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5 White Paper on the Business Environment in China
Still, there appeared widespread optimism about the Chi- duction at its excavator-making plant in eastern China” and
nese government’s willingness and ability to enact further eco- “Shares in China heavyweight Sany Heavy Industry, whose
nomic stimulus to aid the county’s sagging economy, and in second-quarter pro t skidded 28 percent, are still down more
China stimulus is usually heavy on xed assets—just the thing than 20 percent this year despite [the 10 percent surge follow-
to improve the outlook of machinery manufacturers. ing the stimulus announcement].”11
In October 2012 Sany Heavy Industry’s president Xiang In the words of GK Dragonomics managing director Ar-
Wenbo predicted a “golden age” of development in 2013, thur Kroeber, “People had underestimated the impact of the
while Caterpillar also predicted increased stimulus spending slowdown on certain sectors, particularly construction ma-
in China over the course of the coming year and both Swiss chinery [and that] if you are investing there it has been really
oil and gas infrastructure supplier ABB and French rm Sch- painful, the bottom has fallen out.”11
neider reported that orders from China for machinery had
stabilized in late 2012. Notably, however, Schnieder’s nance Supplementing domestic stimulus as an engine for ma-
chief cautioned that “We do not know when it will come. I’m chinery production and imports, Chinese investment promo-
certainly not pointing to clear evidence that the recovery for tion authorities are also actively courting foreign investment
China is for the beginning of 2013.”10 that carries with it technological capabilities; MOFCOM sta-
tistics indicated that there were 1675 new foreign investment
Roughly a week later, the National Development and Re- projects established over 2009.12
form Commission “announced approvals for projects that
analysts estimate total more than 1 trillion yuan ($157 bil- Mergers and Acquisitions are another potential source of
lion), roughly a quarter of the total size of the massive stimu- technology that can be used to cut national reliance on im-
lus package unleashed in response to the global nancial crisis ports for critical machinery, and the Central Government is
in 2008.”11 said to be “pushing forward” such activities, presumably by
making the approval process or other regulatory requirements
Perhaps signi cant was the timing of the announcement, more streamlined.13
which was released “just before a deluge of Chinese economic
data due [two days later] that could con rm investors’ worst Machinery manufacturing, and especially heavy- and
fears that a downswing in the world’s second-biggest economy construction-related machinery manufacturing, appears to
has stretched into a seventh straight quarter” and scant weeks be more geographically diversi ed in China than many other
before the o cial departure of Messrs. Hu and Wen that had industries, with major players in inland provinces, and as far
been scheduled for November.11 north as Harbin—compared with the east-and-southern-
coast- rst development model that has guided the growth of
According to analysts speaking with Reuters, this likely many other sectors.
signi ed a more pro-active approach to the economy than
had previously been taken by Central government authorities Opposite heavy machinery, consumer electronics also
in the recent past.11 play an important role in China’s economy. Acer CEO
Gianfranco Lanci was quoted by China Daily in December
Whatever the cause, many of the same companies who had 2010 as predicting that the mainland market would become
su ered earlier in 2012 appeared to enjoy immediate gains the world’s largest within three years. e same article cited a
in stock price, with “Shanghai-listed Sany Heavy Industry, projection by research rm IDC that the market would grow
Shenzhen-listed Zoomlion and Taiyuan Heavy all surged 10 “21 percent this year from last year’s 54 million units.”14
percent. Japanese construction equipment makers also got a
boost, with shares of Komatsu Ltd rising 6.6 percent in To- is growth is not new. Laptop sales alone in China
kyo and Hitachi Construction Machinery Co Ltd up 4.7 reportedly increased by nearly 35 percent year-on-year in
percent.” Similarly “Caterpillar Inc, the world’s largest heavy 2008.15 In 2009, as subsidies for PCs under the “Appliances
equipment maker, rose 4.1 percent.”11 to the Countryside” program became active, rural sales of
personal computers (both desktop and portable models,
Despite optimism riding on the back of the Central gov- presumably) surpassed 792,000 units between January and
ernment’s announcement, the sector’s outlook is still some- October16. Domestic manufacturers Lenovo, Haier, Founder
what less than bright. and Tsinghua Tongfang together were attributed 97.7 percent
of the total sales under the subsidy program,17 and according
According to Reuters, “Foreign and local machinery to an article in China Daily an increase in the maximum price
makers in China, the world’s largest construction market, are for a product to be accepted into the program from 3,500 to
struggling as the slowdown saps investment growth to 10-year 4,000 would further increase sales by giving the more a uent
lows. Falling pro ts have spurred rms to cut production or farmers opportunities to purchase higher-end models while
seek new clients.”11 still bene tting from the subsidy.16
As a result, Caterpillar began to export Chinese-made ma- Business-oriented technology companies such as Cisco,
