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A Compelling Investment Opportunity:
China's "3-Point Effect"
There are three independent factors that make investing
in China a compelling opportunity right now.
- Emergence of an Equity Market
- China absorbed some US$213 billion
in foreign direct investments from 1996 to 2000, which greatly
exceeded the amount of any other developing country.
- The private sector and individuals
in China have now amassed close to US$1 trillion in liquid
assets.
- The policy makers in China have started
to realize that in order to compete in a market driven economy,
privatization of SOEs must occur. This will create a substantial
market to support IPOs.
Entry into WTO
- Will open the door for a more regulated
business environment for foreigners entering China.
- More goods and services from China
will flow into other countries.
- China will undoubtedly play a major
role in the future of world trade.
Rapid Adoption & High Demand of Technologies
- The PC, Internet and Wireless revolution that took
place in the United States over a span of 25 years is happening
concurrently in China today.
PC & IT
- Revenue in the China IT market will
exceed US$30 billion by 2004 (Source: IDC). Furthermore, the
Linux platform is the OS of choice by the Chinese government.
Internet
- The number of Internet users in China
is growing at a rate of 54 percent yearly and China will be
#2 in the world behind the United States by 2001. Yet, as
the U.S. Internet user penetration rate approaches 60 percent,
China’s penetration rate will only be 10 percent by 2004.
Wireless
- There were 70 million mobile phone
subscribers in China as of September 2000. According to IDC,
the number of mobile users in China will exceed 200 million
by 2004, yet market penetration will only be less than 16
percent. Comparatively, there will be 150 million mobile phone
subscribers in the United States and market penetration will
exceed 50 percent by 2002.
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