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Automation and COVID-19, the greatest danger for workers

The West, primarily the United States, tends to blame low-wage countries – such as China and Mexico – for job losses. However, the greatest job losses are due to automation. Thus, automation based on robotics has improved the productivity of various industries. Artificial intelligence has advanced in the financial, transportation, defense and energy management fields. The Internet of Things, driven by the development of high-speed networks and remote sensors, has improved connectivity between people and businesses.

According to a report by the Brookings Institute, a quarter of US jobs are at risk of being replaced by the advancement of artificial intelligence. Jobs considered “high risk” include about 36 million jobs in office administration, production, transportation and food preparation. The tasks performed in these sectors often contain physical work, information gathering and routine processing activities, which makes more than 70 percent of the tasks potentially subject to automation. To give some examples, 100 percent of the tasks of the operators of packaging and filling machines, as well as ophthalmic laboratories can be automated; as well as 91.4 percent of the tasks performed by food preparation workers.

On the other hand, an analysis published by the Organization for Economic Cooperation and Development concludes that approximately 10 percent of jobs in advanced economies face automation. However, research from Oxford University establishes that the proportion of jobs at risk in the United States is almost 50 percent.

These data should be reassessed due to the appearance of the Wuhan coronavirus or COVID-19. Just in the first few months since the world was alerted of a possible pandemic, Apple cut its sales forecast due to quarantine protocols, Jaguar Land Rover in Britain announced that it could run out of auto parts at its assembly plants, MGA Entertainment, whose toys are made in Guangdong, noted that its production fell 60% compared to the same period last year, Grupo Bimbo temporarily closed one of its 10 plants in China.

In view of this panorama, in the short term we could see an acceleration in the automation of processes, this in view of the fact that human capital is highly vulnerable to the emergence of new diseases and, in particular, due to the depth of this crisis in the manufacturing sector. Today, supply chains are highly vulnerable because they are diversified around the world; thus, any interruption in one of the parts generates significant losses. In this case, with China and Southeast Asia being important centers of manufacturing production and distribution, the interruptions due to the policies that have had to be adopted to prevent the spread of the Wuhan coronavirus have had repercussions in the world economy.

It is highly probable that, in the short term, the industrial sector will highly invest in profound changes in its production systems to take advantage of the technological advances of robotics, artificial intelligence and the Internet of Things to shield its operations from interruptions caused by the inherent vulnerability of human beings. How will governments face this expected scenario?

The truth is that governments are not prepared for a change of such magnitude in industrial production. The instincts of politicians will be focused on recovering lost work instead of allowing people to do less; that is, populist policies.

However, governments will have to rethink their labor policies to adapt to a world with greater technological advances. Thus, fewer people should be allowed to work full time or rethink the term “full time” based on the improvement of productivity. While governments come to these discussions and, above all, to reform their labor laws, we will face a social crisis with low wages and higher unemployment rates. In the short term, governments will not be able to adequately address the problems caused by automation.

 

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GREENPEACE VS KIT-KAT

In 2010, Greenpeace uploaded a video to Youtube that shows an office worker opening a chocolate package Kit-Kat, from which comes an orangutan finger and begins to eat while blood stains. Its purpose was to generate awareness in the consumer about the death of orangutans caused by the felling of trees for the extraction of palm oil, one of the necessary ingredients for the manufacture of chocolate bars. As part of the campaign, the NGO also denounced Sinar Mas, the then-leading supplier of Nestlé palm oil.
The campaign went viral and Nestlé opted to ask Youtube to withdraw the video, arguing copyright infringement for the use of the chocolate logo, but by the time the video was removed, it had already gone viral. At the same time, they issued a statement denying their relationship with Sinar Mas. Both actions caused Greenpeace to start another campaign, but this time requesting a boycott against all Nestlé products. Thus, Greenpeace began to circulate the video again, but now on alternative platforms to YouTube, in addition to publishing Kit-Kat logos rewritten with the word “Killer” and images of orangutans.
Despite the fact that the censorship strategy against Greenpeace was not well received by consumers, Nestlé continued with the same strategy, threatening – for example – to block Facebook users who continued to make negative publications towards the brand. Afterwards, he asked that users who did not agree with it stop following the Kit-Kat page on Facebook and began to eliminate negative comments. Being social networks a means that can give companies the opportunity to create a more personal link with consumers, it also means a risk since it allows users to maintain greater vigilance over the actions of a company and that they can not simply censor.
Due to the elimination of comments, many users created accounts with the sole purpose of continuing to disparage Kit-Kat. In response, Kit-Kat took a confrontational attitude with users, raising a lot of controversy about how the company answered its consumers. The damage to the reputation of Kit-Kat was greater since the users evidenced the inattentive answers of the company, in addition to the environmental issue that caused the crisis initially.
Eventually, Kit-Kat gave in to the pressure. That is why, in 2013, Nestlé released a statement in which it set a series of environmental objectives to meet before 2020, among which was the use of sustainable palm oil. It is not the first time that a company is affected by GreenPeace activism, for example, in 2014 when Greenpeace launched a campaign against Lego for the trade agreements it had with Shell. Brands should not forget that social networks have made companies more vulnerable by becoming the means by which users ask them to be held accountable for their actions in an organized manner.

