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Plans to expand across Asia via Visa’s cross-border capabilities, network
Paywatch, an Earned Wage Access (EWA) startup based in Malaysia, announced last week an MoU with Visa to promote financial inclusion among Asia’s workforce. In a statement, the firm said it aims to…Continue Reading
From August, China is to restrict exports of gallium and germanium, two critical elements for making semiconductor chips.
With China dominating the supply of both elements, exporters will now need special licenses to get them out of the country. The move has the potential to harm a range of Western tech manufacturers that use these elements to make their products.
The move is reportedly in response to Western restrictions on equipment vital for making semiconductor devices.
Above all, the US CHIPS and Science Act of 2022 curtailed exports of high-end microchips and technology to China, potentially affecting Beijing’s capacity for high-performance computing in areas such as defense. Other nations such as Japan and the Netherlands have also imposed restrictions.
So how important are the new Chinese restrictions and what are the implications likely to be?
Silicon is the most widely used material in semiconductors, and is very abundant. But germanium and gallium have specific properties that are hard to replicate and lend themselves to certain niche applications. These get incorporated into countless devices such as smartphones, laptops, solar panels and medical equipment, as well as defense applications.
Both elements are also crucial to technological advancement over the next few years. Germanium is particularly useful in space technologies such as solar cells because it is more resistant to cosmic radiation than silicon.
With the physical limits of silicon being approached in some technologies, increased use of germanium is mooted as a way of overcoming these limits. It is already used in small quantities in some semiconductors to improve things like electron flow and thermal conductivity.
As for gallium, 95% of it is used in a material called gallium arsenide, which is used in semiconductors with higher performance and lower power-consumption applications than silicon. These are used in things like blue and violet LEDs and microwave devices.
Meanwhile, gallium nitride is used in semiconductors in components for things like electric vehicles, sensors, high-end radio communications, LEDs and Blu-Ray players. Its use is expected to grow significantly.
Both gallium and germanium are on the European Union and US lists of critical elements. The UK considers gallium to be critical to its manufacturing interests, though sees germanium as less important.
China controls about 60% of all germanium supplies. The element is derived in two main ways, as a by-product of zinc production and from coal. These respectively account for about 75% and 25% of the total supply.
China dominates germanium that comes from zinc production. The US is one of the alternative suppliers, with deposits in Alaska and Tennessee and additional refining capacity in Canada. But as it stands, the US is still over 50% reliant on imported germanium.
Germanium from coal has several drawbacks. Two of the main producers are Russia and Ukraine, and the war has affected supplies to the west from both countries. In the years 2017-20, Russia was supplying 9% of the US germanium requirement, for instance, but this is now likely to have stopped.
In response to the Chinese restrictions, Russia plans to increase germanium production for its domestic market. This may at least alleviate global demand, even if it won’t help the West directly.
Germanium from coal is also at the mercy of the power industry, since certain coals rich in the element are burned as an energy source. In addition, germanium from coal will become more difficult as much of the world seeks to phase out coal power, which again could tighten supplies.
With gallium, China accounts for around 80% of the world supply, deriving it mainly from aluminum production. There’s actually no shortage of gallium, but even before the new controls, the supply was restricted by a lack of production capacity.
Gallium is also obtained by recycling semiconductor wafers, which are thin slices of semiconductor used in electronic circuits. But once the circuits are integrated into products, the quantities of gallium in each one are so small that it becomes challenging to recycle.
A Nature Communications paper in 2022 noted that gallium is “almost never functionally recycled” once it reaches final products.
The full impact of China’s new export regime depends on a number of factors, including the severity of the controls in practice, and the response of Western governments and companies. As it stands, the controls look likely to lead to higher prices for gallium and germanium, as well as longer delivery times.
This could make it more expensive and difficult for Western companies to produce electronic devices, which could in turn lead to higher prices for consumers. It could also make it more difficult for Western companies to compete with Chinese companies.
In an echo of how the global microchip shortage during the Covid pandemic considerably affected tech manufacturing, this points to a significant impact on the global economy.
