We are now witnessing the most turbulent yet opportunistic era around
the  world since the Industrial  Revolution.  The future global  economic
steam-engine  will  have  to  be  the  USA,  Euro-economy,  and  China.
Understanding the challenges on hand and how China market can  be
a  life-belt  for  foreign entities is important  for designing a strategy  for
future development. A few tips:

THE SUBPRIME CRISIS IMPACT

With lax monetary policy and centralization of power among the riches in the past thirty years, the West was capable of creating series of economic bubbles, resulting in a loss of over 90% of the greenback’s purchasing power.  The  Subprime  Crisis  happens  to  be  the  last straw on the
camel’s back. The era of greed and irresponsibility eventually ends, democracy and capitalism
is now under scrutiny. The US impact is diminishing, but an economic world without strong USA presence will be in chaos.  How  to  shield and get the most from this  financial hurricane is any
organization’s  strategic issue of first priority.  One positive effect of the crisis is the release of
elites and entrepreneurs into free market, and these best-of-the-bests may contribute positively
and constructively in the emerging markets, like China and India, for the next round of economic
boom and a better world.

THE GLOBALIZATION IMPACT

Although globalization has been in effect since WWII, realistic erasure of national boundaries for economic, technological,   and   socio-cultural   purposes  will probably  comes  to  terms   in  the
coming   decade.  China,   India,   Russia,   South  American  and   African   nations   will   act   as
steam-engine s to  pull  the  global  economy  out  from the present recession.  Independent  of
political differences and the short-term mishaps in product qualities, China will be the key partner to both European countries and the USA in the New Economic Era, and play an important role in
revitalization  of  global  economy.  China  carries the most promising internal consumption  and
incubates the largest number of middles  classes  among  all  emerging  markets,  missing  this
most populated country will mean a long term slump in domestic growth – Japan  is  one  good
sample.

THE RESOURCES IMPACT

Although commodities will drop in this short term of recession, resources prices will climb in the next decade – unless the BRIC falls.  Military  actions  may  not  be  the only  means  in  ensuring
supply of resources,  alignment  and  cooperation  on  a  state-level  basis  will  at  least  be  one.
Making   the   best   out  of  the   limited   resources  for  sustainable  and  responsible  business
applications is one topic all enterprises should take special care of,  and  forming  alliance  with
China firms in exhausting this concept will be mutually beneficial opportunities.  The  search  of
alternative resources, substitutes, and effectiveness may push a global technological quantum
jump. It is time for back-to-basic approach on project investment and private equity financing, and China may be a good starting point for something new to happen --- China will still be the largest factory on earth.

OTHER IMPORTANT IMPACTS

THE DELEVERAGE EFFECT

THE DECOUPLING EFFECT

THE CHINA INTERNAL HURDLES AND BOTTLENECKS

THE ECOLOGICAL AND ENVIRONMENTAL EFFECT

KOF Strategists have been in China since 1984 and witnessed with hands-on experience the
cycles  in  the  great  Economic Reform.  Armed  with  excellent  analytic  skill,  strategic  power,
knowledge in the commercial system and know-how in making businesses in China, KOF is
probably the most capable one-stop firm in taking a client to target in the PRC market.