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MARKETING YOUR WEBSITE:

You’ve taken the time to ensure that your site is search engine friendly, meta tags have been added and you’re ready to take the next step in establishing a successful website. So where do you go from here?

One of the best means of achieving your marketing goals is through the use of the website Self Promotion.com (http://www.selfpromotion.com/). This site provides assistance in learning the basics of website promotion. Multiple resources are available to teach you how to market your website and Selfpromotion.com is one of the best resources I’ve found for this purpose. It may seem daunting, but I suggest you take as much time as you need with this website to gain insight into the most effective means of marketing your site. By taking time you need for research, you should realize maximum long term benefits. Further, I would suggest you create an account with selfpromotion.com and utilize their services to assist you in the submission of your site information to all the major search engines. Selfpromotion.com will even allow you to place your site information on auto submission so your site details can be periodically resubmitted.

The best suggestion I can pass along is to submit your site to all major search engines first.

What follows is a list of the most highly valued search engines to submit to:

Google (http://www.google.com/addurl/?continue=/addurl)
Yahoo (http://search.yahoo.com/info/submit.html)
MSN (http://beta.search.msn.com/docs/submit.aspx)
AOL Search (http://dmoz.org/add.html)

Your selfpromotion.com account can be used to submit to each of these search engines. However, you should always read instructions carefully due to the fact that some search engines require manual submission.

A quick trip to your favorite search engine will likely provide links to hundred - even thousands of additional search engines and directories. It can’t hurt to submit your information to any searchable resource you believe would be helpful in meeting your goals and objectives; however the major search engines listed above are the ones used by the majority of web users. Having your site indexed by the largest search engines will provide the most benefit for your site launch and long term site viability.

Site submission is the essential first step in website marketing. However, it can take time to get listed in the search engines. After submitting your information it can take just a few days or as much as several months depending on the individual search engine’s policies. Once your site is listed, it can take many more months to find your site ranked highly enough on your most important keywords and key phrases to provide the needed benefit of site ranking.

At this point you will need to exercise great patience. If you’ve come this far it is because you believe in your site and the products, services or information it provides. Stick with your original course of action. Your site will continue to rise in the ranks the longer it remains an established enterprise. By remaining constant with your keyword and key phrase objectives you will begin to see results, but it takes endurance. There may even come a time when you are listed in the coveted top ten. You should know that there are many who will not stick it out and will close shop before their site has begun to reach full potential.

Should you desire increased short term traffic you may do well to consider advertising your site. It’s true that there was a time when online advertising was cost prohibitive, however, with the advent of ‘pay per click’, web based advertising has become a real possibility for website owners on a budget. This type of advertising provides a rapid increase in short term traffic to your site.

Pay per click is simply a reference to the manner in which you pay for the advertising. You only pay for advertising that actually brings a visitor to your site. This means that your advertisement may be seen in numerous locations and provide multiple impressions, but you do not pay for any of this advertising if someone viewing the online advertisement does not click on the advertisement. You should seek to target ONLY users that are looking for the very thing your site, product, or service delivers.

We will deal much more with ‘pay per click’ in our next article.

Please look for Part 7 of Building Your Way to Online Success.

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Starting a business can be a scary proposition. But if you take five key steps, there’s a way to take away the fear.

1. Research. Knowledge about your market, your targeted customers, your advantage, and your competition can provide you with clarity — and position you to be decisive about your opportunity.

2. Protect Your Idea. Visit www.register.com to find out about reserving a website name. Go to www.uspto.gov to learn about what steps you can take to protect your idea. If you haven’t yet, contact a reputable intellectual property attorney to walk you through what the process is for applying for a patent or registered trademark.

3. Start Part-Time. Instead of making the leap from your current job to running your own startup “cold turkey,” consider keeping your job for security and start your business on the side part-time. This will help you avoid taking unnecessary risks and it will ease the transition financially.

