Australia’s economic future can be bright. The 2015 Intergenerational Report (IGR) says that in 2055 our pay packets will on average, be able to buy nearly 80% more goods and services than now. But, as the IGR concedes, whether these happy days come true really depends on what happens to productivity between now and then. Government policy settings that foster a culture of innovation will be crucial. And there’s the problem. As it currently stands, the World Economic Forum (WEF) ranks the strength of Australia’s innovation environment in the bottom half of the OECD. If we are benchmarking ourselves against the likes of Germany, then that may not seem so bad. But how about China, a country that made a name for itself as the factory of the world on the back of millions of workers paid next to nothing? China rises up the innovation rankings That’s the reality that Australia now faces: out of the 144 countries ranked by the WEF, the strength of China’s innovation environment now lies just seven places behind ours. And don’t forget: per-capita incomes in China are only around one-quarter of those in Australia. To be sure, it’s not so much that Australia has gone backwards. It’s that China has caught up. The days of cheap labour in China ended more than a decade ago. Nowadays when utilities and other costs are added to sharply rising wages, Boston Consulting Group says that manufacturing costs in China are only 4% less than in the US. That’s put enormous pressure on Chinese companies to innovate and produce higher value-added goods and services rather than try to compete on the lowest price. It’s hard to argue with the results. According to the World Trade Organization, China’s share of world manufactured goods trade leapt from 4.7% in 2000 to 17.5% in 2013. Some quip that China hasn’t yet discovered its own Apple. That’s true. But it does have Lenovo and Huawei, the world’s largest manufacturers of PCs and telecommunications equipment, respectively. Then there’s smart phone maker, Xiaomi, a company we’ll be hearing a lot more about in the next few years. And what’s unfolding in the digital space is nothing short of revolutionary. The world’s fasting growing e-commerce market Last month the Harvard Business Review said that over the past five years the digital evolution in China has been more rapid than in any of the other 49 countries they studied. China doesn’t need to find its own eBay or Amazon. By 2012, China’s largest online retailer, Alibaba, already had sales exceeding that of the American giants combined. Industry researcher, eMarketer, says that the value of retail e-commerce sales in China in 2014 was 40% higher than in the US. By 2018, it will be more than double. Runs on the board in e-commerce are now being leveraged in other areas. Alibaba just set up its own bank. To decide who to lend to it will tap its own treasure trove of data: the payments histories of more than 300 million individual users and 37 million small businesses that trade of its online platforms. In searching for the secrets of Chinese success, don’t look for hordes of state-owned enterprises pumped full of government subsidies. Alibaba and co are privately-owned and profit hungry. But what the Chinese government has done well is to recognise the high cost challenge and respond with a narrative about how it can be overcome. Innovation as the buzzword We heard this loud and clear when Chinese Premier, Li Keqiang, delivered his work report at the National People’s Congress earlier this month. “Innovation-driven development” is now the national economic strategy. When addressing the World Economic Forum at Davos in January, Premier Li spoke of innovation and entrepreneurship no less than 20 times. He said that in Chinese eyes they are a “gold mine”. It’s not just words. It was reforms by China’s banking regulator last year that cleared the way for Alibaba to act on its entrepreneurial instincts and branch into finance. Yet far from the Chinese sense of urgency and mission, Australian governments have appeared content squandering the proceeds of the mining boom - a once in a generation opportunity to reposition the economy for sustainable, innovation-led growth. So what about Australia? Innovation policy in Australia is now focused on establishing five industry “Growth Centres”, which will be designed to encourage business-university collaboration. But these have only been allocated around $190 million, compared with almost $3 billion for the UK Catapult Centres, on which they are based. Australia doesn’t need to unleash its own Apple or Alibaba, however enticing such a prospect might be. The reality is we account for only 2% of the world’s R&D, and even less of its markets. But we do need more knowledge intensive “micro-multinationals” that engage in niche production and feed into global networks and value chains. Already in 2012, before the IGR, the Australia in the Asian Century White Paper noted: “Using creativity and design-based thinking to solve complex problems is a distinctive Australian strength that can help to meet the emerging challenges of this century”. Countries like Germany, Switzerland, and more recently the UK, have shown that being a high cost economy doesn’t mean that manufacturing needs to be abandoned. Nor does it mean that international competitiveness needs to be lost. But when a country like China starts teaching the same lessons, it really is time to sit up and start paying attention. This article was originally published on The Conversation. Read the original article.
