ARTICLES : Business, Economy & Technology

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I thot of starting a thread to share good articles on BUSINESS, Economy and related areas. M starting this by posting an article on *Berkshire Hathaway & Warren Buffett*.
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Economics is a bit too hard to study !! esp for a engg guy like me... can anyone suggest a book which gives content in a very simplified form !!!

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Hi all,

Hope this is the right place to shoot my doubts at. If not, please let me know.
Anyone please help me.

1) Where can I get the very basic info relating to Forex reserves, EXIM policies, GDP ?
2) What does MATURITY mean when we speak about loans ?

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hard to believe......

one of the best thread i hv ever seen!!!:shocked:

kudos to moderater>>>>>>>

but we have to carry it forward,so i want to come with ideaz of newly budget 2010 to be presented by our hon'ble finance minister pranab mukherjee......

on 26th of this feb......(2010)

so friend gear all for this,and start disscusing on new terminology to be introduced in this budget!!!!!

which may be{GST tax,LESS Subsidy on fertilizer,service tax return to 12.5%} and much more.......

:clap:but till then keep a look at a nice informative blog
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Some really good articles are here:

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Selling to the Affluent
Some MNCs, such as Procter & Gamble, General Motors and Carrefour, have had success in penetrating China's mass market. But makers of luxury goods have yet to fully exploit China's growing affluent class.
"There is no way that luxury companies are paving the way in China in terms of penetration," according to Hsu. "Because luxury-goods companies are not doing a very good job of presenting their products in China, customers go to London or New York to spend money. In China, a lot of these companies give what I call a 'constrained offer.' If you go into a store, the amount of merchandise is a third of what you see in same store in New York or Hong Kong. Of course, luxury-goods companies are glad people are spending money in New York, but they can't target them and get information on them or send them brochures and so forth. They're missing opportunities."
Hsu estimates that there are at least one million Chinese with access to $1 million in cash. He adds that Bentley sold more cars in China than any other country in 2004.
Even though practicality still reigns when it comes to product choice among Chinese consumers, the emotional and social benefits derived from shopping, so well known to Western consumers, are growing in importance, says Singh, the strategic planning director for China for BBDO. The growth of the economy is changing "the way people look at buying brands and the way they look at themselves as people with money," he says. Even in the years immediately following the economic liberalization begun by Deng Xiaoping in 1978, people viewed money exclusively as a means of security and a "protector," giving little thought to luxury. In recent years, however, Chinese have come to see that money can be an "enabler" and that economic freedom means, in part, the "freedom to be wooed by brands."
Many Chinese citizens, especially the affluent, "have become extremely aggressive, demanding, high-maintenance consumers," explains Singh. "Instead of controlled consumption restraint and denial, there is much more affluence. There's this need to seek some form of expression by buying brands and
wearing them as a badge."
But Singh puts a different twist on the need by affluent Chinese to buy brands. Brands are important -- not necessarily because people need the esteem and want to stand out, but because they actually want to fit in with everyone else who buys brand-name goods. This has led to a form of anxiety heretofore unknown in China. "It's been called 'consumptive anxiety,'" says Singh, who defines the term as the need for people to buy products so as "not to be left behind."
Citing the work of Helmut Schutte, professor of international management at INSEAD in France, Singh notes that the "hierarchy of acceptance and belonging" is inverted in China when contrasted with the West. "The higher-order needs in China are still collective rather than individualistic. Everyone in China
wants to conform to standards in a way that gives them social acceptance. Therefore, symbols become important. People want to subscribe to success. For brands to make a dent over here, it's no longer a game about creating esteem, it's a game about creating popularity."
According to Singh, some of the most popular luxury brands in China -- not only in the largest, so-called "tier one" cities like Shanghai and Beijing, but also in tier two cities in the interior of the country are BMW, Giorgio Armani, Rolex and Louis Vuitton. "Vuitton is trying to open a least three stores a year in China," says Singh. "The number-one brand of clothing is Armani, and not just in the tier one cities."
De Beers is another popular brand. Its diamond engagement rings are big sellers, even though the concept of Western-style engagement prior to marriage does not exist in China. A De Beers ring is not a gift from a man to his fiancee; it is a symbol of love and commitment. "People understand that wearing those engagement rings gives them 'face' outside -- acceptance and validation."
