CHINA’S TRANSPORTATION INFRASTRUCTURE

Current China’s Transportation Infrastructure

China that has nearly 1.4 billion population is facing a largest urbanization in history. This situation is expected to have a huge impact on population migration, productivity distribution and all other social and economic activities including transportation issue. The issue in transportation is on how to develop a comprehensive and modern transportation system which can serve the intercity and intracity traffic in effective, smooth and eco-friendly way as the critical point to the success of new urbanization (Huang, et al., 2020). Apart from the population migration, China also has experienced phenomenal economic and social growth and it resulted to the more mobility and living space. At Present, urban air pollution is increase in China as transportation mode shifts from transit and non-motorized modes to the personal automobile (Cherry, 2005).

The current situation on China’s motorization rate has grown, it will be more severe due to high population. In China there are about seven personal automobiles per 1000 people, this figure does not include privately owned trucks or publicly owned vehicles (including buses and trucks), which increases the number of automobiles to about 28 vehicles per 1000 people. By 2020, the total automobile fleet (not including motorcycles) is expected to grow by between three and seven times the current size depending on economic growth rates (NRC, 2003). The visualization of motorization growth in China is in below chart:

Figure 1. Motorization Growth (Cherry, 2005)

 

The improvement of transportation system in China since 1949 until today can be seen in several public transportations such as air, rail, highway, waterway, and urban transport. Airlines in China offers 1,279 air routes. Among them, 1,035 are domestic, including the routes to Hong Kong and Macau, and 244 are international. The most popular airports are in Beijing, Shanghai and Guangzhou. Apart from Hong Kong and Macau, there are over 200 airports in mainland China, connecting more than 100 internal cities and 80 foreign cities (ChinaTravel, 2020). Chinese airlines grew international passenger traffic by 14% in 2018 and have more than doubled international passenger traffic over the past five years. There are now 29 Chinese airlines competing in the international market, compared with 12 airlines five years ago. From those China airlines, China Eastern Airlines put the top position in terms of seat share and number of routes currently (Centreforaviation, 2019).

Train as the main way of transportation in China has in total mileage amounts to 124 thousand kilometers. The Chinese railway network is 124,000 kilometers long in total, of which 22,000 km belong to high speed railways. These railways cover almost every place in China, even remote mountainous areas, plateaus, and the seaside. The domestic service divides into 5 main categories: high-speed trains, fast trains, tourist trains, express and normal passenger trains (ChinaTravel, 2020). Currently, 30 of China’s 33 provincial-level administrative divisions have high-speed railways. China has the world’s longest high-speed railway network, it happened due to big area that China has. China High-speed trains are designed for speeds of 200 to 350 kph (kilometer per hour) (124 to 217 mph). There are three types of high-speed trains in China: G, D, or C trains.

 

Detail of Trains	G Trains	D Trains	C Trains
Maximum Speed	350 kph (217 mph)	250 kph (155 mph)	200 kph (124 mph)
Second Class	V	V	V
First Class	V	V	V
Superior Class	V		V
Business Class	V	V
Soft Sleeper		V
Deluxe Soft Sleeper		V

Table 1. Design Speeds and Ticket Classes (Chinahighlights, 2020)

 

China possesses numerous and complex highways at all levels, connecting almost all cities, towns and countryside. Safety, quality, convenience and capacity of Chinese expressways have been developed rapidly. The length of highways in China amounts to 1.18 million km, including 68 national highways and over 1600 provincial highways. The Chinese government is speeding up the development of expressways to promote the economy of China. Beijing, as the capital of China, has 11 national highways, linking with plenty of other cities such as Shanghai, Guangzhou, Shenzhen, Wuhan, Chengdu, Changsha, Taiyuan and Xian (ChinaTravel, 2020). Although China has huge highways up to now, it reported that China suffered one of the worst backups on the Beijing-Hong Kong-Macau Expressway, one of the nation’s busiest thoroughfares (Gorzelany, 2015).  Beforehand, Beijing reported as a quite top polluted cities in the world, however currently Beijing has reduced smog levels and dropped down a list falling to 199 from 84 three years before, according to the 2019 World Air Quality Report published by IQAir AirVisual (Marlow and Dormido, 2020).

Further discussion for waterways, China has 110,000 kilometers of navigable rivers, streams, lakes, and canals, more than any country in the world. The Heilong Jiang; Yangtze River; Xiang River, a short branch of the Yangtze; Pearl River; Huangpu River; Lijiang River; and Xi Jiang are the main ones. The Grand Canal is the world’s longest canal at 1,794 km and serves 17 cities between Beijing and Hangzhou. It links five major rivers: the Haihe, Huaihe, Huanghe, Qiantang, and Yangtze. Construction of new railways and highways has diminished the use of China’s rivers for passenger transport. Nonetheless, passenger boats are still popular in some mountainous regions, such as Western Hubei and Chongqing (the Three Gorges area), where railways are few and road access to many towns is inconvenient (ChinaTravel, 2020).

As for urban transportation, China subways has developed well in the past 10 years. Today, there are more than 60 metro lines (paywall) in 25 cities, making subterranean transit accessible to some 291 million people (Zhou and Huang, 2017). China’s largest cities have seen their own networks expand exponentially. Beijing now has 22 lines covering nearly 380 miles and serving some 10 million passengers each day. Shanghai’s metro, which opened in 1993, currently holds the title of being the longest in the world, running 398 miles in total. Both will continue to grow. At the end of 2017, China’s top economic body, the National Development Reform Commission, announced plans to relax the requirements needed for local governments to pursue subway projects. That includes lowering the minimum population from 3 million to 1.5 million, which means more third- and even fourth-tier cities can expect to put in their own proposals (Poon, 2018). The problem is the speed of adapting to the new way of commuting has not kept pace which lead to efficiency of the transportation.

Apart from subways, in big cities, buses are numerous, and the system works rather well. Even if you don’t speak Chinese, you can manage, on condition of taking a map with the names of the streets in Chinese. Do not hesitate to verify the destination with a Chinese traveler (ChinaTravel, 2020). As well as bus, taxi also convenient with clear meter, almost systematically used. Taxis are everywhere at any time of day and night. You have just to hail them or to call by phone. However, these two-transportation tool lead to the congestion that happened in highways as mention previously.

