Forum Archive Index - May 2000

[richard hermans <r.m.hermans@xtra.co.nz>]

Mike Hudson wrote:
> 
> Brian wrote
> 
> "Future progress will revolve around the China finished leather operations
> which must have great potential for the future. It is interesting to learn
> that the factories occupy an area equivalent to the size of two football
> pitches..........I believe the key to this enterprise is the fact that in
> the last 2 years they have been setting up their Chinese operations, at
> considerable cost, and this investment is starting to show returns - revenue
> in '99 increased 43% to $63 mill. with a 1M loss before unallocated expenses
> down from 11.6M in '98"
> 
> A lot of money goes into China and very little comes out, ask Fletchers,
> Lion Nathan and a host US and European companies who have had their fingers
> burned in this market. Lion Nathan are still hanging in there but are still
> losing money. The problem according to one of the Fletcher executives I was
> talking to the other day  is that the cultural differences are so great as
> to almost preclude doing business there. For example a contract means
> nothing, there being no legal remedies for a breach. Western business
> practices and ethics (such as they are) do not apply. The locals regard
> Westerners as easy pickings. The situation was such that in the end
> Fletchers walled away from a $50m investment. This may well be a jaundiced
> view and may hide mismanagement on Fletchers part but I would be very wary
> of investment in China until profits are turned into hard currency and
> repatriated.
> 
> Cheers
> Mike H
> 
> Mike
> 
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Mike,
This is interesting,isnt Tower toying with the idea of moving into the
Chinese mkt??? or maybe its somewhere els?.
Also have enjoyed Chris & Dereks points on the FRO:BCH comparrisons nice
to think someone is onto it behind the scenes ,with the time. Thanks
Margie

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