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News Digests

Stay abreast of what’s happening internationally with developments in corporate public affairs. Here is news that you may find useful and interesting:

Broken links — Japan and the global supply chainND

The Economist, 31 March 2011

Japan’s recent spate of natural disasters has been a significant strain on the global supply change. Given Japan’s control on certain markets such as the resin needed in smartphones and the polymer needed in iPods, the impact of the disruption of the supply change will be extensive. As such, manufactures are scrambling to find alternative suppliers, which has caused a surge in prices. The disasters will likely prompt changes in the way that manufacturers manage their operations. For more information see

The tobacco industry — the last gapND

The Economist, 31 March 2011

Western tobacco firms have not experienced much success in the Indian and Chinese markets. As such, companies are now looking towards South East Asian countries, particularly Indonesia and the Philippines. Indonesia has one of the world’s least regulated markets, and is one of the few Asian countries that haven’t ratified the World Health Organisation’s treaty on tobacco control. Additionally, the tobacco industry in Indonesia provides about 10 per cent of the government’s revenue and provides millions of jobs. Consequently, despite the health risk posed by smoking, Indonesia, and many other small developing countries, are unlikely to impose strict regulations on the tobacco industry given the potential for revenue generation and employment. For more information see

Why sustainability is winning over CEOsND

Duane Stanford, Bloomberg Businessweek, 31 March 2011

Business managers are coming to recognise the cost-saving potential of engaging in sustainable business practices. These practices involve ideas such as using recyclable packaging to reduce shipment weights and consequently transportation costs. The directors of PepsiCo’s Walkers potato chip plant have plans to reuse the steam produced in chip production to clean equipment and wash potatoes, thereby creating a sustainable cycle and reducing manufacturing costs significantly. There are various other sustainable, cost-saving business practices being pursued by different companies. For more information see

Seven steps to better brainstormingND

Kevin Coyne and Shawn Coyne, McKinsey Quarterly, March 2011

Despite perceptions that brainstorming sessions are not useful, if approached properly they can be constructive. An innovative approach to brainstorming, termed ‘brainsteering’, involves a more rigourous process, but more rewarding outcomes. Participants should be informed as to the organisations decision-making criteria before beginning the process, and questions should be informed and specific. Organisers should take care to select their participants carefully, and should break the process into a number of focused sessions to ensure that discussions are productive. At the conclusion of the process, the ideas generated at the session should be submitted to higher-level executives, though the participants should be kept informed as to the implementation of their ideas. For more information see

How India’s commodity appetite can reap a carbon dividend ND

A. Damodaran, The Wall Street Journal, 23 March 2011

India and China’s desire for rapid economic growth has the potential to fuel the development of new, cost-effective low carbon technologies. Both countries are currently being targeted for innovation in electronics, telecoms, steel, aluminium and power equipment, with these industries being fed by metals and minerals. Given the manufacturing of such materials is inherently high carbon emission intense; the potential for the development of new low carbon technologies is vast. Means of introducing low carbon technologies include through the development of a new commodity trade policy, as well as the possibility of India and China investing in a joint low carbon technology development venture, which would result in these two countries becoming global clean technology leaders. For more information see

Social media bursts into Europe’s B-schoolsND

Erica Rex, Bloomberg Businessweek, 18 March 2011

European MBA schools such as Spain’s ESADE and France’s ISEAD have began teaching classes focused on the use of social media in business, as well as integrating social media into their teaching methods. For example, ESAFE uses a Web tool called Moodle to allow students to interact online, while the ISEAD is looking at how to use wikis, blogs and social networking sides to support collaboration. For more information see

China’s economy at an inflection pointND

Anil Gupta and Haiyan Wang, Bloomberg Businessweek, 17 March 2011

China’s latest five-year plan indicates that there will be a slowdown in the annual GDP growth targets over the next five years. This is largely due to a slowdown in the rate of growth in exports from China, a slowdown in the rate of infrastructure investment and the effects of demographic trends in the country. Amongst the features of the plan is a desire to make the economy more energy efficient and less carbon intense, as well as to improve the social security network for Chinese citizens. The expected shift from exports to domestic consumption as envisaged by the plan will increase the importance of multinationals treating China as a core market, and will likely see organisations aligning their strategies with the government’s policy agenda. For more information see