 

China’s Transportation Issue

Like many rapidly industrializing countries, China’s cities face ongoing challenges relating to transport. Although China already have and build various transportation infrastructure, however congestion remains a serious problem and air quality remains persistently poor. It’s right that the air quality becoming better and better but still consider poor. This combination of congestion and pollution is economically wasteful, harmful to health and reduces the quality of life for citizens (Andrewsspeed, 2020).

After such a big development in China’s transportation infrastructure, most of the transport projects are concentrated in central and eastern regions in China which lead to the question of equal regional accessibility and induce more uneven development. The western region is poorly served by roads compared to the central and coastal regions. Another issue that China’s face is the growth of private ownership which has provided greater opportunity for people to select their own housing, work place, business, entertainment, and other activities, has led to the progressive dispersal of the cities and excessive motorized travel volumes which generates negative impact to the urban environment as well as traffic accident. According to the data available, in 2017 vehicle mortality in China was 51.6 higher than in developed countries (Mu and Jung, 2012).

 

Factors for Future Transportation Development in China

Several factors that might affect China’s future transportation infrastructure such as:

 

A.     Tourism

Tourism has become an important contributor to the domestic economy in China since the beginning of reform and opening in the early eighties. It is a main contributor to GDP for and that’s why transportation has a big role to boost tourism in a country due to it links tourists from one location to another. With the continuous developments going on in the field of transportation, some countries still lack proper infrastructure in terms of transportation. China, being one of the biggest economies has to continuously work on transport systems to serve tourists. The development of transportation, transportation vehicles, infrastructure and using new technologies in this sector speed up the development of tourism. If we pay attention to the statistics of China National Tourism Administration, we may see that the tourism dynamics has changed and increased rapidly between 2010 and 2020. A record 56 million mainland tourists travelled overseas in 2010. Outbound tourism is strong, with domestic Chinese tourists making 2.1 billion trips, up 11 percent over 2009, bringing revenue of US$189 billion. By 2020, industry experts have predicted that China will top the tourism industry list at US$688.5 billion (Absolute China Tours, 2020). This trend can be explained with different factors. But the main important factor here is the rapid development of transportation sector and application of technological innovations which enable the tourists to reach many destinations of the world. On the other hand, it has been grown because of fast economic development and the growth of people’s incomes.

 

B.     GDP per Capita of China

GDP per capita is a measure of a country’s economic output that accounts for its number of people. It divides the country’s gross domestic product by its total population. That makes it a good measurement of a country’s standard of living. It tells you how prosperous a country feels to each of its citizens. China GDP has been increased significantly in these past 20 years. In 2015 it was $8,033 and becoming $9,771 in 2018 (Macrotrends, 2020). This situation is breaking the barriers of a centrally planned closed economy to evolve into a manufacturing and exporting hub of the world. China is often referred to as the “world’s factory,” given its huge manufacturing and export base (Silver, 2019). GDP per capita and transportation infrastructure give each other positive impacts. Government that build better transportation infrastructure could help making cities the key to economic progress and vice versa. China’s rising GDP per capita means greater buying power and an economy boosted not only by manufacturing but also increasingly by consumption. Such as traveling in long distances both within and outside the country (Zhu, 2020).

Figure 2. GDP Per Capita China 2000-2018 (Macrotrends, 2020)

 

C.     Growth of Special Economic Zones (SEZs)

China’s remarkable process of economic growth through globalization began in 1978 with the implementation of the “Open Door Policy”. It enabled a partial liberalization of the factors of production and permitted private and corporate capital accumulation, which was mostly forbidden beforehand. This was followed by a massive wave of investments and rapid expansion of China’s transport infrastructure base.

There is no doubt that major regional disparities exist within China. The gap between its eastern coastal regions compared with the central and western regions has only grown wider over time. China’s special economic zones (SEZs) are defined as small geographical areas that allow the integration of free-market principles to attract additional foreign investment. However, the creation and success of SEZs has led to prosperity in the coastal regions of China, creating additional economic disparity between regions.

Figure 3. China Gross Domestic Product by Region 2015 (Crane, et al., 2018)

Certain approaches must be taken in order to reduce the regional disparities within China. These approaches should include investment in the infrastructure of the less-developed regions, developing a greater network of social protection programs that benefit the poor, and reform within local governments to redistribute and better handle economic resources at the local level. At the same time, these benefits have been experienced largely by the coastal regions where SEZs have been implemented. No SEZs currently exist within the central and western regions. Therefore, expansion of SEZs in future will require transport infrastructure. It is a big challenge coming up for China and an effective system must be implemented (Crane, et al., 2018).

 

D.     Population and Level Employment

Population is the biggest concern for China currently. Over the past 30 years, the Chinese economy has experienced unprecedented growth in terms of population and demand for vehicles (Wang, 2015). China is now the second largest world economy, after the US. In 2019, the employment rate in China decreased to 65.2 percent, from 65.7 percent in the previous year. China is the world’s most populous country and its rapid economic development over the past decades has profited greatly from its large labor market. While the overall working conditions for the Chinese people are improving, the actual size of the labor force in China has been shrinking steadily in recent years (Statista, 2020). It boosts the economic capability to have better life such as utilize more public transportation as well as buying vehicles.

 

China’s Future Transportation Demand

Several factors that already being shared in the previous section lead to future demand of China’s transportation infrastructure. Fortunately, the re-occurrence of new technology over the years has helped us on how we live and carry out our day to day activities, and most of this development is as a result of inventing and creating a new ways to reduce our daily stress and live an improved life. It’s also can help current transportation problem in China.

A.     Maglev (Magnetic Train Travel)

It’s current that currently China already have high-speed train, they started to develop maglev train from Shanghai. Maglev means that the train doesn’t actually touch the tracks but rather floats above them. The electrically charged magnets repel the train from the tracks to keep the train levitated, and the lack of friction between the train and the track enables the high speeds (Curiosity, 2016). To have equitable development, then maglev can be built across China especially in the western part. The benefit of using this maglev apart from rapid transportation, carry lots of people then it can also reduce pollution of the country.

 

B.     Electric Cars

Increasing pollution and the threat of global warming have accentuated the need to replace petroleum-fueled vehicles with emission-free substitutes. After decades of R&D, the industry has found electric vehicles as the best substitute for conventional vehicles, which has resulted in the emergence of electric vehicles. The Asia Pacific region has the highest sales of electric vehicles. China is focusing on electric vehicles to deal with the rising vehicle emission in the country and the Chinese government is providing subsidies for the electrification of vehicles, which, in turn, has increased the sales of electric vehicles in China (Lecar, 2019). This movement that initiated from the government is a good move which turn into decreasing the pollution within China.