Another well-known brand with an unusual image in China is Procter & Gamble's Oil of Olay. Oil of Olay, the top advertiser in China, is an aspirational brand, not a common drug-store brand as in the United States. "In the West, Oil of Olay is about telling women to love their skin," Singh notes. "Here, the ads say, 'Oil of Olay will get you a handsome husband.'"
What makes China a complex challenge for marketers is the need to position products so that they are accepted by the largest number of consumers yet are still differentiated, according to Singh. Oil of Olay does just that. "The number-one challenge in this market is to achieve consistency of brand communication, yet permit sufficient flexibility to meet specific needs of individual markets within the bigger China market. For different targets there are different products and for different products there are different tasks."
Beginning in December 2006, foreign financial services companies will enjoy some of the most exceptional business opportunities in China, and Chinese institutions will be pressed to respond to the competitive pressure. That is when the Chinese banking industry will be fully liberalized, allowing foreign institutions to serve individual customers in businesses using the renminbi.
In the report "Wealth Markets in China," the BCG authors say China represents the second largest wealth market in Asia (after Japan), with $1.44 trillion in assets being managed for wealthy people. BCG projects annual asset growth among the wealthy of 13% over the next several years, with assets under
management reaching $2.63 trillion by 2009. "BCG expects foreign banks to create some tough competition in the wealth-management market, as they enter the retail market and attempt to cherry pick the most attractive customers," the report states. "Unless Chinese banks can respond, there is a real and significant threat that many wealthy customers will be lured away by the highly evolved products and services that foreign banks can offer."
Straddling the Fence
As China's economy continues to grow, consumerism will become more prevalent. But it will not be a smooth transition from communism to capitalism. Wharton's Zhang, who was raised in poverty in China, lived much of his life under an authoritarian regime and says those days are far from completely gone.
Chinese citizens today straddle a fence dividing the old times from the new, and are never certain where freedom begins and ends.
Says Zhang: "When I was a boy, was a totally different world. Everybody grew up wearing exactly the same clothes and doing the same things. Now there is more wealth in the country and aspiration is high."
"The country is moving very fast," he adds. "Never in my dreams could I imagine that a country this big with this many people could move so fast. It's astonishing to me, and probably astonishing to most people in the world."
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One Billion, Three Hundred Thousand: The New Chinese Consumer
One billion, three hundred thousand customers: It's a number that has captured the attention of every company in the world that wants to do business in China, hoping to market everything from toothpaste to financial services to luxury cars. But once multinational companies get past the excitement of imagining the opportunities offered by the world's largest consumer market -- growing richer and more status conscious with each passing year -- there is the sobering thought of figuring out how to go about unlocking the secrets to selling to all of these people. Who are they? How much money do they have? What do they want to buy? What motivates their purchases? What are the peculiarities of the Chinese consumer?
Experts at Wharton, the Boston Consulting Group and elsewhere say China's consumers are at a crossroads. They are embracing new economic ideas and habits, and devouring goods that have long been unavailable, unaffordable or forbidden. At the same time, they are part of a consumer culture and an economic system that remain quite different from those of developed countries. In broad terms, there are multiple Chinas -- the old and the new, the urban and rural, dirt-poor peasants and multimillionaires, a land of freedom and authoritarianism whose world outlook and savings and buying preferences reflect the traditions of both East and West.
A Country of Extremes
China is rapidly urbanizing but it is still a "country of extremes," says Hong Kong-based Hubert Hsu, vice president and leader of BCG's consumer goods and retail practice for the Asia Pacific region. China is home to 1.3 billion people, but only about 400 million are in urban areas. In urban areas, incomes have been growing at the same rate as GDP -- about 10% annually, adjusted for inflation -- in recent years, while incomes of rural people rise only 1% a year. Says Hsu: "It's a land of haves and have-nots."
Wharton marketing professor Z. John Zhang agrees. "The distribution of income is very uneven," he says. "There still is a tremendous difference in wealth between people in the city and the countryside.
