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.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.

Tagged In

economy moneygame-us