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  • Posts Tagged ‘Asia-Pacific Global Research Group’

    Asia’s Next Crisis will be a Climate Change Crisis: Using Environmental Impact Bonds to Fund Remediation Responses

    July 20th, 2017  by  Asia-Pacific Global Research Group - Jasper Kim

    asiafacts
     
    In a recent article by the Financial Times (FT), a recent Asia Development Bank (ADB) report warned of a coming climate change crisis.
     
    Here are five (5) major takeaways:
     
    – Asia will be particularly affected due to its large population, dependence on certain crops highly impacted by climate change (e.g., rice yields are forecasted to drop precipitously), as well as having a notable population on or near coastal areas.
     
    – Asia also accounts for almost two-thirds of the 20 cities it is estimated will suffer the greatest increase in financial losses to flooding over the next decades.
     
    – Rising mean temperatures risk killing tens of thousands more older people (certain Asian states have rapidly aging populations), while deadly or debilitating mosquito-borne diseases such as malaria and dengue fever are likely to flourish.
     
    – Mean summertime temperatures in north-west China, Pakistan, Afghanistan and Tajikistan are projected to rise as much as 8C by 2100. Rainfall is forecast to climb by half in many land areas of the Asia-Pacific region, creating new flooding risks.
     
    – The ADB says it has screened its investments for climate change implications, asking questions such as whether new cities, bridges and roads will be able to cope with more severe flooding and other threats. It says other action that could help would be to shift agricultural practices away from evaporation-prone surface irrigation to more water-conscious drip irrigation methods.
     
    Apart from IGO and public sector funding, one innovative way of financing such climate change remediation measures could be the use of pay-for-performance (PFP) environmental impact bonds (EIBs, a specialized form of social impact bond, SIB).
     
    The first EIB/SIB used in the US occurred last year involving DC Water, Calvert Foundation and Goldman Sachs Group, among others.
     
    Social Finance defines a SIB as “a public-private partnership which funds effective social services through a performance-based contract. Social Impact Bonds enable federal, state, and local governments to partner with high-performing service providers by using private investment to develop, coordinate, or expand effective programs. If, following measurement and evaluation, the program achieves predetermined outcomes and performance metrics, then the outcomes payor repays the original investment. However, if the program does not achieve its expected results, the payor does not pay for unmet metrics and outcomes.”
     
    The EIB/SIB structure utilizes market mechanisms and incentives with social and economic returns, which could potentially fund Asia’s environmental remediation programs. As part of such EIB/SIB structure, IGOs such as the ADB could provide first-loss guarantees on equity/mezzanine tranches of such EIBs/SIBs as well as help with collateral and/or credit ratings.
     
    Such advancements to the traditional EIB/SIB structure would help mitigate risk and thus incentivize other market players–both private and public–to help in this coming climate change crisis.

     
     
    If interested in how Asia-Pacific Global Research Group’s consultancy and training expertise can help your organization, CONTACT US HERE.
     
     
     

    “Decoding Kim Jong-un: What North Korea’s Leader Wants” (Forbes op-ed, Jasper Kim)

    February 14th, 2017  by  Asia-Pacific Global Research Group - Jasper Kim

    Below is a truncated version of the original Forbes op-ed piece.
     
    For the full Forbes op-ed, click HERE
     
    This weekend, North Korean leader Kim Jong-un fired not just his country’s first missile test since U.S. President Donald Trump took office this year, he also fired the opening shot in a high-stakes negotiation match between two seemingly unpredictable alpha male world leaders.
     
    So why did North Korea conduct a launch in the very early days of Trump’s presidency?
     
    Kim wants to test his counterpart’s mettle: What will he do? What will he not do? Could Trump ever be trusted? These are the questions in Kim’s head.
     
    So why did North Korea conduct a launch in the very early days of Trump’s presidency?
     
    Kim wants to test his counterpart’s mettle: What will he do? What will he not do? Could Trump ever be trusted? These are the questions in Kim’s head.
     
    Words or action?
     
    Sanctions as sticks are not working as hoped to compel good behavior . Could diplomacy vis-à-vis China work? At the end of the day, it’s unlikely that Beijing would be willing to cooperate with Washington given Trump’s apparent intransigence about China, along with growing evidence that the PRC may be having less sway over the DPRK.
     
    Could then a pre-emptive military strike be a feasible option? In short, given that South Korea’s capital of Seoul has approximately ten million residents sitting in the backyard of the DMZ, which acts as a thin buffer between the two Koreas, the possible military and economic ramifications are too vast to justify a risky military encounter.
     
    This is why Kim finds himself relatively unrestrained from ordering missile test after missile test despite international outcry and sanctions. In fact, such outcries and sanctions are the very justification Kim needs to solidify his power base to his negotiation audience — his inside circle of advisers and elderly military leaders — that the outside world is truly “hostile” to their homeland.
     
    Direct appeal
     
    But perhaps there may be a better alternative to military strikes and more sanctions — why not speak directly to Kim himself to find out what he wants?
     
    A negotiation is defined as “getting what you want.” And most successful negotiations occur when both sides get at least a little of what they want. But too often, even the most experienced parties make sweeping one-size-fits-all assumptions about what the other’s demands are. As studies show, we see things as we are, rather than as they are. In other words, people superimpose their wants, fears, and values onto those with whom they are dealing.
     
    Past and perhaps even current U.S. officials have assumed that Kim is all about ruthless self-preservation. Others claim he wants a peace treaty, strong economy — even reunification. Statements from the North’s state-run KCNA news agency can also be viewed as negotiable first offers packaged in bombastic bluster.
     
    Which of these does North Korea’s leader want? We simply need more information to know. After all, information is power in negotiations.
     
    But rather than making broad-sweeping assumptions, a simpler and more effective approach exists: Just ask.
     