4. Outsource. To keep the complexity of your startup to a minimum, consider outsourcing functions like accounting, payroll, information technology, public relations and more. You might even want to outsource manufacturing, packing and shipping, and sales. Keep your strongest skills and most strategic activitiesperhaps things like design, marketing, and/or customer interactionin-house.

5. Be Willing to Fail. Come to terms with the fact that the best entrepreneurs fail. But if you’re smart you can limit those failures to small battles along the way. The key is to win the war! Know that failure is something that’s just part of businessas it is in lifeand that you can work through those failures on your way to success.

Our bottom line:

If you want to get started with your great idea, “take five” and take away the fear!

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Question: How can I maximize the amount of cash I receive when I sell my business?

Answer: Acquire every last after tax dollar and get paid in cash. Also, follow three critical steps before proceeding:

1. Preplan the sale of your business. This should not be a spur of the moment decision. Rather, it should be well planned in advance. Though it is not possible to control the external environment, such as interest rates and strength of the economy, it is possible to plan for an orderly transition. Start thinking about some obvious sources for a potential buyer. For example, should an employee be groomed for possible succession? Might a good customer be interested in acquiring your business in the event of its sale?

2. Recognize the importance of finding the right buyer. Most businesses don’t have a value that is set in stone. Instead they have a range of value. This means that different buyers will have different perceptions of the same business’s value. It becomes important to pre-plan your confidential marketing effort to gain exposure to multiple buyers, especially synergistic buyers. Synergistic buyers are those individuals who, because of their location, complimentary customer base, financial resources or market position, can profit more from owning your business and are therefore willing to pay more.

3. Consider getting professional help. Unless you have a background in taxes, legal issues and merger and acquisition work, you will probably unknowingly make a multitude of costly mistakes by trying to sell your business yourself. Those mistakes may cost you substantially more than any fees paid for competent professional assistance. Do some homework on various alternatives. Become informed by attending seminars regarding tax issues, estate planning, and so on. Ask your CPA or lawyer to recommend “general knowledge” seminars that might assist your learning curv

Question: How do I legitimately minimize my tax obligations when I sell my business?
Answer: Plan well in advance by reviewing your corporate structure on an ongoing basis. This will enable you to maximize the amount of proceeds you retain from your business’s eventual sale.

As one would expect, the tax rules make it difficult for any quick fixes that give rise to immediate benefits. Consider changes to structure now that may result in more favorable tax treatment when the business is sold in five or ten years.

Start by getting up to speed on recent developments in the tax code. Chances are the code is very different today than when you bought or started your business. So sit down with your professional advisor and review your current business structure and its appropriateness for your business’s eventual sale.

For example, if you are structured as a corporation, the substantial difference to your after tax dollars on sale depends on whether you proceed with an “asset” sale or a “stock” sale. Selling the corporation’s assets can result in proceeds being taxed at the corporate level as well as the individual level when the remaining proceeds are distributed to the stockholders. However, if the stockholders sell their stock, it is likely that capital gains provisions would apply. The difference this makes to retained proceeds can be enormous.

Paying our share of taxes in the United States is an economic reality of life. Yet after tax dollars in the sale of a corporation can vary between 45 percent and 85 percent of the sales price based solely on tax structuring issues. The earlier you start planning for the sale of your business, the more likely you will be to minimize tax obligations.

Question: When is the best time to sell your business?

Answer: The best time to sell your business is determined through a careful consideration of the factors that can and cannot be controlled to maximize the amount of cash you receive. These factors include:

Environmental/External Issues- Beyond our Control

Low interest rates and a low inflation environment with plenty of liquidity and a buoyant economy create an ideal scenario for mergers and acquisitions. Clearly, we have enjoyed this scenario in the United States over the last few years. As a consequence, there has been a flurry of activity in corporate America as well as small business America . Well-run, sound businesses are selling relatively easily for nice multiples. Yet, as we all know, the economy goes in cycles. If the sale of your business is on the immediate horizon, then perhaps consideration should be given to bring the “sell” decision forward in order to take advantage of these robust conditions.

