When choosing where to invest your money, it’s difficult to know where to start. An endless amount of numbers are just waiting to be picked up and analyzed. Meanwhile, more news is coming out by the minute, and the main job becomes what to filter out, and what to remember.
In this piece, we’ll take a closer look at what today’s top CEO’s are choosing to focus on. CEO’s have the necessary resources to hire the very best financial analysis teams, and when they make predictions, there’s a good chance that there is solid academic data supporting their theories.
So, without further ado, let’s hear what 3 top CEO’s are saying about China, and analyze the possible ramifications of their words. We’ll begin with Bob Iger, the CEO of Disney.
A) Bob Iger (Disney)
In an article published by Chief Executive Magazine on August 7, 2014, Iger told his interviewer:
“We’re already bringing our movies to China, and China is now the No. 2 movie market in the world, but [it’s] growing, and will become the No. 1 movie market by the end of this decade or the very beginning of the next decade.”
Lo and behold, last week (Monday, March 2nd, 2015), there was an article published in The Guardian, entitled: “Chinese box office beats US monthly total for first time,” and the sub-title read: “Record-breaking number in China makes it the biggest market for movies in February.” You can imagine what the article was about. Iger was right.
B) Mark Zuckerberg (Facebook)
Zuckerberg has been hot about the Chinese market for quite some time now. On October 27, 2014, we ran a piece, called “Mark Zuckerberg Speaks Chinese,” where we called attention to the fact that Zuckerberg gave a half-hour interview, in front of a live crowd, all in Mandarin Chinese.
There are a whole list of explanations as to what Zuckerberg’s analysts see in China. It could be China’s 1-billion person population which is rapidly modernizing. Or, it could be the stellar performance of China’s index funds over the past couple of years. In 2014 alone, China’s Shanghai Composite Index experienced a 52% increase. That’s just about the best performing large-cap index fund of 2014.
C) Howard Schultz (Starbucks)
“I just came back from China,” says Schultz, “and China is on fire, in terms of growth, development, and consumer aspirations.” Schultz has stated that his goal is to triple the amount of Starbucks stores in China within the next five years.
“China holds the biggest prize of all, in terms of the future of our company,” adds Schultz. “We have 800 stores in Greater China, 400 stores in the mainland, and we will have thousands of stores in China. We will also start growing coffee in the Yunnan province, and we are deeply committed to growing that business… We are looking for the kind of growth that will be disciplined, thoughtful, and highly profitable.”
Summary
So, why are CEO’s interested in China? Well, as Schultz puts it quite bluntly, it could be “highly profitable” for sales. The three CEO’s mentioned above are really just a sample of a much larger trend occurring in business circles all across the globe.
As political barriers continue to break down, business leaders are finding it increasingly tempting to try their luck overseas. The future remains mysterious, but, who knows, we could even bear witness to the day that China becomes the next super-power.