Microsoft is believed to have spent over $US20 million to a startup called Acompli, which makes an email app for Android smartphones and iPhones. The news was reported by Re/Code, with Microsoft later confirming the deal in an official blog post from the company’s corporate vice president for Outlook and Office 365, Rajesh Jha. The email client was developed by veterans from Zimbra and VMWare, and supports both Microsoft and Google email services. US retailers concerned about Chinese online marketplace Alibaba A number of leading US retailers have called on Congress to end special tax treatment for online retailers, citing fears Chinese marketplace Alibaba could “decimate” their businesses. According to Reuters, claims were made in a series of TV and radio ads by a lobby group called Alliance for Main Street Fairness, which includes major US retail chains such as Best Buy, Target and JC Penney. While Alibaba has not yet launched in the US market, the retailers are concerned the company could use some of the money raised through its recent IPO on a US expansion. Google Fiber signups in Texas Google Fiber has opened up signups in the US city of Austin, Texas, according to The Verge. The fibre-to-the-premises internet service costs $US70 per month for data only, with 1 terabyte of cloud storage and TV setting consumers back $US130 per month, and a slower 5Mbps download and 1Mbps upload service available for a once-off $US300 fee. Overnight The Dow Jones Industrial Average is down 43.45 points to 17784.8. The Aussie dollar is down to US85.04 cents.
Entrepreneurs with ambitions beyond their own borders have been invited to apply for one of 15 places in the Australian delegation to Moscow for the Global Entrepreneurship Congress 2014. The Kauffman Foundation, an entrepreneurial education and research network, will coordinate the congress. The summit will take place in 17th to 20th of March. Global Entrepreneurship Week’s Australian coordinator, Natasha Munasinghe, told StartupSmart thousands of young entrepreneurs are expected to attend. “The congress gives all the nations involved in the global campaign a focal point and the opportunity to come together and learn from each other,” she says. The delegates will also take part in research initiatives to identify the issues holding entrepreneurship back in every represented country. A report will be published during the congress detailing the research. Munasinghe says Australia fares quite well compared to many other countries, but more policy changes are needed to grow the ecosystem. “Australia is doing well in some areas such as the ease of starting a business, but when it comes to issues such as accessing funding we could do better. We’ve also got issues around our employee share options scheme and could do more with tax incentives that we have seen work in other countries,” Munasinghe says. Applicants will need to self-fund their trips and are encouraged to reach out to the coordinating team for help securing their visas. Entrepreneurs can apply directly via the congress’s website.
A decision on whether to lower or abandon the GST-free threshold on overseas purchases has been delayed until March next year, following a meeting between Federal Treasurer Joe Hockey and his state counterparts. The move means Australian consumers will still be able to enjoy GST-free imports over Christmas. However, following strong lobbying from retailers, NSW Treasurer Mike Baird says there is a growing consensus among state treasurers that the rule needs to change. “I don’t expect to win a popularity contest on the back of this, [but] it is fair for our local retailers. The tax system needs to be brought into the modern age and we’re prepared to argue for it,” Baird says. Bitcoin crosses $US1000 The price of bitcoin has crossed $US1000 on Wednesday, hitting a high of $US1073 on the Tokyo-based Mt. Gox exchange. The increase has been credited to a US Senate hearing last week, which advocates say granted the digital currency more legitimacy, as well as increased acceptance from the general public. "It isn't just the bitcoin community saying that bitcoin is used for good things and there's a lot of great potential, we have members of Congress and government agencies who all agree," Bitcoin Foundation spokeswoman Jinyoung Lee Englund says. Murray Goulburn launches legal challenge over Saputo bid for Warrnambool Dairy giant Murray Goulburn has lodged an application with the Takeovers Panel attempting to block Saputo from processing acceptances to its bid for Warrnambool Cheese and Butter. Saputo originally promised WCB shareholders a franking credit of up to 50 cents a share, but replaced the offer in its most recent bid with a 20 cents a share bonus payment if Saputo gains 50% of the stock in WCB. Murray Goulburn alleges this contravenes “truth in takeover” legislation, and is also seeking orders restraining Saputo from varying its bid. Overnight The Dow Jones Industrial Average is up to 16102.23. The Aussie dollar is at US 90.80 cents.
