An actual profession: baby formula shopping consultant

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Being a “shopping consultant” in Australia has potential to earn great returns thanks to the steady high demand coming from the Chinese customers. As an article on Business Insider introduced, Chinese students living in Australia can make up to $3000 a week by selling Australia made health products, such as vitamin and baby formula. Today, shopping consultant has become an alternative to those who do not commit to a full-time job.

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Demand for health products made overseas started to rise since China’s Baby Formula Scandal in 2008. Chinese company Sanlu Group was found responsible for producing infant formula adulterated melamine, causing six infants die from kidney stones and about 54,000 infants diagnosed with kidney damage. The scandal led to a long-term national criticism on food safety. Today, when it comes to buying baby formula, traumatized parents still wouldn’t consider products made in China as their first choices.

Since than, many Chinese customers turned to baby products that are made in other countries. Australian product has a great reputation in terms of safety and quality, so it becomes one of the top choices among the Chinese consumers. But the prices of import products at retail stores are often much higher — usually double than the products sold in Australia. One can of formula which costs about $20 in Sydney, can end up charging customers $48 at the retail stores.

 

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That’s when some Chinese living in Australia started to realize the business opportunity. In addition to the sudden raise of demand, a heavy drop in Australian dollar also prompted benefit for this new career.  According to Yahoo, in July 2008, one AUD equals to approximately 6.5 Yuan. However, that same Australian dollar could only buy 4.5 Yuan by Mid October, 2008. It was great news for both Chinese consumers and shopping consultants in Australia, because within three months, all products made in Australia became cheaper by almost a third.

Demand for Australian baby formula started to raise dramatically. Some Chinese live in Australia saw it, and decided to start a business. The shopping consultants take requests from the Chinese customers, and buy baby formula from Australian stores. They distribute products in different ways. Some set up online stores on platforms such as Taobao and WeChat; so communicate with customers via WeChat and ship products directly through custom. The expensive international shipping cost is the biggest challenge for these shopping consultants. For example, the Australia Post’s pricing for international standard shipping starts from $21.64 a kilogram. It is essential for shopping consultants to find cheaper shipping alternatives.%e5%b1%8f%e5%b9%95%e5%bf%ab%e7%85%a7-2016-11-04-%e4%b8%8b%e5%8d%886-05-27

 

The rapid growth of Chinese demand for  led to a shortage in Australian baby formula supply. Supermarkets begin to limit the amount of cans each person could buy.

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However, a change in Chinese custom and e-commerce ruling announced in April this year has led shopping consultants to a greater challenge. They now have to pay for a higher import tax on products — on postage items, passenger carry-on items, as well as foreign e-commerce transactions. While the revenue is being threaten, they are also facing a competition. Some Australian baby formula producing companies have set up official online stores on Chinese e-commerce platforms such as Taobao and Jingdong. The value of RMB has also been gradually increasing since the end of May this year (1AUD=5.18 Yuan, Nov.1st, 2016). Perhaps the good times for full-time baby product shopping consultants are finally coming to an end.

The Future of Music Streaming

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Suddenly, music is everywhere.  We hear in while on our daily commutes, in stores and restaurants, and all throughout our everyday lives.  In today’s climate, music is very easy to access and to consume.  We are able to access any type of music through the phones and are able to pick and choose each song we want to listen to.  In the past few years, companies like Pandora and Spotify have made it so easy for us to access music on-demand from the devices we hold in our hands.  These firms have disrupted the previous revenue models of selling individual tracks for both the traditional music industry and the artists themselves, all while simplifying the user listening experience for consumers.

Many music industry experts believe that this will be the year that the market will correct and stabilize and will determine which firms will be able to survive the consolidation of the music consumption streaming market.

With the introduction of all of these new companies like Spotify and Pandora,  iTunes no longer has a monopoly in the music consumption market.  Streaming services now offer more music at a lower price, essentially making it impossible to justify purchasing one song for a dollar.

There are currently many streaming services in the market, all hoping to win the majority stake in the industry.  Currently, Spotify is the largest in the United States, followed closely by Pandora and Apple Music.

spotify-apple-music-statistaAlthough there are many various streaming companies currently in the market, they all offer slightly different benefits for the consumer and attract different sectors of the population.

One of the obvious current leaders is Spotify.  Founded in 2006, Spotify is the largest streaming service in the United States today, with over 40 million paid subscribers.  Competitor, Apple Music, which has only been released for about a year, has 17 million paid subscribers for comparison.

Over the past few years, the consumption of music has changed dramatically, from physical record sales to individual song purchases made on iTunes to now the unlimited consumption on streaming services.

According to recent numbers published by Billboard, the industry is looking to have the highest numbers of growth and sales since 2009. Currently, over 411 million units, measured in “total album consumption units,” have been sold in the first three quarters of 2016.  These numbers are set surpass the 2009 sales number set at over 489.8 million albums.

