Call for Copy Editor Positions

The Journal of Emerging Knowledge on Emerging Markets, an ICA Institute Publication invites volunteers for the role of online Copy-Editors for the upcoming issues. All core tasks of the Copy-Editors may be accomplished online.

Responsibilities:
The following comprise the major tasks of a copy-editor ( who will be responsible for roughly, 3-5 articles per issue; two issues per year)
1. Critical evaluation of the quality of text (argument-building, writing style, coherence, sentence structure, grammar, formatting and spelling)
2. Suggesting suitable titles, captions etc., if needed
3. Coordinating with authors on the improvement of articles
4. Delivery of the finally formatted articles to the journal for publication

Qualifications:
1. Strong English language and grammar skills
2. Background in literary/technical/news writing preferred; but not required

Benefits:
We are unable to provide any monetary compensation. Profiles of the appointed copy-editors shall be featured on the ICA Institute's website. Also, the appointed persons shall be mentioned in the respective issues of the journal. JEKEM strives to grow as a globally leading working papers journal in the domain of international business, economics and policy. The team members shall be the preferred candidates for several other exciting roles that may come up in future in JEKEM or at ICA Institute.

Interested persons may send a short profile mentioning relevant experience and qualifications (a professional resume is not required). Writing samples would help (could be a blog/website/email attachment). Please correspond through email only: prashant.das@icainstitute.org. Email Title: "Copy Editor".


Prashant Das
Associate Managing Editor
Journal of Emerging Knowledge on Emerging Markets
India China America Institute

A New Avatar of Outsourcing

Recent trends suggest a new wave of outsourcing opportunities that Americans may end up falling in love with. The “Global Outsourcing 2020” event co-organized by the ICA Institute in Atlanta spurs this debate on “Reverse Outsourcing”.

Prashant Das

Co-Editor

India China America Institute Newsletter

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A janitor in an empty American office answers a phone call: “I’m the only one left. They have outsourced…everyone else”. This is a snapshot from a series of cartoons that two University of Missouri professors analyzed in their research (2009) titled “Funny Business: Public Opinion of Outsourcing…” What started as a cost-cutting measure by US companies during Y2K era later became a hot topic of discussion in several disciplines including Information Systems, Business, Policy and Political science. While “outsourcing” and “off-shoring” created immense job opportunities in emerging economies (India and China) in particular, they also became huge socio-economic issues for Americans.

Several experts argued that companies that outsource for short-term goals are short of vision. These arguments strengthened with increased service costs of the outsourcing companies. Simpsons and other American satires vehemently reflected the public sentiments about outsourcing by showing the menaces of job-losses, poor customer-care service and communication (language/accent) issues.
In the meanwhile, the “outsourcing” companies kept expanding: in size, revenue, geographic foot-print, and product breadth & depth. With time, outsourcing seems to have become an integral part of the global business environment. Have a look at the Google Search Volume Index for the keyword “outsourcing” [Fig-I].

With time, the interest about outsourcing seems to have gone down. Now, look at the historical stock price trends of top Indian IT-off shoring companies [Fig-II] which tell an entirely opposite story. Surprised to see the contradiction? Don’t be. The anomaly is, perhaps, because outsourcing has become so integral to business-processes that people are not much amused by this concept any more. A similar contradiction lies in the Google Search Volume Index for the term “Reverse Outsourcing” [Fig-III]. As the curiosity about “outsourcing” decreases, internet-surfers worldwide have been showing greater interest in learning about “Reverse Outsourcing”.
We, at India China & America Institute, canvassed expert opinions on this emerging trend during our recent conference titled “Global Outsourcing 2020” in Atlanta. As a series of distinguished speakers including diplomats, academics and business-leaders shared their insights, there seemed to be a consensus about the changing global business landscape: both in terms of the workforce and emerging technologies. Dr. Jagdish Sheth (a world authority in the field of marketing) pointed out the emerging trend of “Reverse Outsourcing”. Although reverse-outsourcing has multilateral, globally dispersed stakeholders, US, India and China remain the focus of our discussion. Interestingly, the interest about outsourcing among the India-China-America (ICA) triad seems to exhibit historical harmony. I analyzed the Google search pattern about “outsourcing” in the ICA triad since 2004 and discovered statistically very significant correlations between them (USA-India: 0.9; USA-China: 0.2; India-China: 0.2).

