China is now producing goods and services on par with most everywhere else in the world. And with that transformation has come a new opportunity for investors from the Middle East and North Africa.
For much of the last century, “Made in China” was a term that consumers (many of them in the West) tended to associate with cheaply made goods. But as China’s economy has strengthened in the past decade, so, too, has its manufacturing and technology base.
China is now producing goods and services on par with most everywhere else in the world. And with that transformation has come a new opportunity for investors from the Middle East and North Africa. Savvy MENA investors are looking for promising, high-tech growth companies and China is filled with them.
According to Noel Quinn, Regional Head of Commercial Banking Asia Pacific for HSBC, there are two factors leading to China’s rapid growth in the next few years. First is the emerging wealth within the Chinese marketplace itself. Such growth will create a very attractive consumption market that the rest of the world can supply. Second, the shift in manufacturing to high-value from low-value and to high tech from low tech. “That presents opportunities for the rest of Asia to fill the gap in the lower value manufacturing that used to take place in China,” said Quinn.
Indeed, China is no longer home to the low-tech garment assembly lines that characterized its manufacturing base for much of the last 50 years. Its cities are bustling with commerce as its population moves from a mostly rural base to the highly educated urban cores. Here are several industries that investors should be watching as China’s economy continues to grow:
Iron and Steel. China has long dominated the global market for steel and building materials, as it will well into the 21st century. How? Well, imagine a large, bustling city. It might be Dubai or London or Paris. Now imagine 15 cities that size … all in one country. That scenario fairly accurately portrays the rapid and unprecedented growth of cities in China. With all that building activity comes the need for structural steel and smelting operations. China is also home to most of the world’s scrap steel recycling operations.
Automotive. Depending on the source, China surpassed or is about to surpass North America as the world’s largest car market. Although many of the cars that Chinese drivers enjoy are from foreign companies – America’s Buick remains a favorite – China is steadily building up a homegrown automobile manufacturing industry.
Oil and Petrochemicals. According to China’s Ministry of Land and Resources, in 2009 the country became the world’s fourth largest crude oil producer after Russia, Saudi Arabia, and the United States. Along with growing output from its refineries, China’s booming middle class is increasing the country’s demand for oil as well. China’s chemical industry is varied and boasts large, mostly state-owned conglomerates which dominate the Asian markets.
Information Technology. China is going high-tech. Its leaders are slowly allowing the population to access to the World Wide Web. With that movement comes a booming industry for computer software and hardware manufacturing alike.
Garments & Textiles: The production of much of the high quality fabrics and cloth used by the world’s fashion and home design industries continues to originate in China