 

C.     Boeing Electric Freighter

The United Nations aviation body forecasts that airplane emissions of carbon dioxide, a major greenhouse gas, will reach just over 900 million metric tons in 2018, and then triple by 2050 (Tabuchi, 2019). Since China airline is growing rapidly until now, they should start to develop aircraft with less impact to the environment. Boeing future research and development priorities that on future possibility for electric-powered freighter aircraft. It’s a significant step toward a future in which autonomous, electric “flying taxis” zip from skyscraper to skyscraper, bearing passengers and cargo in service of an entirely new form of urban mobility (Hawkins, 2019).

Figure 2. Boeing Electric Freighter (Hawkins, 2019)

 

D.     Future Highways

Road transportation is still important for China, even if they replace the car into electric, they still need a good competent highway for their transportation infrastructure. Numerous companies and organizations are working on creating smart highways using sensors that will help detect and reroute traffic. It’s predicted that the components in vehicles working along with the sensors embedded in the highways themselves. Safety measures in highways will help prevent crashes by detecting car position, speed and momentum. When conditions change suddenly on the road, the system will override a car’s manual control system. It will mean we’ll surrender some of our freedom to a larger system, but it will also lead to fewer accidents and traffic jams (Strickland, 2020). This is important since the traffic accident in China relatively high.

 

Modern transportation is currently experiencing major changes, big applause to the transformative transportation technologies. Almost all the points discussed above are becoming the next innovation occurrence in the transportation sector that will increase how we live and improve the efficiency of transportation system in the world in general.

 

 

REFERENCES:

• Absolute China Tours (2020), A Leader in China Tours Since 1995, Retrieved 17.03.20. from http://www.absolutechinatours.com/about/china-tourism-industry.html.
• Andrewsspeed (2020), China’s Cities Face Challenges of Traffic Congestion and Air Pollution that Continue to Resist Easy Solutions, Retrieved 27.02.20. from http://www.andrewsspeed.com/chinas-urban-transport-challenges/.
• Centreforaviation (2019), Chinese Airlines: Rapid International Growth Impacts Foreign Airlines, Retrieved 27.02.20 from https://centreforaviation.com/analysis/reports/chinese-airlines-rapid-international-growth-impacts-foreign-airlines-460504.
• Cherry, C. (2005), China’s Urban Transportation System: Issues and Policies Facing Cities, UC Barkeley Center for Future Urban Transport, University of California.
• Chinahighlights (2020), High-Speed Train in China (Bullet Train), Retrieved 27.02.20. from https://www.chinahighlights.com/china-trains/china-bullet-train.htm.
• ChinaTravel (2020), What Kind of Transportation You Can Get in China?, Retrieved 27.02.20. from https://www.chinatravel.com/facts/china-transport.htm.
• Crane, B., Albrecht, C., Duffin, K.M. and Albrecht, C. (2018), China’s Special Economic Zones: An Analysis of Policy to Reduce Regional Disparities, Regional Studies, Regional Science, Vol. 5, No. 1, pp. 98-107.
• Curiosity (2016), The Future of Transportation Depends on Magnetic Levitation, Retrieved 27.02.20. from https://curiosity.com/topics/the-future-of-transportation-depends-on-magnetic-levitation-curiosity/.
• Gorzelany, J. (2015), The World’s Worst Traffic Jams, Ever, Forbes, Retrieved 27.02.20. from https://www.forbes.com/sites/jimgorzelany/2015/10/15/the-worlds-worst-traffic-jams-ever/#602895df214c.
• Hawkins, A.J. (2019), Boeing’s Experimental Autonomous Aircraft Completes Its First Test Flight, Retrieved 27.02.20. from https://www.theverge.com/2019/1/23/18194332/boeing-electric-autonomous-aircraft-test-flight-vtol-aurora-flight-sciences.
• Huang, H.J., et al. (2020), Transportation Issue in Developing China’s Urban Agglomeration, Transport Policy, Vol. 85, A1-A22, https://doi.org/10.1016/j.tranpol.2019.09.007.
• Lecar, J. (2019), Electric Cars – The Future Transportation, Retrieved 27.02.20 from https://www.sharedmobility.news/electric-cars-the-future-of-transportation/.
• Macrotrends (2020), China GDP Per Capita 1960-2020, Retrieved 17.03.20. from https://www.macrotrends.net/countries/CHN/china/gdp-per-capita
• Marlow, L. and Dormido, H. (2020), Two-Third of the World’s Most Polluted Cities Are in India, Bloomberg, Retrieved 27.02.20. from https://www.bloomberg.com/news/articles/2020-02-25/china-clears-air-to-leave-indian-cities-unrivaled-smog-centers
• Mu, R. and Jong, M.d. (2017), Introduction to the Issue: The State of The Transport Infrastructures in China, Policy & Society, Vol. 31, pp. 1-21.
• National Research Council (NRC) Chinese Academy of Engineering (2003), Personal Cars and China, The National Academies Press. Washington D.C.
• Poon, L. (2018), China’s Subway Boom Slows Down, Retrieved 27.02.20. from https://www.citylab.com/transportation/2018/02/chinas-subway-boom-slows-down/552935/.
• Silver, C. (2019), The Top 20 Economies in the World, Retrieved 17.03.20. from https://www.investopedia.com/insights/worlds-top-economies/.
• Strickland, J. (2020), What Do You Think Highways will Look Like in 2050?, Retrieved 27.02.20. from https://auto.howstuffworks.com/highways-in-2050.htm.
• Tabuchi, H. (2019), Worse Than Anyone Expected: Air Travel Emissions Vastly Outpace Prediction, Retrieved 27.02.20. from https://www.nytimes.com/2019/09/19/climate/air-travel-emissions.html.
• Wang, M.Q. and Harvey, H. (2015), Chinese Transport: Achievements and Challenges of Transport Policies, Mitig Adapt Strateg Glob Change, Vol. 20, pp. 623–626.
• Zhou, Y. and Huang, E. (2017), A Beautiful Data Animation Shows the Unprecedented Development of China’s Rail System, Retrieved 27.02.20. from https://qz.com/1010911/a-beautiful-data-animation-shows-the-unprecedented-speed-of-development-of-chinas-rail-system/.
• Zhu, J. (2020), China’s GDP per Capita Nears $10,000: What Does It Mean for the Economy?, Retrieved 17.03.20. from https://news.cgtn.com/news/2020-01-03/China-s-GDP-per-capita-is-now-over-10-000-But-what-does-this-mean–MXfyZJ9EHe/index.html

Seputar Beasiswa (jawaban ala2) :D

Question: Jadi aku masih bingung Mbak step2 yg harus dilakukan buat dapat univ dan beasiswa program master di luar negeri itu bagaimana, karna masih buta banget jadi pengen nanya ke Mbak Santi, dulu Mbak Santi step2nya bagaimana ya Mbak kalau boleh tau?