The long-term effects of the controls are difficult to predict because so many factors are involved. Stockpiles of the elements should help to some extent: the US has said it holds inventory of germanium, though not gallium.
Western manufacturers may be forced to diversify their supply chains by obtaining components containing the elements from countries to which China is willing to export. This could lead to increased costs and complexity.
Another avenue is to increase production from alternative sources. In the past, germanium has been derived from minerals mined in Germany, Latin America and Africa, so these options may come back on the table. There is also the potential to invest in researching devices that are less reliant on these critical materials, but that would take time to bear fruit.
Clearly, the move is a significant escalation in the tech war between China and the West. The concern is that it could go further: China dominates the supply of a whole range of vital materials known as rare earth metals, as well as other materials which are required for the clean energy transition. Even before the escalation in hostilities over the past couple of years, China had used its dominance over certain materials as leverage in trade disputes.
So this latest development is concerning to say the least. At a time when the international challenges faced by humanity are greater than ever, the emergence of a new resource nationalism is the last thing anyone needed.
Gavin D J Harper, Research Fellow, Birmingham Centre for Strategic Elements & Critical Materials, University of Birmingham
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Two men are carrying torches and homemade arrows as they slip into the ocean at night on an Indonesian island.
They are from an indigenous community of Bajau people – renowned freedivers who find it better to hunt in the dark when fish, lobsters and sea cucumbers are less active.
But they fear time is running out for their traditional way of life.
“Right now, the water is still clear,” says Tawing, one of the fishermen. “But it won’t stay that way… nickel waste enters our water during the rainy season and the current carries it here.”
Nickel is an integral part of global life, used in stainless steel, mobile phones and electric car batteries. As the world shifts to greener vehicles and needs more rechargeable batteries, the International Energy Agency (IEA) predicts that demand for nickel will grow by at least 65% by 2030.
The IEA expects Indonesia, the world’s largest nickel producer, to meet two thirds of the world’s needs for the metal. The country has already signed deals worth billions of dollars with international players keen to invest in processing plants as well as mines.
But conservationists warn that mining could have a devastating effect on the environment.
Here on Labengki Island in Southeast Sulawesi, Tawing fears that if the government does not take action, waste from nickel mines will end up in the sea, damaging the island and surrounding marine life.
According to data from the Indonesian government, about 50 nickel mining companies currently operate in North Konawe Regency, across the water from Labengki Island.
The journey to get there takes us about an hour by boat. As we approach, the green hills are replaced by brown, deforested patches. Excavators and barges can be seen digging and carrying the “new gold”. The water beneath us is a reddish-brown colour.
In the coastal village of Boenaga we meet Lukman, another Bajau fisherman, who says he can no longer fish near his home.
“We couldn’t see anything underwater when we dived,” he says, pointing at brown water at the back of his house. “We could hit a rock.” The cost of fuel makes it impractical for him to travel further afield to fish and he says if they make a fuss the police end up getting involved.
In order to mine nickel, large areas of trees are cut down and the land is excavated to create open pits. With the roots of the trees no longer present to stabilise the ground, when it rains earth is more easily swept away.
Government data shows that in 2022 there were at least 21 floods and mudslides in Southeast Sulawesi. Between 2005 and 2008, before the proliferation of mines, there were two to three per year, according to the National Agency for Disaster Countermeasure.
Chemicals such as sodium cyanide and diesel can be also used in the mining process. That worries local conservationist Habib Nadjar Buduha, who says that when waste material and water are not properly managed, sediment ends up in the sea.
He showed me a video he shot about 10 miles along the coast, off Bahubulu Island, of a coral reef “suffocated” by sediment.
He is afraid that the same thing will happen in Labengki and in 2009 he founded a conservation group to protect giant clams. “They would never win against nickel pollution,” he says.
“The sediment will bury and destroy them.”
Individual nickel mining companies near Boenaga did not to respond to our requests for comment, but we did speak to the Indonesian Nickel Miners’ Association – about half of the mining companies in North Konawe are members.
The secretary general, Meidy Katrin, says that in order to get a licence companies must agree to carry out reforestation or reclamation of the land when they have finished mining an area.
