Zeev's Turnips Patch-No Politics (ZEEV)

[Lane Hall-Witt]

Foreign companies pinning their hopes and dreams on the Chinese markets are asking for problems IMHO

extelecom--

I have always found the thread's discussions on China to be very interesting, although I haven't chimed in it -- and I think you're absolutely right, that foreign companies that extract "tolls" (such as MSFT, INTC, and QCOM) are not going to do as well there as many people think. Chnia's economy is so intensely deflationary that it represents a huge cost for them to pay a few percent for intellectual property royalties or for commodity products that they will eventually learn to produce on their own (such as chips and operating systems). In general, I think American investors have looked for too long on China only as a kind of third-world backwater that uses slave labor to produce cheap stuff. What we have failed to appreciate is that China has a large population of competent scientists and engineers, and that China has a long-term strategy in place to benefit from technology transfers through its relations with the West.