Answer:

Kayaknya urutannya gini (berdasar pengalaman ya):

1. Cari dulu semua jenis beasiswa yang bakalan mau di apply, karena di sana aka nada semua timelinnya dan requirementnya. Misalnya beasiswa A deadline juni, beasiswa B desember.

Jadi bisa diitung deh untuk ngelengkapin semua persyaratannya itu kamu harus ngejarnya seberapa cepet.

Soalnya kan persyaratannya banyak macem kayak IELTS, essay, recommendation letter, CV, proposal or else, GMAT (kalo USA). Nah untuk dapetin ini semua ga cepet. Karna klo ga salah IELTS itu kan ga tiap hari pelaksanaannya, kalo ga salah per bulan atau per 3 minggu di IDP bandung atau IDP lainnya. Plus ga murah untuk ikut per tesnya.

Juga lu kudu fix apakah untuk ikutan tes2 ini akan pake uang sendiri atau nggak, klo pake uang sendiri juga harus nabung

2. Sedangkan untuk beasiswa misal beasiswa negara A. Habis itu lu kudu tau mau univ nya apa dan jurusannya apa d sananya nanti.

Misal mau negara UK = Chevening, harus tau nih univ2nya apa aja yang ditawarin. Curiga ga semuanya. Jadi harus milih dan juga bener apakah itu yang di suka atau nggak.

Lalu carilah LoA nya (Letter of Acceptance), ini juga butuh waktu yang lama

3. Benerin timeline

Nah klo seandainya udah kerja, ini masalah banget, karena pasti ada rasa males buat ngerjain dapet beasiswanya. Karna mostly klo kerja di Jakarta tuh pulangnya malem dan hanya bisa kerjain weekend, abis itu weekend jangan2 main sama temen2, jadi waktunya abis buat hal yang ga sesuai dengan target cari beasiswa. Trus ini jg ngaruh ke tes IELTS dll, karna biasanya tesnya tuh weekday ga di weekend. Jadi biar ga ketauan orang kantor juga harus pinter2 cari waktu buat cutinya. Mana cuti tuh kan bisa diambil setelah lulus probation. Ini juga harus di perhitungkan.

4. Kerjain essay

Ini juga ga ngasal ,, karna bergantung dari univnya dan jurusan yang diambil plus goal dr beasiswanya. Karna ada beasiswa yang berdasar proyek gitu misal tentang lingkungan, dll. Trus gw jg denger untuk Chevening jg susah essaynya harus di cek in sama yang udah pernah lulus Chevening apakah oke atau nggak essaynya.

Kalo S3 beda lagi, bikinnya proposal, ini jg harus cukup clear metode, data dll dan apakah dosen yang dituju mau ngebimbing kita.

 

Question: Kemudian aku juga masih bingung Mbak sebenarnya beasiswa itu programnya terpisah dengan univnya atau bisa jadi satu dengan univnya ya Mbak?

Answer: Nah ada 2 tipe, ada yang jadi satu ada yang terpisah. Gw gatau mana yang nyatu mana yang misah, emang harus liat lagi requirement dari beasiswanya. Mostly beasiswa yang mis aitu pas ngeapply beasiswanya harus udah dapetin LoA yang td gw bilang di point 1. Letter of Acceptance gitu. Nah ini yang ribet kayak harus tau untuk dpetin LoA tuh harus ngapain aja. Gitu sih..

How could an interesting portfolio picture of retail bank look like?

The main aim of a commercial bank is to seek profit like any other institution. Its capacity to earn profit depends upon its investment policy. Its investment policy, in turn, depends on how it manages its investment portfolio. There are three main objectives of portfolio management which a wise retail bank follows: liquidity, safety, and profitability. The interesting portfolio of the retail bank would be explained in these parameters below:

1.Liquidity

A commercial bank needs a higher degree of liquidity in its assets. The liquidity of assets refers to the ease and certainty with which it can be turned into cash. The liabilities of a bank are large concerning to its assets because it holds a small proportion of its assets in cash. But its liabilities are payable on demand at a short notice. Therefore, the interesting parameters of liquidity for retail bank must hold a sufficiently large proportion of its assets in the form of cash and liquid assets for profitability.

Many types of assets are available to a commercial bank with varying degrees of liquidity. The most liquid of assets is money in cash. The next most liquid assets are deposits with the central bank, treasury bills and other short-term bills issues by the central and state governments and large firms, and call loans to other banks, firms, dealers and brokers in government securities.

2.Safety

A commercial retail bank always operates under conditions of uncertainty and risk. It is uncertain about the amount and cost of funds it can acquire and about its income in the future. Moreover, it faces two types of risks. The first is the market risk which results from the decline in the prices of debt obligations when the market rate of interest rises. The second is the risk by default where the bank fears that the debtors are not likely to repay the principle and pay the interest in time. In the light of these risks, a retail bank has to maintain the safety of its assets.

3.Profitability

One of the principle objectives of a bank is to earn more profit. It is essential for paying interest to depositors, wage to the staff, dividend to shareholders and meeting other expenses. Liquidity and safety are primary considerations while profitability is subsidiary for the very existence of a bank depends on the first two.

Based on those parameters above, the interesting portfolio for retail bank would be:

• Having a potential investment in a wide range assets class including stocks, government bonds, corporate bonds, real estate investment trusts (REITs), mutual funds, exchange-traded funds (ETFs), and bank certificates of deposit.
• Having a positive cash flow along the time.
• The retail bank takes a risk however should be in restricted amount. They must estimate the amount of risks attached to the various types of available assets, compare estimated risk differentials, consider both long-turn and short- run consequences, and strike a balance.

