Economist 7/10/14

  1. Spain’s most successful clothing retailer, Inditex—best known for its Zara outlets—does battle daily against such other multinational fast-fashion giants as Hennes & Mauritz of Sweden, Uniqlo of Japan and Gap of the United States. But it also faces rising competition, at home and abroad, from two Spanish rivals, Mango and Desigual. The larger of the two contenders, Mango is still fairly small: its turnover of €1.9 billion ($2.6 billion) last year was less than one-fifth that of Inditex’s Zara branches. But Mango already has more outlets than Zara, and is in more countries (107) than Inditex as a whole (88). His success blazed a trail for the other two. Isak Andic, Mango’s Istanbul-born founder, started by selling imported goods at a market stall in Barcelona, and Desigual’s Swiss-born Thomas Meyer made denim jackets in Ibiza.Whereas its two younger rivals follow a more conventional fashion-retail model of changing their collections two to four times a year, Inditex constantly churns out new designs, to encourage consumers to return to its shops frequently.Inditex has been able to do without advertising, relying on good store locations in big cities to attract custom. Desigual, in its rush to catch up, has created a buzz with controversial advertisements
  2. WHEN companies spend money on new plant and equipment (capital expenditure or capex in the jargon), jobs and economic growth are the result. One of the aims of central banks’ efforts to suppress interest rates is to encourage more such spending.The emerging markets’ share of global capex fell from 34% in 2011 to 27% last year.The big investors have traditionally been mining and energy firms, accounting for 42% of global capex in 2013.  Why haven’t companies taken advantage of cheap finance and spent more? An obvious reason is that corporate revenue has not been growing very fast. Given that constraint, capex does not look so meagre. For global non-financial companies, the ratio of capex to revenues is close to its highest level in a decade.
  3. IN YALAZA, a remote mountain village near the town of Lice, the seeds of a “free Kurdistan” are being sown. A “popular council” vetted by rebels of the outlawed Kurdistan Workers’ Party (PKK) will soon launch Turkey’s first school offering education in the Kurdish language. Last summer Yalaza’s fields were carpeted with cannabis. They are now filled with tobacco and other legal crops after the PKK outlawed the booming drug trade.Last week the Turkey government unveiled fresh reforms that give the cabinet authority to pursue the talks, including an amnesty for PKK fighters untainted by violence. Thousands of Kurdish activists, including members of parliament, have been released from jail. Laws allowing education in Kurdish, albeit only in private schools, have been passed. 
  4. Scramble is a fringe attraction in a country where snarling xenophobia remains rare. Yet popular culture in Japan is increasingly taking up nationalist causes. Several bands have penned songs about territorial disputes with China and South Korea. The most popular film of the year eulogises wartime kamikaze pilots. Bookshop shelves in Tokyo groan with a category known as kenchu-zokan: “dislike China, hate Korea”.Meanwhile, a policy of “patriotic education” fosters growing anger at Japan even as first-hand memories of the second world war fade. Popular culture in Japan has not always been so nationalistic. But under Shinzo Abe, a nationalist prime minister—and with relentless criticism of Japan from China and South Korea—reflection has morphed into rejection. 
  5. WHEN the IMF visited Bulgaria’s capital Sofia in early June its verdict on the banking sector was that “the system is stable and liquid”. By the end of the month Bulgaria faced a financial crisis, thanks to runs on First Investment Bank (FIB) and Corporate Commercial Bank (CCB), the country’s third and fourth-largest lenders respectively. Delyan Peevski, a controversial businessman suddenly removed large sums from CCB, which triggered a run on the bank. After more than 20% of the bank’s deposits had been withdrawn, Bulgaria’s central bank put CCB under supervision and suspended its operations on June 20th.A week later, FIB was the target of another, seemingly unrelated, bank run. On June 27th rattled depositors withdrew around 800m lev ($550m) in a matter of, Bulgaria also faces a political crisis: on June 29th, the president announced that he will dissolve parliament on August 6th and call elections for October 5th. 

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