Inflation and Growth in Asia Pacific – The Myth of Economic Decoupling

Currently central banks around Asia Pacific region have to worry of two pronged worries; inflation which is fueled by fuel price and economic growth which is adversely affected by global slowdown.  The usual weapon employed, and recently advocated by policy makers, is tight monetary policies, which means squeezing liquidity out from the market through higher interest rate.  However, this time the freedom to use is limited by possible drop in demand both domestically and internationally.

Internationally, export growth around the region has been supported by foreign markets, mainly developed nations. Although US may not be the biggest trade partner in terms of export for some of the countries, its thirst for goods from other nations which has been purchasing in large number from the region indirectly affects the export growth.  And high dependence on export to fuel the domestic growth adversely affects the growth prospect.  

Propelled by low interest rate before the mortgage crisis, demands in US were factored by loans and debts from around the world; China, Japan, Middle East, which hold large US government debts.  The liquidity created has been channeled to pop up demands for toys from China, Oil from Middle East and manufacturing products from India and Japan.  Some of these countries, such as China and India, and also some of the emerging countries such as Indonesia, Vietnam and Malaysia, are main players in regional trade. For example, China has been main buyer of intermediate manufacturing goods, besides producing large quantities of finished goods to be sold in the region and US.  Vietnam and Indonesia, are fast becoming investment destinations due to their low labor cost.  The network of regional trade has one common destination and hope; the large market in Europe and US.  Thus, any hiccup occurs to US economy, the whole network is affected.  

When the oil price escalated, many countries in the region have started to cut subsidies, as the burden of USD140 per barrel is unbearable. Malaysia, Indonesia, Vietnam, India and China, the saved subsidies, are said to be re-channeled for other developmental policies.  However, this unpopular move has negatively affected the low and middle income groups in the countries.  Higher portion of income is now allocated and spent on fuel and food.  The spillover can be felt in price increase in bread, rice, vegetables, milk and frequency in eating outside is cut and purchase of fuel efficient automobiles has increased.  The signs around is bleak; the domestic demand and consumer sentiment has dropped.

Against these backdrops, the stage is now set to promote higher interest rate, tighter loan expansion to lower consumption.  But at the same time, the worry that tighter loan growth and consequently lower consumption hampers economic growth which is already under stress looms.  More importantly, the tighter monetary policy could appreciate countries’ currencies and cause products to be less competitive.  Since US currency is weak now due to low interest rate and other worries of economic recession, any appreciation of regional currencies will not help the export growth which the region depends so much.  But inflation worry starts to pop up in the central banks’ radar screen, workers are now asking for higher wages to compensate the higher cost of living.  If the price wage effect spirals out of control, it may warrant intervention, provided it does not negatively affect the production sector.  

It is really a stressful period, as both inflation and economic slow down could trigger regional stagflation, or if the inflation is tackled, economic slow down.  There is never decoupling of Asian economy from US economy in this globalized world.  

Channel Management Solutions to Challenges

In the IT industry, software publishing enterprises are the ideal market in need of channel services to boost sales revenues. Channel management solutions are necessary to facilitate the relationship between the software vendor and the channel partners. Channel managers are tasked with developing the partnership and streamlining the sales process by channels.

In channel management these tasks are essential:

• Handling relationships – There are generally three parties involved in channel sales: the vendor, reseller or partner and the customer. The margins, credit limits, product price list, terms, etc, must be set. Proper pricing is crucial. It must not be set too high or too low and neither should the margins that affect the final price consumers pay for. Aside from pricing issue, the products have to match the resellers. High value products for example need to be assigned to VARs or Value Added Resellers who have previous experience in selling these kinds of products.

Conflict management comes into play especially between partners. One of the most prevalent challengers in channel sales is too much competition. Sometimes even the vendor would pull the rug out from under a partner when it sees an opportunity to reap the profits for themselves. Stealing leads are frowned upon but not unheard of in the industry.

• Product management and order approval – When leads push through, then the vendor must have the capacity to deliver the product to the end users. Included in this task is the delivery of license key since the product is software applications. In international markets, like Asia or Europe, the prices on the software may differ to reflect the market. It is imperative that resellers be recruited from countries where the product is being sold because they would be more efficient in selling the product since they know the language and has presumably built their reputation locally.

• Payments processing – There must be standard operating procedure for generating invoices and handling payments. One of the biggest hurdles in channel sales is on time payments from customers. It is important to reconcile the accounts or else it is a loss for both the vendor and the partner.