The Recording Industry Association of America (RIAA) midyear report found that the overall industry, not just record sales, was up over 8.15% since 2015 as well.

Many attribute this growth and success to streaming services, as they have created alternative revenue sources for the artists and music industry.  A few years ago, many downloaded their music illegally.  Today, streaming services pay out the artists who have songs on their platforms.

However, one of the biggest criticisms of the music industry today is that the revenue from streaming is nowhere near the physical streaming sales numbers.  Although neither Spotify nor Apple Music releases the actual payout numbers to artists, leaked reports reveal payments of $0.006 per stream by Apple Music.  Additionally, according to Spotify, instead of a per stream payout, they pay out 70% of revenue to rights holders.  This typically averages out to $0.006 and $0.0084 per stream.

These numbers per stream are tiny; it is estimated that the payout for each stream is between $0.004 and $0.008 depending on each service.  For the larger artists who receive radio play and are on major labels, this can be a hbf46252e5beee76e50e7cb08e8ab5f68uge revenue stream, with annual payouts ranging from $100,000 to $500,000 per year.  However, for the small artists who might only have a few thousand fans on Spotify or Apple Music, this can threaten their survival in the business.
Many smaller artists and industry experts have criticized streaming services for their lack of payout, and believe that the streaming services should change their compensation models. However, it is not just small, indie artists who believe this should change.

In June 2015, Taylor Swift posted a Tweet criticizing the Apple Music launch.  She believed that the service should pay out artists during the three-month trial period, which at the time, they were not planning to do.  In a letter entitled, “To Apple, Love Taylor,” she wrote, “I’m sure you are aware that Apple Music will be offering a free 3-month trial to anyone who signs up for the service. I’m not sure you know that Apple Music will not be paying writers, producers, or artists for those three months. I find it to be shocking, disappointing, and completely unlike this historically progressive and generous company.”

Apple VP Eddy Cue responded, on Father’s Day, that Apple would be compensating the artists during the trial period, reversing his initial decision to withhold compensation during the trial period without revenue for the firm.  With this single tweet, Swift was able to alter the business model of a huge media and tech conglomerate like Apple and was able to stand up for all of the smaller artists who do not have a voice as powerful and as large as Swift, creating a larger change in the streaming industry.
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Swift’s label head and president of Big Machine Records, Scott Borchetta, has been very outspoken regarding his views on streaming and has called out Spotify by name. “Ninety percent of those outlets that we visited in that first year are out of business, so 10 years from now, I guarantee you at least half of those streaming services that exist today will not exist, at least not freestanding.”

While there are many like Borchetta and Swift who are outspoken against streaming, for many artists, platforms like Spotify have helped to launch their careers and gain exposure that they could only previously dream of.

For example, Hozier was an unknown artist until 2013, when he was introduced into a Spotify artist discovery program and added to a playlist, and eventually was added to more, increasing his daily streams from an initial 15,000 streams worldwide per day to over 2 million a day (Billboard).  With the support and push of Spotify, Hozier was introduced to over 11 million new fans over the course of two years.

Streaming services can provide success to the lesser-known artists, but many people are weary of the services, as there is an influx of firms in the market that has is constantly changing and evolving.

At today’s point, the streaming services in the market are still in the development stage.  Many, including Spotify, are not yet profitable.  Even companies like Pandora, which has been in business since 2000, has reported losses of millions in the past few quarters.

So, if the companies aren’t making money but have millions and millions of customers, how will they ever be profitable?

The solution, many industry executives and trend predictors believe, is to move away from a “freemium model” and transition to one that is only paid.  In the current economic climate, “freemium” means that companies like Spotify and Pandora offer a free, ad-supported version as well as a paid version for their customers.  Many believe this will begin to vanish, as Apple Music only offers a paid version and revenue would increase if everyone were forced to pay.

With these changes, some services like Pandora and Spotify will pivot, encouraging consumers to pay for access to a streaming service.  However, will new players in the market choose to create a free model to play with these tech giants?

According to the Financial Times, SoundCloud, a popular site for
soundcloudvspotifyremixes and unofficial music, is the next purchase for Spotify.  This could be beneficial, as SoundCloud needs help financially and the purchase would diversify Spotify’s catalogue, as it would include more original content and more indie label releases.

The Spotify/SoundCloud acquisition could be one of many that will occur in the next few years, as the industry condenses and corrects from the current oversaturation.  There are so many players in the market currently and it will be important for the consumers to express their wants and needs in the streaming market so that the companies best suited for the consumer and industry survive.  In a few years,

Three years ago, Spotify and streaming were words that were uncommon in our everyday vernacular.

