Under the hood

Hugh Peyman, fresh out of Shangai, and speaking at the Ashburton investors conference, says that the real drama for people living in the region wasn’t shared by global players.

This is all changing now, and includes countries like India, Southeast Asia, Russia, and China. There area is now firmly on the radar screens, reports Angelo Coppola.

So what about China? Most importantly the one concept is the urbanization and the scale and pace of which is taking everyone by surprise. By 2010 the population will increase from 530m to 620m people. The urban China population will double in the next 15 years.

The impact will peak over the next five to 10 years, and industrialisation is also increasing abreast, and this is good news for commodity-driven countries, like South Africa.

Land tenure is the next big issue, as assets – land – will be sold, providing assets for individuals. The service sector is the next opportunity as it is relatively undeveloped.

Naked consumerism will be a feature of the development of the country, over the next 10 years.

On the oil, front the region will devour the spare capacity cushion that is available, which will drive prices up in the next 10 years. Food is the next importer item that will grab the headlines – in terms of imports. Soybeans are now being imported.

This will be followed by wheat, rice and maize, because production is flat in these areas at the moment.

There is also a corporate impact. The opportunities and threats are vast.

Caterpillar is running scared, and there are concerns that they have left things far to late. They don’t have access to these markets. The heavy equipment demand is in this area. Asian produced heavy equipment is nearly 33% cheaper, and this is a threat.

Areas include aviation which will be a battleground between airbus and boeing and this will make or break either of them; GE is well positioned in four or five major sectors; while BHP Billiton understand the sector, and BP seems to be well positioned.

On the telecoms side Ericson and Motorola have almost fallen out, Nokia is hovering and going through a bumpy ride, while Samsung is there.

BASF are there, and planning a substantial investment, while Lefarge are investing heavily. On the automotive side GM and Volkswagen have had the market to themselves for the past five years, while the locals have started making up ground.