January 13, 2006

Parsing China's Trade Surplus

Over the last two months, due to client projects, I've focused some of the content of this site to opportunities in China. I'm always on the lookout for value added information that relates to my initiatives. So I was pleased when Business Week just published an insightful article called Parsing China's Trade Surplus.

Here's a quote from that article:

"About 55% of all exports are from foreign-owned companies or joint ventures. That share has been growing about 1 or 2 percentage points annually in recent years but may be stabilizing now. It looks like foreign capital coming into China in 2005 is going to be down slightly -- the first time in many years that it will have fallen. That may mean the share of foreign-produced goods won't grow as fast as it has in the past.

But even if you take out all the foreign-owned exporters, Chinese domestic companies have been growing their exports. Their share has been declining, but many companies are exporting more and more. And a lot of people don't recognize that about half of all the goods produced by foreign companies in China are sold in China. The auto sector is the best example -- 95% of the autos sold there are made by foreign companies or JVs."

This would indicate that despite the high volume of exports leaving China, that a domestic market exists. Perhaps North American companies could serve these markets via partnerships with domestic Chinese companies.

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