Monday Sep 21, 2009

China & India Fuel Growth With Infrastructure Projects

While the U.S. is still trying to stimulate spending of U.S. consumers with its economic stimulus programs, countries such as India and China appear to be making much better progress.  On a recent trip in September to China and India via Singapore one can visibly see that Asia Pacific is not standing still and putting idled factory workers toward new infrastructure projects.  Talking with customers and partners in China and India only confirms what could be described as a best practice for any nation looking for economic recovery.

Earlier this year Beijing announced a $585 billion (U.S. dollars) stimulus package (~13% of China's 2008 GDP). As part of this stimulus package China will spend this year $50 billion (U.S. dollars) alone on the ambitious worlds biggest high-speed (started in 2005 and expected to finish in 2020) railway which will connect Beijing, Dalian, Xuzhou, Lanzhou, Shanghai, Kunming and Guangzhou. Beijing's economic stimulus is directly targeted at the ~20 million idled workers in China due mostly to the 20% decline in foreign sales.  Notable statistics of the new high-speed railway include:

  • The buttresses which carry the tracks will consume 117 million tons of concrete

  • 16,000 miles (25,749 km) of new track will be built
  • The Beijing to Shanghai line will consume enough steel to build 120 "Birds Nest" Olympic Stadiums
  • In addition to construction labor the railway will create jobs for engineers and lot's of them.  The railway will be computerized and require a lot of IT spending and resources.  You can be certain the large IT companies are looking to win this business and provide hardware, software, services and support.  A great opportunity.  Bill Powell wrote a great article in FORTUNE magazine with many more exciting facts which you can read here.

    India's growth is equally impressive despite the global recession.  India still needs to build massive amounts of infrastructure while China is already upgrading infrastructure previous built.  I like to describe China as organized chaos while India is still dealing with unorganized chaos.  In Beijing you see cars, buses, trains, people, bikes, motorcycles all in congested traffic in harmony with the traffic signals.  In Bangalore you have the same as Beijing but with everyone only in harmony with themselves.  Traffic signals get ignored, motorcycles are riding on the sidewalk and intersections, at rush hour, give no clear indication as to who has the right of way.  It's simply something that every business professional should experience because you need to know the customer you are selling.  Both are beautiful cultures and part of the solution of economic recovery in the world.  India too will consume massive amount of engineers, software, hardware and services not only to fuel their IT outsourcing industry but to rapidly build their own nation, infrastructure and ultimately their own economy as a world leader.

Blog is available also at: http://bobporras.wordpress.com/

Tuesday Nov 25, 2008

The World Economy is a Turtle...

One would have to be pretty insulated to be oblivious to all the economic troubles throughout the world.   In the last 2 months I have visited Brazil, China and India and the economic impact in each country is amazing.  A year ago in India I was amazed at the Bombay stock index surge and the feverish pace in Beijing preparing for the Olympics.  Who would have thought back then that in one year things would be completely the opposite.  The credit crunch has hit consumer confidence throughout the world.  Banks are not lending.  Even private equity is hard to come by and the terms are not very attractive.  Consumer spending has decreased significantly.  Have you noticed the price of oil as of late?  Some countries that were surging on oil profits are now unable to sustain their economy which was built up over the past few years.  Selling out oil futures for the next 12-18 months is not something that is usually done.  There is plenty of energy data out there.  In India and China you can read about government actions to start infrastructure projects in hopes of jump starting their economy once again.  Stock market reaction seems to be driven less on fundamentals and more on the factor of fear.  Fear that nobody knows where is the bottom of the decline.  What is going to cause a turnaround of the confidence of people to start spending once again?  I read that approximately 70% of most economies are driven by consumers.  Another major factor is the credit market for access to cash for businesses.  It's also true that consumers in some countries are addicted to being highly leveraged so they need access to credit to spend again.  The formula for fixing this appears to be pretty simple:

Mend = Lend + Spend

However getting the lend and spend to occur has been one of the hardest problems throughout the world.  Confidence is easy when things are going well, but confidence in difficult times really is something that doesn't come easy.  Private equity and the venture capitalists naturally will get more inflexible during economic contractions.  New funding rounds for startups are probably going to require new lead investors.  Banks throughout the world are not willing to release capital just yet.  Businesses and consumers all feel the contraction.

The world needs to extend it's arms, legs, tail and neck and start slowly walking forward again.  Staying in its shell means no progress regardless of where you may reside.  It really is a world issue to be solved. 


About

The blog of Bob Porras - Vice President, Data, Availability, Scalability & HPC for Sun Microsystems, Inc.

Search

Categories
Archives
« April 2014
SunMonTueWedThuFriSat
  
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
   
       
Today