Internal Issues-Within our Control

A potential buyer is going to pay significantly more for a business that demonstrates a consistent track record of growing revenues and profitability. However, all too often a business is allowed to stagnate or even decline because the owners have taken their foot off the accelerator. Getting “burned out” and other health issues are probably the most often cited reason for a small business owner wanting to sell. This is understandable, but also often controllable. Recognize the warning signs and take whatever corrective action possible. Again, choosing to sell for a good price while the business is buoyant is far superior to forcing a sale because of health or other issues that have impacted revenues and reduced the business’s value.

Above all, think with the head and not with the heart. A decision to sell can be very difficult for a host of good reasons. Most small businesses don’t have boards of directors holding management accountable. However, sometimes it is prudent to seek outside objective advice from respected confidantes or professionals. These individuals bring a fresh perspective and insight that will assist you in making good strategic decisions for the future of your business.

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It’s now almost two years since I started dabbling on the internet, trying to make money online. At that time it was a bit of an experiment, kind of like a hobby - something that I did partly for the enjoyment and partly in the hope that I would make enough money to leave my day job.

Now, 20 months later my hobby has turned in to a business and it is generating enough income from for me to happily go part time at work.

Should I decide to do this I’ll be taking the huge step from working on my business in my spare time to earn some extra money, to working half the week for myself. I will then be depending on the money from my own business to pay my mortgage and bills.

If I manage to achieve the same success working from home during the day as I have over the last year working a few hours here and there in my spare time I’ll be well on my way to becoming a full time home business entrepreneur.

I know this sounds fantastic, but what if something goes wrong? If I eventually work full time for myself I’ll be giving up a regular full time salary, not to mention company pension, sick pay and bonuses. For this reason I decided to ask myself a few questions. I’ve put together a list of 5 questions that you need to ask yourself before you leave your day job

1. Do you have a financial cushion? Before you give up your full time or part time job, make sure you have some money in the bank in case something goes wrong. Preferably you should make sure that you have no credit card debts or loans and have at least 3 months salary in the bank just to allow you to get back on your feet if the worst happens.

2. Are you making enough money? Sounds obvious, but remember to add up your current outgoings to see if your online income will cover everything. Remember to take into account tax payments and allow for the fact that you’ll no longer receive paid holidays, health insurance, sick pay and a company pension. If you have a big purchase coming up in the near future, such as a new house, you may want to postpone your full time online career until you’ve secured your mortgage.

3. Are your income streams diverse enough? Are you making all your money from one source? If you’re currently making all your money selling similar items on Ebay or earning an income from a small number of affiliate programs or making money from a single program such as Google Adsense, you could be putting yourself at risk. What if the market for the products you are selling disappears? The affiliate programs you are promoting shuts down? You need to take a close look at the sources of your income. Ideally your income should be coming from numerous sources e.g. selling your own products, promoting different affiliate programs, using multiple websites in different niches.

4. Do you have a business plan? Since you are considering taking such a big step you need to have a business plan. This should include a description of your company and the products and services you provide, the analysis of your market, strategy and implementation along with a financial plan.

5. How will you cope with working alone? If you enjoy working with other people every day, it’s likely that you may find the transition to working alone quite difficult. You should consider possible strategies to cope with this change. For example you may want to make sure that part of your business involves working with other people - perhaps providing a service locally or consulting. Or you could fill the vacuum of not meeting people at work by joining a club or taking a part time training course. Making an effort to stay in touch and meet up with friends and former colleagues regularly will also help.

If you consider all these factors before quitting your day job, this should give you the best chance possible of becoming a successful full time internet marketer.

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Hollow Industrial Base

During the last decade, a hot topic in Japan and America has been the “hollowing out” of their industrial bases. The share of Japanese-owned productive capacity located abroad has grown from 8% in 1994 to 40% today. The United States currently has just over 50% of its manufacturing base located offshore. For both Japan and America, the large outflows of direct investment, especially to China, have caused an uneasy feeling that both countries had bleak futures as manufacturing centers.

