Day: June 24, 2017

A second U-turn this year by Ford Motor Co. in Mexico has raised the specter of Chinese competition for local carmaking, adding to pressure on the industry after repeated threats by U.S. President Donald Trump to saddle it with punitive tariffs.

Ford announced on Tuesday it would move some production of its Focus small car to China instead of Mexico, a step that follows the U.S. automaker’s January cancellation of a planned $1.8 billion plant in the central state of San Luis Potosi.

The scrapping of the Ford plant was a bitter blow, coming after U.S. President Donald Trump had blamed the country for hollowing out U.S manufacturing on the campaign trail, and threatened to impose hefty tariffs on cars made in Mexico.

Since then, rhetoric from the Trump administration has become more conciliatory, and Mexico and the United States have expressed confidence that the renegotiation of the NAFTA trade deal, expected to begin in August, could benefit both nations.

But the loss of the Focus business is an unwelcome reminder of competition Mexico faces from Asia at a time China’s auto exports and the quality of its cars are rising.

“For a long time, the quality of vehicles coming out of China was not to global standards. There was a gap in quality that [favored] Mexico – but that is closing,” said Philippe Houchois, an analyst covering the auto industry at investment bank Jefferies. “That is probably a threat to Mexico.”

In the past decade, global automakers have invested heavily in Chinese factories to make them capable of building cars at quality levels that make the grade in developed markets.

Ford’s decision to shift Focus production for the United States market to China from Mexico shows automakers have increasing flexibility to choose between the two countries to supply niche vehicles to American consumers or other markets.

‘Very Troubling’

Demand for small cars in the United States is waning and General Motors Co. faces a similar situation to Ford’s with its Chevrolet Cruze compact.

Were GM to go down the same path with the Cruze and shift its production out of U.S. factories, it could give more work to its Mexican plants – but might also bring its Chinese operations in Shenyang or Yantai into play.

GM did not immediately reply to a request for comment on its plans for the Cruze.

Studies show Mexican manufacturing is competitive, and business leaders believe that NAFTA talks between Mexico, the United States and Canada could ultimately yield tougher regional content rules for the region that benefit local investment.

Ford said its decision balanced cheaper Chinese labor rates against pricier shipping, but that in the end an already-planned refit of its Chinese factory saved it some $500 million over retooling both that facility and its Hermosillo plant in Mexico.

The volatile state of U.S.-Mexican trade relations also carries big risks if Trump renews his threats to impose 35-percent tariffs on cars made in Mexico.

To be sure, Trump has also threatened to levy 45-percent tariffs on Chinese goods and his Trade Representative Robert Lighthizer said he found Ford’s China move “very troubling.”

Trump’s threats have battered the peso, ironically making Mexico’s goods cheaper. Uncertainty over the future of NAFTA pushed the currency to a record low in January, although it has since rebounded.

That same month, the Boston Consulting Group published an assessment of manufacturing competitiveness that gave Mexico an 11-percent lead over China.

That advantage has prompted global firms to plow billions of dollars into the Mexican auto industry, pushing output to record highs. Some officials in the automotive sector painted Ford’s move as a one-off decision.

“There’s still very dynamic investment and growth in plants,” said Alfredo Arzola, director of the automotive cluster in Guanajuato state, one of Mexico’s top carmaking hubs.

Still, there have been “significant quality improvements” in Chinese cars, consultancy J.D. Power said in a 2016 study.

Chinese car manufacturing could catch up with international standards in China by 2018 or 2019, said Jacob George, general manager of J.D. Power’s Asia Pacific Operations, citing the consultancy’s gauge of “hard quality”, or failures.

However, when measured in terms of “perceptual” quality, China was probably still some 4 to 6 years behind, he added.
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After starting work in a hotel kitchen, Zhai Meiqin began selling furniture and built a billion-dollar conglomerate, but she took great pride in being recognized this week for driving a new phenomenon in China: philanthropy.

Zhai, one of China’s richest women and president of the privately owned HeungKong Group Ltd., said she never forgot her humble upbringing in Guangzhou in southern China, where her father was an architect and her mother worked in a store.

This made her determined to help others, and she started donating to charity shortly after setting up the business with her husband in 1990.

As their business grew, taking in real estate, financial investment and health care, Zhai broke new ground in 2005 by establishing China’s first nonprofit charitable foundation.

Since then, the HeungKong Charitable Foundation has helped an estimated 2 million people, by funding 1,500 libraries, providing loans for women to start businesses, and funding orphans, single mothers, handicapped children and the elderly.

“I realized there were a lot of poor people in China and this drove me to earn more money so I could help them,” said Zhai, 53, who was one of nine philanthropists named Thursday as winners of the 2017 Carnegie Medal of Philanthropy.

Zhai and her husband, Liu Zhiqiang, whose HeungKong Group with 20,000 staffers has made them worth about $1.4 billion, according to Forbes magazine, are known for being leaders of the culture of philanthropy in China.

Their foundation was listed as number 001 by the Ministry of Civil Affairs. Zhai said at the end of 2015 there were 3,300 registered nonprofit charitable foundations in China.

Next generation

“By setting up the foundation, I wanted to encourage other people, other entrepreneurs, to also donate to charity,” she told the Thomson Reuters Foundation in a phone interview from Guangzhou translated by her daughter.