UN human rights framework: what executives need to know and do about human rightsND

Anthony Ewing, Ethical Corporation, 12 March 2011

The central tenants of the UN Framework on Human Rights are to protect, respect and remedy human rights. Business can play an important role in protecting human rights, with the UN Human Rights council set to release a set of Guiding Principles for both governments and companies to meet their responsibilities under the framework. There are ten things that companies need to know and enforce when it comes to human rights, which include considering the impact of every aspect of business operations on human rights, and to track and communicate human rights performance. For more information see

Defusing South Asia’s demographic time bombND

Maha Hosain Aziz, Bloomberg Businessweek, 9 March 2011

A significant factor in the ongoing uprisings in the Middle East and North Africa has been dissatisfaction amongst youth at their government’s inability to provide them with employment. Governments in South Asia must accordingly take steps to address any relevant dissatisfaction in their region to avoid facing a similar situation. While leaders in South Asia are currently focusing on boosting economic growth in the hope that this will increase opportunities, governments should also consider creating specialised jobs for today’s unemployed youth. One means of addressing youth unemployment is for governments to encourage entrepreneurship, and to support vocational entrepreneurship by cooperating with vocational schools and universities. For more information see

Crackdown fears chill Vietnam’s dollar black marketND

Ben Bland, The Financial Times, 8 March 2011

Last month the Vietnamese government announced a number of measures designed to shut down the illegal trade of US dollars within the country to support the national currency, the dong. The measures are experiencing some success in Hanoi, however illegal trade in dollars is continuing in the country’s commercial capital, Ho Chi Minh City. The last time that the Vietnamese government installed similar measures in 2008, inflation hit 28 per cent, and the measures were abandoned. Now, the government’s announcement that it will devalue the dong and tighten loose monetary and fiscal policy are fuelling similar inflationary expectations, as well as raising concerns about the scale of public debt. For more information see

The perils of all-employee meetingsND

Amy Jen Su and Muriel Maignan Wilkins, Harvard Business Review, 8 March 2011

Employers and employees are increasingly recognising the ineffectiveness of standard corporate meetings. While it is important to keep employees informed about their organisation, employers need to deliver their message in a way that resonates with employees, recognising that the way in which they communicate this message also affects its effectiveness. Employers should consider alternate ways of communicating their message other than simply hosting all-employee meetings, such as through weekly emails of leader’s blogs or tweets. For more information see

The dragonfly effectND

Jennifer Aaker & Andy Smith, Stanford Social Innovation Review, Winter 2011

The term the ‘dragonfly effect’ refers to the phenomenon of using social technology to generate impact. The technique relies primarily on four essential skills; the ability to focus, grab attention, engage and take action. The technique is explored through a variety of case studies, for example a campaign to find a compatible bone marrow donor in South Asia, Coca-Cola’s ‘Happiness Machine’ and a cancer patient raising money for childhood cancer research. Fundamentally, the dragonfly principle shows that people don’t need money or power to generate social change, but can do so by being proactive and employing social media. For more information see

The pursuit of productivity in corporate IndiaND

Arati Menon Carroll, The Economic Times, 4 March 2011

Estimates suggest that even though labour productivity figures in India have gone up in the last two decades it still lags behind most other economies. What is particularly worrisome for companies is that productivity levels in India don't even compare well with other emerging economies. Productivity is going to be an issue for governments as well. To keep the GDP engine running and sustain wealth creation, enhancing per capita productivity will be crucial. While India's real manufacturing labour productivity has increased by 65 per cent from 1998 to 2006, this growth seems small as compared to China where it has increased by 180 per cent in the same period. As a result, even though labour wage rates in India are significantly lower than in China, productivity adjusted wage rates equate the two countries. As labour and raw materials costs rise, productivity has emerged as one of the crucial ways to retain profit margins and make the country's products competitive in the international market. For more information see

Employment in Asian firms is booming — but for locals, not Western expatsND

The Economist, 3 March 2011

Previously, Westerns could readily find employment in firms based in Asia. However nowadays firms are focusing on hiring locally. This is largely due to an increase in the number of Asians being educated at a tertiary level, with employers recognising that local workers are more likely to make long-term commitments to their firm. The decrease in demand for foreign workers has resulted in Asian governments tightening their visa regulations. For more information see