 

 

Sources

http://www.billboard.com/biz/articles/news/record-labels/7534386/heres-why-2016-is-set-to-be-music-industrys-best-year-since?utm_source=twitter

http://www.billboard.com/articles/business/6656722/spotify-spotlight-support-major-lazer-hozier

http://fortune.com/2016/09/29/spotify-soundcloud-acquisition/

http://www.digitaltrends.com/music/apple-music-vs-spotify/

http://www.digitalmusicnews.com/2016/05/24/apple-music-pays-every-country-worldwide/

http://time.com/3940500/apple-music-taylor-swift-release/

http://www.musicbusinessworldwide.com/scott-borchetta-50-of-todays-streaming-services-will-be-dead-in-a-decade/

http://www.forbes.com/sites/hughmcintyre/2016/09/28/report-spotify-is-in-talks-to-buy-soundcloud/#798f59366a49

 

 

Mongolia to Minegolia: A nation’s struggle to develop amidst sudden economic expansion

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A nomadic herder rides past a traditional ger in Northern Mongolia.

A nomadic herder rides past a traditional ger in Northern Mongolia.

Traveling outside of Mongolia’s only major city, Ulaanbaatar, can seem like traveling back in time 800 years. Among the hundreds of miles of rolling hills, I was hard-pressed to find any permanent, man-made structure. It was a natural landscape so untouched by modern man that I half expected to see Genghis Khan’s enormous army thunder down a hill aboard hardy little ponies.

Nomadic herding culture has been a part of Mongolia for thousands of years and it remains a major part of Mongolian life. However, Mongolia’s economy is undergoing massive transformation that could change both the cultural and natural landscape forever.

From 2009 to 2013, the Mongolian GDP nearly tripled in size from a scant $4.584 billion (US) to $12.582 billion, according to the World Bank.

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Mongolia’s explosive rise in the Asian sphere began in the late 1990s when Mongolia found itself to be, quite literally, sitting on top of a gold mine. More important than the gold mine, however, was a copper mine, one of the largest in the world, that was buried underground, just north of the Gobi Desert.

Combining lush national resources and its location just north of resource-hungry China, Mongolia was set to launch itself from rural nomadic countryside to industrialized nation within a span of a few years.

Throughout its expedited transition from a largely agricultural economy to an economy in which one fifth of GDP relies on the mining sector, Mongolia has struggled to strike a balance between rapid growth and growth that is sustainable, fair, and environmentally responsible.

Today, the mining industry makes up 20 percent of Monglia’s GDP. This makes the Mongolian economy somewhat reliant on fluctuating commodity pricing as it sells its copper, gold, and other earth minerals to China. It is possible, however, that mining’s share of the GDP is much higher but the Mongolian government is presenting its nation as a well diversified and therefore more stable economy for investment.

Even at 20 percent of the economy, if metal and earth mineral prices plummet, as they did in the second quarter of 2012, GDP growth can halt or even contract without other industries to offset decreased revenue.

Since the beginning of development at the Oyu Tolgoi mine, a major contributor to GDP growth, GDP per capita has grown over 800 percent. However, the Gini Coefficient, a measure of income distributions in which a value of 0 represents perfect equality and 100 represents absolute inequality, Mongolia is rated a 36.5.

This rating ranks Mongolia 70th in terms of equality among nations worldwide. To put this in perspective, the most equal country is Ukraine with a score of 24.8 and the second most unequal country is South Africa, a nation that is still suffering great disparity along racial lines as an aftereffect of apartheid, with a score of 65.

While not nearly as bas as South Africa, nowhere is the disparity of development in Mongolia better illustrated than in Ulanbataar. In the center of downtown lies the massive Chinggis Square, named after the nation’s hero, Genghis Khan. On one end of the square sits the Blue Sky Building. This $200 million project is a glass and steel office building and hotel reaching 344 ft. high which would not look out of place in London, New York, or Shanghai. From this vantage point, the city skyline is dominated with towering cranes building offices, apartments, and shopping centers.

Construction on the Blue Sky Building in Ulaanbataar before the hotel and office building opened in 2009.

A mere 15-minute drive away from the downtown area is a very different sight. On the outskirts of the city an estimated 800,000 former nomads have settled in their gers, traditional felt tents that have been used by nomads for centuries. Here, there is no plumbing, running water, or civil services like trash collection. Some estimates place unemployment in these ger districts as high as 60% and without their herds to support them, many are likely living in poverty.

The story of Mongolia’s rise from uniform underdevelopment to the state of Ulanbataar today began in 1997, when the democratic government, established after the fall of the Soviet Union, which maintained Mongolia as a buffer against China, passed the Minerals Law of Mongolia. This law established the state’s ownership of all mineral resources within its borders and reserved the right to sell mining and exploration licenses.

