Show Me The Money!

In China the corporate savings rate is over 50%, and the government wants to encourage outbound investment. Assets in the USA are at a low point in price cycles. The USA is by far the world's biggest consumer market, and China the world's largest manufacturer, and for all their ability to cut cost, Chinese manufacturers are earning a fraction of the margin that USA-based marketers and retailers collect by selling Chinese made goods. They just don’t know how to run a consumer marketing and retail machine. Given all this, should we expect Chinese capital to be chasing bargains, building market access, acquiring more margin?

Nope. Because:

1. China runs top down - government policy rules.  Strategic necessities – are the priority: commodities, energy, and control of infrastructure; China needs iron ore and unobstructed energy imports a lot more than it needs drop-ship warehouses in Reno. Or cash.

2. The USA is too much work.  Media, government and regulatory can all kill a deal instantly. Worst of all: Chinese investors can't get visas.

It’s nothing like the way China treated western investors. "Welcome to China, Leave Your Money Here" platforms like investment zones; western-style housing compounds; government-run concierge for regulatory, recruitment, construction, water and power supply; tax holidays. African, Southeast Asian, Middle Eastern projects may not
offer the glamour of an American division, but they roll out the red carpet for Chinese.

The biggest help to Chinese companies in the USA is coming from China's own - check my interview this week with the North America Rep office of the City of Shenzhen, who helps Huawei, BYD, and their Pearl River Delta neighbors with their USA objectives.

The Chinese private sector is also working on it – like Vantone, ramping up The China Center in New York City.  Like Chinese i-bankers helping find energy deals for their clients from Shandong.

Otherwise, business people who want to play a role in Chinese inbound investment form discussion groups on social media, and join The China Business Network. It’s about getting up to speed so we can get some dollars and jobs back. Getting deals packaged and offered properly to attract the money; and then convincing the Chinese to hire smart lawyers and accountants, to talk to the people through the press so there’s back-up when the dragon slayers attack …it’s a long cultural gap to span. Especially when a denied visa can send the whole thing into the bin.

Hear that crashing sound, Homeland Security? It’s billions of yuan cascading into Australia.

See the original post here.