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

To: RealMuLan who wrote (4114)	1/9/2005 12:41:54 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China learns importance of brand name marketing By Morris Bechloss Special to The Desert Sun January 9th, 2005 In their incessant march toward manufacturing supremacy and internal consumer growth, the Chinese have opened up a new front. Up until now the rampaging Chinese industrial engine has used its own manufacturing ingenuity, plus imported plants from the U.S. and others to build the world class base it has already achieved. But now the intrepid Chinese are bringing a new dimension into play -- buying foreign brand names. With multi-billions of foreign currency in their coffers, Chinese companies are going on a shopping spree. Sporting the world’s lowest cost manufacturing, combined with universally acceptable quality standards, China is ready to approach the world with high profile brand names. That increasingly capitalist-minded nation has grasped the value-added concept of marketing. This is bound to add even more euros, yen, and dollars to China’s already bulging treasury. Lenovo-IBM is the most recent coup that China has achieved in putting this new strategy to work. Already in Beijing’s reservoir are TCL Corp., which merged its television business with France’s Thomson to create the world’s biggest TV manufacturer. One of that group’s premier brands is time-honored RCA. In the automotive arena, Shanghai Automotive Industry has announced purchase of a 48.9 percent stake in Korean truck maker Ssangyong for close to $500 million. China’s next target is reported to be Britain’s MG Rover Group Ltd., recently said to be in financial trouble. The Chinese Commerce Ministry estimates that the country’s corporations spent $2.85 billion buying foreign companies and miscellaneous assets in 2003. Straszheim Global Advisors, an American research group specializing in Chinese equities, surmises that Chinese investments in foreign companies could reach $7 billion in 2004, and $14 billion in 2005. China knows that the success of this new stage of global marketing is mandatory in achieving the top-rung of the export ladder to which the Asian giant aspires. China also knows that it doesn’t have the time to develop its own global brand names, as the Japanese did within 30 years after World War II. China is similarly reaching into the acquisition of global natural resource companies to make sure that it will have the commodity underpinning to keep its ambitious expansionism intact. The Chinese have already invested billions in oil and gas projects throughout Africa, Southeast Asia and Latin America. There is even talk that Beijing-based China Commerce Corporation will spend up to $5.5 billion to buy Canada’s biggest mining company, Noranda, Inc. This turn of events should come as no surprise to those with knowledge of the middle kingdom’s 5000-year-old history. The Chinese were not only among the original world capitalists, but have been responsible for developing the super-charged economies of Indonesia, Singapore, Vietnam, Philippines, Taiwan, Thailand, etc. Millions of Chinese residents in these countries have been in the forefront of Southeast Asia’s economic dynamics and will continue to expand such commerce in their adopted lands. The finalization of the China/ Asian trade pact in 2010 will bring these behemoths together into the world’s largest free trade consortium, encompassing 2 billion people. With Southeast Asia already in commercial contact with the other member of the billion population club-- India-- a new giant economic consortium could well be in the making. If such an objective were achieved within the next decade, almost half of the global population would be encapsulated in a mammoth free trade zone. This potential amalgamation would also give credence to 19th century British Admiral Alfred Thayer Mahan, who developed the Heartland theory. This concept postulated that whoever controlled the Eurasian heartland would master the globe militarily and commercially. Instead of China, India, Russia, however, the new superpower lineup would be China, India, and the ASEAN nations, with the U.S. standing by as the world’s No. 1 consumer and technological innovator. Such a powerful regional block should become real much sooner than later. -------------------------------------------------------------------------------- Morris R. Beschloss of Rancho Mirage is an international economist and financial writer. He can be reached at (760) 324-8166. His column on global economic issues will appear weekly in The Desert Sun’s Business section. thedesertsun.com