How to avoid getting burned in China and IndiaND

Anil K. Gupta and Haiyan Wang, Bloomberg Businessweek, 1 March 2010

Managing strategic partnerships in emerging markets such as China and India requires a realistic understanding of that complex regulatory requirements and a lack of familiarity with foreign operating environments complicate joint ventures. Multinational companies attempting to exercise strategic control in the absence of a dominant ownership stake must avoid impractical attempts at absolute control while ensuring partners with divergent agendas do not dominate the partnership. Overcoming this managerial challenge requires a disaggregation of business operations in the host country and the selection of partners whose strategic agendas are likely to be complementary with your own. Formal authority to appoint key managers must be maintained, however indirect control over the partnership can be cultivated by controlling the ecosystem surrounding it. For more information see

Managing government relations for the future: McKinsey global survey resultsND

McKinsey&Company, McKinsey Quarterly, February 2011

Companies are increasingly recognising the impact of and the value of collaboration with governments, however despite this recognition, only a small percentage of companies feel that they are able to have regular influence on government. There are five main categories of companies’ engagement with government; opportunists, avoiders, partners, reluctant engagers and adversaries. Although many companies have strategies to manage their external affairs, they encounter difficulties in implementing these strategies. To improve government relations, companies need to build their collaboration capabilities and take note of best practice cases from other companies. For more information see

Can China become an intellectual property powerhouse?ND

Lara Farrar, CNN, 15 February 2011

China doesn't have the best reputation for respecting intellectual property rights. But the Chinese government has outlined an ambitious plan to up its annual patent filings by 2015 to two million. Yet legal experts warn that China's potential rise as a major player in the field of intellectual property could present new challenges for both Chinese and international companies working within the country and abroad. ‘International companies are going to have more problems if they do not learn to play the game ... If you do not register your IP (intellectual property) in China, that is the equivalent of giving your competitor a royalty free license. If you don't get a Chinese patent that means you have no right to sue’, says Tony Chen, a patent attorney in Shanghai. For more information see

As enriched China ages, families strainedND

Jaime FlorCruz, CNN, 13 February 2011

China's elderly population — people over 60 — reached 167 million in 2009, making up 12.5 per cent of the total population. It is growing by over 3 million a year. China's economic ascent has also raised life expectancies: the average Chinese person lived to 73 in 2008, compared to just less than 47 years in 1960, according to the World Bank. China is not the only country facing a rapidly graying population. But other affluent countries have well-developed social security and welfare systems in place to take care of the needs of the elderly. China does not. Until an extensive welfare system is put in place, Chinese children will be mainly responsible for looking after elderly parents. In one recent survey, 66.2 per cent of Chinese high school students said they planned to take care of their parents in old age. For more information see

ACCC says companies are responsible for dodgy testimonials posted on their social media pagesND

James Thomson, Smart Company, 11 February 2011

ACCC chair Graeme Samuel says companies will be held responsible if they do not delete or respond to false, misleading and deceptive testimonials on Facebook or Twitter. The comments follow the Federal Court’s decision to fine an allergy products company and its director $7500 for allowing false and misleading testimonials to be published on its commercial Facebook and Twitter pages. Philip Argy, a lawyer who specialises in technology matters, says that companies must carefully moderate official, corporate Facebook pages. He gives the example of a knife company, which receives a post on its Facebook page from a customer claiming the company’s knives can cut through steel. ‘If it’s false and you do not delete it or respond, then you have adopted publication of that post and you are liable for it’. For more information, see

Companies law set to mandate 2 per cent CSR spendND

The Times of India, 10 February 2011

The Ministry of Company Affairs in India is set to announce a new Companies Bill that requires companies meeting certain financial thresholds to allocate 2 per cent of their net profit for the preceding three years on CSR. While this bill marks an important change in company law, it has been criticised in that as of yet it has not clarified exactly what constitutes CSR spending. Additionally, the government has decided against policing this spending, instead allowing companies to self-regulate and relying on stakeholders to hold companies accountable. This proposed CSR spending would be in addition to the CSR spending already imposed on companies in the mining and coal sector. For more information see

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