The ‘China effect’ which can lift companies during tough times
26 March 2009
There’s plenty of gloom around, so some companies are doing their best to push out good news. China is hurting too from the global economic downturn but also provides a relative bright spot thanks to a massive fiscal stimulus, still-functioning markets and relatively undimmed faith in the potential spending power of over 1.2 billion consumers.
Cue the latest version of the “China effect”. Increasing numbers of multinational companies are rightly tapping into the China growth story to reassure investors, employees and other stakeholders.
Some recent examples: Alcatel Lucent, the telecom equipment maker, won a recent contract from China Unicom to install 3G equipment, giving the share price a fillip. GE Oil & Gas has been selected to supply compression equipment for the second phase of 12,000 mil-long natural gas pipeline built across China.
This is an important development. It’s vital for CEOs and senior management to communicate that not only are they working to get the most out of their businesses in developed economies, but that emerging economies provide some upside during this tough time.
At the same time, communications need to be realistic. These corporate good news items provide opportunities to highlight companies’ prospects for growth in some areas. However, unless activities in China are going to turn a company around, problems elsewhere need to be addressed – and communicated appropriately.