    For the amount of resources, lives, and security risks involved, the amount of direct communication between Kim and the most senior U.S. leaders commensurate to North Korean leader’s level of seniority have been negligent to nil. From the perspective of the Confucian and Stalinist-driven mindset of this young leader, it’s critical that a presidential level leader be present in the room. After all, the messenger is the message.

     
     
    If interested in how Asia-Pacific Global Research Group’s consultancy and training expertise can help your organization, CONTACT US HERE.
     
     
     

    The End of the “One China” Policy?: Trump Using The “One China” Policy as a Bargaining Chip

    December 5th, 2016  by  Asia-Pacific Global Research Group - Jasper Kim

    trumptaiwanprcflags-copy 
     
    In recent days, US President-elect Trump has received criticism both domestically and internationally over his recent phone call from Taiwan President, Tsai Ing-wen.
     
    Given that the US has recognized a “One China” policy since 1979, what could be the meaning of Trump’s latest actions–defying decades of existing apparent political protocol?
     
    This is a broad question that will be further delineated from an apolitical perspective using a “negotiator’s lens.” As a self-professed negotiator, Trump has taken the view that “everything’s negotiable,” the following reasons could underly the President-elect’s decision to speak directly with Taiwanese President, Tsai Ing-wen.
     
    1. Why would Trump receive a call from Taiwan’s Tsai, given the potential for antagonizing China?
     
    The answer is simple. Trump spoke with Tsai to increase Trump’s bargaining power over China.
     
    From a negotiation perspective, China has generally viewed its nearly four decade “One China” policy with the US as a given. The One China Policy–negotiated by Kissinger and Nixon in the 1970s–is a policy that is viewed with great weight and pride by Beijing. After all, it is arguably because of the US-PRC’s One China policy that allowed China to definitively assert itself from a regional to a global purview as a diplomatic–as well as economic and military–powerhouse.
     
    By following long-held diplomatic protocol, Trump most likely took the view that the US would gain relatively little, if anything at all, as a new negotiator-in-chief. Even with the One China policy in a status quo state under the current Obama administration, tensions between the US and PRC have, if anything, escalated in the form of increased military tensions and posturing both in and outside the Asia-Pacific region.
     
    Why not then—from Trump’s negotiator’s mindset perspective—remind Beijing not to take the One China policy for granted? Why not remind Xi Jingping of the possible, albeit remote, risk of the US increasingly and purposely, as a negotiation strategy, taking greater notice of Taiwan? Even if such overtures from Trump towards Taiwan fall slightly short of an outright reneging on the One China policy, such negotiation tactic can increase the US’s negotiation power vis-a-vis Beijing. This could translate into greater terms and conditions for the US regarding things it wants from China now or in the future.
     
    As a rough analogy, imagine you are a partner for a large firm undergoing a perfunctory yearly performance review. Under normal circumstances, your mind would normally be preoccupied with the possible upsides that you hope to receive from your other partners (negotiation counterparties), such as the amount of your yearly bonus. But instead, imagine that the firm’s partners instead tell you that there’s a chance that you could be fired. Thereafter, after you go through various nightmare scenarios in your head of you looking for a new job, finding ways to support your family, and/or seek ways to live on your current savings, the partners thereafter inform you, “Well, congratulations, after some internal contemplation, you’re not fired after all; you get to keep your job, with all its current rights and obligations.” The outcome is still the same–the status quo. But surely, you will agree that such an unexpected and shocking review process will now serve as a renewed impetus towards dealmaking on behalf of the firm in the future.
     
    2. Why did Trump not follow traditional diplomatic protocol as suggested by certain experts and bureaucrats, including the US State Department?
     
    Tradition and protocol is good until it is not. In other words, the benefits of diplomatic tradition and protocol may, at a certain point, be outweighed by its constraints. This type of thinking is why so many of the best and brightest minds from around the world have constantly sought to seek US shores, rather than other countries, for jobs, education, and citizenship. It is because traditions and protocols that originally acted as fundamental pillars within certain societies suddenly became weighted tipping points and constraints in terms of limitations on individual and economic freedoms. This was certainly the case with the US colonies when it was ruled by the UK monarchy, leading to the Declaration of Independence and the formation of a new republic.
     
    As a political presidential candidate, Trump represented the epitome of an unorthodox political candidate. Trump’s supporters liked him not because he followed protocol in terms of his speeches and rhetoric, but to the contrary, because he challenged the norm, status quo, and political elitism.
     
    It should thus be no surprise then that Trump, now as President-elect, is trying to “think different” by not following the typical dog-and-pony show that certainly can exist in bureaucratic circles in Washington, DC, Beijing, and elsewhere.
     
    Why do such protocols exist in Washington, DC? From a negotiation theory perspective, it is based on a “not-to-lose” negotiation mindset, known as a dispute settlement negotiation (DSN) mindset, as opposed to a “play-to-win” negotiation mindset, known as a deal-making negotiation (DMN) mindset.
     
    A “not-to-lose” DSN mindset is often the mindset of cautious bureaucrats who fear risk rather than seek opportunity. Such a mindset is often based on a working assumption that the status quo (par) is as good as things can generally get. However, such extreme caution can lead to the tangible risk of missed opportunities and gains by taking a “play-to-win” DMN mindset–the type of dealmaking mindset that President-elect Trump proclaims to have, and appears to be taking based from his past business dealmaking experience.
     
    3. Could Trump’s perceived lack of possible diplomatic predictability lead to “lost in translation” communications between the US and its allies and foes?
     
    The short answer is yes. However, the rest of the world will adjust. This may seem somewhat pompous and arrogant, but it is true. The US, in the era of Pax Americana, is the world leader in terms of military, economic, and diplomatic might. For many countries, particularly non-liberal democracies, the election of a potentially new US president every four years is often perceived as a relatively frequent affair compared to the potential life-long tenure of an undemocratically elected dictator, king, or military ruler. And with what is often the case with an incoming US president from a competing political party, such new president will not only be busy trying to undo his predecessor president, but also have a unique personality and style while in the Oval Office, and thus, in communicating with world leaders.
     