The goal of this law was to grow Mongolia’s economy after a dip that left their GDP below the billion-dollar mark from 1993 to 1994. If the government could sell its mining and mineral exploration rights to international mining corporations, it could, in theory, increase levels of foreign direct investment, lower unemployment, and raise GDP.

Investors found abundant Mongolian reserves of copper, gold, fluorspar, and uranium highly attractive. In addition to owning natural resources, Mongolia shares a border with China, the world’s largest importer of raw materials. This presents a lucrative opportunity to sell materials to China at a lower price by minimizing transportation costs that make metals and minerals from South America more expensive.

Combining natural resources with its proximity to China, a country that imported $25.1 billion in refined copper and $63.9 billion in gold in 2014, Mongolia looked like the world’s premier destination for mining operations.

Turquoise Hill Resources Ltd., a subsidiary of the Canadian Ivanhoe Mines, found a massive copper reserve in southern Mongolia. It announced a $4.4 billion investment in underground development at its mining sight Oyu Tolgoi on December 14, 2015. Estimated to be the world’s third largest reserve of copper, Turquoise Hill originally invested $6.2 billion in 2013, after years of exploration and analysis, to begin production.

Turquoise Hill Resources has invested over $10 billion so far in the Oyu Tolgoi mine and surrounding infrastructure.

These investments were massive in communities where wealth was generally measured by herd population rather than hard currency. The influx of capital and demand for labor encouraged many nomads to abandon traditional herding practices in order to work for mining companies or construction companies which were needed to build infrastructure like roads and bridges virtually from the ground up.

In order to include Mongolian interests in mining decision-making, the Mongolian government and Turquoise Hill spent five years negotiating the Oyu Tolgoi Investment Agreement. The agreement states that the Mongolian nation has a 34 percent equity stake in the mine with the ability to renegotiate their ownership to 50 percent as soon as initial investments have been recuperated. This clause is very favorable for mining companies which are essentially guaranteed the recuperation of their investments.

Additionally, the agreement holds the investor accountable for regional economic development, adhering to national and international environmental standards, contributing to national infrastructure, maintaining a workforce that employs mostly Mongolians, and investment in the education of the Mongolian people.

While these terms are written into the official contracts, there is little evidence to support the clauses did anything more than pay lip service to ideas of sustainable development.

With the volatility of commodity pricing, those who have sold all of their herds and bet on Mongolia’s industrialized future by settling in cities are facing just as much if not more uncertainty than their countrymen and women who remain herders. Over the past five years, copper prices have fallen over 50 percent affecting both wages and unemployment.

After a severe dip in prices following the global economic crash in 2008, copper prices rose. Since 2012, prices have been decreasing.

After a severe dip in prices following the global economic crash in 2008, copper prices rose. Since 2012, prices have been decreasing.

Dwindling copper prices have slowed economic growth to a crawl, the World Bank predicts 0.8 percent growth rate in 2016, and the Mongolian currency, the togrog, has plummeted in value.

Many economists blame Mongolia’s economic downturn on changes in the slowing Chinese economy. China, which is the destination of 80 percent of Mongolia’s exports, has decreased its demand for commodities like copper and coal, which has driven down international commodity prices significantly. This serves as a double blow to the Mongolian economy because China is not buying as much and prices are falling in the international marketplace.

Despite contractions in copper prices and resulting economic uncertainty, many nomads continue to settle in cities either to seek economic opportunity or escape the uncertainty of harsh winters that can wipe out an entire family’s herd, a Mongolian’s source of wealth and survival. The increasing frequency of these unusually cold winters are intensifying movement to urban areas, as herds die off on the ice covered steppes. These extreme weather conditions have been attributed to pollution and its affects on climate change.

Just like in Ulanbataar, families who renounce their nomadic lifestyles settle in gers on the outskirts of mining towns. During the winter months, when low temperatures average around -28 degrees Fahrenheit, former nomads burn massive amounts coal to keep warm and cook. Air pollution is so bad in the colder months that it exceeds the World Health Organization’s most lenient standards by 600 to 700 percent.

This creates a spiral of urbanization. As more nomadic families leave the countryside and gather in mining towns and cities, pollution increases thereby worsening and increasing the frequency of hard winters, forcing more families to trade their herds for mining or manufacturing jobs.

Former nomads settle in their gers near mines to find work.

What were once seen as beacons of opportunity are now more like poverty traps. Those who work in the mines are either susceptible to injury or the arduous labor prevents many miners from being hired past age 40. Even people who have moved to cities to support the growth of mining towns by opening shops and restaurants are feeling the strain of dwindling copper prices as miners become unemployed and have less to spend. And without the herds of sheep, goats, yaks, and horses that used to sustain Mongolians through the harsh winters, those who can no longer find work will find an economic landscape almost as barren as the Gobi Desert.