So
what does China have to do
with American business, and especially what does China
have to do with the roofing business in the USA? A few things in the news
lately have me thinking.
So
what does China have to do
with American business, and especially what does China
have to do with the roofing business in the USA? A few things in the news
lately have me thinking.
The
recent trip to Asia by our president and his
entourage had a lot of highlights and a couple of lowlights. I am glad he went
to India
to pitch our products and culture there. Such a sales trip can go a long way.
One of the points the pres and many others highly placed in the government and
financial world continue to make is that China must cease the practice of
artificially manipulating the value of its currency. Allowing the RMB to rise
would make American products more competitive in China (and would make my next trip
there more expensive … but that’s another blog).
Not
taking a position on the currency in China except that our leaders’
attention to it reminds us that we compete in a global economy, and that even
in the roofing business we have to keep at least a casual eye on the global
economy, as changes overseas have more of an impact on our local markets than
ever before. And faster than ever before.
Really
interesting this week was China’s
move to restrict domestic and foreign investments in real estate. Foreigners
will only be able to own one piece of property, and Chinese nationals will be
restricted in their property ownership. This is meant to cool the real estate
market to prevent a bubble (like the one that burst here) and will doubtless
cool construction. A cooling in construction activity in China may
portend a cooling of commodity prices here, including commodities such as
steel, copper, and cement. Oil and asphalt could ultimately be affected.
I
think China
is right to cool the growth in construction, but it is a shame in many ways.
The emerging rich in China - the entrepreneurs who have ridden the long wave of
growth there - have very limited access to markets and investing in real estate
was one of very few ways they had of achieving capital appreciation. On the
other end of the economic spectrum the hardworking people in China, such as my good friends
Julia and Peiyu, cannot afford housing as the boom has driven prices up so
high. And a reduction in construction will firm already high prices causing
this trend to continue.
Easy
for me to say, but if the growth in China is going to continue they
will have to advance the economic reforms that have brought them to this point.
If they do, they will continue to be a significant competitor in the world
markets. I am not sure they will be able to do it. The good news for us may be
better pricing and availability of commodities that we will need as our economy
emerges from recession.
Julia
and Peiyu, by the way, are a young couple living in Beijing whom I met several years back when
Julia was working as a translator for an affiliate firm of the China Building
Waterproofing Industry Association. She and Peiyu have set their wedding date
for April. Our infrequent correspondence and my even more infrequent visits to
their country tend to make the news from China just a little more familiar
to me. Julia presently works as a translator for the state-owned television
network, CCTV, and Peiyu is editor of an aviation-industry periodical.