    Presidential candidate Trump has already used very direct language during the course of his 2016 campaign, including those directly aimed against Beijing. But Beijing is so far not in apparent panic mode. So far, China’s leaders have more or less taken a “wait and see” patient approach–a wise, strategic move. The world should follow suit.
     
    Maybe President Trump will adjust his language, tenor, and approach once in the White House, maybe not. But one virtue of being the world’s most powerful man in the world’s most powerful nation, is that the world will adjust, if anything because the world has little choice but to adjust to the style of a new US president.

     
     
     
    If interested in how Asia-Pacific Global Research Group’s consultancy and training expertise can help your organization, CONTACT US HERE.
     
     
     

    Development Financing for Education in Asia: The Case for Development Impact Bonds (DIBs)

    April 14th, 2016  by  Asia-Pacific Global Research Group - Jasper Kim

    educationfinancing 
     
    To help developing countries and regions become more self-sustaining, a means of attracting alternative education funding is needed. Given the large populations of developing countries, education in those countries will have an immediate impact not only on individual countries but also on a global scale.
     
    Providing education-based resources should not be the sole responsibility of the public sector. The private sector should also play a part in securing greater funding for education, which generates many positive economic and social spillover effects. But how can interested parties such as states, nonprofit organizations (NPOs), and intergovernmental organizations (IGOs) collaborate with private sector entities to secure scarce funding for education projects?.
     
    OECD data demonstrate a clear downward trend in total official development assistance (ODA) to the education sector from donors. For example, in 2009, education aid commitments amounted to $15.7 billion, compared with $13.1 billion in 2012, a $2.6 billion decrease in just three years.
     
    Moreover, education ODA as a share of total aid has consistently lagged behind health and population programs, while also similarly reflecting a downward trend. For example, in 2009, ODA for health and population programs represented 12.2 percent of total aid, compared with 8.7 percent for education in the same year. While aid for health and population programs increased from 12.2 percent in 2009 to 12.9 percent in 2012 (increasing steadily every year), the opposite trend occurred in the area of education, which received 7.7 percent of total aid in 2012 as compared to 8.7 percent in 2009, the percentage decreasing steadily every year.
     
    If the targets for education in the post-2015 development agenda are to be met, greater educational funding is needed, not less. Why not, then, simply issue bonds as a remedy? In short, bonds issued by sovereign issuers would increase debt to gross domestic product (GDP) ratios, which in turn could negatively impact credit ratings for the country in question, thus raising the price of financing overall for the sovereign issuer. Even at the IGO level, a crowding-out effect exists in which a critical issue arises: What sectors will be funded with scarce donor funds? If the OECD data pattern extends to bond issuances, education financing may again face relatively less funding as compared with other social programs.
     
    One innovation solution exists through a market-based public-private partnership (PPP) known as development impact bonds (DIBs), which are a subset of the social finance field as well as the finance, law, and development fields.
     
    DIB Transaction Components and Participants:
     
    In broad terms, the main legal DIB stakeholders (social and financial networks) include:
    • Social impact investors
    • Intermediary
    • Government (or IGO)
    • Service provider
    • Assessor/evaluator
    • Advisor
    • Constituents (assistance project, program, or persons)
    • Local community/society at large
     
    From a legal purview, DIBs are a series of interrelated contracts that secure funding in an innovative, market-based manner. From a social finance purview, DIBs are a bond-driven funding mechanism between public and private sector parties. In the DIB structure, two parties take opposite positions in regard to “success metrics”—with one party providing education financing if the designated project is deemed successful, and a counterparty providing education financing if the project is deemed as not successful—relating to a socially beneficial/development-oriented project.
     
    Integrating such key development finance technologies and tools can create next generation DIB funding structures for education development projects and programs. These DIB funding structures can mitigate market risk, improve liquidity, and foster greater participation in both the public and private sectors for participants aspiring to provide education financing as part of the post-2015 development agenda.

     
     
     
    If interested in how Asia-Pacific Global Research Group’s consultancy and training expertise can help your organization, CONTACT US HERE.
     
     
     

    Negotiating with Powerful Parties: 5 Strategies

    December 23rd, 2015  by  Asia-Pacific Global Research Group - Jasper Kim

    powerbalance
     
    The recent and original Star Wars trilogies involve an epic clash between good and evil. Within the context of the Star Wars story line, a small rebel alliance was pitted against a seemingly much larger galactic Empire (The First Order, in the recent plot line of The Force Awakens).
     
    Such epic clash may appear like the concoction of science fiction rather than a real world scenario. But this is not exactly true.
     
    Switch the Empire/First Order with a larger competitor/superpower. Then switch the Rebellion/Resistance with a smaller start-up/organization/non-superpower. Now things become all the more real with very real and practical implications.
     
    This then raises the question: What is the best negotiation strategy for dealing with a seemingly larger and more powerful counterparty?
     
    Below are five (5) strategies supported by practitioner perspectives, but also academic studies:
     
     
    1. IS YOUR COUNTERPARTY REALLY MORE POWERFUL?
     
    Your foe may seemingly appear larger and thus more powerful. But it’s important to note that larger is not more powerful in every contextual situation.
     
    The benefit of being a larger entity is often a general association with more resources–along with greater scale and scope (i.e., domestic or global footprint/presence). But in certain situations, being large can have its distinct disadvantages. Such disadvantages can at times outweigh the advantages of being a larger entity. For example, a behemoth company may be overly diversified, with its resources spread out overly thin, domestically and globally.
     