Surprisingly, in Japan the pendulum is now moving back as large Japanese multinationals are busy investing in manufacturing plants at home. Here are just a few examples of this trend. Canon is building a large digital camera facility and plans to spend 80% of its $7.2 billion capital budget in Japan over the next three years. This is a reversal from the past ten years when 80% of its capital budget was spent overseas.

Toshiba is building a $2 billion semiconductor facility. Sharp, Matsushita and Nippon Steel are also building major plants in Japan. Overall, spending on plants and equipment in Japan is rising at a 10% clip.

It’s not that China is not important to Japan’s economic growth. China has passed America to become Japan’s largest export market. In addition, it needs a strong presence in China to tap its rapidly growing consumer market as well as a low cost base to manufacture lower tech products. For certain products like cars it is also likely to keep large manufacturing bases in countries like America. For example, Toyota produces more than 1 million cars annually at eight manufacturing plants in America and has two plants under construction in Texas and Tennessee.

But for the more advanced capital-intensive products, the investment is clearly coming home. How can we account for this surprising turnaround and what are the lessons for America?

Lose Now, Lose Big Later

First, Japanese firms have learned the drawbacks of outsourcing. Supply bottlenecks, poor infrastructure, power shortages, uneven quality, difficult inventory management and high employee turnover are just some of the problems. Secondly, even though China’s wages are about 5% of Japan’s, its increasingly sophisticated factory automation has lessened the importance of labor costs. For advanced high tech products it accounts for only 10-15% of total costs. Having manufacturing closer to home also shortens new product lead times and increases cooperation between R&D and production teams leading to a crucial edge in staying ahead of its nimble competitors. Supply lines of 2,000 miles can be problematic.

Finally, and perhaps most importantly, there is the critical issue of protecting intellectual capital. Having research, development and production closer to headquarters better protects proprietary technologies. Unfortunately, here in America the outsourcing trend does not appear to be reversing even in capital-intensive products. Many of the new high tech jobs are for managers to manage the outsourcing process. Microsoft, Intel, IBM and Motorola all have large and growing R&D centers in China to take advantage of Beijing’s cheaper pool of talent. Given China’s disregard for intellectual property rights, perhaps American executives should pause and reconsider the long-term costs of growing outsourcing programs.

Their offshore R&D staff may very well walk off with proprietary knowledge and the company’s future. Many Americans believe the loss of manufacturing jobs is just about lower wage rates in other countries but this is not always the case. One example is Whirlpool which makes its high-end front loading washing machines in Germany ($32/hour labor) and ships them to US ($23/hour labor). The reason given by Whirlpool: trained German workforce, available capacity, and necessary technology. Whirlpool could have produced these washing machines at their Ohio plant and saved the $50 per unit shipping costs while creating high wage American jobs.

Leverage Our Strengths

Then there is America’s growing annual trade deficit that exceeds $600 billion a year with $200 billion attributable to our trade gap with China. You have to admit that it is harder to make a strong case against Chinese trading practices when 40% or more of American imports from China come from American multinationals with China-based manufacturing plants. Why not sell more of the stuff we make in China to China’s 1.3 billion consumers? If these markets are not open to American companies, let’s use the leverage of access to America’s vast consumer market to bust them open.

There are some economists and policymakers who claim a strong manufacturing base is not important. I beg to disagree. History shows that manufacturing is the foundation of all wealth and that research and development follows manufacturing rather than the other way around. There are now more American workers in state and local government then in the manufacturing sector, and manufacturing as a percentage of GDP has fallen from 20% in 1980 to less than 10% today. This is not a call for isolationism or rolling back globalization, just a reminder that outsourcing has its downside. How about a little common sense and balancing short-term cost savings against long-term strategic risks?

Stop Accepting the Risk for Short Term Benefits

Instead of just taking the comparatively easy step of lowering labor costs by outsourcing, let’s roll up our sleeves like the Japanese, improve manufacturing techniques and reap the benefits of keeping more production and technology closer to home.

