Business Capital Trends with Douglas Castle
International Business - Entrepreneurial Trends [Volvo In China As A Case In Point]
Plainly speaking to entrepreneurs, internationalists, trend-watchers, and leaders of small to mid-sized businesses in search of new markets, China is being tacitly acknowledged as a place to 1) manufacture relatively inexpensively), and 2) to sell into a burgeoning consumer market that is fueled on earnings and wealth rather than on credit. Other Asian nations are being regarded with a similar covetousness and avarice.A word of advice to younger companies -- think about the benefits of e-commerce, and investigate the possibilities of going global. These will become two competitive necessities.
The result of this perception, and the trends which support it (see Volvo article, below) is that we are entering into an age where manufacturing companies which once did their administration in their countries of domicile, occasionally outsourced some of the manufacturing or assembly, and did their marketing principally with re-imported finished products wihin their own home economies (with a percentage for export), are fast becoming mere admistrative "shell" entities.
These shell entities are legally domiciled and headquartered in their home countries, but they are both manufacturing and marketing out-of-country and offshore. It is simply a prudent shorter-term economic choice.
By way of simple example, take an American consumer goods manufacturer which has its products produced in plants throughout China, and sells predominantly to Asia and in parts of Eastern Europe and Latin America, with only limited sales in the USA. The ultimate result spells increased profit for the company, but also contributes to the decline in US employment, consumerism, and career opportunities. Most of the real economic value is added out-of-country, and most of the profit is generated (and increasing kept or expended) actually goes out-of-country. What remains behind is merely an American "shell company" which just maintains its roots (and perhaps its books of account) here. This same phenomenon is happening in virtually every currently-regarded "industrialized nation".
Expect this result to accelerate:
1. True employment losses in the US and other currently-regarded industrialized nations;
2. An export of great minds, innovation, initiative and career paths out of the United States and other currently-regarded industrialized nations;
3. Export of employment, disposable personal income, investment and accumulated wealth outside of the US and the other currently-regarded industrialized nations;
In summary:
Expect every company which reaches a certain "critical mass" of revenues per year to become multinationalized. This means that every business in any of the currently regarded industrialized nations (no matter where domiciled, and barring government-imposed trade restrictions) will eventually reach a size (or as Malcolm Gladwell would say, a "Tipping Point") where it will Internationalize. Every entrepreneurial small- to mid-sized business, from start-up to growing company, should start preparing itself preemptively for the world of outsourcing, import, export and internationalism.
Personally, as the Chairman of TNNWC Group, LLC, I am seeing increasing interest and inquiries coming to our International Connections Service (ICS) Division by the month. Additionally, these companies are increasingly young at the times of inquiry. What may start as virtual export or import experiment on the part of an entrepreneurial entrise may ultimately turn into a significant logistical reality.
Whether it is perceived as patriotic or not, companies will become more aligned with those nations where their suppliers, manufacturers, and production facilities are actually located, and where their greatest customer markets are located, than where they are domiciled.
All prospective investors in such enterprises will want to know is "Where can I buy stock or a participatory interest?"... "What exchange are the shares or units traded in?"... and "What currency should I purchase those shares, units or interests with?"
Following is an article extracted from a recent SmartBrief Newsletter published by ELFA (Equipment Leasing and Financing Association):
- Volvo Construction Equipment sharpens focus on China
Volvo Construction Equipment President and CEO Pat Olney said the company will continue its ambitious growth strategy for China and elsewhere in Asia. "We will support this approach with products dedicated to this market, using local Chinese knowledge and leveraging an expanded Asian manufacturing and distribution footprint," Olney said during his first news conference as chief. ForConstructionPros.com (5/18)
Faithfully,
Douglas Castle,
Chairman
TNNWC Group, LLC.
Related articles:
- Douglas Castle's Blogs And RSS Feeds On WordPress (douglascastle1.wordpress.com)
- Small Business Alert - Growing US Export Support and Incentives (douglascastle1.wordpress.com)
- Entrepreneurial Applications And Platform Users - Are You At Google's Mercy? (douglascastle1.wordpress.com)
- UPDATE 3-Volvo goes in-house to appoint new boss (reuters.com)
- Volvo Construction Equipment plant in Shippensburg to absorb workers leaving the company's North Carolina plant (pennlive.com)
- Volvo plans $10 billion China investment in next 5 years (cnn.com)
- Special Report: Geneva Auto Show: For Volvo, There May Be More Dash (nytimes.com)
- Volvo to invest $10 billion and build cars in Chengdu, targets 20% of China's premium segment in 2015 (paultan.org)
- RPT-Volvo to remain profitable in 2011 -CEO (reuters.com)
- Volvo to remain profitable in 2011 -CEO (reuters.com)
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This article has been published in varied versions in the The National Networker (TNNWC) Weekly Newsletter, The Global Futurist, The Internationalist Page and several other blogs by this same author.
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