China

Off to China…Again!

Reprinted from our sister blog at www.reversemergerblog.com:

I just arrived in China for my third visit this year. I remain a strong believer in the enormous opportunity for successful, growing Chinese companies to access capital and seek a path to liquidity with a trading stock in the US. Obviously I’m not the only one. Most reverse merger players have either been to China or set up shop there. Some go nearly every month. To show how things have changed, the second edition of my book, coming out in December (you can pre-order on Amazon now- hint hint), has a full chapter on China, whereas the first edition from 2006 only described it somewhat briefly as a relatively new but growing trend.

This trip I am making several speeches and visiting with clients and other contacts. It is definitely worth the grueling trip. I have met some talented, dedicated, goal-oriented entrepreneurs and dealmakers who are truly incredible and I enjoy working and cooperating with them. And the friendships developed are a very nice secondary benefit. It is an amazing and unique place.

I am also hearing some serious talk about other countries beginning to push deals to go public in the US, and I expect that in the coming months we will all see that begin to develop. The world gets smaller and smaller. See you when I’m back - I’ll try to write from there but have a crazy busy schedule! Later guys.

China

Global Online Population To Hit 2.2 Billion By 2013

The number of people online around the world will grow more than 45 percent to 2.2 billion users over the next five years, according to a new report by Forrester Research.  Asia remains the biggest global Internet growth engine: 43 percent of the world’s online population will reside in Asia by 2013, with 17 percent of the global online population in China. Growth rates in the US, Western Europe, and the major industrialized nations in Asia Pacific such as Australia, Japan, and South Korea will slow to between 1 percent and 3 percent.

“While per capita online spending is likely to remain highest in North America, Western Europe, and the developed markets of Asia throughout the next five years, the shifting online population and growing spending power among Asian consumers means that Asian markets will represent a far greater percentage of the total in 2013 than they do today,” said Forrester Research Senior Analyst Zia Daniell Wigder. “Multinational organizations must understand the dynamics of the shifting global online population to ensure that they are positioned to take advantage of emerging international opportunities.”

The Internet user base is increasing in every area of the world. Regional highlights include:

• North America. Online penetration in the US is set to rise from 73 percent to 82 percent over the next five years, representing about a 3 percent annual growth rate. By 2013, US online penetration will be on par with the most highly penetrated markets of Europe and Asia, such as the Netherlands, the UK, Japan, and South Korea.
• Europe. Europe’s Internet growth will be fueled by the continent’s emerging markets. Internet usage in Russia and Turkey will grow by almost 8 percent annually, while growth in Spain’s online population will increase by an average of more than 5 percent each year.
• Asia. China’s online population (already the largest in the world) will rise by nearly 11 percent each year over the next half decade. Other Asian countries with substantial online growth rates include India, Indonesia, Pakistan, and the Philippines. By contrast, growth rates in some of the more mature markets such as Japan and South Korea will rise by less than 2 percent each year.
• Latin America. Brazil is currently the fourth largest market in the world in terms of number of Internet users, but despite a 7 percent annual growth rate over the next five years, it will drop to the No. 5 position in 2010 when it is surpassed by India.
• Africa and the Middle East. The countries of the Middle East and Africa currently represent just 8 percent of the global online population but over the next five years will see some of the highest growth rates in the world, around 13 percent. Egypt, Iran, and Nigeria are among the countries with the highest growth rates in the region.

Countries With The Most Internet Users: 2008

1. US

2. China

3. Japan

4. Brazil

5. Germany

Countries With The Most Internet Users: 2013

1. China

2. US

3. India

4. Japan

5. Brazil

China

More China Stuff

As I am leaving China to return home to celebrate July 4th with my family, I thought I would share some interesting tidbits from just today’s China Daily, which gives good insight into what issues are important to Chinese business and society.

1. The government has worked to encourage “ODI” (overseas direct investment) by Chinese folks. Often the level of ODI is compared to “FDI” (foreign direct investment), which is also encouraged. They expect ODI to reach $180 billion this year while FDI will probably hit around $100 billion. Watch for more Chinese takeovers of companies throughout the world as the recession continues to lower values while China has huge foreign exchange reserves.

2. GM is struggling through bankruptcy but their sales in China increased almost 40% in the first half of this year, to almost 1 million cars. The car business here is booming big time.

3. They remain, understandably, extremely concerned about swine flu, not only because of the health issues, but as it may affect tourism. A school had 7 students down with the virus, so all the other 700 students plus faculty and parents are to remain quarantined in their homes for the next 7 days.

4. A very impressive report shows how in the last 20 years government efforts to subsidize mothers giving birth in hospitals rather than at home with midwives has very dramatically reduced the mortality rates both for mothers and newborns.

5. All the latest Michael Jackson news is covered in detail.

6. China has increased its goal of bringing nuclear power to more places by 2020. They feel alternative energy development is key. While nuclear power remains controversial in the US, here they are moving ahead full steam (no pun intended).

7. A Hong Kong listed toll road operator got the OK to complete an IPO in Shanghai. IPOs had been been “quietly” banned since last year. Good sign for markets throughout the world.  Thirty other companies have also gotten the go-ahead to go public here.

8. Local stock markets surged yesterday after reports that the recovery seems to have begun here and that positive earnings reports for the rest of the year are expected.

9. Madoff news is closely followed here.

10. British Petroleum and China National Petroleum Corp. have won a bid to develop oil fields in Iraq. This is a major contract for both.

Thanks so much to my friends in Guangzhou for a most memorable visit. I will return for sure! And happy 4th of July to all my fellow Americans..

China

China in 2009…Hot!

I am in Guangzhou, China for business meetings. Summer here is quite hot indeed. A good metaphor, as things in China in general remain hot business wise. While some here decry the reduced growth rate to roughly 7% annually from 12% annually (and no question that has caused some economic hardship and layoffs), the environment is very positive, as I reported during my last visit to China in March.

The swine flu, combined with the difficult economy in the rest of the world, has hurt the local tourist industry for sure. Some hotels are really struggling. We had no problem with the flu issue, although a full plane temperature check took place before we deplaned here. We assume that will change once the flu recedes.

A number of simple things here could be good lessons for us in the US. We did not have to remove shoes to go through airport security. Free wifi throughout Hong Kong airport was very nice. The valet stationed 24/7 on my hotel floor adds a very nice touch. My blackberry world edition popped right on when we got here. I have always felt most welcome here, and their focus on service and attention to detail are indeed extraordinary.

No question the trip is long and the 12-hour time difference a real challenge at times. But I remain bullish on China and its growing business relationship with the US, especially in helping Chinese companies go public in the US through reverse mergers and similar alternatives to traditional IPOs.