Having focus segmentation of market, for the example only for the people with higher investment that can be the customer of this retail bank. The purpose is to keep the health of its bank balance sheet.

Why is the balance sheet a key instrument for any strategic decision?

A balance sheet is a financial statement that reports a company’s assets, liabilities and shareholders’ equity at a specific point in time and provides a basis for computing rates of return and evaluating its capital structure. It is a financial statement that provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders. The upper management of any business is tasked with the responsibility to take the decisions which will enable to company to achieve the best financial results possible in the context of the external environment. They have to make judgement calls on how to achieve the best balance between the company’s costs, running and capital investment, and the income and profit that it can achieve as a result of these costs.

Several reasons why the balance sheet is becoming the key instrument for any strategic decision are as follow:

1. The information contained in a balance sheet can give a good business manager/owner valuable insight into how the company’s performance could be optimized.
2. Investors or potential creditors can use this information to determine whether to invest in the business or extend credit to it. By analyzing your profits and losses, investors or creditors can determine whether you make wise financial decisions and whether you are likely to be able to stay in business and earn enough revenue to pay them back.
3. Business manager/owner can see if the business is not making a profit, then they can determine what expenses to cut by examining your balance sheets.
4. In another situation, if the business is not doing well, then in the balance sheets has all list for the assets. Thus, it can easily determine whether liquidate any of the assets to pay off business debts.
5. In addition, if the company would like to invest in another business, it can be examined by its balance sheet. If the business has a large amount of liability relevant to its assets, negative cash flow or little income, the business is probably not a wise investment. If the balance sheets show that the business is making a profit or that it has few liabilities, the business is likely to make you money if you invest in it.

Based on those explanations above, it summarizes that the balance sheet can be a source of further decision making for the business manager/owner to make sure the company runs smoothly. In addition, it able to make another party believe for further investment or extend their credit which impacts the company’s performance in the future.

My Calculation Covid19 (ala2) :D

These 3 types of scenario are part of quantitative risk analysis. Using these methods, an analyst may assign values for discrete scenarios to see what the outcome might be in each. The definition of each type scenario is as follow:

• Most likely case scenario – this is the average scenario based on people assumptions.
• Worst case scenario – considers the most serious or severe outcome that may happen in a given situation.
• Best case scenario – this is the ideal projected scenario and is almost always put into action by people to achieve their objectives.

 

If we want to choose in between best-case, most-likely case or worst-case scenario then we should compare several factors, such as:

 

1. Statistic of COVID-19 (corona virus) in comparison to other viruses’ outbreak.

It can be seen from this below table:

 

Name of Outbreak	Period	Global Cases	Country Infectious	Global Death Annually	Death Rate
Seasonal Influenze	Every Year	9% annually	Across the world	291.000 – 646.000 cases	0.1%
SARS	2002 – 2004	8.098 cases	29 countries	774 cases	15%
H1N1	2009	24% global population	Across the world	284.000 cases	0.02%
MERS	2012 – present	2.494 cases	26 countries	848 cases	34%
Ebola	2014 – 2016	28.652 cases	10 countries	11.325 cases	50%
Zika	2015 – 2016	175.063 cases	90 countries	14.530 cases	8.3%
COVID-19	2019 – present	818.699 cases (up to end of Mar’20)	Across the world	39,784 cases (up to end of Mar’20)	5% (up to end of Mar’20)

(Source: Healthline, 2020)

 

Based on the table above, it stated that COVID-19 is less deadly than the similar illness SARS (severe acute respiratory syndrome) and MERS (Middle East respiratory syndrome) but more infectious (R₀) than seasonal influenza. Like the case fatality rate, R₀ is an estimate that can vary considerably by location, with age group, and over time, and that is likely to be revised.

1. Vaccine Development

Currently researchers in China and the US are developing a vaccine for the COVID-19. Using so-called “vaccine platforms,” researchers take a relatively harmless virus (like for common cold) and add elements of this virus into it to provoke a reaction from the immune system. However, they still not find the right vaccine yet up to now. In addition to the unknown risk is the ability of the virus to mutate. One thing makes the development of a vaccine against coronaviruses especially difficult is their ability to adapt.

1. Some Countries Actions as a Benchmark

 

• China

As COVID-19 continues to spread around the world, the measures implemented in China may be instructive for other countries that currently struggling to control the virus. Five lessons that other countries can take from China are as follow (Weforum, 2020):

• Speed and accuracy are the keys to identification and detection

One of the critical tools in controlling a major epidemic is having specific, reliable, accurate and fast detection methods to screen infected and non-infected people. During the early days of the outbreak in Wuhan, there were no test kits available, and screening depended on laboratory nucleic acid sequencing analysis, a labor-intensive and costly method. The National Medical Products Administration of China took immediate action to speed up the work of biotech companies to develop detection kits.

• Make the right decisions at the right time, the right place, for the right people

The experience in China reinforced the importance of listening to science and public health experts during pandemic event, and overreacting is better than not reacting. The decisions that have been made such as provide clear guidance about the degree and scope of lockdowns, keep essentials like food and supplies flowing through organized, government-controlled arrangements, establish electronic recording and tracking systems and local response teams to handle identified cases 24/7, etc.

• Evaluate medical resources and response systems

In Hangzhou, 204 public health physicians have been investigating cases, identifying close contacts, and making sure they remain under surveillance. Besides, in Hangzhou, doctors completed the world’s first double-lung transplant surgery on a COVID-19 patient.

• Implementation of preventive measures in communities, schools, businesses, government offices and homes can influence the trajectory of this epidemic
• Keep the public well informed

China has provided continuous, clear communication to the public. In Hangzhou, for example, the major news outlet provides daily updates on the number of COVID-19 cases and clinical treatment outcomes, plans to be implemented and guidelines and procedures to follow.

After the solution that being taken by China government, it showed the result in the graph of total cases and death.

The fact from exponential data above said that the growth rate of total cases in China declines from11.76% before Mar’20 into 0.05% in Mar’20. The declining graph is also capture in the total death of China from 12.78% before Mar’20 into 0.38% in Mar’20. This situation supported by medical devices, government policies, civilization obedience and the level of country wealth.