Carl Delfeld is head of the global advisory firm Chartwell Partners and editor of the Chartwell Advisor and the Asia Investor Intelligence newsletters. He served on the executive board of the Asian Development Bank and is the author of The New Global Investor (iUniverse:2005). For more information go to www.chartwelladvisor.com or call 877-221-1496

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A professional degree in Juris Doctor relates to a higher grade of studies in law. With business houses expanding in size and the legal issues gaining higher importance for day to day working of large corporates, demand for Juris Doctor professionals has been increasing. As the business interacts more with the society and their other counterparts need to resolve legal matters emerge simultaneously. All this has given an impetus to students aiming for career in law field. But a purely law background without any corporate experience may not be well accepted by business industry. Top ranked services in companies also demand a graduate in business organization along with lawyer’s degree.

As demand for combined degree in JD and business is being a preferred combination to build a rewarding career in law. Business and law schools at various places have joined hands to impart students with best career courses. At many places Law Schools providing degrees of Juris Doctor and business school providing Master in business administration present a cooperative program for the convenience of aspiring students. This opportunity to avail concurrent degrees in both fields is a stepping-stone for success of students. Students who cannot travel to different places at the same time have a best prospect of finding excellent professional training under one roof.

Surviving in the law field gets tougher from the day one tries to enter the school of law. Getting admission requires fulfilling entire formalities along with earlier creditable basic high school record, clearing the admission test for the law school and even recommendations from people. The same is applicable for business studies a student is required to prove his quantitative skills and efficiency in microcomputers to get admitted. A dedicated and hard work during the courses ensures students with excellent results which in turn to provide better career opportunities.

A law person has various prospects for different types of career that he would like to accept. Depending on his caliber and willingness to work hard a lawyer can decide upon practicing law in an exclusive law firm or he may choose to be an in house lawyer. An exclusive law firm requires an extensive knowledge of one particular area in law where as an in house lawyer is required to deal with entire aspects of legal issues that relate to the particular company in which he is involved.

While undergoing training in one of the law schools a student would learn about different aspects of law like civil law, criminal procedures, constitutional law, contracts, property, professional responsibility, basic federal income taxation, legislative and administrative interpretation and many others. The syllabus is cautiously devised to ensure that students receive exhaustive training to deal with maximum situation in the professional front. Similarly Masters Degree in Business administration imparts education in business for global society, corporate finance, managerial accounting, information resource management, strategic management, master’s project and other similar relevant courses. Anyone pursuing both law and business studies simultaneously has an advantage of studying some courses that are counted towards both degrees and hence a considerable amount of work is reduced for these students.

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Are you a newbie or a guru? Let’s find out.
Signs of a newbie:

1. You have 10 hits on your new website, all your own.

2. Your only listing for your website on google is listed as index.html.

3. You have more than $30 on your phone bill,mostly for tech support.

4. Most of your forum postings start with “help” or “I need help.”

5. Your website starts out with “welcome to my website.”

6. Your inlaws call you on the telephone to say that they did not opt in to your email list.

7. You print out pictures of all the girls you met on the chatline.

8. You hang out at the coffee shop just to show off your new laptop.

You know you’ve become a guru when:

1. You start saving email addresses.

2. Your new affiliate site just made a sale and you can’t find the password to your click bank account.

3. You name your new baby with a domain name you saw on the web.

4. The first thing you do in the morning is check your website sale stats.

5. Your hosting fees are greater than your gas bill.

6. You start reading urls off back of trucks and bill board signs.

7. You have more friends on the internet than in real life.

Well there you have it. The question is are you a newbie or
a guru? Maybe the question should be does it really matter…

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Almost every individual dreams of owning a profitable business. Some may also be interested in an undertaking for the common good, example in case of non-profit organizations. But when we speak of a profitable business, it is not merely inflow and outflow of cash. A lot of detailing needs to be done to make an undertaking profitable.

