Dr. Scott MacDonald's blog

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Shipping, Trade, and China

Shipping remains a critical factor in global trade and also has been a key factor in the rise of the Chinese economy since the last decades of the 20th century. However, the 2008 Great Recession caught global shipping in a period of fleet expansion and greater capacity to carry freight per ship. Post-2008 the shipping industry has faced tough times. Trade has not recovered from levels prior to that year. Rates have been drastically cut, company revenues have plummeted, some companies went into bankruptcy (as with South Korea’s Hanjin Shipping in 2016), and other companies have merged.

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The Hanjin Bankruptcy and Choppy Seas

In early September the Korean shipping company, Hanjin, went into bankruptcy, no longer able carry the burden of its $5.5 billion debt, a long string of losses, and brutally intense competition coupled with the loss of support from its bankers.

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China, Football FDI, and Soft Power

It is often said football or soccer is a universal language that everyone understands. It is estimated around 250 million people play football in 200 countries, making it the world’s most popular sport.

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Chinese Companies and the Changing Business Landscape

Chinese multinational corporations (MNCs) are finding the new global business landscape daunting. In their transformation from being domestic-oriented firms into companies expanding into foreign markets and acquiring foreign enterprises, Chinese MNCs have benefited from easy access to international capital markets and foreign and Chinese state-owned financial institutions. However, this is changing. Looking at the turmoil in international financial markets, access to capital likely will be harder to obtain as foreign investors are now more risk-adverse and taking a harder look at corporate risk profiles. Furthermore, many state-owned Chinese companies have relatively high debt portfolios compared to many of their Western counterparts.

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China-Venezuela relations: The Ties that Bind?

Chinese government officials and businesses must be rethinking their commitment to Venezuela. Although the Latin American country holds the largest proven oil reserves in the world, it remains questionable if PDVSA, the state-owned oil company, has the ability to repay the debts it has incurred in past years.

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The Challenges of China Abroad

Much has been made about the expansion of Chinese multinational companies globally. While commodity prices were up, times were good for both Chinese companies and their local counterparts in Africa, other parts of Asia, and Latin America.

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China and Latin America–A Changing Relationship

During the early years of the 21st century Chinese multinational companies (MNCs) actively engaged in Latin America. An abundance of natural resources and a growing Latin American middle class fit China’s needs for essential raw materials and a growing Latin American middle class fit the Asian country’s need for overseas markets. In turn, Latin America was able to diversify export markets for its oil, copper and soybeans.

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2014’s Unexpected Oil Crash: Implications for China’s Economy and Global Commitments

Economic forecasts often do not work. That was evident in 2014 with the surprising +40 % plunge in oil prices. While this signaled economic problems for Iran, Russia, Nigeria and Venezuela, it is a positive development for other countries, including China.

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The Global Rollercoaster and Chinese Business

Chinese business has come a long distance. Throughout the first seven decades of the 20th century China was largely inward looking and disrupted by political fragmentation, famine and foreign invasion. Although Mao Zedong reunified China, it was Deng Xiaoping’s rise in 1978 that made the economy a central priority, perceived as a useful vehicle to pull millions of Chinese out of poverty and restore China as a serious international power. Two short decades after Deng, Chinese business, both state-owned and privately held, began to stride in significant numbers on to the international stage.

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Corporate Rationalization and Iron Ore Miners: Tough Times

The global iron ore mining industry is undergoing a major rationalization, which emphasizes the importance of corporate flexibility in the face of changing market conditions. Iron ore industry prices have fallen from over $130 per metric ton (CFR Tianjin Port prices) at year-end 2013, hitting their lowest level ($89) in almost two years in June. Numerous analysts expect that prices will stay below $100 for the rest of 2014 and possibly 2015, as well. A major driver of this price plunge is oversupply, partially caused by the ramping up of production by the major multinational corporations (mainly Australian and Brazilian) that dominate the business.

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