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Newsletter
February 2005 |
SourceGlobal® with presence
in US, China, & India, offers global
sourcing services to the Heavy-Equipment OEMs in North-America. |
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CONEXPO-CON/AG 2005
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SourceGlobal® will be at CONEXPO-CON/AG 2005, March 15-19 in Las Vegas. Stop by booth N-2700 which is located in the North Hall. Please email if you would like to set up a meeting. CONEXPO-CON/AG 2005 is
the world's largest show for the construction and construction
materials industries, showcasing the latest equipment services and
technologies.
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China
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| Chinese Economy Still Accelerating |
Despite
efforts by Beijing to cool down the growth of the Chinese economy, the
Chinese economy grew by 9.5% in the fourth quarter of 2004. On
October 29th the Central Bank increased lending rates for the first
time in a decade and appears to be poised to do so again along with
increasing reserve requirements for banks. The government has
also issued numerous orders to halt construction, project approvals and
land sales. Clearly however these measures have been either
ineffective thus far. China has overtaken the US in consumption
of grain, meat, coal, steel, fertilizer, television sets, cellular
phones, and refrigerators.
Inflation appears to be under control as prices increased only 2.4% in December.
However inflation cannot be staved off forever with simple interest
rate increases. At some point revaluation of the currency will
have to occur. Chinese leaders have made it clear they are in no
hurry to revalue the currency though they recognize that they will have
to do so eventually. Chinese officials intend to keep the economy
growing at around 8% per annum and intend to gradually adjust the
dollar peg, currently at around 8.25.
For additional detail:
Beijing May Expand Efforts to Cool Economy
China in No Hurry to Revalue Currency
China Leaves US Behind as World's Top Consumer
China Sees Sweltering 9.5% Growth
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| Counterfeit or Real? |
One
can already purchase the next Harry Potter book in China. Not
written by or even translated from the work of JK Rowling mind you,
but it is available. One of the biggest challenges to doing
business in or with China is the prevalence of counterfeiting.
Many firms, both domestic and multi-national, are hesitant to invest in
China due to the risk of having their products stolen and knocked
off. Even automobiles, motorcycles, drugs, and high tech
electronics are not immune to knockoffs. Some knockoffs are so
good they are hard to distinguish from the originals, though products
with a significant amount of technology in them are hard to reproduce
perfectly. Even an imperfect copy can cost sales however.
The scale of the counterfeiting is impressive. Recently officials
seized over $5 million worth of equipment from a plant making Louis
Vuitton knockoffs. A recent Businessweek cover showed two
motorcycles, one an authentic Honda and the other an eerily similar
Chinese copy. The US Chamber of Commerce is on record stating
that China has made "limited progress" in 2004 towards meeting its WTO
obligations to enforce trademarks, patents and copyrights.
For additional detail:
By Fighting Fakes, China Wins Too
The Great Call of China
Fighting the Fakes |
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Quick
Facts
China Infrastructure
Internet Users
94 Million
Railways 70,058km
Roads 1.4MM km
Gas Pipelines
15,890km
Oil Pipelines
14,478km
Paved Airports
507
Merchant Marine
1,850 ships (1000GRT or over)
Telephone:
Landlines
263 million
Cell phones
269 million)
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India
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India, Inc.
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While
China gathers much of the press, India has quietly had a fantastic
2004. Sales of the top 1000 companies in India rose 16% with
net profits improving over 60%. Out of 68 manufacturing
sectors only 6 reported low or negative growth. The number of
credit upgrades rose 21% year over year in manufacturing, financial
services and infrastructure. Much of the growth seems to have
come from small to mid-cap companies whose operating profits grew
nearly twice as fast as their larger breatheren.
Much of the credit for these
phenomenal results stems from a series of market reforms over the last
five years. It's not clear however if this sort of growth
rate is sustainable without reform in the government's fiscal
policies. Currently resources are being poured into paying
for the deficit that would be better utilized in infrastructure
improvements which promote economic growth.
For additional detail:
India Inc. On a Roll
India Manufacturing Sector Records Higher Exports
India Inc's Year of Breaking Records
Moody's, India Inc. Caution Government on Fiscal Deficit
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Mergers and Acquisitions Are Back
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M&A
is back and not just in the US. India and China have been hotbeds
of acquisition activity of late. In January of 2004, the Indian
government raised the $100 million cap on investment in foreign
investment by Indian companies to the net worth of the the
company. As a result, Indian firms acquired over 75 companies
outside of India before mid-2004 and the activity has only increased
since. One of the major industries, business process outsourcing,
also appears to be in the midst of a consolidation wave. Most BPO
acquisitions are from large consultancies such as Accenture, Cap Gemini
and IBM.
For additional detail:
India's Great Global Takeover Game
Outsourcing's Acquiring Minds |
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Quick
Facts
India's Global 500 Companies
IndiaOil 189
$25.3BB Revenue
Bharat Petro. 450
$12.1BB Revenue
Hindustan Petro. 462
$11.7BB Revenue
Reliance Indust. 482
$11.3BB Revenue
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