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U.S. companies feel a colder wind in China, even as many still rake in profits
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U.S. companies feel a colder wind in China, even as many still rake in profits
"A slowdown in China’s breakneck economic growth, stiffer competition from Chinese companies and rising labor costs have combined to cut into profit margins for U.S. companies operating here. Many executives feel the playing field is being tipped against them by a government that favors domestic companies, or they complain about being excluded from key sectors of the economy by laws restricting foreign investment. Meanwhile, hazardous levels of air pollution are making it increasingly hard to recruit foreign executives to come here.
In a possible sign of the growing disenchantment, U.S. investment fell 9.3 percent in the first five months of 2014, compared to the same period last year. Although such numbers are volatile, there was an even bigger decline in investment from Europe.
“Perhaps the golden age for multinationals in China is over," said Duncan Clark, chairman of investment advisory firm BDA."
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“What has changed is that the easy money, the easy opportunities, the lower-hanging fruit have started to go away,” said Christian Lundblad, a professor of finance at the University of North Carolina’s Kenan-Flagler Business School. “So those nagging things — that have always been there — are starting to become a bit more pronounced. The opportunities are getting more complicated than they used to be.”
But there is also a change in how foreign investors are now treated. In the past, executives recall, China treated foreign chief executives almost like visiting heads of state, ushering them around in official convoys for audiences with the president and promising them tax breaks to set up factories. Today, foreign CEOs are almost as likely to be condemned by regulators or state media for exploiting Chinese consumers as they are to be glad-handed by top leaders.
“Foreign companies have an opportunity in China if they are doing something that China needs, or doing something that China can’t do,” said James McGregor, Greater China chairman of consultants APCO Worldwide. McGregor says the environment for foreign companies is getting harder, as Chinese companies get stronger. “There is less that China can’t do, and less that China needs.”
http://www.washingtonpost.com/world/us-companies-feel-a-colder-wind-in-china-even-as-many-still-rake-in-profits/2014/07/03/dcbfa233-ee13-4e67-b791-3b3e38bca890_story.html
-> Looks like there is an opening for India, let's see if we can seize the opportunity.
In a possible sign of the growing disenchantment, U.S. investment fell 9.3 percent in the first five months of 2014, compared to the same period last year. Although such numbers are volatile, there was an even bigger decline in investment from Europe.
“Perhaps the golden age for multinationals in China is over," said Duncan Clark, chairman of investment advisory firm BDA."
...
...
“What has changed is that the easy money, the easy opportunities, the lower-hanging fruit have started to go away,” said Christian Lundblad, a professor of finance at the University of North Carolina’s Kenan-Flagler Business School. “So those nagging things — that have always been there — are starting to become a bit more pronounced. The opportunities are getting more complicated than they used to be.”
But there is also a change in how foreign investors are now treated. In the past, executives recall, China treated foreign chief executives almost like visiting heads of state, ushering them around in official convoys for audiences with the president and promising them tax breaks to set up factories. Today, foreign CEOs are almost as likely to be condemned by regulators or state media for exploiting Chinese consumers as they are to be glad-handed by top leaders.
“Foreign companies have an opportunity in China if they are doing something that China needs, or doing something that China can’t do,” said James McGregor, Greater China chairman of consultants APCO Worldwide. McGregor says the environment for foreign companies is getting harder, as Chinese companies get stronger. “There is less that China can’t do, and less that China needs.”
http://www.washingtonpost.com/world/us-companies-feel-a-colder-wind-in-china-even-as-many-still-rake-in-profits/2014/07/03/dcbfa233-ee13-4e67-b791-3b3e38bca890_story.html
-> Looks like there is an opening for India, let's see if we can seize the opportunity.
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» Gone with the wind
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