• Italy

As policymakers around the world struggle to combat the rapidly escalating COVID-19 pandemic, they find themselves in uncharted territory. Unfortunately, throughout much of Europe and the United States, it is already too late to contain COVID-19 in its infancy, and policymakers are struggling to keep up with the spreading pandemic. The failure has been noticed in Italy and these are explanations for that failure, which relate to the difficulties of making decisions in real-time, when a crisis is unfolding (Pisano, et al., 2020):

• Recognize the cognitive bias

The initial state-of-emergency declarations were met by skepticism by both the public and many in policy circles, even though several scientists had been warning of the potential for a catastrophe for weeks.

• Weak partial solution

The importance of systematic approaches and the perils of partial solutions. The Italian government dealt with the COVID-19 pandemic by issuing a series of decrees that gradually increased restrictions within lockdown areas (“red zones”), which were then expanded until they ultimately applied to the entire country. When the decree announcing the closing of northern Italy became public, it touched off a massive exodus to southern Italy, undoubtedly spreading the virus to regions where it had not been present.

• Learning is critical

Certainly, there are valuable lessons to be learned from the approaches of China, South Korea, Taiwan, and Singapore, which were able to contain the contagion fairly early. But sometimes the best practices can be found just next door. Because the Italian health care system is highly decentralized, different regions tried different policy responses. The most significant example is the contrast between the approaches taken by Lombardy and Veneto, two neighboring regions with similar socioeconomic profiles.

Although the Italian government already take actions to prevent the spread of COVID-19, however the graph of cases and death are still increasing.

The growth rate of total cases in Italy is still around 26.85%. On the other hand, the growth rate of total death is around 33.72%. Government speed to decide new policy as well as compliance from the community is the most important thing in this pandemic situation.

• Iran

When other countries began to suspend travel with China in early February, Iran did not pay heed, given its economic isolation and dependence on China. When cases of the COVID-19 began to grow in Iran in mid-February, Iranian officials admittedly suppressed the news in order to maintain voter turnout in the country’s rigged parliamentary elections. The situation of the coronavirus pandemic is far worse than what has been reported. It happened due to the Iranian government restrict the information from independent journalists. Until today, the graph of cases and death from Iran is still increasing. Actions that have been taken by Iranian government such as follow (BBC, 2020):

• After several weeks, Iran’s President Rouhani ordered shopping centers and bazaars across the country to shut for the 15-day holiday. The only exceptions are for pharmacies and grocery stores. It started in the beginning of Mar’20.
• The authorities have also closed key religious sites, among them the highly revered shrines of Hazrat Masoumeh and Imam Reza in the cities of Qom and Mashhad.

Although the government has closed schools, universities and shrines, and banned cultural and religious gatherings, it has not imposed complete lockdowns so far. Those actions are still not reflective of the graph of cases and death of Iran.

Similar to Italy’s situation, the graph is still not showing decline cases and death. The growth rate of total cases was around 22.21% and total death 19.11%. With the less restriction implemented by the Iranian government, it predicts that the graph will still increase in the next couple of weeks.

• South Korea

Despite a sudden spike in infections, South Korea is now winning the fight against the COVID-19 coronavirus. These are some actions that the South Korean government did towards this pandemic:

• There is a drive-thru for COVID-19 examination.
• COVID-19 examination is covered by national insurance, insurance cover is greater for patients recommended by doctors.
• When the spread of the virus is getting wider, the government made a law in the form of financial penalties for residents who did not want to undergo the examination and residents who left their house.
• The Ministry of Manpower provides assistance to families who cannot work due to COVID-19, 50,000 Won per day per family.
• The government provides the Emergency Ready App.

And other actions that lead to the decline movement of cases and death in this country.

Another good movement coming from South Korea, where they can make the graph decline in early Mar’20. The growth rate is decline from around 32.03% before 10^th Mar’20 into 1.18% currently. As for the total death is also declining from 21.97% before 10^th Mar’20 into 5.15% currently.

Not all countries have a good government that can act quickly towards this pandemic as well as good healthcare facilities. 80% of the world population is still living in developing countries (Worldpopulationreview, 2020). With this fact, the growth of COVID-19 in terms of total case and total death cannot be more than a 20% decline from the preliminary outbreak.  Based on all those explanations of each factor above, I will calculate the outcome of the corona crisis in worst-case scenario with a middle fatality rate, faster infectious, zero vaccines until today and government plus medical infrastructure of each country.

Total Cases & Death Progress

(Source: Worldmeters, 2020 )

 

Based on the update of cases across the world and mathematic calculation on the growth rate from the exponential distribution, the current growth rate is 7.43% of total cases and 8.73% of total death. With the worst-case scenario of decrement 10% using an assumption that most of the developed countries will do such a significant action and impact towards the spread of COVID-19. However, not all of those countries will success to slowing down the spread. Furthermore, this is the prediction of total cases and total death until June’20:

By the end of June’20, the prediction towards total cases would be around 579,539,839 (7.5% of worldwide population) and total death 85,256,209 (1.1% of worldwide population).

 

Another Online Test Ala2 2020 Haha

Sungguh ya,,, ribet amat ini apalagi yang paradigm paradigm,, LOL.

1.Where would you put the push-pull boundary for standard products and for customized products? *

The efficiency of Supply Chain Management (SCM) in everyday operations will impact business performance. It can be done by evaluating every process of SCM itself, such as procurement of raw materials, delivery final goods, inventory management, etc. Supply chains dictate when the product should be made, delivered to storage and centers and finally delivered to a retail store or shipped. Push and Pull strategies in SCM help companies map out their supplies based on various factors concerning their exact needs. Herewith the difference definition and explanation from push and pull supply chain system:

Pull Supply Chain –In this system, the process of manufacturing and supplying is driven by actual customer demand. Inventory is acquired on a need-basis. The benefits of this type of planning include less wastage in the case of lower demand. However, the issue usually coming from the delivery time due to manufacture has a special treatment to produce the unique request of the product

Push Supply Chain – In this system, logistics are driven by long-term projections of customer demand.  This type of method becomes valuable to companies as it helps plan them for events in the future demand. This gives the companies meet their needs in time and also gives them time to figure out other logistics like where to store the inventory. However, the issue usually coming from high inventory cost since the manufacture deliver the product with a high number on top of the amount of demand that exists.

Based on that explanation above, the standard product is more suitable to utilize push supply chain in the company’s system, on the other hand, customized products are more suitable to use pull supply chain. It’s because customized products are usually relating to the special specification demand of the product from the customers.