“The question is, are the companies doing it?” she says, admitting there are patches of bare land that have not been reforested. But she says this may not be the fault of companies with permits: “This area also has a lot of illegal mining activities.”
She puts the onus on the government to check up on miners to make sure they are complying with the rules and ensure that what they put in their reports matches the reality.
The head of Boenaga village, Jufri Asri, sees things differently to Lukman and Habib. He believes the mines have brought benefits to his community. “Take the price of fish,” he says. “I don’t take fish to the city to sell because the price is higher here. These companies need fish too.”
His 21-year-old son has a job at a nearby nickel mining company and, like other families in Boenaga, they receive a monthly compensation fee of at least $70 a month from the mines.
Financial agreements are common and are designed to offset any inconvenience caused by mining activity and heavy vehicles travelling past homes as they go to and from the pits. Jufri notes that if nickel production increases, the amount of compensation they get also goes up.
In the capital, Jakarta, we meet Novita Indri, a campaigner for Trend Asia, an NGO that promotes sustainable development. She blames the authorities for being “too weak” – she wants to see higher environmental standards and tougher regulation.
“We don’t have a track record of sustainable mining yet,” Indri says. “Indonesia has a lot of homework to do, strengthening law enforcement, increasing emission standards, and implementing environmental regulations.”
When we put this to the adviser to the Ministry of Energy and Mineral Resources (ESDM), Professor Irwandy Arif, he tells us the government is concerned “about the impact of mining activities on coastal sedimentation”, not just in this region but across Indonesia.
However he believes pollution is caused by illegal nickel mines, not licensed companies.
He insists regulations mean that legitimate operators have water management systems in place to ensure nothing dangerous ends up in the sea and he does not believe they would ignore the rules and risk losing their permits.
But Prof Arif acknowledges that at illegal mines without treatment systems “the soil will just be eroded”.
He tells us that anyone who doesn’t comply with the regulations is prevented from selling nickel and that two illegal miners have been taken to court in the North Konawe Regency – the area where Boenaga is located.
But Prof Arif admits supervision needs to improve: “Illegal mining exists everywhere in Indonesia,” he says. “So far we have not managed to regulate it properly… we need to map which ones are legal and which ones are illegal so that we can minimise this environmental damage.”
He points out that in order to try to improve the situation, the government recently established a national illegal mining taskforce.
But many of the Bajau people we spoke to say change is not happening quickly enough. If things continue as they are, conservationist Habib warns that the damage could be irreversible.
“What they are destroying is our future,” he says.
Getty ImagesByju’s, once among the most valued edtech start-ups in the world and a darling of investors during the Covid-19 pandemic, has seen a dramatic downturn in its fortunes after operational and financial setbacks in recent months. Experts say it marks a necessary correction in the bull run of Indian start-ups.
“Byju’s is a company that has grown too fast too soon,” says Shriram Subramanian, who heads an independent corporate governance research and advisory firm.
Founded in 2011, Byju’s launched its learning app in 2015. With 15 million subscribers by 2018, the edtech firm became a unicorn (valued at $1bn) amid much fanfare.
It expanded substantially during the Covid-19 pandemic as students turned to online classes during lockdowns. But in 2021, it posted a loss of $327m, which was 17 times more than the previous year.
Since then, the edtech giant has witnessed an extraordinary unravelling. Valued at $22bn (£17.28bn) last year, Byju’s has seen its valuation slashed to $5.1bn this year by Prosus NV, the company’s biggest investor and shareholder.
The company did not respond to the BBC’s queries.
“After the pandemic, when children returned to schools there was going to be a downturn,” Mr Subramanian said. “But Byju’s kept on growing and investors kept on putting money into it. They did not see the signs that there could be a downturn.”
Aniruddha Malpani, an angel investor and vocal critic of Byju’s business model, says the company had “paper fortunes”.
“There’s a big gap between value and valuation,” he said.
With exponential growth during the pandemic, Byju’s went on an acquisition spree in 2021, spending $2bn to acquire edtech start-ups and firms like WhiteHat Jr, Aakash, Toppr, Epic, and Great Learning.
