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Written by Raymond Mobrez, P.h.D, Director
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China has started to realize that the decline in its economic activity has had a positive effect on the environment. Obviously, less green house gases are being emitted, which are predominantly the reactors of the global warming phenomenon. Recently, Peking has been targeting the issue of how to lower its emission of Carbon Dioxide resulting from its rapidly growing Industrial and transportation sectors, in the atmosphere following the end of the current economic slow down.
Currently, the Chinese government is facing a lot of criticism resulting from unfavorable economic conditions. However, the environmental stance of china has been debated critically over the past decade. Many disagree with the Chinese government's policies towards green gas emission, as China's first priority has been to tend to its economic growth rates, in doing so preserving its “economic miracle”.But little attention has been given to the environmental consequences resulting from such a miracle.
However, China is now in a position to use alternative methods that could satisfy its environmental critics. For example, on January 19th, the Chinese authorities lowered gas prices between 14% and 18% but consequently imposed a higher tax on gas consumption. This imposed tax substitutes for the decrease in price while regulating spendings on consumption. This mentioned tax is flexible for modification in case of future variations in oil prices.
Furthermore, China has allocated 4 trillion yuans from its $584 billion economic stimulus plan aimed at reviving the economy, towards transforming high energy consuming industries, that consequently contribute highly to the rate of pollution, into more environmentally friendly ones. Another 3.5 billion yuans were dedicated to general environmental projects.
Moreover, China doubled its investments in its public electricity company making it reach around 1.2 trillion Yuans, while also approving many projects for construction of nuclear energy plants to take effect promptly. China has also managed to resist calls for mineral sector assistance to lower taxes on imported aluminum and other high energy consuming products, even though domestic production of these products is falling.
However, a big portion of the economic stimulus plan is focused on construction. Hence, it would be very difficult to avoid an increase in steal and cement producing factories that rely heavily on carbon as their main operating fuel source (80%). Thus, this coming period will present China with challenges of conflicting nature; the economy versus the environment. Moreover, in December of 2009, the world is faced with the challenge of a substitute for the Kyoto agreement, where all eyes are turning on China, as it is one of the major green gas producing countries in the world.
It is clear that the Chinese government aims to reduce its energy consumption by at least 20% by the end of this decade. However, in order to do so, policy adjustments towards the consumption of coal as a main energy source must be altered. Furthermore, by the end of 2009, the Chinese authorities will be able to present statistical data in hopes to prove that it has been successful in lowering its energy consumption by the targeted 3.46% between January and September 2008 and that of the same period in 2007.
Thus, with the current global economic situation, China faces a golden opportunity to place itself on the path of a green revolution development strategy.
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Written by Raymond Mobrez, P.h.D, Director
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Both Sony and Nintendo released their sales statements for the third quarter, setting the stage for a grim set of final figures. Even though both companies are suffering under the current global economic conditions, Nintendo seems to be left in the shade.
The harshest problem that both companies face is that international demand is declining, and both rely heavily on overseas sales for the majority of their earnings. Moreover, the yen has appreciated considerably against many currencies, resulting in a diluted value of overseas revenues when converted to yen.
This was witnessed in the breaking down of Sony's financial statements, where revenues were recorded at ¥200 billion in the third quarter 2007, fell to ¥16 billion. The majority of these losses resulted mainly from the exchange rate alone.
Nintendo, however, does not release quarterly figures, rather, it rounds up its figures for the first nine months of the fiscal year. Nintendo's figures also show losses leading from the exchange rate system, however, losses accounted for only 18% of total.
Part of Sony's problem is its diversity. For the most part, its different electronics offerings aren't mutually supportive. This was especially true of its mobile phone affiliate, Sony Ericsson, which made a big contribution to the ¥45 billion lost by the electronics division.
However, the game division did moderately well for Sony. Even though sales dropped, it managed to bring profits. PS3 software was the only winner amongst all the others. The PS2 system reached the end of its life cycle and PSP sales fell slightly.
Nintendo only provides its results in terms of the total of the fiscal year, of which the holiday season constitutes the third quarter. Some quick math with the previous quarters' results, however, yield some pretty impressive numbers. Net sales were ¥700 billion, yielding a profit of ¥68 billion, or about $750 million. It's not all good news though, as of its last quarterly report, net income was running about ¥10 billion ahead of the previous year; now they're running about ¥45 billion behind, even though operating income is up substantially.
Nintendo DS reached close to 12 million units sold over the holiday season and the Wii picked up another 10.4 million. With this increase in hardware sales, software sales also were driven up. Software sales alone accounted for about ¥250 billion in revenue.
It's clear that Nintendo has guessed right in designing a console that can appeal to the mass market, one that it acknowledges in its earnings statement: "Nintendo will continue to pursue expansion of the gaming audience and provide products that offer unique entertainment that puts smiles on the faces of people of all ages and genders." Its focus on that market has helped it avoid having its success in gaming diluted by the broad losses in many divisions that are plaguing Sony, despite the fact that both companies are facing a similar economic problem.
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