953. The Federation of Korean Industries, which represents Korea's largest companies, welcomed the agreement saying it would promote the two countries' economic interests.

Korean concerns

The negotiations were long and protracted and raised heated passions on both sides. Hundreds of South Koreans have protested against the deal, arguing that a glut of US imports would make Korean businesses uncompetitive and threaten their livelihoods. One protester set fire to himself close to the Seoul hotel where the talks have been taking place, while a number of opposition politicians have gone on hunger strike in protest at the proposed move. But President Roh Moo-Hyun said there is majority public support for the deal despite the protests and predicted parliament would pass it. He said Seoul will start discussions over free trade with the European Union by June.

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BBC Friday, 30 March 2007

'Emotional' end to Burberry fight

More than 300 workers have made a final march from the gates of a south Wales clothing factory which has closed after 60 years of production. Burberry has closed its plant in Treorchy, Rhondda, after months of protests and negotiations, saying it is not commercially viable. Celebrities had campaigned to keep the factory open, and the closure provoked protests around the world.

Jean Young, who worked at the factory for 25 years, said: "A lot of us have been crying and saying 'so long' to friends we might not see again. We're not all local and although we'll try and stay in touch, we're all going in different directions, some to new jobs, others retiring and some have already left with depression."

The company, which took over the plant in 1989, announced last September it planned to leave Rhondda and move polo shirt production overseas where costs were lower. Treorchy's production will now be shared between sites in Spain, Poland, Portugal and China.

Mervyn Burnett, a senior organiser for the union, said concessions, which include enhanced redundancy payments, long-service awards, and around £500,000 for workforce re-training, were mainly due to campaign efforts. He said although the workers would always resent the company, they had "come to terms" with the closure. "Morale is still good - they're pleased with what the campaign has achieved," he added. Of the 309 workers originally facing unemployment, 175 have already found alternative work. All staff will receive redundancy packages of no less than £3,000.

Liberal Democrat candidate Karen Roberts said: "Yet again it's jobs that have been lost to the area, and what do we replace them with? "How many jobs do we have to lose before something is done?"

A spokesman for Burberry said: "The Treorchy factory will close on 30 March, following a 12-month review from 2005-2006; a thorough consultation process and a three-month extension to the closure date, for employees to be retrained and to allow maximum time for staff to find alternative employment."
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