2. What are the implications of bring together people who are differently acculturated, educated, and nurtured? * 

The difference between those three terms are:

• Accultured people is the one who learns and adopt host cultural norms, values and beliefs. Under this circumstance, personality development, the educational objective was assimilation, by the individual of an already defined cultural identity.
• Educated people are the one who learns and adapts his behavior from the formal school system and often has a certificate or certificates to show for it at the end of the whole process. Usually what they think is based on scientific and always see the cause and effect from the logical point of view.
• Nurtured people is the one who learns and adapt his behavior in the correlation between environmental factors and psychological outcomes. External factors are likely to play a bigger part in developing the personality of an individual than the genes it inherits from its parents.

By bringing together these three types of people will bring different reactions to one specific phenomenon. For example, there is a cultural belief of these parts of American society in a statement of “Success is more important than happiness”. For the accultured people possibly they will 100% directly believe about this statement, however, it would be a different reaction from the educated people. This educated people possibly trying to figure out several studies related to this and will believe with the latest development of its research. On the other hand, nurtured people will react to this statement based on their psychology. Perhaps for them, success is not important at all to measure happiness, and possibly another factor can influence most of their happiness.

3. Make a comparison between the traditional (so-called Kotler type) marketing management paradigm and SDL (Service Dominant Logic).  *

Kotler’s traditional marketing management’s definition is an art and science of selecting a target market and having, keeping and improving consumers through creating, delivering and communicating preferred customer value. On the other hand, SDL can be considered as an alternative theoretical framework for making clear the value creation by exchanging logic actors between configurations. It’s basically developed to understand the purpose and type of markets. The underlying idea of SD logic is that people’s powers to use the competencies applied by others for the benefit of others and the exchange of services for mutual service. Recently, SD logic has become a contributor to the co-created understanding, sharing the common goal of several scientists in disciplines, striving for human value co-creation, change by developing an alternative to traditional logic. According to Kotler’s traditional view, customers do not purchase only products or services, they buy all experiences they are going to have, and values which are offered by the company. In that holistic perspective of the customers proves the requirement of the SDL. Because the initial and significant extension of this mindset is providing a more holistic and dynamic way of looking of value creation which emphasized also by Kotler earlier.  In addition to that, SDL also takes institutional arrangements as coordination mechanisms in systems. SDL totally defends the idea of creating a holistic value which can be favorable by all societies. Regarding Kotler, he also emphasized the idea of creating value for external factors to be a successful brand.

Netherlands Uwuwuw

Perjalanan yang hanya 5 hari ini adalah perjalanan yang agak gila buat gw tahun ini, alasannya adalah, oke emang ini pas banget lagi libur Paskah ya jadi sebenernya sah-sah aja sih untuk liburan. Tapi sebenernya pas ke sini itu pas banget lagi masa banyak buangeeet tugasnya. Jadi resikonya adalah sebelum pergi, gw 3 minggu ngerjain tugas udah kayak orang gila sumpah. Dari jam 8 pagi sampe jam 10 malem setiap harinya, sampe sampe weekend juga kayak gitu ahahaha. Parah dah. Tapi beruntungnya gw adalah setelah liburan leha2nya enak banget dan punya cukup waktu buat belajar exam yang udah deket gitu.

Nah ke belanda itu ngunjungin sahabat traveling Europe sayah HAHAHA. Namanya Ria, dia tinggal di Groningen. Nah gw dari Budapest pesawatnya turun di Eindhoven, itu super jauh banget dari Eindhoven, kalo naik kreta bisa 3 jam sendirian. Belanda itu kota mahal, semua-muanya mahal termasuk tiket keretanya. Tapi dengan bantuan ria, smuanya di bantuin dia nyari yang paling murah AHAHAHA. Keren euy ria, lup pisan. Nah kota apa aja nih yang berhasil gw kunjungin : Groningen pastinya, nah di sini itu pas banget lagi ada Bloemen Festival, itu adalah di mana mereka jualan bunga-bunga dengan harga miring. Si ria aja berhasil dapet 5 Euro untuk sebucket bunga mawar dll yang warnanya lucu banget.

Untuk hari lainnya kita ke Keukenkof, tau kan tempat apa ini? Jadi,, gw baru tau juga nih kalo Keukenkof itu emang hanya buka selama 2 bulan doang, pas lagi spring gini. Gilak ya. Kirain sepanjang taun buka aja gitu. Ini nih tempat tulip2an yang terkenal seantero dunia itu. Dan banyak banget yang dateng ke sini. Ya iyalah emang lagi masa turis2nya. Edan lah sesak, tapi sangat bahagia akhirnya bisa ke sini. Nah ktia di temenin sama temennya ria satu anak belanda gitu, seru deh dia baik bangeed…

Abis itu berhasil ke Schipol, Amsterdam. Ini emang si Amsterdam itu yak pinuuh pisan ya namanya juga ibu kota negara belanda. City centernya penuh gitu, walo emang lagi banyak perbaikan jalan, ini juga termasuk city bike, banyak bener deh sepeda. Eh nggak ding, bike country..LOLOL.

Yang paling di suka ya Zaanse Schans. Ini gw suka banget karena akhirnya ngeliat windmills yang super tradisional itu. Gw kira se Belanda ada kayak ginian, tenyata kayaknya tuh ini udah di rubah ke yang modern kayak mirip di negara Austria gitu. Yang tradisional hanya di kota ini aja. Duuuuh ya ampuun lucu bangeet. Di tiap-tiap menaranya ternyata ada kekhususannya yaitu produksinya beda-beda, kayak ada yang produksi kayu, oil dll. Heuheu. Seru karena ada toko keju yang banyak pilihan rasa kejunya, dia kasih sample, akhirnya gw makan semua tipe yang gratisannya aja, gak beli apa2 ahahaha.

Berhasil juga ke Den Haag, tapi cuma untuk beli magnet doang. Dan juga berhasil ketemu temen MB lama, yaitu Karjo di Rotterdam. Sumpah ga niat asalnya ke kota ini, tapi demi karjo apapun gw lakukan deh hahaha. Dibeliin es krim sama pacarnya pulak, baik bener.