Do you think your company may be vulnerable to social media activism? Contact us to make a damage control and containment plan, you can write us at info@riesgospoliticos.com.mx.

 

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AIR EUROPE, A DISCRIMINATION CRISIS?

In 2013, a Spanish airline known as Air Europa had an incident with a wheelchair passenger after denying access for not carrying a passenger. The passenger Mara Zabala, of Spanish origin, complained to the employees of the airline for not allowing her to board the plane. The employees of the airline argued that, due to security policy, it was necessary for the passenger to have a companion who could assist her in case of an emergency.
Zabala, who by the way is an expert in social communication, used Twitter to denounce the company that forbade her to travel unaccompanied when other companies do. Under the hashtags “#denuncia #discapacidad #denuncia”, in a short time reached thousands of retweets, so the message of denunciation quickly gained popularity.
The tweet generated many criticisms of the company not only for denying the service to Zabala – when she had previously traveled alone with Air Europa – but also for not having facilities for people with reduced mobility that other airlines offered. The mistake of Air Europa was to ignore the damage to its image that comments on social networks were causing. The company chose to ignore the incident. The most he did was to reiterate to Zabala what his internal policy stipulated about passengers in need of additional assistance. In the absence of a communication strategy focused on mitigating the crisis, comments on social networks continued to escalate. Eventually, a problem in customer service escalated to touch a much larger issue: that of discrimination.
The problem escalated to attract the attention of Spanish legislators and, eventually, the European Commission. The Popular Party of Spain asked Air Europa to hold a meeting to discuss the incident. Given the refusal of Air Europa, the Spanish Popular Party presented the case to the European Commission through the Group of the European People’s Party.
Soon, the European Commission published a report on current legislation that allows airlines to request a passenger in a wheelchair to travel with a companion. The report stated that the legislation helps airlines benefit from forcing users with disabilities to buy another plane ticket. Based on this report, Zabala appealed to various organizations for the protection of persons with disabilities, stating that the legislation is clearly discriminatory. One of these bodies, the Spanish Committee of Representatives of Persons with Disabilities, demanded that Air Europa change its internal policy on its own initiative, since the current regulation does not guarantee them. For its part, the European Commission announced that the regulation of airlines in terms of security would be reviewed in order to address problems such as Zabala, but to date there have been no changes.
The case of Air Europa demonstrates that the omission of a problem is a problem in itself, sometimes just as damaging to reputation as making an equivocal decision about it. Starting with a tweet, the magnitude of the crisis escalated to reach the halls of national and supranational governmental instances. A strategy of silence before the problem contributed to increase the crisis since, for many users, it seemed that the company was not doing anything to solve the problem.

Do you have doubts about how to handle reputation crises? Write to info@riesgospoliticos.com.mx to provide you with the advice you need.

 

 

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NEW SILK ROUTE, WILL CHINA DOMINATE THE WORLD?

In 2013, the President of China, Xi Jinping, presented a project that includes the development of infrastructure to facilitate the exchange of goods through land and sea corridors around the world. Currently, 80 countries participate in this project, whose official name is ” Belt and Row Initiative ” , referring to the ancient silk route used in the times of the Han Dynasty, in the first century BC. This initiative consists of the financing by the Chinese government of infrastructure around the world in exchange for political, commercial and strategic benefits.

China is the second economic power of the planet and, according to experts, it has the potential to become the most important commercial power in the world. China went from being one of the most impoverished countries in the world, after the policies of Mao Zedong “One Step Forward” and the “Great Cultural Revolution”, to be the main creditor of developing countries for the construction of infrastructure.

Among the objectives of the New Silk Road are: to facilitate regional development by eliminating barriers to trade, increase communications with neighboring countries and increase the flow of raw materials to China. To achieve these ends, we seek to create alternative maritime and land routes to those currently used, such as the Strait of Malacca and the Suez Canal, where 20% of world trade passes through.

It is estimated that this initiative could generate a market ten times greater than the United States. To fulfill this colossal goal, resources are available from the New Development Bank (composed of the BRICS countries: Brazil, Russia, India, China and South Africa), the Silk Road Fund and the Asian Investment and Infrastructure Bank (origin Chinese). Likewise, if the stated objectives are met, this initiative would add 56,000 MDD to Chinese exports and 61,000 MDD to imports, which represent 36% of world GDP, according to Euler Hermes consultancy reports . However, the International Monetary Fund warned that “resurrecting the silk route … can also lead to a problematic increase in debt, creating challenges for the balance of payments.”