    Think: The Roman Empire. The reason for the Roman Empire’s implosion—seemingly at the very pinnacle of its power–was ironically due to its string of prior successes (of conquering people, land, and resources). The Roman Empire was simply too large to succeed. In the current era where technology and being nimble is a strategic advantage, being too large is arguably now a sine quo non to stress-testing, collateral damage, or outright collapse of a larger entity or foe.
     
    Much like the Roman Empire, the Empire (First Order) appears like a foe that can easily defeat the Rebellion (Resistance). But as we see in the Star Wars mythology, a smaller often ill-equipped band of unlikely heroes can prevail over a larger more organized and well-equipped foe.
     
     
    2. IS YOUR COUNTERPARTY WILLING TO USE ITS POWER?
     
    A key strategic question is will your counterparty understand and actually use its power? First, does your foe understand its actual power? You may believe this is to be a given. But it is worthwhile to stress-test this working assumption. For example, even just prior to the U.S.’s delayed entry into World War II, it was arguably uncertain from not just America’s perspective, but its other Allies as well as its enemies, just how powerful America’s entry would impact the outcome of the war. In hindsight, it was a game changer. At the time, it was not so certain.
     
    Second, is your negotiation counterparty actually willing to use its power against you? It’s important to note that the question to ask is definitively stated one, without the ambiguous “may” or “could” wording that clouds a clear strategic analysis. The answer should be a definitive and categorical yes or no, based on the best available imperfect information attainable (at the time, and of course, given the circumstances).
     
    For example, regarding the Korean peninsula, a key question would be: Is North Korea actually willing to use its nuclear weapons against its enemies (above and beyond mere saber rattling)?
     
    In the lighter context of the Star Wars trilogies, the key question would be: Is Darth Vader willing to use the Death Star to destroy planets (and stars)? The answer in A New Hope (Episode IV) was an emphatic yes, as demonstrated when the Death Star used its laser weapons capability to destroy Alderaan, the home planet of Princess Leia (who was then being held captive by the Empire to solicit information about the whereabouts and plans of the Rebel Alliance). Similarly, in The Force Awakens, the First Order Star Destroyer’s “Catapult” superweapon was in fact used to destroy many lives (above and beyond the mere appearance of having such power).
     
     
    3. TAKE PRE-EMPTIVE STRATEGIC STEPS
     
    Take strategic steps to maximize the likelihood of your success. As Sun Tzu claimed, “Every battle is won before it is ever fought.”
     
    If you’re the smaller party, fighting a battle in the traditional sense is a game that will often be geared against you than in support of you (i.e., pivoted towards a loss than a gain). Thus, strategically, you should seek to delay, divert, or dispense of the need for battle with your larger counterparty.
     
    Strategically, understand what is your GPS (Game rules, Payouts/Penalties, Strategy) vis-à-vis your opponent. Next, step into the shoes of your foe to calculate the other side’s GPS. In doing this, assign a person to play the role of your adversary foe. This will help clarify and extend the relative perspectives of both sides in terms of positions (what you/foe want) and interests (why you/foe want such positions). This in turn will help clarify your negotiation strategy analysis.
     
    Next map out a “decision tree” of possible best next steps, with assigned probabilities. For example, let’s say you are a small Silicon Valley start-up about to negotiate with Google (a tech titan). Further along in this simplified hypothetical, let’s say you then consider, calculate, and then ultimately conclude that the possible decision tree possible outcomes could be (1) majority buy-out (30% probability); (2) minority investment (35% probability); and (3) no agreement (35% probability). As before, this is calculated on the best available imperfect information at the time.
     
    In Star Wars: A New Hope and The Force Awakens, the smaller renegade group of rebel fighters determine that their GPS would be to counter-attack the Death Star (Star Destroyer).
     
     
    4. USE INFORMATION STRATEGICALLY FOR TACTICAL ADVANTAGE
     
    Negotiation is an “information game.” If you have a competitive advantage in information, the game pivots more towards a win for you (or your team/organization/country).
     
    But where do you get information about your negotiation counterpart? First, seek information from publicly available information (Google, public filings, the press, news articles, etc.). Second, seek information from your foe’s other counterparties, enemies, and even friends. Specifically, find out who they are, then reach out and make strategic contact with them. You can be honest and say that you are making contact merely to get information on how to best work with a particular entity with which the person who has been contacted has had prior dealings. Third, for all remaining data, seek information directly from your counterparty (through a separate but related negotiation communication strategy).
     
    In The Empire Strikes Back (Episode V), Han Solo (Harrison Ford) and Princess Leia (Carrie Fisher) could have solicited information about the Empire from Lando Calrissian (Billy Dee Williams). Lando, as mayor of Cloud City, had prior dealings with the Empire, who stayed strategically neutral until Han and Leia’s unexpected arrival to Cloud City sufficiently incentivized Lando to betray Han and Leia (however, Lando then later betrays the Empire by subsequently helping Leia, Luke, Chewbacca, C-3PO, and R2-D2 to escape along with Han Solo in frozen carbonate form).
     
     
    5. KNOW YOUR “WALKAWAY POINT”
     
    What is your “walkaway point”? This is your negotiation decision matrix anchor—based on your personal metrics (i.e., money, emotion, pride, nationalism, etc.). Knowing this information, you will know the general limits and boundaries of your “yesable” negotiation range. Without knowing this information, you will conversely not know the general limits and boundaries of your “yesable” negotiation range. This in turn will increase the likelihood of you not knowing what you ultimately don’t want (as well as what you do want in your dealings with your counterparty opponent). This is a very dangerous position to put yourself or your organization–especially when such risk can be mitigated through this suggested strategic approach.
     
    For example, in the 1990s, when Microsoft was being investigated by the Department of Justice for alleged antitrust behavior at the time, Microsoft’s management team should have considered whether it would allow Microsoft to be broken up into smaller independent entities onshore if legally compelled to do so, similar to the case of the Baby Bells previously. Or alternatively, would this be beyond its walkaway point, compelling Microsoft to consider other alternatives, such as moving some or all of its offices offshore to other countries? Knowing such valuable walkaway points is not just useful, it is absolutely critical.
     