It soon surpassed digital payments platform Paytm to become India’s most-valued start-up.
Byju’s channelled hundreds of millions into its marketing, roping in Bollywood superstar Shah Rukh Khan and football star Lionel Messi as its brand ambassadors. It became the main sponsor of the Indian cricket team and an official sponsor of 2022 FIFA World Cup.
But in recent months, the company has been dogged by complaints as parents accused it of not fulfilling its promises – coercing them into buying courses they couldn’t afford and then not providing the promised services. Some also said that the firm used predatory practices to exploit customers.
Former employees complained of high-pressure sales culture and unrealistic targets. The firm has laid off thousand of employees in the past year in a bid to cut costs.
Byju’s has denied the allegations made by parents and its former staff. It has also been facing investigations from the government.
In April, the firm’s office in Bengaluru was raided by Indian authorities over suspected violations of foreign exchange laws. The company denied any wrongdoing and assured its workers that it had fully complied with the laws.
In May, lenders to the company filed a suit in a US court, accusing it of defaulting on payments and breaching terms of the loan agreement, including months-long delays in releasing financial statements. The lenders also accused the company of diverting funds through its US-based subsidiary Alpha, a claim Byju’s denied.
In June, after reportedly missing an interest payment of nearly $40m, Byju’s sued the lenders over alleged harassment.
It also began another round of layoffs, firing nearly a thousand employees. There was more trouble waiting for the firm from its own auditors.
Deloitte Haskins and Sells Llp quit as the company’s auditors citing the delay in Byju’s submitting its financial statements. The auditors said it impacted their ability to assess the company’s books.
This was soon followed by news that three of its board members had resigned, leaving just CEO Byju Raveendran, his wife Divya Gokulnath and brother Riju Raveendran on the board.
The start-up is reportedly now in talks to restructure its debt load.
Reports also said that there were calls for the CEO’s resignation at a shareholders’ meeting this week, but two investors at the company denied these claims.
“Byju’s failed at holding itself to the standard expected of a company its size,” said K Ganesh, a serial entrepreneur and angel investor who founded one of India’s largest online grocers, BigBasket.
The delay in filing financial statements was “unacceptable and unconscionable”, he says.
“Most sectors that benefited from the pandemic and expanded rapidly are now facing headwinds because the return to normal has been more drastic than they expected,” Mr Ganesh said. “This is true for all companies in the edtech sector.”
Experts say the sector’s potential was overestimated during the pandemic.
“Technology by itself will never work,” Dr Malpani explains. “You need it along with safe space for children where there is adult supervision, peer to peer learning.”
“Byju’s was essentially selling hardware, like its tablets, with study material that could be found online for free,” he says.
These start-ups were valued at a “stratospheric, unrealistic level” during the pandemic and are being valued at “realistic levels now,” Mr Ganesh said.
He added that one of the reasons Byju’s is at its current crossroads is the “detrimental” board structure of venture capitalist-funded companies.
“With just managers, founders and investors on board – each of whom is bound to protect their own interests – there is nobody to protect the interests of the company. This is unlike a public listed company where regulatory rules ensure a set of independent directors on board and insist on an audit committee headed by an independent director,” Mr Ganesh explained.
Several experts, including Mr Ganesh, have been advocating that start-ups that reach a certain level should be told to work like public listed firms.
At the shareholders’ meeting, the company is said to have agreed to form an advisory committee consisting of independent directors to advise and guide the CEO on the composition of the board and the governance structure
Mr Ganesh and Mr Shriram said the company could still course correct if it acknowledges its missteps and commits to immediate action on all fronts.
But Dr Malpani believes Byju’s has not shown the intent to do this.
“They need to conserve as much cash as possible which will give them a long runway and cut down on costs aggressively, more than just through layoffs,” says Mr Shriram. “Also, sell off some businesses to raise capital.”
Byju’s has set a timeline of September end for the completion of its 2022 audit and December end for its 2023 audit.
Analysts believe Byju’s current situation will only have a positive short-term impact on India’s start-up ecosystem.
