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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (4109)	1/9/2005 12:32:55 AM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China Inc flounders in foreign waters SHANGHAI: What do a former military-run TV maker, a monopoly jet-fuel importer and a foreign exchange bank have in common? They are glaring examples of corporate ineptitude, highlighting China Inc.’s uphill struggle abroad, analysts say. State-controlled television maker Changhong, jet fuel supplier China Aviation Oil Singapore and Bank of China all lost millions of dollars when they expanded overseas. Executives and analysts say reckless expansion, years of feeding off lucrative government deals, lack of technology and mollycoddling via state-led rescues will hamper progress for years to come. Since Deng Xiaoping launched reforms two decades ago, China has become the world’s seventh-largest economy, overtaken the United States in attracting investment and become the world’s third-largest trading power. Now, flush with cash after years of growth, firms from appliance maker Haier to television and mobile phone company TCL Corp. are blazing trails overseas. Yet few corporations, despite dominating respective home markets, stand a chance of becoming the next GE or Sony, analysts say. “Under the state central planning system, no one went bust unless the government decided they did. That’s their legacy,” said David Webb, editor of Webb-site.com, a non-profit corporate governance watchdog. “As a result, some of these companies have not adjusted to the fact that they have to manage their working capital.” Forcing their hand: Consider the battle between Changhong — the biggest taxpayer in the southwestern province of Sichuan — and U.S. consumer electronics distributor Apex Digital Inc. over half a billion dollars in bills. The unfolding story has seen the arrest of Apex founder David Ji — a naturalised U.S. citizen — in China, the abrupt departure of a high-ranking Sichuan official after 10 months in office and the fall of state champion Changhong into the red for 2004. Apex, which says it paid its bills, was considered such an asset Changhong set up a special department to handle the account, and offered Apex preferential credit terms of up to three months, local media said. “Ji understood Changhong and knew how badly they had to expand overseas,” said Byron Wu, China research manager for iSuppli. “I don’t think Changhong realised what kind of financial risk it was getting into by extending such credit.” The U.S. firm — which sells electronics to the likes of Wal-Mart and Circuit City — accounted for nine-tenths of Changhong’s exports of $760 million in 2002. Local media said risk controls were so lax Apex managed to secure more TVs and DVD players even after Changhong tried to shut down the account. —Reuters dailytimes.com.pk