China and Taiwan’s Influence on Global Technology Trends

China has recently overtaken the US as being the largest automotive consumers. You might think, so what? China may be on the other side of the world but customer demands in China indicate what the consumer can expect in the US.

Globalization has drastically transformed several local communities but this new influence from the East may prove interesting. Commentators have created the term ‘C-Factor’ for this new influence.

Companies from Japan and South Korea have been revered for their technological expertise and approach to business. Everyone is well aware of the Japanese and Korean technological power houses that dominate the tech landscape. However recently, particularly in the home computer market, Western companies have achieved a large share of the market. Even more recently there has been the growth of two East Asian countries in the tech market – Taiwan and China.

The manufacturer of some of the world’s most popular, high-end technology devices is located in China. China is now also home to the 4th largest PC manufacturer in the world.

Although not quite as famous in global economies as China, Taiwanese technology companies continue to rapidly grow. Acer is now the second biggest computer manufacturer – jumping over Dell to achieve this spot. This shows the technology industry to be a continually developing market. It will be interesting to see if the C-Factor (and T-Factor) affects industries such as health, food and so on.

Western companies often find it challenging. What is popular in East Asia is often unheard of in the West. To crack the Asian market Western businesses often offer radically different products, brands and marketing campaigns. This can simply be explained by cultural differences – aesthetics do not always translate well. Companies that operate online, Asian countries are definitely a game changer.

Most people like to think of the world as converging into one globalized culture. The spread of English and international brands further fuels these ideas. Yet when it comes to the Internet, there are still many cultural differences.

One example is the prevalent use of texts and SMS messages commonly used by young Europeans. In certain Asian countries, this technology is mostly unused and email technology is used instead. Furthermore, cell phones and other devices may be a more popular method of accessing the Internet in Asian countries compared to the conventional personal computer in the West. This poses genuine problems for online companies – if the technology that is favored is different then you cannot merely translate a website and expect it to gain traction.

Social networks are a great example of the differences. Facebook is arguably the most popular website in the Western world. It ranks as the number 1 most popular site for many countries and has a user base that would rank it the third biggest population behind China and India if it was a nation. However, social networking has yet to be fully embraced by East Asian markets. In China, Facebook is ranked outside of the top 100 most visited websites and it is only ranked as number 27 in Japan. Twitter, another huge online social networking website also has much lower user numbers in East Asian countries.

Similarly, online bookmarking (allowing you to save your bookmarks online) is not used as much. The majority of users come from English speaking countries whilst the number of users from East Asian countries is a lot lower. Language differences may be accountable for some of this but other factors also play a part. Layout, design and content should all be tailored for specific cultures. This is largely the reason why there are so few truly global brands.

You might be wondering what is popular then in Asian countries. Blogs are used much more than in the West. Blogging is popular all around the world but many Asian have a big blogging culture. Celebrities often own blogs and frequently publish posts and blog photos. Friends also work together on joint blogs. There are blogging platforms specifically catered for specific countries, each with individual quirks and unique features. Personal home pages are also very popular with many people setting up home pages which feature images, links, videos and so on.

Seeing how the social network marketplace is not universal speaks volumes on the differences in cultures and struggles faced by marketers and international businesses. If you combine this with the C-Factor and Asia’s immergence in the technology market everyone may soon talk about how the West is different from the East. Ultimately, it will be interesting to see if these new companies can continue at this pace and if they can stay ahead of the competition once they reach the top.

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Working Towards a Global Convergence of Accounting Standards

Although some would consider the U.S system of financial reporting one of the most efficient in the world, many would also point out that we have many inefficiencies. This can be seen through the multiple scandals in major US companies such as Enron and WorldCom, and with rapidly increasing technology and the ability to communicate across the world in seconds, it is clear that a global standardized set of accounting principles will soon be a necessity. Though a convergence of accounting standards to a “one-size-fits-all” method of financial reporting is enticing, there are multiple road blocks that prevent us from instituting a universal system. However, despite the problems, there are many who are working to initiate a global convergence of accounting standards and principles

