Tony Sagami examines the buying behavior of Chinese companies and delves further into what that means for the U.S. In this issue of Money and Markets, Tony Sagami takes a look at what U.S. industries could be affected by all the Chinese companies buying in the U.S.
Jupiter, Fla. (PRWEB) September 10, 2007 -- In this issue of Money and Markets, Tony Sagami takes a look at Chinese companies buying up American properties and compares it to the Japanese spending spree of the 1980s.
The Japanese buying spree was a function of the country's great prosperity. Throughout the 1970s, Japan consistently had the second-largest GDP and one of the highest per-capita incomes in the world.
The Japanese are no longer the heavy hitters they used to be. However the Chinese are picking up where the Japanese left off.
State-run China National Offshore Oil Company (CNOOC) tried a hostile takeover of Unocal in 2005. CNOOC eventually abandoned its $18.5 billion bid for Unocal, but that was just the first salvo.
The Lenovo-IBM deal was only one of many Chinese buyouts in recent memory.
China isn't restricting to just the U.S. Chinese companies bought 40% of the Northern Light oil sands project in Canada, 10% of an Azerbaijan oil field and pipeline, and invested billions in Venezuela to get some of the crude oil that was previously going to the U.S.
The Chinese aren't just buying businesses; they're buying skyscrapers, shopping malls, farms, forests, ski resorts, vineyards, refineries and mineral deposits.
Another two significant marriages were announced just last week: Taiwanese personal computer giant Acer is buying Gateway Computer for $710 million. Treated as a combined company, those companies would have had $15 billion in sales and sold 25 million PCs last year. The Gateway purchase will dramatically increase Acer's U.S market share to 10.8%.
Hewlett-Packard and Dell, which control about 52% of the U.S. PC market, better watch out. Between Acer and Lenovo, it's predicted that shrinking profit margins could occur for the two American giants.
Separately, a Chinese company announced its interest in buying Seagate Technology, one of the only two computer disk drive makers in the U.S. IBM sold its disk drive business to Hitachi in 2002, and Fujitsu and Toshiba are the other major players. So a Seagate takeover would definitely put Asia at the top of the PC food chain.
The current Chinese buying binge is very different from the Japanese spree. There are at least three important differences this time around.
First, the Japanese companies doing all the buying were privately owned as opposed to many of the Chinese buying being state-owned and state-run.
Second, Japan is a democracy whereas China is not.
Third, and most importantly, Japan was not buying strategic resources like oil and natural gas and China is. China will need plenty of natural resources to fuel its construction boom.
This has huge implications for investors smart enough to put that knowledge into action. So, how can this be used to make money?
The Chinese will continue buying access to the raw materials they need to fuel and support their rapidly expanding economy.
As in energy products like oil, natural gas and coal.
Metals, like aluminum, copper and steel.
Foods, including pork, poultry and agricultural products.
Construction materials, such as cement, timber, heavy equipment.
"So, it won't take much homework to come up with a list of companies that are probably sitting on resources that the Chinese want. One of the Money and Markets gurus, Larry Edelson, has nailed this trend in his Real Wealth Report. Whatever is to be done, make sure to pay attention to what the Chinese want. Because right now, the Chinese are a major force to be reckoned with," advises Mr. Sagami.
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About MARTIN WEISS & MONEY AND MARKETS
Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.
About Tony Sagami
Tony Sagami, the owner and founder of Harvest Advisors, an investment research and money management company, has been managing money for more than 20 years and is one of the early pioneers in the application of technical and quantitative analysis to mutual funds and stocks.
Prior to establishing his own firm, Mr. Sagami was managing director at W.E. Donoghue & Co, serving additionally as the Director of Investment. During his successful career, he also held the position of account executive at Merrill Lynch.
Mr. Sagami has been frequently quoted as an expert and is appreciated for his frank, consumer-friendly views. He has appeared in publications such as The Wall Street Journal, Barron's, Kiplinger's, Smart Money, Business Week, New York Times, Washington Post, Investors Business Daily, Bloomberg, Financial Planning Times, Mutual Funds Magazine, Chicago Tribune, LA Times, and many others.
Mr. Sagami holds a degree in economics from the University of Washington.
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