Global Glance: July 18, 2016
A quick look at intriguing international stories
By John Bostwick, Managing Editor, Radius
Welcome back to Global Glance. This week we look at:
Venezuela authorities took over a US-owned factory in Caracas last week. The factory’s Texas-based owner Kimberly-Clark — whose brands include Huggies, Kleenex and Scott — had shut down the plant due to an inability to obtain raw materials in the country, which is in economic freefall. The Wall Street Journal quotes Venezuela Labor Minister Oswaldo Vera on the government seizure: “Kimberly-Clark will continue producing for all Venezuelans and is now in the hands of the workers.” The Journal explains that Venezuela authorities justified their actions by stating that Kimberly-Clark had terminated 900 workers “without consulting the government.”
Sources in the article claim that the takeover amounts to a public relations move by President Nicolas Maduro’s government, as materials necessary to operate the factory are effectively too expensive to import. The action is not an isolated incident. The Journal indicates that Maduro and his predecessor Hugo Chavez have in the last 17 years “seized over 1,200 farms, companies and other private businesses in the name of the Socialist Revolution. Production has plummeted, helping to empty shops of goods.”
The Financial Times reports that Kimberly-Clark said in a statement that the company is “’indefinitely suspending all business operations in Venezuela, effective immediately, due to the continued deterioration of economic and business conditions’ as the protracted slump in crude prices continue to weigh heavily on the oil-dependent economy.” As if that weren’t enough for the reeling South American nation, the Times reports in that same article that Citibank, also based in the US, would close certain operations in Venezuela, including the Central Bank and Bank of Venezuela accounts. The Times quotes a defiant President Maduro: “Do you think they’re going to stop us with a financial blockade? No, gentlemen, this is a different world. Nobody stops Venezuela. With Citibank or without Citibank, we march on … with Kimberly or without Kimberly, we march on.”
Bloomberg.com reported that a Citibank rep said in a statement that its decision to shut down certain operations “’is not a reflection of our commitment’ to the country, and that it will continue discussions with the administration of Venezuelan President Nicolas Maduro.” Curiously, neither the Times nor Bloomberg.com explains the reason for Citibank’s decision, though presumably it was influenced by the country’s inflation. A January CNN.com overview of Venezuela’s economic meltdown noted that Venezuela’s currency, the bolivar, “has plummeted at a breathtaking pace.” That article explains that Venezuela’s government has, confusingly, three official exchange rates, including two for certain imports, and that most Venezuelans exchange bolivars and highly-sought-after dollars at an unofficial rate.
The country is now experiencing what some are calling a humanitarian crisis, with shortages of food and other necessities. Al Jazeera reported that on July 10, some 35,000 Venezuelans took advantage of President Maduro’s 12-hour relaxation of border controls to flood into Colombia to purchase basic goods such as medicine and even soap. (Maduro shut down the border with Colombia last year after a “diplomatic row between the neighboring countries,” which was precipitated by an altercation that led to the deaths of three Venezuelan soldiers.)
For more information, read “As Venezuela Goes Hungry, ‘Maduro Diet’ Causes Garage Sale Fever,” published this month in The Miami Herald. Despite the borderline flippant title, the article provides an excellent overview of the country’s current dire situation. Here’s a sample: “With Venezuela’s oil revenue running dry, it no longer has enough money to import food and basic goods. Price and currency controls are fueling hoarding and driving up inflation, which the IMF expects will hit 500 percent this year.” The Herald reports that many formerly middle- and lower-class families have been reduced to selling their belongings for next to nothing to avoid going hungry.
Lyft's Evolving Global Expansion Strategy
Global Glancers may recall that last year we ran a section on Hulu’s decision to forgo international expansion in favor of concentrating on the US market. Hulu’s strategy contrasts with that of its deep-pocketed, ambitious rival Netflix, which now has members in more than 190 countries.
There is a near-perfect analog to these contrasting strategies in the ride-sharing world. Uber — which according to CrunchBase has raised over $15 billion in funding — operates in over 450 cities around the world in what The New York Times calls a “quest to build a global empire.” Uber’s top US-based competitor Lyft decided last year to (like Hulu) concentrate almost exclusively on its domestic market. The Mercury News reported last July that Lyft scrapped previous plans “to expand across the globe” by the end of 2014, due to “pressure from investors, insufficient cash reserves and the desire to further distinguish itself from Uber.”
The Mercury News says that analysts believe “Lyft may not have fully appreciated the cost and complexity of going international when it first made those promises [to go global].” It explains that in Uber’s international model, “each city … becomes a battle zone where a company has to use precious resources to fight the entrenched taxi industry and opposing regulators.” Needless to say, a company like Uber that has raised staggering amounts of money is better equipped to cope with those existing local industries and regulators than Lyft. (According to CrunchBase, Lyft has raised about $2 billion.)
Still, the lure of global expansion is strong. In December 2015, Lyft announced that it was partnering with Grab Taxi and Ola, ridesharing companies servicing Southeast Asia and India. These partnerships complemented a similar ridesharing agreement between Lyft and the China-based ride-sharing company Didi Kuaidi, which Lyft had announced three months earlier. The company explained its strategy like this: “By establishing strategic partnerships with local market leaders Didi, GrabTaxi and Ola, we’re able to remove many of the pain points and language barriers that often come with foreign travel.”
Lyft was in the news again last week for its evolving international expansion strategy. The company’s president, John Zimmer, explained to Fortune that “Lyft does not see value in spending the money required to navigate China’s uncertain regulatory landscape the way Uber has, but its alliance does not mean the company has given up on international expansion.” In fact, he said that Lyft will “very likely” expand into other countries. It’s of course an open question as to whether Lyft will create new partnerships in other countries or expand on its own. Either way, Fortune notes, “It’s expensive to compete.”
Larry: The UK’s Once and Future Chief Mouser
“Battersea Dogs and Cats Home? This is Downing Street. We need the biggest, baddest rodent catcher you’ve got, STAT!”
Something close to that conversation played out in 2011, after a live BBC TV news report outside 10 Downing Street — the home of British prime ministers since 1735 — inadvertently captured the image of a rat scurrying under the residence’s famous glossy black door.
According to the UK government’s official history of 10 Downing, the Battersea animal shelter, headquartered in London, recommended that 10 Downing adopt Larry to solve their rodent problems. Larry is a certain piebald tabby cat who had a reputation among Battersea staff for catching mice. UK officials followed the recommendation and Larry has lived in 10 Downing ever since. The website explains that Larry, who has the official title of Chief Mouser, “spends his days greeting guests to the house, inspecting security defenses and testing antique furniture for napping quality.” His reputation is such that UK residents “send him gifts and treats daily.”
Larry will continue in his position of CM under the country’s new prime minster, Theresa May. A Washington Post article on the subject quotes a Cabinet Office spokesperson: “Larry is staying. He’s very much the Downing Street cat, not the Camerons’ personal cat. He is a Downing Street legend.”
The Telegraph reported last Wednesday that former Prime Minister Cameron helped solidify Larry’s legendary status, “[using] his final Prime Minister's Questions to insist that he ‘loves’ Larry the cat and speak of his ‘sadness’ that he cannot take him with him.” Cameron was responding to criticisms that his relationship with Larry had been a PR ploy. Cameron went on to tweet a photo of the Chief Mouser lounging comfortably on his lap as “proof” of their mutual affection.
— David Cameron (@David_Cameron) July 13, 2016
Larry also has his “own” Twitter account — @number10cat — which now has about 65,000 followers. Larry tweeted of the above image: “He promised me nobody would see it!”