“Now I want to make sure that the next generation continues this culture of philanthropy in China,” she added, with two of her four children taking an active role in her foundation.

The other philanthropists to win the Carnegie Medal — which was established in 2001 and is awarded every two years — came from around  the globe.

The list included India’s education-focused Azim Premji, Canadian-born social enterprise pioneer Jeff Skoll and American-Australian lawyer and former World Bank Group President James Wolfensohn.

The winners were chosen by a committee made up of seven people representing some of the 22 Carnegie institutions in the United States and Europe.
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Cambodian activists fighting plans to transform Phnom Penh’s largest lake into a luxury development made a tactical decision when they took to the streets: put women on the frontline to show a “gentle” face and prevent violence.

But it was wishful thinking.

The women of Boeung Kak Lake, once home to a thriving community, have been kicked, manhandled, threatened and jailed, one of many land battles globally where women are bearing the brunt of the crackdown on protesters.

“We are mostly women because we are more gentle so we face less violence. This is our strategy,” said Im Srey Touch, a 42-year-old activist from Boeung Kak Lake.

“If we let men participate in our protests, we let them stand behind us or outside, and we stand in the front to reduce the likelihood of violence.”

​Evictions began in 2007

In fact, as the number of people killed in land conflicts around the world soars, more than half of the dead have been women, rights watchdogs say.

In Phnom Penh the conflict began in 2007 when nearly 4,000 families were stripped of their housing rights after the Cambodian government leased the Boeung Kak Lake area in the nation’s capital to make way for an upmarket mini city.

Since then, the lake has been filled with sand and most of the 4,000 families evicted, with little to no compensation, amid complaints about the social and environmental impact.

Over the years, more than a dozen activists protesting the evictions have been arrested, most of them women through whom land is passed down in many parts of Cambodia.

Whose courts?

In February, a court sentenced Tep Vanny, the most high-profile lake activist, to two and a half years in jail for inciting violence and assaulting security guards.

Rights observers say the government is using the courts and jails to muzzle activists, including those defending their land rights against government officials and their business cronies.

“It is a signal to civil society that ‘We can come after you whenever we want. The courts are ours. We can make anything we say about you stick,’“ said Phil Robertson, deputy director of Asia for New York-based nonprofit Human Rights Watch.

The government of Minister Hun Sen’s ruling Cambodian People’s Party (CPP) rejects such criticism and says it respects due process.

“The court makes decisions based on the constitution and, like every open society, the court provides justice to everyone no matter who they are,” said government spokesman Phay Siphan.

​Long history of land disputes

Amnesty International has criticized the Cambodian government for “bending the law to their will” to crack down on dissent. It said 42 criminal cases have been brought against the Boeung Kak Lake activists since 2011.

“Nobody believes Tep Vanny was assaulting these security guards,” said Robertson, who accused the judges of being “stooges” of the CPP.

Home to 15 million people, impoverished Cambodia has a long history of disputes over land rights, many dating back to the 1970s when the communist Khmer Rouge regime destroyed property records, and all housing and land became state property.

Cambodia began to privatize land after 1989, when Hun Sen’s CPP-led government shed its communist past and courted foreign investment, paving the way for economic land concessions.

“After privatization, land prices started going up, and people were at risk of land grabbing by companies, the state and well-connected individuals,” said Naly Pilorge, director of the nonprofit Cambodian League for the Promotion and Defense of Human Rights (LICADHO).

LICADHO says the lack of a publicly available land register detailing boundaries means authorities could confiscate land, claiming that affected families were living on state property.

Between 2000 and 2014, about 770,000 Cambodians were affected by land conflicts, according to charges presented by lawyers at the International Criminal Court in the Hague.

“Because Cambodia is lawless … with close ties between companies, government, the military and police, it’s a recipe for violence,” Pilorge said by phone from Phnom Penh.

A broken family

Despite the court cases and jail time, the Boeung Kak Lake women persist. They protest loudly and lie on the ground when ringed and roughed up by authorities. They are arrested in groups, sometimes just two, and, once, 13 of them.

Pilorge says authorities now appear to be trying a new tack, turning their energies onto Vanny on whom it is taking its toll.

During a brief recess before her guilty verdict Feb. 23, the 37-year-old divorcee who was arrested last August described the impact of her detention on her son, 11, and daughter, 13.

“I lost my role as a mother. I have a broken family. My child is sick,” she said, adding that she could not be there for her daughter’s surgery to remove her appendix.

“During the last hearing, my daughter cried until she fainted … I am a mother but I’m in prison. I can’t take care of her,” she said.

Activists suspect authorities are using her in a bid to silence other activists ahead of local elections this month and next year’s national vote.

A lake activist who was arrested with Vanny last year, Sophea Bov, was convicted for insulting authorities and fined $20. So far Bov has refused to pay the fine, Pilorge said, but no one has come for yet although the judge could imprison her.

“She was hoping that if she refused to pay the fine, she could go to prison to be with Vanny. Imagine where they are now, to think like that,” Pilorge said. “As human beings, we grow and we become stronger with challenges … these women have been tested, and they’ve overcome a lot of obstacles.”

 
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