As investments shift to China – Where should you invest?
July 27, 2010

As the world economy restructures, the global financial axis tilts East and China cements its place in the world, there is tremendous opportunity for investors to strike gold in the middle kingdom.

According to China’s commerce ministry, in 2010, there were 690,000 registered foreign companies in China, investing more than US$1,000 billion. The Chinese domestic market is expected to grow by Rmb2,000 billion (US$295bn, £193bn, €229bn), outstripping exports. Already buoyant on China, the American Chamber of Commerce in China recently published a report arguing that in the next 30 years the US can achieve “three trillion-dollar goals”: US$1,000 billion for annual US exports to China, US$1,000 billion for revenues of US businesses in China producing goods and services for the Chinese market, and US$1,000 billion for cumulative Chinese FDI in the US.

With the Chinese economy now stabilized, assured of not bursting or overheating, focus is now on where to invest in China. Over the years, the market has matured, the economy has lived through its turbulent twenty years and its time for the economy to consolidate its gains. Realising this, Beijing too is favouring a slowdown,  is encouraging internal development and inclusive growth.

As a follow-up to yesterday’s article on being the right time to invest in China, Inchin Closer lists 3 industries that will succeed in the following years in China. Here’s your investment guide –

  1. Consumer goods: As China focuses on making inroads into rural areas and opening up the domestic market, consumer goods are expected to have a gigantic market.  Already highly successful in urban areas sales of consumer goods rose in 2009 to Rmb12,530 billion, contributing more than half of gross domestic product. With raising rural incomes, a higher disposable income and increase awareness and brand consciousness, consumer goods ranging from creams and mobile phones to cars and apparel are all expected to witness a massive jump in sales.
  2. Environmental goods and services – Go Green is what China’s  hip urban, fast food chowing generation has been told. They see the smog hang overhead, cloud their sunny days and spread nasty infections and they can’t stand it anymore. The olympics, where Beijing saw bright blue skies for a change made the Chinese realise the impact they were having on their own environment. Led by massive clean-up campaigns and even larger budgets, Beijing is making sure the green message is heard loud and clear. Being tagged the world’s largest energy consumer further seems to have strengthened China’s resolve to protect their environment. As change leaders, investments are being made not only in R&D, but also in encouraging new inventions at the student level.  Green cars, green energy, health foods, health clubs and spas will be in high demand in the future.
  3. High-end manufacturing – Beijing has been intent on moving up the value chain. strategically working on brushing off the cheap goods manufacturer tag, China is keen to become a high-end manufacturer. Since the past few years, Chinese universities have been honing the right talent, salaries have risen 15 percent year on year and foreign companies that promise to bring in new, cutting edge technologies are given the red carpet treatment. The signs are clear, China no longer wants to be a low-cost destination and they are slowing but surely changing their course. Products ranging from machinery, to auto parts,  speciality systems to complex components are all manufactured in China now.

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