How to present like Steve Jobs: Presenting a new product or business in front of potential investors or clients can be a daunting experience. US author and chief executive of Breather, an on-demand space company, Julien Smith has been doing a bit of presenting lately and has realised the way he does it has changed significantly as he seeks to emulate Apple’s Steve Jobs. Why? “Well, as it turns out, if you want to present something you consider revolutionary, then that is exactly how you should be doing it,” he writes on his blog. In this post he sets out what he’s learnt from Jobs on presenting. Opening up The Guardian: From its scoops of phone hacking at the News of the World to the Edward Snowdon revelations that the US National Security Agency tapped millions of phone calls and emails in the name of combatting terrorism, Britain’s The Guardian newspaper has been first with some of the biggest news stories in the world in recent times. This feature in The New Yorker reveals how the paper delivered its biggest stories, while also profiling editor Alan Rusbridger. It also discusses how The Guardian might survive when traditional media is fighting to retain readers in a world dominated by the internet. Julian Assange: He may be confined to a small room in the Embassy of Ecuador in London, but Julian Assange’s reach and profile appear undiminished. He’s addressed the United Nations, written a book, given interviews, run for election to the Australian Senate and played a role in the Edward Snowdon affair. Vanity Fair looks at life for Assange and how he’s maintained his profile and work despite being physically removed from the wider world. Lessons from a dysfunctional US Congress: The US government has been partially shutdown as politicians refuse to compromise on new laws. It’s a situation that has many in the US and around the world shaking their heads. Samuel Bacharach, a professor at Cornell University, isn’t pulling any punches when he describes Congress as “politically incompetent”. But within that incompetence are some leadership lessons he’s explained in this article for Inc.com.
A Hobart-based game developer, Six Faces, has been named as one of five companies accepted into the European iGaming Congress Startup LaunchPad program in Barcelona. Six Faces was formed last year and develops online wagering games. The six co-founders had worked in the gaming industry for decades. Six Faces managing director of business development Craig Driver told StartupSmart they had launched the start-up because they were keen to create new products. “We’re trying to change the space, and bring some newness to a space that appears on the surface to be innovative, but really it’s a lot of same-same,” Driver says, adding that the experience of the team has created some vigorous conversations that have led to robust products. Driver says he expects it was their Swopstakes product, a lottery based on sports results, which got them into the pitching competition as it was a fresh idea. The team will be pitching to a crowd of over 1,500 delegates, including an expert panel of gaming investors. Six Faces will be partnering with existing Australian wagering companies and launching their offering in March 2014. Driver says the gaming market is ripe for disruption. “The market is very competitive with a large number of players, but all are competing with essentially the same product suite, the same offering and even very similar price points,” he says. This meant customer acquisition was becoming really expensive, and the promotions were becoming laughable. “We saw an opportunity to differentiate ourselves on product, and we’ll be looking to partner with existing companies and give them a competitive advantage.” Driver says they’ll be seeking global partners and possibly investment at the pitch day, where they will have eight minutes to pitch and answer questions from the judges. “It’s about exposure, and we’re looking to partner with companies globally and in a number of jurisdictions. We’re here in Australia, and we’ll be partnering to launch here in March, but all of our products are global so we’re focused on the UK and Europe next as they’re vibrant gaming markets,” Driver says. Four of the six team members are based in Tasmania. “From relatively humble beginnings and surrounds to be on a global stage and representing Tasmania and Australia, we’re pretty excited,” Driver says.
