According to emails orginiating from Private Intelligence Firm Startfor. Chinese Investments around the world have not been a success story as some anticipated. In one email that was produced from the Startfor Hack. It stated of Chinese Companies efforts to find investments in South America, “Failures have happened for a number of reasons:
1. Lack of understanding of how to do deals overseas, and especially in
Latam
2. Perception that the having a relationship with Latam government (ie.
The President or whomever) is good enough
3. The President of the country in many cases can’t control what is
going on in a particular province, and Chinese firms need to understand
that the local political situation is what really matters (national
politics is almost irrelevant)
4. Not hiring competent advisors. Not hiring advisors at all. Why?
Mainly because it’s difficult for Chinese firms to pay money for
“advice” and also in some cases there isn’t a relationship with the
advisor. So the trust isn’t there
5. Overpaying for some assets.
6. Underpaying for some assets. In instances where Chinese underpaid,
they bought the wrong asset. It may have been cheap, but that’s because
it was located next to the narcotrafficker drug logistics corridor 🙂
“
The email from Allison Fredricka of Stratfor then continued on the subject, “Another trend that I see is that Chinese companies will start doing
manufacturing deals. Particularly in Brazil. Excavator companies like
Sany or Zoomlion will buy manufacturing plants in Brazil because they
need to get into the Brazil market.”
Iron Ore Production and Manufacturing’s Symbiotic relationship
As one document from The World Bank issued in 1998 stated, “Steel is manufactured by the chemical reduction
of iron ore, using an integrated steel manufac-
turing process or a direct reduction process. In
the conventional integrated steel manufacturing
process, the iron from the blast furnace is con-
verted to steel in a basic oxygen furnace (BOF).
Steel can also be made in an electric arc furnace
(EAF) from scrap steel and, in some cases, from
direct reduced iron.”
These materials are often used in the creation of Infastructure, and Motor vehicles. One example that can be seen in The United States is The Golden Gate Bridge next to San Fransisco California. For Automobiles, it can been in manufacturing plants in The United States and China. In the 1980’s, American Steel Factories closed down in places like Pennsylvannia, and New York. Turning the area into what is now called the Rust Bowl today. Many have argued in the past that America cannot compete with a nation whose workers are will to take less money.
Austrailia and Iron Ore
In another email from Texas based company Stratfor, Chinese companies now have an opprotunity to invest in abandoned Austrailian Mines. According to Stratfor’s source on the situation, “This is a major statement of no confidence, and also a hit to overall
revenue. The point to note is that if the companies do not explore on
their exploration tenements, they forfeit them. This leaves the door open
for the Chinese to come in and snap them up, as I predicted.”
This was in reference to Austrailian Companies losing revenue as a result of Austrailian Companies cancelling exploration in the mines. The source providing Stratfor with the information was a former member of The Austrailian Senate. In the email, in which this situation was referenced at the time. The Iron Ore attachment had stated regarding Iron Ore trading, “Once again, physical Iron Ore was a non event, with sellers
happily sitting on their material, with buyers unwilling to meet
their price demands. Vale sold two cargoes this week at prices
lower than indexbased reference prices. One cargo with 246,000
tonnes of 64.4grade iron ore fines was sold at $144.15 a tonne
CNF and another shipment with 236,000 tonnes of 63.2grade
fines was sold at $141.5 a tonne, both via tenders.”
The report then went on to talk about the increasing amount of Chinese Investiment into Infastructure and Urbanization all over the world. Examples of this can be seen in a recent Associate Press Article.
Global Resources Competition
The top two Nations competing for Natural Resources are The United States, and China. Recent attempts at competing with China had turned into a problem for the Obama Administration. The now Bankrupt Solar Energy Company Solyndra was given loans by The United States Energy Department to build energy infastructure. The issues surrounding the Solyndra Bankruptcy are still in dispute. Meanwhile, the competition for Global Natura resources still continues.
Idaho Calling
This is Idaho Calling 