China: A paradise for
companies seeking growth
Lisa W. Hess, a
money manager, writes in Forbes, "The war-related economic
drag (on US economy) will not be over soon. Since religion
is involved, this struggle will last years and years, if not
decades. The "war on terrorism" is a polite way of
referring to a conflict between radical Muslims and mainstream
followers of Judeo-Christian tradition....With the US embarked on
such a self-defeating path, it is folly to keep the bulk of your
portfolio in domestic issues." Or in other words, look
at growth economies like China.
Why is China an interesting market for
companies seeking growth?
- China is the biggest consumer market in the
world. Its middle class may be as large as 200 million
people. And these are not people who are fed up with
advertising and have no more place in the home to buy anything
else (a very American problem). These people can't wait
to buy stuff and their savings are meant to buy the next
consumer product that is on their wish list.
- Membership in the World Trade Organization (WTO)
has made it somewhat easier to do business in China.
- The Chinese Government has also made some
progress in developing a legal system and making it easier for
foreign companies to operate in China.
- Chinese consumers are fascinated by branded
products, and if marketed right, they are ready to spend their
- China has consistently been attracting
highest amount of direct foreign investment for about ten
years now. Foreign investment in October 2004 increased 23 percent from a year earlier to $53.8 billion
after gaining 21 percent in the first nine months, the Beijing-based Ministry of Commerce
reports. That exceeds last year's tally, which was an all- time high.
- Wal-Mart Stores Inc., the world's largest retailer, this month opened its 40th store in China and said it plans to open as many as 15 more next year. France's Carrefour SA, the biggest overseas retailer in China, said in May it aims to open as many as 15 superstores a year in the country, its largest and fastest- growing Asian market.
- Disposable incomes in urban areas, home to a third of China's 1.3 billion people, rose 7 percent in the first nine months of this year to 7,072 yuan per
capita. China's gross domestic product (GDP) is expected to rise to $5,078 per person in 2030 from $1,139 this year, according to UBS AG.
This is when Chinese government has been trying desperately to
stop the economy from overheating.
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