    In Star Wars: A New Hope (Episode IV), Obi-Wan Kenobi (Alec Guinness) determined that his walkaway point for an impending and epic light saber duel with Darth Vader would be the ultimate sacrifice of his own physical body (although he would continue to exist in non-physical form through the Power of the Force).
     
    In summary, these are five (5) concise strategies (of many more that can be utilized), which are easy to implement and extremely value-added.
     
    These strategies have proven to be the difference maker when it comes to negotiating with larger and seemingly more powerful counterparties.
     
     
     
    Sources: Kim, Jasper (2015); Adler, R. S. & Silverstein, E. M. (2000).

     
     
     
    If interested in how Asia-Pacific Global Research Group’s consultancy and training expertise can help your organization, CONTACT US HERE.
     
     
     

    India and Japan Counterbalancing China: How Shared Interests and Fears Led to Negotiation Cooperation

    April 6th, 2015  by  Asia-Pacific Global Research Group - Jasper Kim

    Narendra Modi, Shinzo Abe, Taro Aso
     
    India and Japan recently pledged cooperative efforts to deepen national security interests, as a means to counterbalance China’s increasing influence in the Asian region.
     
    “A strong India-Japan partnership is not only in the national interest of the two countries but is also important for peace and security in the region,” India’s Defense Minister Parrikar stated, reiterating that he would like to see a strong partnership with Japan in defense equipment and technology.
     
    While Indian Prime Minister Narendra Modi is involved in one controversy after another within India, there is no doubt that abroad he has been winning hearts and minds wherever he goes outside of his country. Among the first of his official visits was a five day trip to Japan where he was personally welcomed by Abe. With both parties claiming that bilateral ties held great potential, any observer could tell that the foundation for a stronger relationship was being laid down from the outset.
     
    But what is it about this particular set of ties between India and Japan that makes it so special? Similar political and economic goals? Threats from other neighbors? A need to find understanding partners?
     
    When two economic giants come to the negotiating table, the mindset makes a huge difference. India and Japan represent the second and third largest military spenders in the region. With the only overt gestures being friendly, and either side acquiescing benefits to the others, the emphasis on collaboration was strong from the onset. Already sharing a history of having supported each other from before both world wars, the historical foundation between India and Japan had already been set. It only needed two like-minded leaders—such as Modi and Abe who have shared interests and fears–to incentivize the process towards negotiation cooperation.
     
    In negotiation theory, there is a concept called ‘likeness theory’ that forms the crux of any relationship where both negotiating parties can find elements outside of the negotiation that help them bond. This, in turn, based on related negotiation behavioral studies makes it easier to find a solution and collaborate, repivoting the negotiation process towards a positive-sum game, not a zero-sum game.
     
    Here in this case, both Abe and Modi appear to have similar goals (or likenesses) for their respective nations. Both are fiscally conservative, both are known for favouring an internal economic strengthening, have nationalist tendencies, support strengthening ties with neighbors and both are trying to raise their nations to a standpoint where the world recognizes both India and Japan as true global powers, not just economic powers. With this kind of shared likenesses between Japan and India, it becomes easier for the two Asian giants to negotiate towards cooperation rather than betrayal (non-cooperation) in a iterated prisoners dilemma-type scenario.
     
    Both Modi and Abe have come to power at times when their people are hungering for economic and political change. With Modi looking to drastically improve India’s infrastructure, Japan is looking for markets to invest in, making this a “win-win” relationship based on “shared and complementary interests” that have a greater chance of principled rather than positional bargaining between the two Asian giants.
     
    Another common factor for both countries is their mutual neighbor, China. There is no subtle undertone for India here, as there is while negotiating with China, no horatory promises to cooperate while simultaneously coping with intrusions into sovereign territory or aggressive overtures in the international arena (something Modi hinted at in his speech in Kyoto). Similarly for Japan, with relations with China taking a nose dive due to diplomatic riffs and economic disagreements, finding other equally strong partners within the Asian region is imperative.
     
    Such ever-changing negotiation climate is also simultaneously a clear signal to America that intra-Asian cooperation may not be solely U.S.-centric at all times. With both India and Japan being strong strategic partners for America in the Asian subcontinent, it seems that both India and Japan are taking steps not behind but in concert with the United States under U.S. President Barack Obama.
     
    From India’s purview, Modi’s is initiating an “Act East” policy – a throwback of sorts and perhaps an improvement on the nation’s earlier “Look East” Policy. We know Modi also took no time in meeting Chinese Premier Xi Jinping in a recent multilateral diplomatic meeting and is set to visit Xi in May later this year. On the other hand, Modi has also already spoken to president Park Geun-Hye of South Korea on the phone. Further, his regular references to the rapid economic growth South Korea has experienced since the 1950-53 Korean War (the nation’s “Miracle on the Han” economic experience) speaks volumes about Modi’s admiration and perhaps economic benchmark for the country relating to India, with a population of over 1.2 billion people.
     
    Based on the actions of both India and Japan, it is apparent that both Modi and Abe have the shared common interests and fears that may incentivize strategic cooperation vis-à-vis China. But how the forging of such closer India-Japan ties affects the U.S. and Europe is still to be determined.

     
     
     
    If interested in how Asia-Pacific Global Research Group’s consultancy and training expertise can help your organization, CONTACT US HERE.
     
     
     

    Hidden Meanings in Negotiations: 5 1/2 Things to Know

    June 21st, 2014  by  Asia-Pacific Global Research Group - Jasper Kim

    Negotiation
     
    Negotiation is based on communication. Communication, in turn, is based on verbal and non-verbal communication.
     
    Science and studies have led to some startling and valuable findings that may provide “hidden meanings” for your negotiations.
     
