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Access To Cheap Capital

April 2nd, 2009


Wall Street Journal published an article about Chinese mergers and acquisitions, suggesting that there is an advantage in low-cost capital being made available in Mainland China. ¬†A year ago, I put up a blog post¬†touching on the same subject, linking the phenomenon to the closure of Taiwan- and Hong Kong-owned factories. Key point: Bank money is being loaned out to industrialists at a low rate of interest, and lenders are not in the habit of pushing for repayment. Access to capital in this way becomes an unusual competitive advantage in business. Chinese manufacturers continue to find it advantageous to make a product for $1 and sell it for $1 (if not for less), because they are focused on unrelated ambitions. It is one more reason why I have concern for products that are made in China today. Producers should be focused on manufacturing quality products, not on tangential opportunities…

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