As the trends on “reverse outsourcing” have started building up; there seems to be numerous schools of thought about what exactly it means. Search the internet about “Reverse outsourcing”, and you will only be more confused; as all interpret this term in their own ways. I do not want to conduct a semantic discussion. Yet, here is our take on “reverse outsourcing”: it is the reversal of outsourcing pattern between two markets consisting of businesses and workforce.
What follows is a discussion on three types of business-models projected as “reverse outsourcing” on different sources. Their interpretations might be correct in their own right; yet, I take the liberty to name two of them otherwise; and identify only one of them as “Reverse outsourcing” in its “true sense”. Please note that the discussion is in the context of US, India and China only.

Non-Core Diversification:
Some large American companies start selling their non-core competencies to other companies (mostly, within a geography) who may not be their conventional clients. A classic example is Amazon, primarily a book-selling company which, in 2006 formed Amazon Web Services to provide IT Infrastructure services in the ‘cloud’ to a new set of clients. Earlier, they were providing e-Business solutions to their non-conventional customers such as Borders. Another example is Walmart Realty, a division of the retailing behemoth Walmart stores, Inc. which provides real estate services to its clients. In contrast to Walmart’s conventional customers (retail buyers), Walmart Realty serves an relatively non-conventional customer base: businesses and stores.
Walmart might have considered outsourcing its real estate practice, a non-core business activity. Instead, they retained this practice within their own organization structure; and later leveraged on the built-up competencies to diversify their product portfolio. Is not this about “prevention” or outsourcing as opposed to “reversal”?

Job-Pooling:
Recently, several non-American companies (and individuals) have been hiring American individuals to do smaller chunks of work. Websites like guru.com, odesk.com and elance.com act as matchmakers between individuals with specific skills and employers with relatively smaller, yet skill-specific tasks. ABC TV-channel recently reported that American freelancers made around $15 millions from non-US companies through this model.
“Retailed-outsourcing” would probably be a more appropriate name for this business model. The job-takers could very well be from India and China as much as from the US. “The reversal” of outsourcing, again, does not clearly manifest in this model.

Reverse Outsourcing:
Viola! The Reverse outsourcing happens when a foreign (say, Indian, Chinese or Brazilian) outsourcing company hires American employees. Motivations are multiple: cutting the travel and visa costs of employees from home countries, better understanding of the American markets (reducing the cost of “reworking” caused due to poor understanding of client requirements), higher client penetration in the American markets, and diversification of talent pool. A Chinese company, for example, is reported to have hired Lakota Express Inc., a small company owned by American natives to accomplish “proof-reading” tasks of their deliverables. An Indian minister recently claimed that between 2004 and 2007 US earned around $105 Billion through jobs provided to Americans by companies with Indian head-offices. Indian IT giants such as TCS, Infosys and Wipro have been expanding (or plans to) their American employee-base in Cincinnati, Dallas and Atlanta respectively. These development/delivery centers are managed and trained by Indians. Here lies the reversal of outsourcing trends in its true meaning!
Apart from serving the business needs of the foreign companies, Reverse outsourcing may also help in improving public sentiments in the US about outsourcing. In fact, some thinkers believe that through the reverse outsourcing models, companies headquartered in emerging markets have contributed towards the economic recovery of the troubled US markets.
Reverse outsourcing is yet to define sustainable business practices for itself. Both American and foreign-parties need to leverage on each other’s respective capabilities. The equity of roles of both parties will have to be ensured so that not only is the optimal blend of workforce achieved, the two markets (US and foreign) are well understood and tapped.
In an ABC channel video a panelist was educating the American workers on how to set up a “personal connection” with their Indian clients. “…We work in different continents; but we are all part of this small world…” she urged. For sure, Reverse outsourcing has a promise to yield the best of the two worlds.

