Today's Rude Awakening (the daily reckoning spinoff) has an astute esdsay on China as market-savvy capitalists. Excerpt:
<<In 2004, Chinese firms invested only $490 million directly in U.S. companies and assets. Comparatively, U.S. multinationals invested $15 billion in China. So again, American fears of a Chinese takeover seem irrational in light of the facts.
Another myth has also sprung from the flurry of recent
Chinese acquisitions of American companies. It is said that
the Chinese are interested in purchasing American brands
and securing outlets for their cheap goods. Chinese
appliance maker Haier has made a bid for Maytag, for
example. Yet, a fascinating piece in the Wall Street
Journal earlier in the month by two Boston Consulting Group
advisers based in Hong Kong argues convincingly to the
contrary.
The advisors note that Haier "has spent ten years building
its own brand in the U.S. and now has its name on 10% of
new U.S. refrigerators." Refrigerators are too large to be
made in China. They are made right here on U.S. soil.
What Chinese companies bring to the party, the Boston
Consulting duo argues, is management skill and savvy.
"Chinese management is an under-rated asset in American
discussions of China's global strategy. Almost all large
successful companies in China are turnarounds of formerly
politically managed state-owned enterprises."
These management teams took the reigns in the 1980s and
learned the art of the turnaround specialist – they cut
costs, leveled corporate organizational charts, and pruned
losing businesses. "The CEOs of Haier," the authors
continue, "all started and spent their entire careers on
the factory floor."
The CNOOC management team is no different. Fu Chengyu,
CNOOC's CEO and Chairman, earned his master's degree at the
University of Southern California and spent 13 years
working with international and U.S. oil companies. CNOOC
shareholders have enjoyed the benefits of Chinese
managerial skill.
Since its listing four years ago, CNOOC's market cap has
grown four-fold amidst an energy boom. It maintains an
investment grade rating, with net cash on the balance sheet
and solid profits. As the chart below illustrates, CNOOC's
earnings have nearly tripled over the last four years – or
more than twice the results that Chevron and Unocal
delivered over the same time frame. >> |