• Report Generation – These are unavoidable tedious paper work for channel managers that consume valuable time. They are required however, so companies can gain valuable insight to how they are progressing as far as channel sales goes.

A Partner Relationship Management or PRM tool can provide solutions and help in with these tasks of channel management. PRM offer features that would make the job of channel management a lot easier:

• Set partner levels or tiers – Vendors with hundreds of different channel partners would be at a loss on how they can differentiate the low-performing resellers from the high-performing resellers. With a fully automated system, resellers’ performance are transparent and based on the information, resellers can be awarded silver, gold or platinum status.

• Training, support and marketing materials – With a comprehensive PRM channel management solution, partners will have a valuable resource for product information, and marketing materials to use in generating sales.

• Automated reports – Manual tallying of sales is eliminated because the report is automatically generated. Channel managers and resellers will be allowed to focus on a more important task which is selling.

• Channel management conflicts are averted because with features like lead registration, partners will avoid competition with each other for the same business.

A Visit to Rebel – Held Area in Asia

We started our journey towards Kilinochchi and reached the Omanthai Military Check Point, the Northernmost Frontier of the Sri Lanka Army in the mainland and stopped for clearance.

Dr. Jayalath Jayawardene spoke to the Military Officials and we were cleared after a few procedures and set on our journey towards North. In a few minutes’ time by passing the No Man Zone, we reached the LTTE Check Point. I spoke to an LTTE member who questioned me about our mission. I explained our mission and introduced the German team and others there. I told we had already informed the Political wing of the LTTE about our mission.

They were highly concerned about our mission as we were about to visit the Mulaitivu region which is an LTTE stronghold. The German Television crew had come with satellite equipment for direct transmission of disaster immediately from the spot. We thought whether we would be facing any difficulties because of the security issues. But we had been cleared and were on our way to Kilinochchi.

While we were traveling we found both sides of the highway were a blend of dense forests and the paddy lands created a lot of excitement within me. Peacocks were everywhere, busily foraging in the paddy lands.

After two hours of our journey we reached Murukandy, a stopover for passengers where a small Hindu temple is found. It has become a tradition for passengers to stop there and worship the God, which was enshrined in that small temple especially if they were Hindus. Others too used to stop there as a pastime and buy a variety of foodstuff available there. We too stopped for a while but not very long, as we were already late according to our schedule to reach Kilinochchi. We had to arrange accommodation for more than twenty-five persons. I was highly worried as there were fifteen German nationals, and they would expect reasonable accommodation for the night. When we reached Kilinochchi it was early night.

We went to meet LTTE’s media spokesman who was coordinating our mission in the LTTE-controlled areas. He was startled at the number of people on our mission. He asked his subordinates to look around for places to accommodate us. Visiting NGO members and the media people had already occupied the available places. We were stalled for a couple of hours.

The German T.V. crew and the German Praktikum (Internship) students were in their vans for hours and it was sad to see their situation. Some of the youths who came with us from a local T.V. channel started to scold me, as I was the coordinator in those areas. But I had to pacify them saying after all it’s a relief mission, and we were prepared to bear the hardships.

Some how or other the LTTE’s Political Wing found accommodation and I had to take some of the German students to the lodgings, which had been arranged for them. My responsibility had been narrowed down. The German Television crew had also been assigned a place.

Some of the students were asking whether their rooms were equipped with mosquito nets. I had to find rooms with mosquito nets for them. But one room with nets, I had to reserve for a Sinhalese couple as promised. I had taken some extra care that they should not feel that they had been discriminated in a Tamil area. I had told the students I had to keep that room for the couple. All the students got rooms with mosquito nets in that complex except two students. Then I went to the LTTE’s Political Wing office to check what was happening there.

AGSEP’s Director Dietmar Doering said he would be staying where the female students and some of the AGSEP staff were staying for their safety and went with them. The young Sinhalese couple got a room at the LTTE’s Political Wing office. The incident might be as surprising as an Israelit couple taking night shelter at the office of the Palestinian rebels.

I returned to one of the lodgings, where the students were staying and got into the room, which had a mosquito net, which became available, as the couple had found room at the Political Wing. I was a little worried staying in my room because of my German friends. Would they have any misgivings about me? So, I knocked at their room doors, but got no response from them.

The exhausting day-long journey had overcome them with deep slumber.