Forum Archive Index - July 2000

["Warner Lamb" <cloud9@i4free.co.nz>]

I wouldn't be too quick to discount the political risks of doing business in
China or many of the tigers.Those seeking high returns/rewards have found
out many times you need to apply big risk factors over there.While the
outstanding gains in % terms of growth and GDP look very attractive, many
people forget that pure investment can be the big driver of these
"outstanding figures", ie A lot of money going in but not alot coming
out....just look to the Asian crisis of not so long ago.This is the biggest
single driver of growth and is called the "catch-up" effect/theory by
economists.It is sometimes misleading when quoted in % terms rather than GDP
per capita.(its easier for a growing economy with a per capita income of say
$1 to grow by $1 and say look 100% growth but more difficult for a mature
economy with a $10 per capita income who grows the same $1, look...only 10%)
So while not an excuse totally for AQL,as his words show,they seem a little
surprised! by how hard it is to work in these type of markets.Why do people
have such short memories?Too many $$$$ signs blurring their vision.
As for ITC and the likes of Exo-net, I have read that the GST saga in
Australia will be the best market for those products in the near term so why
does everyone have Chinaitis.Sure one day,huge market but when I was there a
couple of years ago...There were still people living in caves..Im not
kidding..caves(how many cavedwellers need software?)And the other thing that
comes to mind IF a particular software gets remotely big in China is piracy,
not a small problem.I would say BIG risk discounting is called for.
I can obviously understand where the likes of Mc Ewen will be coming from.
Even companies as massive as Qualcomm are not immune from the politital woes
of China and Sth Korea etc....
I would say any company with investment in China should be weighed
carefully..I was in Japan when China casually lobbed a couple of missiles
near Taiwan for a "test"...BE Careful.
Warner




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