    They include the following:
     
    1. Opposites: Some expressions when said are signals that mean the opposite of what is being said. Examples include, “In my humble opinion…” and “Although I sympathize with your opinion..”
     
    2. Prenouncements: Prenouncements are neuro-linguistic cues. Examples include “As you are aware,” “Before I forget,” “Incidentally,” and “By the way.” When these terms are verbally communicated, it can signal to the listener that an important fact or opinion (potential game changer) may follow such expressions, hence the term prenouncement (words prior to an important announcement).
     
    3. Legitimizers: Legitimizers are terms used that attempt to legitimize a subsequent statement. Examples include “Frankly,” “Honestly,” and “To be honest.” Ironically, such terms used to justify a subsequent statement may be a hidden clue that this may not necessarily be true.
     
    4. Justifiers: Justifiers are linguistic terms used to prepare the listener for failure or not meeting expectations. Examples include “I’ll try my best” and “We’ll see what we can do.” As a countermeasure, the listener should then try to recalibrate the expectation value (in negotiation jargon, aspiration point) upwards.
     
    5. Erasers: Erasers are words used that completely reverse (negate) some, most, or all of what was just said. The main two examples are “But” and “However.” From a neuro-linguistic perspective, the listener remembers very little of what was said prior to such eraser verbiage. Instead, try using “At the same time,” or “Having said that.”
     
    5 1/2. Deceptions: Decepter linguistics are terms that serve to disguise the true knowledge or skill-set of the negotiator. Examples include “I didn’t graduate from a big name school, but” and “Although I’m not an expert.”
     
    Excerpts inspired in part from Secrets in Power Negotiating by Roger Dawson.
     
     
     
    If interested in how Asia-Pacific Global Research Group’s consultancy and training expertise can help your organization, CONTACT US HERE.
     

    Happy Holidays & A Happy New Year – from Asia-Pacific Global Research Group (asiapacificglobal.com)

    December 20th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

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    Wishing You and Your Loved Ones A Very Happy Holidays & Happy New Year
     
    Asia-Pacific Global Research Group.

     
     
     

    Bitcoins, Bubbles and Bullishness: 5 Reasons Why Bitcoin Will Bust

    December 7th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

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    Top 5 Reasons Why Bitcoin is Doomed
     
    Bitcoin is billed as a virtual currency that acts as electronic cash. Its value has soared from below $1 in 2011 to over $1,200 as of today. What is its intrinsic value, though? It is probably really worth less than $1 and this dramatic price rise is nothing less than a speculative bubble that will burst in due course. Although Bitcoin may be doomed for reasons I will outline below, the idea of a virtual currency is appealing. Ideally, a virtual currency would be as widely accepted as cash. You would be able to pay with it electronically at the store with your cell phone instead of carrying cash. Merchants would like it because the transactions fees would be much less than credit cards and debit cards. You could transfer the currency to anyone around the world without the high wire fees at banks. Although virtual currencies hold promise for the future, Bitcoin’s design will not allow it to be successful.
     
    Here are five reasons why Bitcoin is not the virtual currency of the future:
     
    1. Bitcoin is Not a True Medium of Exchange
    Money has to have certain properties to be called money. Money needs to act as a medium of exchange. If you take Won currency into eMart in South Korea you can exchange it for anything at the store. Likewise, you can do so with Won currency anywhere in South Korea. The Won is a true medium of exchange in South Korea. Can you use your Bitcoin at eMart? No. Can you use it at other stores in South Korea? Maybe a handful. There are only a handful of places in the world that accept Bitcoin. There are so few, in fact, that when someone does announce that they are accepting Bitcoin, it makes the news. Cyprus University became the first known university to accept Bitcoin. I never heard of this university before reading that article. Bitcoin has to be widely accepted to meet the medium of exchange criteria. The demand for Bitcoin that is driving its price above $1,200 is not due to its desirability as a medium of exchange. When looking at Bitcoin’s value as a medium of exchange it is certainly worth less than $1 because the US Dollar is enormously more successful as a medium of exchange. Although Bitcoin is terrible as a medium of exchange, it is fantastic as a marketing tool. It seems that all you have to do is announce that your company or institution is accepting Bitcoin and you make international headlines. Richard Branson is no stranger to clever marketing and recognized Bicoin’s value as a marketing tool. He recently announced that his Virgin Galactic is now accepting Bitcoin to buy tickets into space.
     
    2. Bitcoin is Not a Good Numeraire
    Another property of money is that it is a numeraire. You can easily count your money to measure your wealth and compare it to others. Forbes publishes its annual list of the World’s Richest People. Because money is countable, you can measure how much you have or measure who has the most. Sure, you can also count how many Bitcoin you have, but it is not as reliable as counting in other currencies that are much more widely used and much more stable in value. If you try to measure your wealth in Bitcoin it will fluctuate as wildly as the price of the currency itself, which we mentioned was less than $1 a few years ago and is now greater than $1,200. Bitcoin does not satisfy this property of money either. Again, in measuring Bitcoin’s value as a numeraire, it is certainly worth less than one US Dollar, which is widely used and relatively stable.
     
    3. Bitcoin is Not a Good Store of Value
    The third property of money is as a store of value. If you have more money than you need today, you can simply save it for the future. You can put it in the bank or under the mattress or wherever you’d like. You are storing money for later use, and because money has value, it’s a store of value. You can also store Bitcoin. Bitcoin are stored in a virtual wallet. The virtual wallet could be on your phone, your computer, or even a virtual bank. Part of the reason the Dollar and the Won are a good store of value is that they are relatively stable and widely accepted. You can put your Won in the bank for several years and feel fairly confident that you can take it out later and buy what you need with it. Dollar and Won deposits are also insured by the government. Bitcoin deposits are not insured and there have been reported cases of hackers breaking into computer systems and stealing Bitcoin. Additionally, the fact that Bitcoin’s price is unstable and the fact that you can only use it at a few places like getting your degree at the University of Cyprus and then shooting yourself into space, limits its appeal as a store of value. Again, as a store of value the Dollar is much better than Bitcoin, so Bitcoin’s value in this regard should be less than $1.
     
