Saturday, February 12, 2005

Henry Blodget's Slate column: The Real "Great Leap Forward"

Henry Blodget (need a hint? Merrill Lynch, Amazon $400) writes a series ("go east, young man") on the China gold rush for Slate Magazine

The Real "Great Leap Forward"
By Henry Blodget

"According to China, Inc., a (great) new book by Ted Fishman, China now draws more foreign investment capital than any other country ($53 billion in 2003). The half-trillion foreign dollars invested in China since 1979 have built an estimated one-third of the country's current production capacity. A large chunk of this money, interestingly, has come from Chinese expatriates, some of whom fled the country during the Communist takeover."

"... but China's population is so huge that even a fraction of it represents an enormous market. For example, according to the Harvard Business Review, China is now adding 4 million to 6 million new cell phone subscribers per month. This statistic is mind-boggling. It means that, every year, China adds a new cell phone market about the size of Germany's—and Germany is the third-largest cell phone market in the world."

"Is the China business opportunity real enough that the next generation of gold-seekers should "go East"? Provided one construes "go East" to mean "learn Mandarin, develop guanxi, and be prepared to weather multiple economic and political storms over a multi-decade career," the preliminary answer is "Yes." I say "preliminary" because the next books on my reading list have titles like The Coming China Collapse." Read more