Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
?
EE Times-Asia > Manufacturing/Packaging
?
?
Manufacturing/Packaging??

China stock market slide: Impact on electronics industry

Posted: 07 Aug 2015 ?? ?Print Version ?Bookmark and Share

Keywords:Apple? electronics industry? stock market?

It is virtually impossible for a foreign entity to own a Chinese company. Local control is required and often that means a controlling interest by one of those state-controlled entities. With China's demonstrated ability to place controls on corporations at will, as seen in the last few days, foreign companies must be asking if their investments are viable.

The balance of trade is a major issue. It's clear that China operates more as a single huge corporation than as a free market. Imports are minute in comparison to exports. The US exports just $120M annually to China and most of those intermodal containers from China end up in US scrapyards.

The trade issue points to another of China's storms. Labour costs have risen sharply over the last five years, and the economics of "Made in China" are being called into question by even major Chinese companies. Taiwan firm Foxconn, the employer in China, is discussing a move of 1.2 million jobs to India over the next few years. This might be a political ploy to leverage government concessions or to appease Apple, but it highlights the cost issues. The social impact of this and other companies leaving would be substantial

Meanwhile, the U.S. government has to decide if it will intervene in a rumoured purchase of the sole US DRAM manufacturer, Micron, by a Chinese state-owned conglomerate. This may be the strategic straw that fractures the camel's back. Clearly, the open market dream of a "New Open China" is mostly fictional, while the bargain is one-sided and with a nation beginning to rattle the sabre a bit.

Does this mean more on-shoring back to the U.S. and EU? That seems like a possible strategy. Not only does it create a more agile US market, it brings jobs back to cities, potentially returning the US economy to a level last seen before GW Bush. The economics for on-shoring are much better than in years, and the turmoil in China creates a time to review and decide.

China's top leaders appear to be a pretty competent bunch and they may well succeed where others have failed, but these are definitely "interesting times"!

- Jim O'Reilly
??EBN


?First Page?Previous Page 1???2



Article Comments - China stock market slide: Impact on ...
Comments:??
*? You can enter [0] more charecters.
*Verify code:
?
?
Webinars

Seminars

Visit Asia Webinars to learn about the latest in technology and get practical design tips.

?
?
Back to Top