It’s no big surprise to many of us, but you have to say, wow, what a year for China economically. I won’t get into the politics and philosophies of this China boom that really began some years back, but I do want to address it from a business and supply chain perspective.
China surpassed the United States to become the world’s largest automobile market in 2009, figures just released show. China has also surged past Germany to become the biggest exporter of manufactured goods (in the midst of a global recession). The World Bank predicts that soon, China will overtake Japan to become the second largest economy in the world.
So what is the smartest China strategy for U.S. businesses to react with? I believe we have to look at the opportunities that the situation in China presents and discover how to grow trade, provide them with the supply chain and industry resources they need, and grow our own jobs and capital. There are other alternatives to be sure, but none that I see that will benefit U.S. companies as much in the long run.
Just look at the report issued last month by The American Chamber of Commerce (AmCham) in Shanghai showing that China presents one of the few future growth areas for U.S. businesses around the world. Based on a survey conducted by AmCham and Technomic Asia, the report reveals that 60% of American companies are investing in China for the revenue that is being created by the China market. In other words, their investment is not related so much to the availability of low-cost labor.
Another big, glaring bright spot is the material handling industry in China. If your business is involved in material handling systems and the technology, equipment and processes of warehousing and distribution, the door is wide open. It is quickly becoming one of the most important material handling markets in the world, and you don’t want to miss this fast boat to China (pardon the pun).
Other key sectors to watch right now in China include: 1) Medical, particularly healthcare services, look for the privatization of hospitals; 2) Automotive, consolidation of OEMs, growing strength of dealers and dealer groups, stronger aftermarket parts distribution; and 3) Consumer products.
I’d like to know your thoughts on China strategy for U.S. companies. What do you foresee in the next year or the next decade?
Go!Go!Go!
Jim
More resources
Multi-client report on warehousing opportunities in China: http://www.tompkinsinc.com/china/warehouse/china-warehouse-report.asp
Strategic sourcing and procurement: http://www.tompkinsinc.com/operations/procurement.asp
Caught Between the Tiger and the Dragon: A Business Novel
Book: The China Ready Company