The Kumarajiva Expedition

The Expedition
Retracing Kumarajiva’s travels, the expedition will undertake a complete circuit of the Taklamakan desert in Xinjiang Uighur Autonomous Region of China, travelling in a Landcruiser convoy over 6000 km and exploring the ancient cities, caves, crafts and flora on the Northern and Southern Silk Routes. This unique journey-- starting and finishing in Urumqi, China-- from 3 to 28 September 2010, coincides with 60 years of Sino-Indian diplomatic relations.
Background
Kumarajiva was a Buddhist scholar (344-413 A.D.) whose father was Indian and whose mother was a Chinese princess from Kucha, Xinjiang. He studied both Hinayana and Mahayana Buddhism and was renowned as 'the Great Translator' for his translations inter alia of the Diamond Sutra and the Lotus Sutra from Sanskrit into Chinese. He studied in Kashmir and then travelled the entire Silk Route from India to Yarkand and thereafter to Turfan and Dunhuang. Incidentally, the Diamond Sutra is the first ever complete printed work (Dunhuang 868 A.D.), well before Gutenberg’s invention in Europe.As a Buddhist, Kumarajiva was a universalist, venerated nature and was spiritual, but also a great traveler, scholar and diplomat. He learnt Chinese during a short spell in captivity, well enough to communicate and ultimately to translate, and rose to high office as Imperial Guru.
Expedition Theme and Purpose
The Silk Route symbolized globalization and universality at its earliest, and Kumarajiva likewise the spirit of learning, enquiry, brotherhood, goodwill and peace. Today, when India and China---two ancient civilizations—are reinventing themselves as modern and developing States, Kumarajiva’s example and values are particularly important. With India and China celebrating 60 years of diplomatic relations in 2010, the expedition is thus relevant and timely.
Kumarajiva Expedition Members
The 7 persons constituting the expedition team (details below) live in different parts of the world, and are highly regarded for their contributions in their own fields of endeavour. They are well-traveled global citizens united in the pursuit of the expedition mission.

• Ravi Bhoothalingam: Psychologist, company director and former corporate CEO, with an abiding interest in China and High Asian civilizations. Knows Mandarin, and is deeply involved in Sino-Indian business and cultural initiatives.


• Sushama Bhoothalingam: Linguist and practitioner in natural childbirth and geriatric care. Her main focus on the journey will be on women’s issues.


• Jay Dehejia: Former high-powered telecommunications expert and global multinational senior executive, now active in social entrepreneurship and education.


• Vidya Dehejia: Professor at Columbia University, New York and an authority of world repute on Indian art, art history and archaeology. A complete list of her publications and academic contributions is available on google.com.


• Jenny Halsey: Having spent 25 years travelling the world as a UK Foreign Office wife, she was able to indulge her passion for garden design and botany –even in the deserts of Saudi Arabia--and looks forward to the Taklamakan.


• Surjit Mansingh: Professor at the American University, Washington D.C. (formerly of the Indian Foreign Service and Jawaharlal Nehru University, Delhi), she is a recognized authority on international politics and foreign relations.


• Neeta Premchand: Paper has been her passion. She spent several weeks in Japan learning to make it and has since written a book, having visited almost every place where it was made by hand, except Khotan, now on the Expedition route.