Even within cities you find huge disparities in income. This is a phenomenon you can't lose sight of if you're selling consumer goods. You have a billion customers, but they're not all the same." If China is a country of extremes, it is also a "country of contradictions," notes Harjot Singh, ad agency BBDO's strategic planning director for China. Consumers want products that are practical and work well, but they also covet brands that convey images of success. "Functionality of products still commands a premium," he says. "Yet Chinese consumers also want products that make them unique."
"It's difficult to generalize overall about Chinese consumers," says Joseph Wan, director and vice president of BCG in Hong Kong. "Companies are only beginning to realize the differences among consumers. In terms of geographical segmentation, most companies are pretty good at understanding that consumers in the western versus eastern parts of China are different. But there are so many intricate nuances that it's almost impossible to generalize -- and things can change so rapidly."
At the same time, a strong middle class is emerging. BCG estimates that there are 25 million to 30 million middle-class households in China, compared with 8 million affluent homes. "More people are moving into the middle class every year than into the affluent class," according to Hsu. "In general, the growth in middle-class incomes has been one of the key drivers behind the growth in a lot of consumer categories: color TVs, beer, mobile phones, personal computers. These are categories that enjoy high penetration in China."
A BCG report published in December 2005 -- titled "Wealth Markets in China: Exciting Times Ahead" -- shows that wealth in China is highly concentrated. Less than one half of 1% of Chinese households holds more than 60% of the nation's personal wealth. Among these rich households, about 70% of the wealth is held by households with more than $500,000 in assets under management.
In all, 1.59 million households have $500,000 or more in assets under management, according to the report, prepared by BCG consultants Tjun Tang, Thomas Klotz and Thomas Achhorner. Some 250 million households have $100,000 to $500,000 in assets under management, and 527 million "non-wealthy" homes have less than $100,000 in assets under management.
In recent years, the richest Chinese have gotten richer -- a trend that shows no sign of abating. "There is a polarization of wealth taking place," says Tjun. "The Chinese say, 'the two poles are separating.'"
But, significantly, the report also notes that the non-wealthy households are not getting poorer. Since 1999, households with assets under management of more than $5 million have grown from a 14.3% share to a 16.6% share of China's personal wealth. During that same period, non-wealthy households have accounted for a steady 36.6% of all wealth.
"China is going through an economic boom period and that's driving a lot of consumer behavior changes," says Hsu. "And this boom has been going on for 25 years now."
Since 1980, Chinese GDP has been growing 10% a year, on average, after adjusting for inflation. Per capita income in China has grown by a factor of seven during this period, a pace greater than that enjoyed by Japan in the quarter century following World War II. Still, it is important to note that most Chinese are very poor, and even many working couples strain to make ends meet, according to Wharton management professor Marshall Meyer.
"At the top, there's a lot of wealth," says Meyer. "Folks engaged in entrepreneurial ventures, particularly ventures where they connect MNCs (multinational corporations) with the large state enterprises, have been able to make money. But the average family probably feels like the average family in the U.S. -- less well off today than a few years ago. Now, people are optimistic in China, but there's a tremendous squeeze on family budgets, and the squeeze is due to medical and education costs and the skyrocketing cost of housing. Combine these with the need for families to save for retirement. Under the one-child policy, you've got an inverted pyramid with one child supporting four grandparents, in principle. People have to sock away a lot of money for retirement. And returns on savings are extremely low in China, so people have to sock away more."
Middle-Class Growth
Nonetheless, the growth of the middle class is good news for companies selling in China. The Chinese middle class numbers 25 million to 30 million households, according to BCG. BCG defines the "middle class" as those households with an annual income of $4,300 to $8,700. "Mass affluent" households are those with incomes of $8,700 to $11,600. "Affluent" households earn at least $11,600 a year.
Middle-class Chinese are both savers and spenders. Since China's financial-services sector remains relatively primitive, and consumer credit is still virtually non-existent, consumers squirrel away money for long periods of time so that they will have enough to purchase the highest quality products and services they can afford.
Noting that the personal savings rate in China represents a whopping 50% of GDP, BCG's Hsu calls China "a culture of extremely frugal people. They've gone through hard times, starting with the Cultural Revolution in just the last generation. Most never went to university."
