China Challenges - Andrew Baxter

-

 

For years  chatter has persisted about China’s growth threatening to take them to  the top of the world order. More recently however, China has been facing  some challenges affecting the size of their economy and just what type  of economy they may be set to become.

The Last 15 Years in China

Host Andrew Baxter equates  China’s last 15 years to something similar to an internal industrial  revolution. A shift away from a historically agriculture based economy  to a major manufacturing and technological centre of the world has seen  the Chinese economy boom. Though the agriculture and primary production  remains strong in China, Chinese citizens have moved into more urban  areas in their droves with such major industry coming into the country.  Cheap labour has historically been a major drawcard for competitive  businesses looking to manufacture their goods more cheaply.

China   also has not adopted a floating exchange rate, keeping it fixed for the most part which allows for some great stability which enables them to   take on tasks that other countries can not. Another competitive edge has  come from the fact that China has been a developing nation throughout this period, not falling under much scrutiny for its carbon emissions   over the years.

The Shift Away From China

As  China has become larger and larger, some of what used to be so   attractive about it for business appears to have perhaps fallen by the   wayside. Host Andrew Baxter notes  that there has been a recent trend of major US companies moving their  operations out of China for a range of different reasons. Once upon a  time the UK was the manufacturing capital of the world, attracting lots  of foreign business due to a surplus of natural resources combined with  cheap labour. As things changed however and conditions in the UK for  cheap manufacturing began to dim, we saw a shift to other nations where  those conditions remained available. This may be similar to what we are  seeing now with China, with many businesses moving out of China and into  neighbouring developing nations in Asia.

China’c  continued 0 Covid infection policy may have contributed to this, with regular lockdowns in the manufacturing centre of the world causing a lot  of supply chain disruptions around the world. Even Apple, which once  produced the bulk of their products in China, have moved production out  of the country.

The Biggest Risks for Manufacturing in China

As  a complex and multifaceted issue, there are an array of different risks  in play for those that are looking to take their manufacturing business  into China. Host Andrew Baxter sees  2 major ones – government policy and the potential for corporate  espionage. The government policy in particular is a major one at the  moment. The risk of having your operations shut down due to government  policy around that no Covid policy can really cause mayhem for a  business and if that is avoidable in other countries, it would certainly  be quite attractive. Although they may have to pay a little more, major  companies are accepting the slightly higher costs in other countries  for the sake of assurance that their supply chains won’t be shut down at  any given moment.

Where Can We Find Opportunities?

As is the case when any major issue arises – there are opportunities that present themselves. Host Andrew Baxter notes that the largest threats to businesses  around the world at the moment is the difficulty associated with   transporting goods across seas and instability stemming from the work   force and government policy. US manufacturers have the opportunity to   trade very heavily with Canada and Mexico in large amounts under NAFTA   which ensures some pretty attractive conditions. As a US company, moving  operations into Mexico where labour is cheaper, goods can be   transported by road or rail, and where time zones are even the same may lead to some big US names moving into Mexico as a long-term strategic   move. As a primary producer of agricultural goods, major companies   moving manufacturing operations may bring some opportunity about for up and coming Mexican companies.

Comments

Post a Comment

Popular posts from this blog

Navigating the Debt Ceiling: Andrew Baxter’s Call for Principled Leadership

-
Image
  In the midst of complex economic discussions and political wrangling, one voice emerges with clarity and conviction: Andrew Baxter. In his recent insights into the intricacies of the debt ceiling debate, Baxter sheds light on the delicate dance that policymakers must perform to ensure economic stability. Raising the debt ceiling is not merely a matter of bureaucratic procedure; it is a fundamental aspect of fiscal responsibility and governance. As lawmakers grapple with this pivotal issue, Baxter emphasizes the need for principled leadership, bipartisan cooperation, and a steadfast commitment to responsible governance. At the heart of Baxter’s message is the call to rise above partisan divides. In a time when political polarization threatens to undermine progress, Baxter advocates for a unified approach to addressing economic challenges. By transcending political differences and embracing fiscal prudence, policymakers can navigate the complexities of the d...
Read more

Income Investing and Dividend Strategies – Andrew Baxter

-
In the world of investing, income investing and dividend strategies have gained significant attention and popularity among investors seeking to generate consistent returns and build wealth over the long term. These approaches focus on capitalizing on the power of cash flow generated by investments, particularly through dividends, to create a steady stream of income. In this article, we will delve into the concept of income investing, explore dividend strategies, and discuss their benefits and considerations. Income investing revolves around the idea of generating a regular income from investments, such as stocks, bonds, real estate investment trusts (REITs), and dividend-paying funds. The primary objective is to seek out assets that offer reliable and attractive cash flow, allowing investors to supplement their income or accumulate wealth over time. One of the key components of income investing is dividends. Dividends are a distribution of a company’s profits to it...
Read more

Five Things You Probably Didn’t Know About The Stock Market

-
The stock market is a massive puzzle that is changing every day. Nobody knows everything about the stock market, however we have a few things for you that you may not know. Join us this week as we dive into 5 things you may not know about the stock market: Money is Never Lost in the Market For many who have seen their accounts become smaller and smaller over time, this one may be tough to believe. The truth is however, money never simply disappears on the stock market, it merely changes hands. Host Andrew Baxter points out that where there are buyers, there are sellers meaning there is always someone else on the opposite side of any trade you take. What is happening is merely a transfer of ownership between people who have different opinions on where the price is going to go where someone is wrong and someone is right. The majority tend to find themselves on the losing side with a small percentage of people occupying the winning side. When frustrated with the stock marke...
Read more