Outputs
The members on their return will make presentations and write articles in newspapers, magazines and learned journals, lecture and hold photographic and other exhibitions in prominent learned Societies and cultural organizations, and give TV and press interviews.
Every member undertakes to advance in his or her unique way, international understanding and knowledge through this special and unusual venture.
Sponsorship
The Kumarajiva Expedition welcomes sponsorship, encouragement and support from those who share its goals. Particularly welcome would be assistance which will facilitate members in the following:(i) free entry to all major cultural relic sites in Xinjiang, and viewing of original sites and artifacts (rather than replicas);(ii) free photography therein;(iii) free access to reserved areas such as the Loulan mummies;(iv) access to media and TV.

Contact and further information
Ravi Bhoothalingam (Kumarajiva Expedition leader)
TeL: +91-124-2396448, (mobile): +91-9811112666

email: sush.ravi@gmail.com

BRIC Vs Chindia VS Chimerica

Prashant Das

ICA Institute

China's Housing Bubbles

Dexin Zhou

PhD Researcher (Finance)

Emory University - Goizueta Business School , Atlanta

Contact Info: zhou.dexin [At] gmail.com

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Dwelling Narrowness, a recent Chinese TV series, has attracted considerable attention from the public. The TV series vividly depicts the hardship of a family to purchase an apartment in Jiang Zhou (a fictitious city that resembles Shanghai). Many young urban residents see the remarkable parallel between their lives and the story in the TV series. The Chinese tradition urges them to own a piece of property in order to settle down. However, the apartment prices remain unaffordable.
A Chinese who once worked in Tokyo was surprised by the apartment prices in Shanghai, where he later relocated. He says that the apartments in Shanghai are almost as expensive as the ones in Tokyo, even though the GDP of Tokyo is greater than that of Shanghai. The median salary of a college graduate in Shanghai was 2,567 RMB in 2008, roughly 380 dollars and the average deposable income is 8,113 RMB per person. The average apartment price is over 22,000 per square meters (more than $32,000) per square foot as of this December. A college graduate has to spend almost 9 months of his salary and an average Shanghai family needs a whole year’s disposable income to purchase only a square meter of an apartment.
An increasing number of analysts and policy makers are expressing concerns on a growing bubble in China’s property market. If the housing prices are indeed caused by excessive liquidity in the market, the central bank can make adjustment by tightening up the monetary policy. However, the problems may lie on the structure of the economy, which cannot be solved by simply changing monetary policies. I will introduce two newly emerging views on the causes of the high housing prices.
He Keng, the vice chairman of the Financial and Economic Affair Committee at National People’s Congress, says that the local government has the incentive to inflate the real estate prices. Specifically, this is a result of the disparity of interests between the central government and the local government. The tax revenue sharing arrangement in 1994 has introduced an asymmetry in the government power and the government revenue. The percentage of local government tax revenue declined from approximately 80% in 1993 to roughly 45% after 1994, while the proportion of local government fiscal expense increased from 68% in 1990 to 75% in 2004. This arrangement has given the central government a huge fiscal war chest and has left the local government to deal with the fiscal gap. The land-transferring fee becomes a natural source of non-tax income that mitigates the fiscal gap. In the recent three years, the land-transferring fee has become one of the major financial resources for big cities like Shanghai. Shanghai’s land-transferring fees in the first three quarters of 2009 reached 65.2 billion RMB, while the total fiscal revenue of Shanghai (January to August’ 2009) was 174.48 billion RMB. Thus, the local government has the incentive to inflate the housing prices in order to gather enough financial power. He Keng believes that there is a twin-bubble in the real estate market. The local government tries to inflate the land prices in order to increase their fiscal revenue and the individuals are speculating on the housing prices.
Larry Lang, a lecture professor at Hong Kong Chinese University, provides another structural explanation for the high real estate prices. He attributes the high housing prices to a structural imbalance in the public sector and the private sector. According to Lang, the deteriorating return on investment and the excessive productivity in the private sector (Lang cites the stunning 30% failure rate in the Guangdong Manufacturers as an evidence of the declining ROI) are inflating the housing prices. A huge amount of liquidity that should have gone to the manufacturing sector and other parts of the real economy has instead gone to the stock market and housing market and are pushing up the residential real estate prices. He says that simply tightening up the monetary policy will prick the bubble, but the whole economy will suffer from the consequences. He also thinks that the only way out is to improve the investment opportunities.
The heated residential real estate market has already brought the attention from the top policy makers. Moreover, they seem to have considered addressing some of the structural problems in their policy proposals. The standing committee of the state council recently identified that the housing prices in some areas are increasing too fast and the government will take on this issue by four means – an increase in the supply, differentiating the terms of credit to the residential purchases and the investment purchases, strengthen the housing market regulations and increase the support to provide affordable housings to the low-income families. In fact, the property tax is already under test-run and is expected to be introduced in the near future. The introduction of the tax is likely to have a cooling effect on the market. He has proposed a more radical approach that aims to stem off the ill incentive of the local government to generate revenue from the land transferring fee. He proposes to let the central government take over the land transferring fee revenue. While this solution is not difficulty in the technical sense, it will inevitably face resistance from the local government. Finally, no matter whether his proposal will be adopted, the housing market probably does not have much upside. Wang Shi, the CEO of the biggest residential developer, has prepared his firm for the burst of the housing bubbles. The speculative buyers may need to take a leap of faith to jump into this market.