The foremost thing that one needs to decide before undertaking any business activity is the structure of the corporate. A business organization can be a sole proprietorship, partnership or a family undertaking depending on the extent of rights and liabilities that one wants to design. Sole proprietorship is perhaps one of the simplest legal structures. It a one man company. In a partnership, the company is jointly owned by several partners. When a sole proprietor seeks the capital investment from another partner, without any further interest of the latter in the business, it becomes a limited partnership.

The second step is formulation of business plan, though this may not be required in case of small companies. A business plan chalks out the entire framework of the activity one proposes to undertake. It not only brings clarity and goal orientation but also acts as a positive influence on banks to provide finance.

Finance is the lifeline of any business, be it a profit oriented organization or a social service undertaking. Depending upon the size of the business, the magnitude of finance required may vary. While a small sole proprietorship may raise resources easily from the owner itself, a large corporation may require external help. A business may approach banks, investors or finance companies for the money. While banks usually have tough rules, a finance company helps to come up with an easy bargain.

After the corporation is finally on its wheels, what becomes important is effective management. An important thing that is to be monitored is the direction in which the business proceeds. The business has to move in the direction and manner as was planned. Secondly, the relation of the management with its employees is very important. Unless the employees are motivated to do their jobs, they cannot give their best to the business. Proper encouragement can also work wonders. At the same time, the negative behavior of the employees needs to be discouraged. The organizations need to strive for a healthy office environment in order to attain its goals successfully.

Accounting is a tricky area for all the organizations. Every business needs to adhere with sound accounting purposes to ensure healthy economic growth. Accounting is required to calculate the tax, avail the tax benefits, determine liabilities, and most importantly to calculate the profits and worth of the business undertaking. Adverse accounting practices can attract various penalties and can also lead to closure of the business. Fraud is commonplace with business and accounting, and needs to be prevented.

Before starting with any business activity, one needs to be aware of the legal requirements and other related information. A meticulous preparation is required to make a simple business undertaking successful.

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If you have ever run your own business you know how much of a hassle it can be to try to keep employees updated on new technology. Training can be very time consuming and expensive for both the company and the employee. This is where business simulations come into play. Using this technology you can find fun, unique, and cost effective ways to train your work force.

Business simulations can be offered in software, games, charts, and other easy to use systems. The most preferred way is with games because this keeps students entertained while they learn. This means they will pay more attention to the lesson and will actually enjoy it.

One very interesting business simulation environment is a lot like role playing. The student will be given a scenario and must figure out how to complete a certain task effectively. Depending on how the student tries to complete the task or how they answer the questions will decide how the environment plays out. This means that if they choose the wrong answer they can have something fail that can effect the simulation. This gives an interactive approach to learning and is more life like because your actions will have consequences.

There are also numerical charts that are used. These help teach employees to keep track of numbers and figure out expenses. It helps give them accounting skills and responsibility.

The best part of business simulations is how easy it is for the teacher to keep track of the students. With software and charts they can follow the students work and keep track of their progress throughout the program. This provides the employers with a hands on approach to what the students are doing.

All of these benefits are helping to switch over companies to use Business Simulation programs. It costs very little for them to try and can help them immensely with the training of their employees. This also helps employees have a good time while still getting the training they need.

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Introduction

Everyone wants to see a comparison between China and India but why? They do not share eating habits, common sports, lifestyle or culture. They do not even have the same land mass. The economic policies and political systems are also different. Yes, both have a long rooted history and similar population base and both produce polyester and textiles. But that’s where the similarities between the two countries end.

The polyester industry in China has grown remarkably to 14 million tons per year and will soon reach 18 million tons. India has close to 2 million tons of capacity today and will soon increase to 3 million tons. Indian companies often worry about what the Chinese will do, but the Chinese producers are rarely curious of Indian companies.

The success of China’s polyester weaving industry is the result of recent investments and the substantial rise in China’s capacities is also the result of recent relocation of Taiwan’s polyester industry to the PRC.

Chinese Scenario

China’s economy developed rapidly after the implementation of reformation and the open-up policy implemented twenty years back. The average increase of GDP keeps growing at a healthy 9.8% annually. This high rate continues and the stable increase of China’s economy provides a good foundation for development of the country’s chemical fiber industry.