Though the Generally Accepted Accounting Principles (GAAP) have acted as a suitable and reliable set of standards, it is comprised of items from various organizations that vary in format, unity, and structure, and at times GAAP has been considered inconsistent and difficult to interpret. As financial reporting has been becoming increasingly more complex, stock holders and non experts have expressed concerns about how foggy some company’s financial statements are. Similar to some of the issues expressed by the stock holders, companies have let their concerns with the inconsistency of our current financial reporting system be known. Additionally, they have stated that often times it is very difficult to ensure accuracy in their financial statements given the complexity of the GAAP requirements. The GAAP also tends to be more conservative compared to financial accounting standards in other countries. This is due to, in part, the legal implications that come with issuing a financial statement. In short, accountants are worried about being sued. This differs somewhat from the International Financial Reporting Standards (IFRS), which is primarily based in Europe. Because financial accounting laws are different across the way, it is more difficult to sue accountants. With this conservatism consistent with GAAP, coupled with the lack of clarity of financial requirements, comes multiple public companies restating their previous years financial reports as to prevent lawsuits. In 2007 nearly 10% of US publicly traded companies restated their prior financial reports. Not only is the restatement of financial reports costly to companies, but it also can shake the confidence of their current investors and deter future stock holders.

One major issue in the convergence of accounting standards deals with the detail that financial reports should be presented. While the majority of people in the US who hold stock would prefer a broader more abridged format of financial statements that are easily understood, there are users of financial accounting statements, such as market analysis and other financial professionals, who would prefer a more detailed account of financial reports. Users of financial accounting statements simply have overlapping and conflicting needs for financial data of a variety of types.

We are getting closer to a two system world accounting standard every day. The majority or Europe and developed Asian countries use the IFRS, and the US GAAP is currently the most widely used set of accounting principles throughout the global capital market. Despite the problems that face a global convergence of accounting principles, with today’s rapidly increasing technology, it is looking like more and more of a possibility. In fact, the Accounting Standards Board of Japan (ASBJ) met with the Financial Accounting Standards Board (FASB) in Norwalk, CT on October 22, 2009 to discuss their common goal of instigating a set of global accounting standards. This was their eighth time meeting, and it is clear that a global convergence is a priority. However, that is not to assume that we should expect a universal accounting standard in the near future. There are many cultural and legal implications that must be taken into consideration before a complete and total convergence of principles can be achieved. In order for a universal set of accounting principles to work, the stock holders, market analysts, and accountants must all evolve with the changing market and quickly learn to adapt the new principles. In addition, the legal system must also adapt to this new standard. Initially a set of universal accounting standard will leave the accountants open to significant subjectivity. (Fortunately, this should subside as people become more and more comfortable with a universal system.) Therefore, a modification of the legal standards concerning accountants is a necessity. It would be ignorant to assume that a convergence of accounting standards will be an easy thing to achieve, and financial reporting will remain complex. However, we will see a global convergence of accounting principles in the future. The question is simply whether that future is five years or twenty years away.

Sources:

Kemp, Robert. “A Closer Look At Convergence of Accounting Standards: The Reality of Our World – GLG News.” Gerson Lehrman Group – The Expert Network. Web. 21 Oct. 2009. <http://www.glgroup.com/News/A-Closer-Look-At-Convergence-of-Accounting-Standards–The-Reality-of-Our-World-9184.html>.

“View Point: Convergence of IRFS and US GAAP.” Www.pwc.com. Ed. Edward Smith. PricewaterhouseCoopers, 7 Apr. 2007. Web. 23 Oct. 2009. <http://www.pwc.com/en_GX/gx/ifrs-reporting-services/pdf/viewpoint_convergence.pdf>.

“Accounting Standards Board of Japan Meets with Financial Accounting Standards Board to Discuss Global Convergence.” Public relations, press release distribution, investor relations, SEC filing | Business Wire. Ed. Christine Klimek. 22 Oct. 2009. Web. 25 Oct. 2009. <http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20091022006369&newsLang=en>.

Conrad W. Hewitt, “Opening Remarks Before the Initial Meeting of the SEC Advisory Committee on Improvements to Financial Reporting,” US Securities and Exchange Commission, Washington, DC. (August 2, 2007)

Keiso, Donald E., Jerry J. Weygandt, and Terry D. Warfield. Intermediate Accounting. Thirteenth ed. Madison, Wisconsin: John Wiley & Sons, 2007. Print.