Is anyone making money in China?

Related entries: Business Issues, Corporate News, General, Investment

This is a question I am often asked. And the answer is…yes. Not everybody of course. But as previously noted, 61 percent of EU and 75 percent of US companies report profits from their China ventures (not to mention additional profits derived at home from sourcing cheaply there). Chinese companies also make money. The latest round of results bears this out, in rather bullish form:

    China Mobile: Profits up 28 percent.

    China Netcom: Profits up 414 percent.

    Bank of China: Profits up 33 percent.

In addition, there has been strong volume growth for some foreign companies (though the profit position is not clear):

    Dell: Shipments in China to rose by over 40 percent in the first quarter (twice the speed of the market), and have been over US$1 billion for 4 quarters. The growth was put down to new distribution (regional rather than national distributors) and aggressive localization (with a “Made-in-China for China” strategy).

    Cannon: Annual revenues in China were up 38 percent in 2005.

The stories are not all rosy though. For example, Volkswagen, in the challenging auto sector, has felt the pain of strong competition after years of enjoying a leading position. It was reported to have lost 119 million Euros in China last year (following profits of 222 million Euros in 2004).

All this action makes people very excited, and a flurry of US corporate activity has been announced, with Ford and Wal-Mart both making news:

Ford’s Volvo is going to set up production of 10,000 cars a year in China in 2007 at Changan Ford in Chongqing. This is on the back of doubles sales in 2005.

Meanwhile, Wal-Mart (already sourcing more in China than many countries do!) plans to hire 150,000 people over the next five years, and to open 20 new stores this year (to add to the 56 it already has).

Please contact us to discuss the issues you are facing in China, and to see how we can assist.

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2 Responses to “Is anyone making money in China?”

  1. Archive » Foreign Profits Pass US$200 Billion| China Business Blog Says:

    […] Investment, News I recently wrote about companies making money in China (“Is Anyone Making Money in China?”), and listed several local and foreign companies that were d […]

  2. | China Business Blog Says:

    […] We already know that foreign businesses in China are profitable (see here and here), but US companies’ corporate profits were over US$2 billion in the fist half of 2006 – […]

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