Over the last three years, polyester growth in China has been driven by government policies of “preferred product,” availability of funding through local banks and subsidised power. Moreover, China got ready to meet the global challenges of free trade through WTO.

China’s textile industry has a long history and maintains a high level of processing technology. With its low labour and textile processing costs, China has a competitive advantage over many other countries, and is able to compete all around the world.

China is the world’s largest producer and consumer of synthetic fibre, with production and consumption of these products accounting for one-quarter and one-third of the global total. China currently ranks first in terms of polyester production; with its 2004 polyester output reaching 7.25 million tons, up 74.6 per cent year-on-year. The polyester industry will expect an annual increase of 8.3 per cent in domestic consumption, to reach 15.3 million tons this year and 18.3 million tons by 2008.

The big player obviously is China. Polyester production in China grew from a 12-percent share of a 19 billion-pound market in 1990 to 37 percent of a 46 billion-pound market in 2002. This rate
(20+ percent compounded annually from 1995 through 2002) cannot be sustained, and it is projected that China will produce approximately 36 billion pounds of polyester in 2010, a 10-percent annually compounded rate of increase from 2002. This effectively will force the rest of the world to limit polyester production.

It is amazing how private entrepreneurs made investment choices quickly and came on stream faster than anyone could think off. A typical polyester plant built in 24 months was a record back in the mid-1990s. China set the new record by cutting this to 14-15 months. Many of the existing producers consume their own fiber or yarn for in-house processing and value addition. Most POY producers have in-house texturing, some even have knitting, weaving and dyeing facilities. Most are large companies, expanding exponentially over a short period of time. Land, power and infrastructure were available and abundant. Funding was provided based on what the Chinese call fazhi (regulations) and guanxi (relationships). Import duties were waived for imported technology and equipment. Western capacity, which faced much higher production costs, began shutting down and the world watched as China expanded polyester capacity at an amazing rate. For a few companies, this became a great opportunity to sell PTA and MEG, the raw materials for polyester.

But something happened in the last 12 months. China started facing power shortages, raw material shortages and a tightened monetary policy. China today faces widespread power outages in all the industrial areas and a tightening of working capital. On top of this, the domestic PTA shortage is 4.50 million tons and the MEG shortage is 2.60 million tons. Soon these numbers will grow to 5.70 million tons for PTA and 2.80 million tons for MEG.

The Indian Scenario

The Indian polyester industry of the early 1980s was built under the “License Raj” (the Government of license). The licensed plant capacity was set at 15,000 tons per year, the so-called “minimum economic size.” Several plants were built in that time frame, some even in rural areas to earn tax benefits. In the early 1990s another growth spurt took place, with two major players, Reliance Industries Ltd. and Indorama adding significant capacities. Chemtex - DuPont (now Invista) built most of these plants and it is still a leading supplier of polyester plants to India.

Reliance integrated backwards to raw materials, Paraxylene and then to basic chemicals. This made Reliance the only company (in the world) to start with oil and go all the way down the value chain to the sale of fabrics. Indorama, already in the textile business, integrated back to polymerisation. This resulted in two major polyester producers and one major Purified Terephthalic Acid producer. Subsequently, Reliance acquired several smaller producers and converted those assets to specialty fibers. At the same time, several smaller producers invested in batch lines and chip-fed POY machines. The chip consumption in Surat (the major textile area in Northwest India) is close to 300,000 tons.

Earlier this year, India predicted that capacity would double to 4 million tons with large investments by several companies.

Investment has happened to some extent, but is controlled by two major players. It was also predicted that several of the chip-to-POY producers would install CP capacity and not rely on chip supply from external sources. Plans to get to 4 million tons have been drawn up, and the textile industry is reshaping itself from a fragmented system to large modern facilities. Several companies are upgrading their facilities in capacity and quality to meet the free trade system under WTO.

