It's nice to get the big picture every once in a while. That's what you get with Robert Broadfoot, a top analyst on what is happening in China these days.
Broadfoot, the head of the Hong Kong-based Political and Economic Risk Consultancy, spoke here yesterday at a meeting sponsored by U.S. Bank. It attracted many of the bank's clients, large and small, thinking about doing business in China. Example? Alpha Technologies, a Bellingham maker of backup power generators for the cable industry. It's moving rapidly overseas with its products.
Broadfoot is moderately pessimistic about China, forecasting that it will continue to grow but present difficult choices for companies wishing to penetrate the market. "China may not be for you," he said. China requires a company to be of some size, able to do its homework and be realistic about expectations, Broadfoot said.
Leadership changes will not go as smoothly as many expect later this year, he said, although that does not mean unrest or problems. "China's leadership change will be no more unstable for China than our counting hanging chads in Florida."
Quick quotes from Broadfoot:
โข "China will have to devalue its currency 30 to 40 percent sometime in the future, especially if the dollar continues to weaken. Something has got to give."
โข "If you bring a technology into China, you can expect to have it ripped off. The question is how you manage the issue."
โข "China is not for small companies. You are probably better off to export. But even if you stay in Seattle, you will feel an impact from the price power of China."
โข "You may not like the system, but it is stable."
โข "Minuses? The legal system is a nightmare. Regulations will change depending on who you talk to. More than 30 percent of the loans on the books at Chinese banks are nonperforming. Corruption is an example of where the central government has lost control."
โข Pessimistic? "I don't get paid for hunky-dory. I get paid to find out what could go wrong with all this." |