The US government shutdown has come into effect with more than 800,000 government employees forced to take unpaid leave, as Affordable Care Act reforms roll out. “This Republican shutdown did not have to happen – I want every American to understand why it did happen,” US President Barack Obama says. “[The Tea Party Republicans] shut down the government over an ideological crusade to deny affordable health insurance to millions of Americans. “One faction of one party in one house of Congress in one branch of government shut down major parts of the government because they didn't like the law.” Facebook introduces new mobile app ad capabilities Facebook has introduced new capabilities to its mobile app ads, claiming the features will boost the amount of time users spend in third-party mobile apps. Instead of ads simply prompting users to install additional apps, the ads can now also be used to promote in-app purchases. The new feature allows, for example, an ad in a travel app to promote a discounted airfare. Melbourne and Sydney boost average house prices to a record high The average value of houses in Australia’s major capital cities has been boosted to a record high, fuelled by rises in Melbourne and Sydney, according to new RP Data-Rismark figures. The average capital city house price rose by 1.6% during September, boosted by a 2.5% rise in Sydney, a 2.4% increase in Melbourne and 1.1% in Adelaide. The increases offset falls in Darwin, Perth, Canberra, Brisbane and Hobart. “Over the past 10 years, values have only risen by an annual rate of about 2.5%. So in many ways Sydney's playing catch up at the moment,” RP Data analyst Tim Lawless says. Overnight The Dow Jones Industrial Average is up 0.41% to 15191.7. The Aussie dollar is down to US94.01 cents.
The United States is one step closer to a government shutdown after Democrats rejected a proposal by Republicans to delay the Affordable Care Act by one year in exchange for passing temporary funding for the US federal government. Failure to pass a funding bill by midnight – 2pm AEST – would see thousands of US government employees forced to take unpaid leave. “One faction of one party in one house of Congress in one branch of government doesn't get to shut down the entire government just to refight the results of an election,” US President Barack Obama says. “Congress needs to keep our government open, needs to pay our bills on time, and never, ever threaten the full faith and credit of the United States of America.” Online sales growth slips in August Online sales slipped by 0.1% during August to an annual growth rate of 9.6%, the slowest since 2010, according to new NAB figures. The figures also show that online sales now equate to 6.2% of spending in traditional retailers. “What we're also seeing is weakness just about everywhere, but particularly in fashion, which is one of our largest sub-sectors online," NAB chief economist Alan Oster says. “I think what you're really seeing is weak levels of retail sales and that's being affected both in the traditional sales and online.” Alan Kohler pulls the plug on Inside Business Alan Kohler is stepping aside from the ABC’s Inside Business program after 12 years on air, citing the “ridiculous workload” created by the program in addition to his other commitments. ‘‘I’ve been doing Inside Business for 12 years, it really has been great. I’ve really enjoyed it. I designed the program, started it off, had fantastic people working on it,” Kohler says. ‘‘I really enjoyed doing the TV interviews, so I’m going to miss that. I’d like to find a way to continue doing interviews, if I can.’’ The national broadcaster says it remains committed to its business news coverage, despite the Sunday morning business news program ending its run on December 1. Overnight The Dow Jones Industrial Average is down 0.84% to 15129.67. The Aussie dollar is up to US93.26 cents.
Business Council of Australia chief executive Jennifer Westacott is urging the federal government to aim for a surplus within three years and adopt a new set of fiscal rules for future federal budgets.
A team called PIVOT has taken out the title at Startup Weekend Brisbane, which will see one team member travel to the United States as part of the Advance Innovation Program.
Global Entrepreneurship Week has kicked off with a bang in Australia, with a lengthy list of events tipped to provide plenty of inspiration for aspiring entrepreneurs.
US President Barack Obama has insisted the “best is yet to come” for America after winning a second four-year term yesterday, defeating Republican Mitt Romney.
Retail start-ups are being encouraged to sniff out incentives from landlords who are desperate to fill space, as established brands begin to avoid shopping centres due to high rents.
A start-up launched by a Sydney doctor to aid paediatric care in remote Aboriginal communities has been named among the world’s 50 most innovative new businesses by Global Entrepreneurship Week.
The vice president of multinational finance giant GE has raised doubts about the success of online training programs, insisting they can’t replace face-to-face courses.
President Obama discusses legislation currently before Congress that would give a tax credit to small businesses. The tax credit will go to businesses that are hiring new employees, or raising the wages of their existing staff.
The Reserve Bank of Australia has stoked hopes of a further interest rate cut by stressing that inflation must be kept low and that non-mining businesses needed to grow in order to keep unemployment down.
A $15 million investment in an Australian biotechnology start-up has been judged the Best Venture Capital Investment at the 2012 Vaccine Industry Excellence Awards in Washington.
Project PowerUp is the brainchild of Ryan Wardell, a 20-something entrepreneur based in Sydney. The business bills itself as Australia’s first crowd-funding platform for start-ups.
The US could still lose its AAA credit rating, even if, as expected, Congress passes a deal struck between party leaders to avoid a debt default.