chinery to the Middle East and Africa, Hitachi “slashed pro-
136
Still, there appeared widespread optimism about the Chi- duction at its excavator-making plant in eastern China” and
nese government’s willingness and ability to enact further eco- “Shares in China heavyweight Sany Heavy Industry, whose
nomic stimulus to aid the county’s sagging economy, and in second-quarter pro t skidded 28 percent, are still down more
China stimulus is usually heavy on xed assets—just the thing than 20 percent this year despite [the 10 percent surge follow-
to improve the outlook of machinery manufacturers. ing the stimulus announcement].”11
In October 2012 Sany Heavy Industry’s president Xiang In the words of GK Dragonomics managing director Ar-
Wenbo predicted a “golden age” of development in 2013, thur Kroeber, “People had underestimated the impact of the
while Caterpillar also predicted increased stimulus spending slowdown on certain sectors, particularly construction ma-
in China over the course of the coming year and both Swiss chinery [and that] if you are investing there it has been really
oil and gas infrastructure supplier ABB and French rm Sch- painful, the bottom has fallen out.”11
neider reported that orders from China for machinery had
stabilized in late 2012. Notably, however, Schnieder’s nance Supplementing domestic stimulus as an engine for ma-
chief cautioned that “We do not know when it will come. I’m chinery production and imports, Chinese investment promo-
certainly not pointing to clear evidence that the recovery for tion authorities are also actively courting foreign investment
China is for the beginning of 2013.”10 that carries with it technological capabilities; MOFCOM sta-
tistics indicated that there were 1675 new foreign investment
Roughly a week later, the National Development and Re- projects established over 2009.12
form Commission “announced approvals for projects that
analysts estimate total more than 1 trillion yuan ($157 bil- Mergers and Acquisitions are another potential source of
lion), roughly a quarter of the total size of the massive stimu- technology that can be used to cut national reliance on im-
lus package unleashed in response to the global nancial crisis ports for critical machinery, and the Central Government is
in 2008.”11 said to be “pushing forward” such activities, presumably by
making the approval process or other regulatory requirements
Perhaps signi cant was the timing of the announcement, more streamlined.13
which was released “just before a deluge of Chinese economic
data due [two days later] that could con rm investors’ worst Machinery manufacturing, and especially heavy- and
fears that a downswing in the world’s second-biggest economy construction-related machinery manufacturing, appears to
has stretched into a seventh straight quarter” and scant weeks be more geographically diversi ed in China than many other
before the o cial departure of Messrs. Hu and Wen that had industries, with major players in inland provinces, and as far
been scheduled for November.11 north as Harbin—compared with the east-and-southern-
coast- rst development model that has guided the growth of
According to analysts speaking with Reuters, this likely many other sectors.
signi ed a more pro-active approach to the economy than
had previously been taken by Central government authorities Opposite heavy machinery, consumer electronics also
in the recent past.11 play an important role in China’s economy. Acer CEO
Gianfranco Lanci was quoted by China Daily in December
Whatever the cause, many of the same companies who had 2010 as predicting that the mainland market would become
su ered earlier in 2012 appeared to enjoy immediate gains the world’s largest within three years. e same article cited a
in stock price, with “Shanghai-listed Sany Heavy Industry, projection by research rm IDC that the market would grow
Shenzhen-listed Zoomlion and Taiyuan Heavy all surged 10 “21 percent this year from last year’s 54 million units.”14
percent. Japanese construction equipment makers also got a
boost, with shares of Komatsu Ltd rising 6.6 percent in To- is growth is not new. Laptop sales alone in China
kyo and Hitachi Construction Machinery Co Ltd up 4.7 reportedly increased by nearly 35 percent year-on-year in
percent.” Similarly “Caterpillar Inc, the world’s largest heavy 2008.15 In 2009, as subsidies for PCs under the “Appliances
equipment maker, rose 4.1 percent.”11 to the Countryside” program became active, rural sales of
personal computers (both desktop and portable models,
Despite optimism riding on the back of the Central gov- presumably) surpassed 792,000 units between January and
ernment’s announcement, the sector’s outlook is still some- October16. Domestic manufacturers Lenovo, Haier, Founder
what less than bright. and Tsinghua Tongfang together were attributed 97.7 percent
of the total sales under the subsidy program,17 and according
According to Reuters, “Foreign and local machinery to an article in China Daily an increase in the maximum price
makers in China, the world’s largest construction market, are for a product to be accepted into the program from 3,500 to
struggling as the slowdown saps investment growth to 10-year 4,000 would further increase sales by giving the more a uent
lows. Falling pro ts have spurred rms to cut production or farmers opportunities to purchase higher-end models while
seek new clients.”11 still bene tting from the subsidy.16
As a result, Caterpillar began to export Chinese-made ma- Business-oriented technology companies such as Cisco,
chinery to the Middle East and Africa, Hitachi “slashed pro-
136