    4. Bitcoin is in a Speculative Bubble
    Supply and demand determine the price of financial assets. The supply of Bitcoin is created by a process called mining. If you mine for Bitcoin you can earn Bitcoin, just like mining for gold could get you gold. To mine for Bitcoin you lend the use of your computer to help process and authenticate Bitcoin transactions. Unlike Visa or Mastercard, for example, there is no central payment processing computer system that verifies and approves transactions. Bitcoin uses a dispersed network of volunteered computing power to do this. In return for this you can earn Bitcoin. However, it turns out that mining for Bitcoin gets harder and harder over time. It’s been estimated that if you use your personal computer to mine for Bitcoin that it could take several years to earn a Bitcoin. The electricity you consume in trying to mine for Bitcoin may actually cost you more than it’s worth. There is also an arbitrary supply cap of 21 million Bitcoin. This means that after the 21 millionth Bitcoin has been mined, there will be no further Bitcoin produced. Thus, the supply of Bitcoin is increasing at a decreasing rate.
     
    On the demand side we’ve already shown that the demand for Bitcoin has nothing to do with its value as a medium or exchange, a numeraire, or a store of value. In other words, the demand for Bitcoin is not the result of wanting to use it as money. The demand for Bitcoin is purely for speculative purposes. This is a classic bubble that will burst once enough people realize that Bitcoin is no more valuable than a Dollar bill.
     
    5. Bitcoin is Allowed to Float Against Other Currencies
    I believe that one of the design flaws of Bitcoin is that it was immediately allowed to float against other currencies. An economy can’t survive a wildly fluctuating currency. This is why central banks will intervene to stabilize their own currencies. An unstable currency is bad for business. It’s also very bad for Bitcoin. Imagine a store like Wal-Mart trying to accept Bitcoin. They would have to somehow constantly update their Bitcoin prices on thousands of products several times a day. The cost of doing so would greatly outweigh the benefits of accepting Bitcoin. If you want a virtual currency to be widely accepted, it needs to be stable. The best way to do that is to fix the value of the virtual currency to the value of the currency in the economy it’s operating in. In other words one unit of virtual currency should equal one Dollar. This makes it easy to implement for merchants, who would otherwise have to have two sets of prices on everything. Because there is no central authority that can intervene to stabilize the value of Bitcoin, Bitcoin will never be stable and therefore can never be widely accepted as a medium of exchange.
     
    Bitcoin is doomed to crash and burn. It is a speculative bubble. Its free floating nature leads to instability, which will prevent its widespread use. Its true value is less than the value of one US Dollar because the Dollar is so much better in terms of the functions that money must serve. Accepting Bitcoin, in the short-run, does appear to attract a lot of attention to your business and may therefore be an excellent marketing tool. It has also done a great job of getting news out about a virtual currency. All that needs to be done is to create a new virtual currency that addresses the pitfalls of Bitcoin.
     
    The 3 Things Needed for a Successful Virtual Currency:
    1. The Virtual Currency Should Have a Reliable Institution Backing It
    2. The Virtual Currency Should be Completely Stable
    3. The Virtual Currency Needs a Virtual Bank With Insured Deposits

     
    Part of the reason the US Dollar is such a reliable form of money is that it is backed by the US Government. The central bank of the US will intervene in currency markets to stabilize the Dollar if needed. You don’t necessarily need the backing of the US government to have a successful virtual currency. For example, Apple could launch a virtual currency called iMoney. You could buy iMoney with US Dollars. Apple would back iMoney such that the value of iMoney would always equal the value of 1 US Dollar. If someone offers you less than $1 for your iMoney, you could sell it back to Apple for $1. Therefore, iMoney would never drop below $1 in value. If someone wanted to buy iMoney they would never pay more than $1 for it because Apple stands ready to sell iMoney for $1. iMoney would therefore be stable in value and backed by an institution that is trusted. A stable virtual currency backed by a reputable institution will lead to greater adoption of that currency by merchants. Merchants would pay a fee for iMoney transactions similar to, but much smaller than, Visa or MasterCard transaction fees. Apple in turn would use some of this iMoney profit to purchase insurance on iMoney deposits. Your iMoney would then be protected against theft if it is stored in the iBank, just as your US Dollar deposits are insured when deposited at a bank. The iPhone 5S would be a perfect way to use your virtual currency. You go to the checkout counter at the store. The cash register connects to your iPhone via Bluetooth or some future technology. You place your finger on the fingerprint scanner and the virtual currency is transferred from your iPhone wallet to the store’s iBank account.
     
    Alternatively, Samsung could do the same with a sMoney virtual currency that is fixed in value to the Won. They would launch it in South Korea. South Korea, having some of the most tech savvy consumers in the world would be the perfect place to launch such a virtual currency.
     
     
    Brian Sullivan is an Assistant Professor of Finance at Hallym University in South Korea. He is a graduate of both The University of Chicago Booth School of Business and The University of California at Berkeley. His wife is from the Philippines.
     
     
    If you are interested in how Asia-Pacific Global Research Group can help your organization, CONTACT US HERE.
     
     

    Battle in Bangkok: Protest Politics & Key Factors for Investors (Guest Blog)

    November 30th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

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    Recent news coverage about the political turmoil unfolding in Thailand has led to speculations about the country’s future. Given the current political temperature, investors are primed to wonder whether Thailand can continue be a reliable hub of emerging market growth that it has been since the 2008 global financial crisis. This depends on several factors and our analysis of those is highlighted below.
     
