US companies adjust to a more mature Chinese economy

Nancy Marshall-Genzer Jul 23, 2015
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US companies adjust to a more mature Chinese economy

Nancy Marshall-Genzer Jul 23, 2015
HTML EMBED:
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It’s not easy doing business in China these days.  Stocks have fallen — in some cases by 30 percent — and property values are down.  

“You know, all American companies are getting whip sawed in China to a certain extent,” says Barry Naughton, a professor at the School of Global Policy and Strategy at the University of California, San Diego.

Naughton says U.S. companies are having to adapt to a more mature Chinese economy that is slowing down. But American businesses are reacting differently; some Wall Street investors are leaving China altogether.

“I see a big differentiation in views between portfolio investors and then the multinational companies,” says  Nicholas Consonery, director of the Asia practice at Eurasia Group. “There tends to be a much more negative sentiment in Wall Street than in the corporate world today.”

Consonery says Wall Street is used to double-digit growth in the Chinese economy. Now he figures it’s growing about 5 percent, slightly less than official growth statistics from the Chinese government. Still, that’s nothing to sneeze at. U.S. companies just have to get used to a more mature, slower- growing Chinese economy.

“In the past, the biggest restraint on growth was maybe not having the capacity,” says John Frisbie, president of the U.S.-China Business Council. “For many companies, that era is behind them, and now it’s more like you would see in other markets around the globe.”

Frisbie says consumer demand in China is holding up, so companies like Starbucks are doing OK. But things are tougher if you’re U.S. business catering to, say, the fickle housing market.

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