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Damato of the Day Is ... "China in the News - Building American Business"

By Rick Damato
November 23, 2010
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.

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Rick damato update
Rick Damato is the editorial director of Roofing Contractor. He has held a number of posts in the roofing industry since 1974 and has contributed to the magazine since its inception in 1981. He can be reached at 770-331-7858 or on Twitter @RoofsByRick.
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