“Due diligence, founders’ rights, the need for an internal auditor, independent board members and terms and conditions of corporate governance, which were earlier glossed over, will become stricter,” Mr Ganesh said.
“India has good corporate governance laws,” Mr Shriram said. “It is for the investors and other stakeholders to demand more from Byju’s.”
Analysts say investors are used to handling bull and bear runs and have short memories when it comes to these dips.
“There’ll be another [like this] in two years,” Dr Malpani says.
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CHINA VS JAPAN Bangkok resident Pasit Chantharojwong drove a Toyota Corolla for a decade and a half before switching to Great Wall’s Ora Good Cat this year. “I’ll never go back to a combustion-engine car again,” said the 55-year-old teacher, who also drives part-time for a ride-hailing service. Of theContinue Reading
However, Mr Adrian Choo, chief executive of recruitment firm Career Agility International, believes that retrenchments now “are no longer necessarily tied to recession cycles”. Instead, they may be due to rapidly changing technology or shifting of customer demand for products, which may sometimes result in the company closing entire businessContinue Reading
I went to China with my wife and two cats. I had never been to China before and my Mandarin as a second language was mediocre. Since I had little prior exposure and knowledge of the marketplace, I decided the best option was to aggressively immerse myself in the environment, to quickly understand the issues, opportunities, vast geography, and most importantly, the people who were at the heart of our business execution.
With Singapore being a sanctuary of structure and stability, being willing to get out of one’s comfort zone – be it going overseas or even simply having a mindset shift in working styles – can perhaps be one of the biggest challenges that Singaporeans face.
But in our interconnected world today, getting uncomfortable – and having rounded experiences – is imperative to earn our place at the global leadership table, noted a recent Alliance for Action on Business Leadership Development (AfA-BLD) Insights Report by the Singapore Business Federation.
Today, the spotlight is turning towards Asia as firms increasingly look to the region to grow their businesses. According to the International Monetary Fund, Asia’s economy is expected to grow 4.6 per cent this year, contributing about 70 per cent of global growth.
Yet globally, Asians still largely remain underrepresented in corporate leadership roles. For instance, a study by the Center for Creative Leadership in September 2022 showed that Asians only account for 4 per cent of executive teams in US-headquartered companies and 3 per cent in Europe-headquartered firms.
With Singapore being an attractive regional hub for corporates, as home to the regional headquarters of more than 37,000 international companies, one question remains: Why aren’t more Singaporeans leading these corporations?
When it comes to hard skills, Singaporeans have what it takes to be leaders. Our universities are among the top ranked internationally, and more than 35 per cent of residents aged 25 and above are university graduates. Singapore is also deemed to be the most proficient in English in the region, and our students regularly top international math and science rankings.
With such achievements, however, have Singaporeans become so comfortable that we are at risk of losing our competitive edge?
Many of my business counterparts have observed that it is often difficult to get Singaporeans to take up overseas roles. Many of us are risk-averse, shying away from unfamiliarity and choosing to remain within the structured comforts of our home environment.
Japanese automakers are risking a repeat of the decline of Detroit’s big three automakers – Chrysler, Ford and General Motors – because of their resistance to electric vehicles (EVs). Nearly 40% of Americans who bought Teslas had switched from Japanese brands, primarily from Toyota and Honda.
At a time when 25% of new car sales in China are EVs or plug-in hybrids, a lack of EVs is costing Japanese brands sizeable sales. In a market weakened by Covid-19, Japanese brands tumbled the most — by a third from the year before — compared to just 9% for US and European brands.
After surpassing Germany to become the world’s second-largest auto exporter in 2022, China is on track to surpass Japan relatively soon. Given the long-term decline in car sales within Japan — with 2022 sales 26% below that of 1996 — a loss of market share in exports is a serious hit.
The export problem is also largely because of EVs, which now account for half of all Chinese automobile exports. Most of these are made by foreign brands, usually through joint ventures with domestic partners.
In the first half of 2022, Western Europe accounted for around 34% of China’s total car exports. China’s share of the European EV market is predicted to rise from 5% in 2022 to 15% as early as 2025.