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Is India Ready for REITs?

Vivek Sah, Ph.D.
Dr. Vivek Sah is an Assistant Professor at Burnham-Moores Center for Real Estate, University of San Diego. Sah’s primary research interests are in the areas of REITs, Real Estate Mutual Funds, and Behavioral Real Estate.

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The talk of launching REITs in India in a structure similar to what exists in the United States has been going on for many years. What should be realized, however, is that many aspects of real estate in India must be addressed before one could even think of introducing such a product to the investment community.

As straightforward as the question may seem, the answer is not a direct “yes” or “no.” Rather, it requires a careful consideration of the characteristics of the Indian real estate industry, what it lacks and what needs to be done to develop a mature real estate market capable of sustaining a structure such as REITs.
REITs are a unique blend of Main Street and Wall Street. They are securitized real estate vehicles, in which a group of investors pool money to buy assets, mainly income-producing real estate. REITs were created to help the retail—vs. institutional—investors participate in the broader real estate market indirectly.

Because real estate as an asset class is a capital-intensive investment, many retail investors had not been able to include it in their investment portfolios before the creation of REITs. To encourage retail investors to invest in this asset class, REITs were created in the United States as part of special legislation that allowed them to be incorporated as companies without being taxed at the corporate level, provided they followed a set of rules and regulations. One of the main regulations is the distribution of 90% of their income to their investors as dividends. This created a pass-through entity that investors benefited from as they received a consistent income flow, unlike stocks, which may or may not pay dividends.

Like stocks, however, REITs are part of the overall capital markets/Wall Street. REITs thus invest the pool of money sourced from their investors—the Wall Street part—into real estate markets, linking them with Main Street as well. It is important to emphasize the dual nature of REITs since the existence of a mature capital market is as important as the existence of a mature real estate market. The absence of one of these elements makes it impossible for a REIT market to function. The talk of launching REITs in India in a structure similar to what exists in the United States has been going on for many years. What should be realized, however, is that many aspects of real estate in India must be addressed before one could even think of introducing such a product to the investment community. The dual nature of REITs emphasizes their dependence on the real estate asset/physical space market. Without an organized real estate market, REITs can’t deploy the funds they raise. The model above shows the various components of an efficient REIT market and what India is lacking.

The model shows the absence of various aspects of real estate in India that would be required for the efficient functioning of REITs in India. The absence of even one of these elements could lead to an inefficient REIT market and trigger a collapse in the entire system. Rather than a failed attempt, it would be wise to build up each of the elements over time before initiating any discussion of REITs in India. A failed attempt would be a detriment to the globalization of REITs and discourage any foreign REIT, such as a U.S. REIT, from launching in India in the future.