6 Reasons Why Chinese Companies Remain A Huge Threat To The Rest Of The World

china factory manufacturing

Photo: Feng Li/Getty Images

Much has been made about how Chinese companies have been losing their global competitive edge due to rising labour costs and a shrinking workforce.However, Credit Suisse strategist Mujtaba Rana argues that it’s still too early for other companies to lower their guards.

From his note to clients today:

There are six reasons why we are still concerned about the competitive threat presented by Chinese corporates to remain in certain sectors: (1) slower domestic growth (we expect 7.7% this year down from 9.2% last year), (2) excess capacity in China (investment to GDP at 46% last year has meant rapid capacity growth), (3) momentum in the trade numbers, (4) an undervalued exchange rate (35% undervalued on PPP measures), (5) a focus on growth rather than profitability, and thus a lower operating margin structure (6) government targets within the 12th 5-year plan that target the development of certain industries.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.

Tagged In

economy moneygame-us