Japanese automakers are finally waking up and making some changes. In December 2021, Toyota announced its goal of producing 3.5 million battery EVs by 2030, up from the previous goal of 2 million.
The new goal equals 35% of the company’s 2022 global sales. Honda now targets 2 million battery EVs by 2030, equal to half of current sales. Even with these changes, Japan significantly lags behind other wealthy countries.
Unfortunately, these companies are still hedging their bets by spending billions of dollars on cars that are either losing popularity — such as hybrids — or were never popular, like plug-in hybrids and the truly futile hydrogen fuel cell vehicle.
In 2022, global sales of battery EVs and plug-in hybrids combined overtook traditional hybrids, but sales of battery EVs were three times as high as plug-in hybrids.
In January 2023, the plug-in hybrid share in the United States was still a measly 1.2% while the battery EV share hit 6.2% and will keep rising. Bloomberg New Energy Finance believes that global gasoline car sales peaked in 2017 and will never recover.
Yet both Japan’s government and automakers are still obsessed with the romance of hydrogen fuel cell cars. Tokyo allots more subsidies to fuel cell cars than to EVs. The Mirai, Toyota’s fuel cell car, was introduced in 2015 but has only sold 22,000 units worldwide since then.
The irony is that Chinese brands seem to be repeating exactly what Japanese automakers did to Detroit’s big three, and for the same reason — a shift in technology and market conditions that dominant oligopolists fail to adapt to.
Until the two oil price shocks of the 1970s, Detroit’s big three’s market share held up at 85%. Then, oil prices suddenly rose at the same time as the government’s imposition of stricter pollution controls.
Japanese brands seized the opportunity to offer smaller, more reliable, fuel-efficient and less polluting cars, while Detroit resisted improving fuel efficiency and lowering emissions.
Japanese automakers also put computer chips into their cars before others. Within less than a decade of the oil price shocks, Japan became the world’s biggest auto exporter, prompting protectionist measures in both the United States and Europe.
Today, Detroit’s combined market share in the United States is down to just 40%, and Toyota has become the world’s biggest automaker, a status that General Motors previously enjoyed for 77 years.
Just as success blinded Detroit to a change in the times, it has done the same with Japanese brands. Just-retired Toyota chieftain Akio Toyoda dismissed EVs as overhyped and repeated the myth that shifting to EVs would actually increase carbon emissions.
The latter is only the case where coal generates an unusually high share of electricity — globally, EVs emit 30% fewer emissions than gasoline cars and the advantage keeps increasing as the use of renewables grows.
Toyoda’s successor, Koji Sato, told the press, “we will thoroughly implement electrification, which we can do immediately.” But many analysts remain skeptical of his commitment.
Japanese automakers seem to assume that they can still focus on hybrids and catch up if the time comes to focus on EVs. But it is not clear whether catchup will be easy, partly due to internal corporate culture.
It is common for managers and engineers at highly successful companies to become too attached to the business model and technology that originally brought them success. Insiders say that many Japanese executives hesitate to stray too far from the policies of the seniors who promoted them.
It is not impossible for Toyota, Honda and other Japanese automakers to change course and avoid a plunge in market share. But time is not on their side.
Richard Katz is Senior Fellow at the Carnegie Council for Ethics in International Affairs. This is an adapted version of a piece that originally appeared here on Japan Economy Watch.
This article was originally published by East Asia Forum and is republished under a Creative Commons license.
SYDNEY: Solomon Islands Prime Minister Manasseh Sogavare arrives in China on Sunday (Jul 9) for his first visit since striking a security deal, pledging to “remain neutral” amid rising China-US competition and prioritise his nation’s development needs. Western analysts said Sogavare would be feted after signing the security pact thatContinue Reading
BEIJING: US Treasury Secretary Janet Yellen said 10 hours of bilateral meetings with senior Chinese officials in recent days were “direct” and “productive” and helped stabilise the often rocky relationship as her four-day Beijing trip drew to a close. Yellen, who departs Beijing on Sunday, told a press conference the United StatesContinue Reading