China 2009: A Rollercoaster Ride

2009 will be the most challenging year for China in a decade. We believe it will still be a good year, but with increased downside risk, and for some sectors more than others. Most importantly, the Chinese government has both the mindset and the means to control and overcome potential problems, and has already acted preemptively and aggressively to minimize the economic slowdown and promote a fast recovery. Nevertheless, international companies would be well advised to keep a close eye on the economy through 2009.

Macroeconomic risks aside, the focus of attention for most international companies over the coming year will be dealing with the volatility and uncertainty in the Chinese market. Fortunes will vary sector by sector, but for those with resources available, the economic slowdown offers a golden opportunity for better value investments.

International companies should also take this chance to seek efficiency gains and implement cost control measures, while continuing to pay as much attention to human resources now as before. The question is: how many international companies are ready for this changing environment?

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