Even with such a small polyester capacity, India is still a net exporter of textured yarn and spun yarn. With higher quality materials and lower than Western costs, this still remains a small but viable source for Western companies. The environment is highly suitable to build new capacity due to reduced import duties, lower interest rates and more than $100 billion worth of foreign reserves. Banks were prepared to lend money based on project feasibility, market demand and not based on fazhi.

But something happened in October this year. Increased raw material prices and reduced POY prices hit the small chip-based producers. Making POY from chip is not a viable option under such circumstances. Capacity started shutting down and most small companies are operating at 50% utilization rates. If the situation continues, they will be forced to drop below the 30% level or even shut down. Short term, ideas of integrating back to polymerization are not viable, and Reliance and Indorama plan to bring more than 780,000 tons of new polymer capacity on stream in 2005 and 2006. Recent polyester expansion moves by India’s big players. will dramatically change the supply posture to the Indian subcontinent. It is unlikely that India seriously will threaten China’s dominance in the market.

India has adopted the Japanese Ministry of International Trade and Industry (MITI) model of industry and government cooperation in fibers, textiles and apparel. According to reports, the program is just reaching the commercial phase. It appears there will be a competition between India and China in polyester fiber manufacturing. Countries with smaller commitments to polyester will be squeezed as these two goliaths meet each other in the marketplace of commodity staple polyester.

An assured supply of raw materials, a competitive supply chain, quality-conscious production processes and respect for intellectual property rights are the core strengths of the Indian textile industry. These factors will serve India well as it seeks to take advantage over the competitors.

Conclusion

Can anyone guess what will happen with polyester growth in China and Indian. China will continue to have raw material shortage through 2006 and India will have surplus raw materials. Nevertheless, although the industry in both countries seems to be stalled temporarily, it is certain that it will pick up in both countries in 2005 and 2006 as polyester demand growth worldwide is simply too strong. And more than likely, over 75% of new capacity will be built in either India or China.

Even though the per hour labour cost in China is said to be higher than that in India, the Indian exporters widely claim that the Chinese labour productivity is 50 per cent higher than that of India, which, in the final analysis, renders the cost per piece of any finished textile product in China lower by 25 per cent.

Also, land in China is 100 per cent owned by the Government and enterprises can only lease it for 39, 49,59, 69 or 99 years depending on the location. For industrial sites, land can be leased from as low as US$ 2 to US$ 16 per sq. metre - one-off payment for the entire period. The enterprises would just need to spend on superstructure and they would have to pay only nominal tax and other utility fees. This makes the rental cost negligible compared to India.

The power cost in China is rated at least 40 per cent cheaper than that in India. While these are the general benefits enjoyed by Chinese-owned companies.

With a total world market approaching 65 billion pounds by 2010, competition for market share will be intense, with oil prices pushing up the bottom and a world fiber market squeezing down the top.

Conclusion

Can anyone guess what will happen with polyester growth in China and Indian. China will continue to have raw material shortage through 2006 and India will have surplus raw materials. Nevertheless, although the industry in both countries seems to be stalled temporarily, it is certain that it will pick up in both countries in 2005 and 2006 as polyester demand growth worldwide is simply too strong. And more than likely, over 75% of new capacity will be built in either India or China.

Even though the per hour labour cost in China is said to be higher than that in India, the Indian exporters widely claim that the Chinese labour productivity is 50 per cent higher than that of India, which, in the final analysis, renders the cost per piece of any finished textile product in China lower by 25 per cent.

Also, land in China is 100 per cent owned by the Government and enterprises can only lease it for 39, 49,59, 69 or 99 years depending on the location. For industrial sites, land can be leased from as low as US$ 2 to US$ 16 per sq. metre - one-off payment for the entire period. The enterprises would just need to spend on superstructure and they would have to pay only nominal tax and other utility fees. This makes the rental cost negligible compared to India.

The power cost in China is rated at least 40 per cent cheaper than that in India. While these are the general benefits enjoyed by Chinese-owned companies.

With a total world market approaching 65 billion pounds by 2010, competition for market share will be intense, with oil prices pushing up the bottom and a world fiber market squeezing down the top.

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