Market positions held by European companies in China are too small for the firms to fully benefit from strong economic growth forecast there this year and next, analysts say.
China is emerging as a major locomotive for global growth, with its economy tipped to expand by a robust 8 percent this year and slightly better next year.
The US economy remains fragile meanwhile, and that of the EU even more uncertain.
But "for the time being, European businesses' part in Chinese economic activity is very small. It is still a bit early for growth in the region to have an impact" on their results, says Jean-Noel Vieille, research director at the Aurel Leven brokerage.
Among the French firms that have a foothold in the Chinese market are the telecommunications equipment company Wavecom and smart-card makers Oberthur and Gemplus.
But aside from these "very particular cases ... the US growth on which we are counting is a much stronger factor" in judging short-term prospects for European firms, he adds.
China's rise among the global economic giants will nonetheless make itself felt soon.
"China's passage from a production zone to a consumer country will help provide fuel for the global economy," says Alain Bokobza, strategy head at Societe Generale Equity Research.
Chinese consumers will not see their buying power increase much however as long as the yuan remains undervalued owing to its indexation to the dollar.
Great disparities also exist between economically active coastal areas and underdeveloped interior regions.
"While there is definitely a new dawn in China, per capita gross domestic product remains very low," notes Huges de Montvalon, director of economic studies at Oddo Securities.
Some even insist that China is dangerous for certain western companies.
"Most of those have only one or two big clients, and when problems arise they suffer greatly," says Vieille of Aurel Leven.
Wavecom, which makes 70 percent of its sales in China, has been subject to the fortunes of its clients there.
A profit warning early this year linked to increased competition and an overdue drawdown of Chinese stocks pushed the company's shares down by 45 percent in less than a month.
On the other hand, after announcing a contract with Legend, the Chinese maker of computers and mobile telephones, Wavecom shares surged more than 22 percent over an equivalent time span.
Another pitfall is that "China is a country where the banking system is full of bad debts," and its market could prove disappointing next year, warns Bokobza of Societe Generale.
Some brokers are nonetheless advising clients to invest now in issues that will benefit from growth in the region, especially given an anticipated boost from a nascent Japanese rebound.
"European stock markets would be well advised to focus more on European companies present in Asia and Japan," say Francois-Xavier Chevallier and Stephane Malvert of CIC Securities in a research note.
Their brokerage singles out technology, industrial and distribution issues in particular.
Among those poised to profit from the Asian recovery according to CIC are Air Liquide, Alcatel, AXA, BMW, Bouygues, Carrefour, Casino, Christian Dior, Danone, Highwave Optical, HSBC, Lafarge, LVMH, Peugeot, Renault-Nissan, Saint-Gobain, Schneider, Siemens and Volkswagen.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
While China’s leaders use their economic and political might to fight US President Donald Trump’s trade war “to the end,” its army of social media soldiers are embarking on a more humorous campaign online. Trump’s tariff blitz has seen Washington and Beijing impose eye-watering duties on imports from the other, fanning a standoff between the economic superpowers that has sparked global recession fears and sent markets into a tailspin. Trump says his policy is a response to years of being “ripped off” by other countries and aims to bring manufacturing to the US, forcing companies to employ US workers. However, China’s online warriors
RSS