Experts: Opportunity lies in Chinese stock collapse
- Bruce Bachenheimer
While most may see the recent Chinese stock market collapse as an indicator of economic despair, some business experts see it as a golden opportunity for Westchester and Fairfield County firms.
Bruce Bachenheimer, a clinical professor of management at Pace University and the executive director of Entrepreneurship Lab ”” a Lubin School of Business networking and development program ”” said now is as good a time as ever for local companies to explore opportunities for partnerships and strategic alliances with Chinese companies.
“If I was a Chinese firm and saw this going on, I wouldn”™t want to have all my eggs in one basket,” he said. “New York City is the financial capital of the world, and there is a lot of talent here in Westchester County and Fairfield County. I see it as an opportunity for small firms to do business.”
Despite China having the second largest economy in the world after experiencing accelerated growth in recent years, the Shanghai Stock Exchange has been on a downward slump for much of the summer.
Aug. 24, now widely known as “Black Monday” in the financial world, saw the Shanghai main share index lose 8.49 percent.
Calling the U.S. a safe haven economy, Bachenheimer said Westchester”™s standing as a wealthy county with large amounts of intellectual capital make it a desirable destination for Chinese companies. Investments in the the tech industry would help these firms diversify.
Investors in Westchester, he said, can do one of two things: buy from China, where products and services are less expensive, or conversely, sell to Chinese companies. The selling opportunities, he said, are plentiful in a big market where specialty products may not be impacted by the shrinking Chinese growth rate.
At roughly $10 trillion in gross domestic product, the Chinese economy is still the second largest in the world and has been growing at a very rapid rate for decades. Though the rate is slowing now, it continues to grow. The latest crash does not mean a direct negative impact on Westchester”™s small businesses, Bachenheimer said.
“I think, if anything, the Chinese stock market crisis provides more opportunities than stability does,” Bachenheimer said. “They should take these market jitters as an opportunity, not a reason to withdraw into a shell. The Chinese symbol for crisis is the same symbol for opportunity.”
Marsha Gordon, president and CEO of the Business Council of Westchester, said because China has been heading toward an economic adjustment for a while, area businesses may have been prepared for its pending economic downfall.
“Sophisticated businesses are prepared for the ups and downs in the economy,” Gordon said. “It will be interesting to see if this has any effect on consumer confidence with the sharp stock market swings. We have not heard this as an immediate business concern, or opportunity, from our members.”
George Avidon, managing partner at Norwalk-based The TradeXchange, a web-based trading information service, said he anticipates local business will need to rely on ingenuity and creativity to adapt to the “zeal” with which the Chinese approach business and global competitiveness.
“A renewed competitive nature may need to be restored to local business as the most recent currency volatility poses additional complexities,” Avidon said. “As local businesses, our greatest asset, in addition to capital and a wealth of business acumen, is the ability to adapt to new business climates and economic change.”
At the macro level, Avidon said Chinese products and services may decrease in price due to the devalued and depreciated renminbi. This in turn may cause U.S. export prices to rise.
Speculation has surfaced that the Chinese government may have made figures rosier than they truly are and its economy may be slowing down much more than stated. With its growth is at its lowest level in six years, Avidon said there is a considerable amount to distrust in the data provided by the Chinese government.
“Local business will need to approach each data point with seriousness and some level of skepticism,” he said.