Yang paling tak terlupakan dan plis jangan melakukan kesalahan ini lagi ke depannya. Oke, sebagaimana kita ketahui bersama budget traveler adalah orang yang mau ngirit tapi kalo bisa dapet sebanyak-banyaknya. Gw pikir tuh ya semua bandara di dunia ini akan buka selama 24 jam. Akhirnya dengan kebodohan yang sangat dasyat gw kan emang flight pagi, jadi malemnya gw berpikir ah ya udah nginep di bandara as usual. Eh taunya bandaranya di tutup jam 12 malem. Pantes aja ada bapak2 yang nanya, ini oke kan gak bakal di matiin jam 12 kan bandaranya. Gw sotoy, dan bilang ya iyalah lalu berusaha tidur. Taunya ada satpam yang ngusir2in orang. Akhirnya gw di luar bandara kedinginan selama 4 jam sodara-sodara. Dia buka lagi bandaranya jam setengah 5 pagi. Ya Allah, hanya dengan jaket biasa aja di udara 11-13 derajat. F*ck bangeeet. Gak lagi2 deh. Overall, kesedihan ini  ketutup sih dengan kebahagiaan bisa ke Keukenhof. Hehe..thanks belandaa…

Malmo – Sweden

Nah karena tripnya kemaren ambil 4 hari, akhirnya salah satunya di pindahin untuk nyempetin liat swedia yaitu malmo aja deh ahaha. Yang hanya disinggahi dari Copenhagen Cuma pake kreta skali jalan skitar sejam setengahan kalo ga salah (lupa lagi padahal baru bulan lalu hwakakak). Nah gw kira di kota ini bakalan ada one day ticket gitu yang bisa naik bis segala-gala. Taunya satu lokasi dengan lokasi yang lain bisa dilaluin dengan hanya jalan kaki doang ahaha. Seru juga ternyata gak gede-gede amat. Lagi-lagi dingin dan sepi. Ini ya Eropa bisa kali terima aku seorang diri ini menjadi bagian dari warga negara kalian ahahaha. Yang paling bagus di malmo tentu saja si patung orchestra yang gw nanti-nantikan. Sebenernya banyak yang bagus, tapi gw sukanya ini, karena: gamao kalah sama dek sinta yang udah pernah ke sini juga. Kalo katanya dek sinta ya anak-anak swedia itu suka ke Malmo karena ada KFC di city centernya karena di kota lainnya gak ada tuh katanya AHAHA, kok kasian sih. Tapi ga tau ya kalo di Stockholm mungkin ada juga lah yaa.. Lalu keren deh kita ke menara yang tinggi banget yang berdekatan dengan laut. Gila lautnya ombaknya gede banget dan keliatan banget tuh jembatan yang menghubungkan Swedia dan Denmark, keren banget di laut lho itu si jembatan di pasang, ga serem bakal ancur atau segala macemnya.

Kita di sini lagi2 Cuma sehari , gak pake nginep karena nginepnya balik lagi ke Copenhagen. Tapi di sini tempat souvenirnya biasa-biasa aja, dan sedikit. Postcardnya gak ada yang bagus, so so aja, akhirnya beli yang gede sekalian. LOL. Kalo ke swedia lagi maunya ke Stockholm buat ngeliat yang katanya bagus tuh adalah metronya banyak artnya gitu dan beda-beda dari satu metro ke metro lainnya. Ak seneng, udah 2 Nordic countries yang udah keinjek.

Copenhagen – Denmark

Nah ini adalah negara Nordic pertama yang dikunjungin, sumpah rasanya deg-deg an juga, kenapa karena perginya sendiri juga yang pertama dari Budapest, di sana harus nginep semalem di airportnya as usual buat nunggu ria di hari berikutnya pagi. Emang nih si nordic2 ini emang smuanya mahal banget. Tapi kita tetep budget minded. Smua-smuanya udah di budgetin dan berusaha supaya pengeluaran total gak lebih dar target yang ada. Sampe makan tiap harinya di fast food fast food aja yang gampang. Nah ini termasuk trip yang targetnya gila banget karena banyak banget lokasi yang pengen kita datengin.

Yang terbaik dari semuanya tentu saja adalah Nyhavnn,, aku suka banget karena dia itu sungai tapi banyak kapal-kapal lucu di kanan kirinya. Warnaya out banget kalo cuacanya lagi bagus. Hwaaah, coba aja kaya dikit, bisa nyobain salah satu resto di kiri kanannya, dan nyobain makanan khas Denmark. Eh tapi makanan khas Denmark jangan-jangan cuma monde butter cookies aahahahaha. Tempat bagus lainnya menurut gw adalah national librarynya, keren deh ada 6 tingkat (kalo ga salah) dan sebelahan sama sungai gedenya itu. Emang nih pas kesini itu udah spring, tapi jaket yang gw bawa adalah jaket winter hwakakakak. Yakaleeee…emang ini negara lokasinya di atas sih ya jadi aja suhu masih dingin banget. Mana anginnya kenceng banget juga.

Nah sama seperti negara-negara eropa lainnya, emang negara ini masih sepi juga akhirnya aaahahaha. Mreka pada kemana sih,,oiya mungkin karena weekend. Nah begitu hari senin, ramenya adalah sekitar jam 9-10, mereka semua pergi kerja, tapi ternyata mereka itu suka banget naik sepeda. Emang kayaknya sih ini kota termasuk bike city deh jadi semua orang pada pake sepeda keren gitu. Walo winter pun mereka hebat banget deh kuatan.. huhu,,bisa kerokan tiap hari nih kalo aku di sana HAHAHA. Overall, kalo ada kesempatan bisa tinggal di negara Nordic, pengen banget di salah satunya. Apapun tapi kayaknya swedia yang paling bikin deg-deg an seru kayaknya di sana ya…

Slovakia yang gitu-gitu aja

Kalo Vienna aja so so,,ini so sad ahaha. Kenapa? Karena super gak ada apa-apanya lagi dibandingin Vienna tersebut. Kok kayaknya malah sama aja kayak Gyor yak AHAHAHA. Duh mau cerita apa ya. Oh oke deh,, di salah satu ujung jalan di city center ada restoran yang letaknya di bawah tanah dan itu super enak banget, bagus juga… iya ,, di sini nyobain makanan khusus Slovakia. Hmm,, apa lagi ya

Oh yang rada paling terkenal adalah ada patung gorong-gorong, udah itu doang ahahaha. Akhirnya selfie di sini. Kalo gak salah total di sini juga Cuma 6 jam, ya karena emang gak ada apa-apanya. Mau cerita apa lagi ya? GAK ADAAAA.. udah yaa.. hahaha