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Fairfield, IA, United States, 2010/09/18 - Asia: Facts & Fiction - There is a lot of noise in the media these days about India and China. As expected, the hype is exaggerated. But for companies in Australia, Europe, and America, there is a real cause for concern.
To get a sense of what is happening, consider just the foreign acquisitions by Chinese and Indian companies.
• China is ranked #2 in acquiring UK companies;
• That’s a $22 billion expenditure by Chinese companies;
• Acquisitions: Oil & Gas, Mining, Media, and Automotive.
Diverting Production to China
When state-owned enterprises such as CNOOC (China’s largest oil & gas production company) take over a foreign oil company:
• The purpose is to divert production to China;
• This reduces the available supply to the rest of the world;
• Your cost for these commodities goes up;
• Along with the corresponding supply chain costs.
Indian Industrial Giants Seeking New Acquisitions
Most major industrial giants in India are looking out for acquisitions in Europe and North America as the economic slowdown continues to make these companies cheaper.
Competitors with 25-65% Lower Operating Costs
When acquisitions are executed, Asian companies get two significant benefits.
First, by using Asian resources, they can reduce their costs anywhere from 25% to 65% depending on the operational areas targeted.
New! Competitive Products Produced at a Lower Cost
Second, they gain direct access to European and American markets.
• They get an inside view into how these markets work;
• Who the competitors are, and what their customers need;
• New products and services can be developed or acquired at a fraction of the cost in Asia;
• European and American products can also be offered to their existing Asian client base;
• Giving the acquired company a more stable customer base;
Access to Abundant Funding and Operational Excellence
If you compete with these companies, you are dealing with a group that has:
• Succeeded in the most competitive markets already;
• Has the backing of abundant funds in all currencies;
• Direct access to operational excellence through world-class facilities;
• Have operating costs dramatically lower than yours.
Stronger US Footing In Global Economy
If you look outside the world of acquisitions, you see more and more sophisticated outsourcing, global collaborations, and specific joint ventures designed to give local businesses (in Australia, Europe, and America) a stronger footing in the rapidly-changing global economy.
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