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Morgan Stanley: China to Change Asian Pattern
Morgan Stanley Asian Area Chairman Morison said at World Economic Forum East-Asian Summit that lots of world industries would be attracted to China and that many Asian economic entities would make a change from industry to service and intellectual property rights areas for an incessant effort made by China for opening up with tremendous opportunities provided and a low-cost market created.��
He holds that close cooperation between government and enterprises is needed for a change of education and research policies is involved and new immigration policy has to be shaped. Due to a possible regional economic shrinkage from China's low-cost market Asian companies need to better and rehash their balance sheets.
Morison said it would become tougher and tougher for Asian companies to invite investment through stock markets if their capital stock profit rate is lower than that of America and Europe and they couldn't use their capital efficiently for an improved profit rate.
He pointed out that three challenges are facing the Asian compaanies: Low capital stock profit rate, opportunities and challenges from China's continued opening and problems rising as how to cope with a slowdown of the global economy.
When making a comparison of Asian companies' capital stock profit rate with that of their foreign counterparts in America and Europe, Morison said from 1990 to 1997 the former (with Japan excluded) was placed at 9.9%, America, 14.2% and Europe, 10.4%. Furthermore, the year 1998 saw a 1.6% drop in Asia compared to a 12.6% profit rate in Europe and 16% in America.
For a sluggish American economy no heydays are found now by Asian companies depending on developing exports to the US over the past years, not to say a spiraling estate market striking the Asian companies hard.
Concerned about a pessimistic future of Asian companies, Morison advised to go through an adjustment process their American counterparts did in the 80s, cutting down capital input and disposing of surplus assets and inventories.
It would make things hard for a change to be made by Asian companies from clan- or state-run to capital-oriented and this calls for reforms initiated by themselves and on their own. Multinational companies would join in without doubt vying for a market share, he said.
Morison also talked about the negative impact of global economic contraction on Asian companies. It would be inexcusable not to reform for the key point here is a matter of how to use capital in an effective way by Asian companies on their own, he said.
By PD Online Staff Yang Ruoqian
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