    We conclude that (i) although the current political unrest may remind near-term investors of Thailand’s inherent political risk, the medium to long term prospect of Thai economy is less likely to be affected by an outcome of such unrest; and (ii) the real challenge for Thailand going forward is how it can cope with structural changes in its growth model.
     
    1. What causes the current Thai political upheaval?
    As followers of Thai politics may note, the ongoing protest movements that led to the current political upheaval revolves around one polarizing figure: former Thai prime minister Thaksin Shinawatra. Setting aside class and income gap analyses, the movements in general contain two opposing camps: his supporters vs. his opponents. While Thailand has experienced political protests before, most notably in October 1973 and May 1992, political protests have not become ingrained in Thai culture until Mr. Shinawatra became prime minister in 2001. Having witnessed Mr. Shinawatra’s party won many landslide elections to form governments between 2001-2006, the first group of his opponents (i.e., the “Yellow Shirt People” group, as manifested by the color of shirts worn by protesters) staged several public demonstrations. Later when an opposing force led by the Democrat Party became the government, the group that supported Mr. Shinawatra (i.e., the “Red Shirt People” group, again as manifested by the color of shirts worn by protesters) then staged several public demonstrations from 2009 to 2010.
     
    2. What is the future of Thai politics as a result of the current upheaval?
    The current political upheaval started from a disagreement over an amnesty bill. Proposed by the government led by Yingluck Shinawatra, Mr. Shinawatra’s sister, who became prime minister in 2011, the bill caused outrage among Thais because it would have essentially nullified thousands of corruption cases, among them Mr. Shinawatra’s conviction. As a result, the Thai public then started to protest the bill in a peaceful civil disobedience fashion in October 2013. Perhaps taken by surprise, the government softened its stance by promising not to pursue the bill further if the Senate rejected the bill. In November 2013 all members of the Senate presented unanimously rejected the bill. Ms. Shinawatra’s government has also continued, up to the date of this blog, to handle the protests in a manner that can be described as both stern and even-handed. Thus, the Democrat Party and opponents of the government are presented with the problem of picking a cause as popular as objecting the amnesty bill to keep momentum going in their street protests. Which brings us to the current state where the two sides are currently at the unblinking political standoff. Given a track record of Mr. Shinawatra’s party winning each general election by a landslide in the past decade, it is likely that the Democrat Party may not gain sufficient votes in the next general election to form a ruling government. Or that is supposed to happen if everyone plays by the same rule. But has protest politics ever been about playing by the same rule?
     
    3. How does ongoing political protests affect the Thai capital market?
    The short answer is not much, but this gives a sense of false hope. Although almost always punished by near-term investors, political instabilities in Thailand have not really affected the country’s capital market in the past decade. For instance, except the dip during the period of couple quarters after the global financial crisis in 2008, the Stock Exchange of Thailand SET Index has grown steadily from 2003 to more than double its size in 2012 before reaching a record peak at the second quarter of 2013. Many observers may note that this is the same decade where political protests became prominent in Thai culture. However, the SET Index has already climbed down after that quarter due to several trends that caused capital outflows from many emerging market countries, most notably the announcement by the U.S. Federal Reserve to taper its quantitative easing asset-purchase programs, and the breaking news confirming the then much-rumored “China Slowdown” in late May 2013, (i.e., several months prior to the current political standoff). This is not to understate the near-term effect of the political unrest – indeed in the period of one month after the protests against the amnesty bill had started, the SET Index moved massively downward from around 1,450 to around 1,350 points (about -7%). Nevertheless, given the long-term data that has seen sharp cliffs rubbed to shallow hills, it is reasonable to conclude that (i) there has been a decline in investment growth in Thailand for some time, and (ii) such decline was not necessarily caused by the country’s political risk alone. However, if violent clashes occur among protesters and/or the government, it would likely be reflected negatively further in the Thai capital market (i.e., severely delay its recovery from the already much lost ground).
     
    4. What are other developments that investors in Thailand should consider as crucial factors?
    There are at least three key global factors: the effect of the Fed QE tapering, China’s economic recovery, and Japan’s Abenomics policies. The most notable of these is the China recovery and Thailand’s place in China’s supply chain. Followers of China and Thailand economic growths may notice some correlation in the rises and falls in the economy of the two countries in the past decade. But this trend appears to end in the third quarter of 2013 where China economy seems to recover, but the Thai economy continues to slow down. Another factor that may render Thailand less competitive regionally is Japan’s weaker yen, and its potential diversifying of its manufacturing bases away from Thailand to neighboring Southeast Asian countries.
     
    Then there are the domestic factors: Rising business costs, and contraction in financial and real sectors. These factors combining with the dynamics of key global factors require Thailand to adjust its growth strategy in order to stay competitive; such strategy may include improving on its export-led growth model, and exploring further option in its service-led growth model. An example of this may be the Thai tourism industry, which is still doing extraordinarily well within the overall domestic contraction, expanding almost 30% year-on-year as reported by the Bank of Thailand in September 2013. A recent survey of flight cancellation in November also shows that Thai tourism industry has yet to be affected by the current political unrest, revealing almost unchanged number of flight cancellations during the industry’s “high season” in November and December.
     
    In summary, although political unrest alone may not have been a deal killer for investors in the Thai capital market, the peaceful resolution to any such unrest, as well as policy initiatives that attempt to address the country’s challenging factors, should make investing in one of Asia’s most dynamic economies less of a bumpy ride.
     
     
    Kemavit Bhangananda is a registered U.S. attorney with the State of New York Office of Court Administration. A former vice president of Lehman Brothers, he is a graduate of Thammasat University Faculty of Political Science (B.A. International Relations) in Thailand, and Suffolk University Law School (Juris Doctor) in the U.S.

     
     
    If you are interested in how Asia-Pacific Global Research Group can help your organization, CONTACT US HERE.
     
     

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