On the whole, Chinese have more money than ever before. But because the days of harsh poverty are not that far behind them, many middle-class consumers insist that products be practical in nature and function well, according to Hsu.
At the same time, however, people are beginning to look beyond the functionality of goods. Middle-class and affluent consumers spend much of their discretionary income on items that will help them rise in stature compared to their neighbors. "Incomes have increased so much that some people have already taken care of their basic needs," according to Wharton's Zhang. "Their aspirational level is much higher now. They're looking to consume things that are not entirely necessary. Yet the Chinese are also frugal and will reject products they see as impractical or of low quality."
Some of the most popular products among the middle class and affluent are color televisions, mobile phones and personal computers, according to BCG consultants. Providing schooling for children is also vital. "Education is always a priority, since Chinese couples can only have one child ," Zhang notes. "Parents are always concerned that they don't spend enough to give their kids a head start."
People with the means to do so also tend to spend a lot on real estate, an outgrowth of the importance that the Chinese, in what is still a largely agricultural nation, have always placed on land. It is not unusual for wealthier city dwellers to have multiple apartments or houses, Zhang says. Affluent Chinese also enjoy traveling in Asia and around the world. China has become one of the largest tourist-originating countries in the world, adds Zhang.
Eye-Opening Behavior
Hsu says a visit to a middle-class Chinese home can be an eye opener into the idiosyncratic behavior of consumers. "You see amazingly insightful things -- where consumers trade up and trade down. Actually, they do both at the same time because there are not enough dollars to go around. A couple with a child
will spend a lot on that child. If you go into homes without kids, you see that people spend their money on products that make them feel and look good or give them social status. It can be clothes, mobile phones, fragrances or skin-care products. They don't spend money on products their friends and neighbors can't see. They may not be willing to pay premium prices for brands like Windex window cleaner or Kiwi shoe polish.
"It's important for companies to segment consumers and understand where they're willing to trade up and trade down," Hsu says. "Chinese consumers are experimental. They will pay a premium price for a new brand to try it. But if it's not better, they won't buy it again."
Instead, the buyer will go back to using his or her local brand of laundry soap or dish detergent. Brands like Safeguard soap and Tide detergent are national brands, and they are so popular now that they dominate their share of the market. But many local brands exist in China, especially in less cosmopolitan
regions where many of today's city dwellers grew up. In local or regional markets these homegrown products offer consumers choices that can compete strongly with global brands.
Companies must also pay attention to how the Chinese shop. "For some items they go to the store more often but spend less, and vice versa," says BCG's Wan. "It's a very complicated picture. The rate at which they adopt certain products will also change by demographics, and they have different behaviors
across price points and brands."
By way of further explanation, Wan echoes Hsu's comments about the unpredictable, ever-changing way in which Chinese consumers trade up and trade down. This is one key difference, by and large, between Chinese and American consumers and it is the kind of behavior that can make life challenging for corporate marketers. Says Wan: "A Chinese consumer may say, 'I can trade down on my car.' He may decide that a car is no longer important, even if he is making more money than he ever has before. If he has additional savings or income, he might decide to buy better kinds of wine
and spend less on a car. He is balancing his portfolio, so to speak. This happens all the time, across demographics and incomes."
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u plzzz keep posting and keep on sharing ur resourses

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Buddy !!

In that case why is there a need of even putting the site's link. Everyone is aware of, Fortune 500, news, interviews - FORTUNE Magazine on etc etc, so they can go and read whatever they want !!! Isnt it ???

I guess u missing the purpose of this thread, its kinda ready reference of good articles and readily available to read at one place..

Do u still have any objection ??

No body has objection.... but i like readin the articles in the html format than the monotonous lengthy format in here, in the forum... so if u can post a link that will be nice... also we can read related articles in that... am not telling that post links as but as The Nobel prize for economics A natural choice

because i had to go to the site and i searched for the article there, and read it...

I guess many PGs do that...

So post the links... if so much interested, can post the article along with the link... unless u are getting and posting a paid article. What say guys?


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