Tractus Executive Director Presents on Opportunities and Risks for Corporates Investing in China and India at the 2017 Annual Site Selectors Guild conference
While risks are ever present as globalization hits a major speedbump, opportunities for investment in China and India abound for companies that understand the trends driving each of these economies.
Tucson, Arizona USA 26 March 2017 – Tractus Asia Limited’s Executive Director and member of the Site Selectors Guild, Dennis Meseroll, participated in a panel discussion on Opportunities and Risks in Global Investment – the Corporate Perspective, at the Site Selectors Guild’s annual conference in Tucson, Arizona, USA.
During the conference’s open plenary session, Mr. Meseroll participated in a panel providing an overview of the key opportunities and risks for corporations considering investing in China and India. Mr. Meseroll noted that, “In China, the forces driving investment opportunities are the 3 “Cs” Consumer demand, rising Costs and Compromised assets.” China has the world’s largest middle class population at over 110 million people. They are demanding high quality food products, retail and leisure experiences and healthcare services. In the agro-food sector in particular, these trends create investment opportunities for foreign companies to take advantage of their technological and brand strength in the areas of food production, supply chain traceability, safety and quality to combine imports of traceable raw materials with domestic production.
“India is seeing a surge of interest in investment as it emerges from China’s long economic shadow”, said Meseroll. The Indian economy is now growing faster than China and received the largest share of FDI in the world, surpassing China for the first time ever in 2016. Improved market access brought upon by Prime Minister Narendra Modi’s on-going deregulation of the economy, low labor costs for services and manufacturing and availability of English speaking talent, are some of the key drivers of India’s investment attractiveness.
With opportunities there are always risks. “In China, government and private sector debt has risen to levels that present significant risks to stability and much of this debt is financed through the shadow banking system”, said Meseroll. While some economists believe that given China’s growth rate, current stage of development and ability to strictly control capital flows, this is not an unsustainable level. Others argue, including Tractus, that because the entire financial system is so opaque and the quality of information poor, the risk of serious impacts on the economy are high. Mr. Meseroll also noted that, “. . . as the central government tries to engineer an economic transformation to a consumer driven economy, improve environmental compliance and continue to urbanize the world’s largest population and second largest economy, it will continue to change laws and regulations at a rapid pace that play havoc with corporate budgets and operational plans”.
The Indian economy faces similar financial risks brought on by government and private sector borrowing, although in India more of this debt is denominated in foreign currency than in China. “For India to continue to be able to absorb now record levels of FDI as well as domestic investment the government will need to push forward with some ambitious projects to improve India’s notoriously poor physical infrastructure: roads, rail, airports, ports and mass transit. There is a high risk that needed investments will not be made on-time or of sufficient quality to meet India’s needs”, said Meseroll.
Other panelists addressed opportunities for investment in Central and Latin America, Central and Eastern Europe, Africa and Southeast Asia.
Tractus Asia Limited (www.tractus-asia.com) is an Asia-based foreign direct investment strategy and execution advisory firm with offices in Shanghai, China; Chennai, India; Jakarta, Indonesia; Yangon, Myanmar; Singapore; Bangkok, Thailand and Ho Chi Minh City, Vietnam. Tractus advises and assists corporations develop effective market entry strategies and assists them throughout the execution process, including site selection, real estate transactions and investment incentives negotiations to corporate establishment and start-up management. For global economic development organizations, Tractus provides export promotion and investment attraction representation services throughout Asia.
The Site Selectors Guild (www.siteselectorsguild.com) is the only association of the world’s foremost professional site selection consultants. Guild members provide location strategy to corporations across the globe and for every industry, sector, and function. Founded in 2010, the Site Selectors Guild is dedicated to advancing the profession of international corporate site selection by promoting integrity, objectivity, and professional development. Members are peer-nominated, vetted, and must demonstrate a significant amount of location advisory experience. Guild Membership is the highest standard in the site selection industry.