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Western views on investments in china

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Blue Canyon Partners Principal David Hartman this past September was invited to speak at The First Capital Summit Forum in China. The forum focused on capital investment and co-prosperity in 2014. David provided a Western view of investment in China.

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Western views on investments in china

  1. 1. © 2014 Blue Canyon Partners, Inc. David G. Hartman, PhD September 28, 2014 Western Views of Investment in China 美国眼中的中国投资价值
  2. 2. © 2014 Blue Canyon Partners, Inc. How Western Views of China Have Changed Over Time 2 China is very big. I wish they could buy our products China is where we produce for global markets China is the center of world construction demand China is now one of our biggest consumer markets China is the world’s only large, fast- growing market What will China be next?
  3. 3. © 2014 Blue Canyon Partners, Inc. 1. China’s growth slowdown is causing great concern 2. China is risky for individual investors but offers high returns ▫ Safer to invest in US companies that invest in China • General Motors versus FAW, BYD, Geely • Yahoo versus Alibaba ▫ China investments are becoming expensive and still risky for US companies • When growth rates are high, the value of a property is determined by whether current growth rates are maintained. • Environment, rules etc, can change rapidly 3. Today’s big story is overcoming remaining barriers to China’s development ▫ eCommerce ▫ New focus on services, the environment, higher value-added production ▫ Moving west for lower cost Three Themes of US Investing of China 3
  4. 4. © 2014 Blue Canyon Partners, Inc. Assessment of the Alibaba bet 4
  5. 5. © 2014 Blue Canyon Partners, Inc. China’s distribution system was very inefficient compared to the US Products cost more in China than the US, even when produced in China Infrastructure investments enabled fast- delivery services eCommerce completes the cycle by bypassing distribution Why eCommerce Is Such a Big Opportunity 5
  6. 6. © 2014 Blue Canyon Partners, Inc. 6 Chinese Companies Have Unique Innovation Where China has Been and Where China is Headed as a Global Competitor 1. Remarkable change in not much more than 20 years: command and control to largely market-driven 2. Having created a formidable set of Chinese competitors who are large, well-funded and tend to follow a different business model. 3. From 11 companies in the Fortune 500 in 2002 to 100 in 2014 Early Bird Fast Follower Electrolux Haier Ericsson Huawei Caterpillar Zoomlion, XCMG, Sany Apple XiaoMi Amazon Taobao Facebook WeiXing
  7. 7. © 2014 Blue Canyon Partners, Inc. 7

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