One of the great advantages of these Chinese loans to finance infrastructure is that they are bilateral in nature. This allows loans, despite being more expensive, to be more advantageous and flexible compared to loans provided by multilateral institutions such as the World Bank. This makes them extremely attractive to countries that have restrictions in accessing international financial markets such as, for example, Venezuela. It is worth mentioning that, although these Chinese credits are given with fewer restrictions than others, the conditions always benefit the Chinese economy, for example, in the case of Ecuador it was stipulated that only Chinese companies would be used to develop the projects with this country.

According to Stephan Monier, Chief Investment Officer of Lombard Odier , China has found a way to acquire a central role at a global level while the United States is losing it due to the adoption of protectionist policies. Thus, this initiative has accentuated the economic rivalry between China and the United States, generating geopolitical frictions due to the capacity of influence that the Chinese government has gained in the international concert.

This new area of ​​influence is the result of the fact that, with the New Silk Road, China is reinforcing and increasing its presence in Asia and Europe, that is, places where the United States traditionally exerted influence. Likewise, China has considerably increased its presence in African countries, where it finances the construction of entire cities in, for example, Kenya, Guinea, and Ethiopia. Thus, this program has strategic implications for world politics since it could generate the legitimacy of Chinese actions, especially in the South China Sea, where there are tensions with its neighbors for their sovereignty, on the part of the international community.

There are still many elements to analyze in order to measure the degree of success of this project. However, the first steps have been taken, the world has to be prepared to take advantage of the advantages that this brings and, at the same time, protect against the threats that come with a project of this magnitude.

 

Are you interested in knowing what opportunities and risks your company has as a result of Chinese economic policies? Write to info@riesgospoliticos.com.mx to provide you with the advice you need.

 

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2019, YEAR OF THREATS TO THE PHARMACEUTICAL INDUSTRY?

2019 has been a year full of uncertainty in political, social, and economic matters. We could affirm that this climate, in its majority, has been caused by the decisions of the government rather than by external factors. It is the first time that a left party comes to power with a majority in Congress and, in addition, has a very high citizen approval. However, the actions that the Federal Executive has implemented have generated important pressures for the country’s industrial activity .

Specifically, the pharmaceutical industry in our country faces important challenges that are worth considering for decision making during this year. On the one hand, we must study the changes that will take place when the new T-MEC free trade agreement comes into force, particularly the chapter on industrial property. On the other hand, the National Chamber of the Pharmaceutical Industry Affiliation (CANIFARMA), reported in recent days the lack of import permits that could result in shortage of medicines.

Our country represents the second largest market in Latin America for the pharmaceutical industry, generating 65,204 jobs in national companies. It is expected that by 2020 the consumption of medicines in our country will amount to 26,276 million dollars; However, the risks mentioned can be obstacles to achieving these projections.

Since the current government took office, the Federal Commission for Protection against Sanitary Risks (COFEPRIS) has not granted any import permit or sanitary registration. The aforementioned has caused the delay in the delivery of the tendered medicines in December and a shortage of medicines in the private sector is beginning to be felt, due to the lack of raw materials for their production. Between 2006 and 2018, the pharmaceutical sector grew by 100%; being these permits granted by COFEPRIS key to the development of the industry and promote a balance between generic and patent medicines. However, the lack of permits by COFEPRIS can become a brake on the growth of the industry.

Another challenge for the pharmaceutical sector is the upcoming entry into force of the T-MEC, since prices and access to medicines in Mexico may be affected. These effects are generated because the practice of accepting new uses of known medical substances and registering their patents is regulated. That is, if a chemical molecule is created to cure a specific disease, but later other people find that it serves to take care of another disease, the second people can register the patent for a second use, even if they are not the owners of the original patent . This is known as a secondary patent.

This new protection represents an advance in scientific innovation and technology, but experts say that it will be US pharmaceutical companies that will benefit the most due to their extensive experience in the development of chemicals and pharmaceuticals. It is worth remembering that it is precisely EE. UU who dominates the registration of patents worldwide.

On the other hand, pharmaceutical companies that produce generic drugs will be affected by the increase in patents’ duration, from seven to 10 years. This will represent an important challenge for the industry in Mexico since we are the country that consumes the most generic medicines worldwide, representing 90% of the total purchases of medicines.

 

 

Are you interested in knowing what other challenges the pharmaceutical companies and the medicine market will face in Mexico? Does your company need advice to determine the risks it faces by provisions contained in international treaties or national

 

 

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