China's inflation
The major advantage of the Chinese economy has been to keep prices low and sales growth high. The country of China has focused on the ability to grow its sales and become a global manufacturing platform for the world China's economy has never been about profit margins it has been however about keeping the Chinese people employed countries like America wearable to use the the low-cost Chinese imports to keep a lid on inflation. Wages in China have started to rise rapidly energy prices food prices and food demand are exploding evidence of this can be seen from the China's national Bureau of statistics measure of inflation as it jumped to an 11 year high of 7.1%. This rising inflation is forcing Chinese manufacturers to try to defend their slim operating margins by increasing the prices of exported goods unfortunately for Chinese manufacturers is very difficult to pass on the cost of higher commodity prices such as energy to consumers in countries that are undergoing recession for example the United States. What is his mean for investors in the Asia-Pacific region? Firstly, the company still be hit hardest by the Chinese inflation are large exporters of consumer products for example Sony. Our position at commodity wealth.com is to invest in countries and companies that provide commodities that are necessary for such a large companies as Sony. Countries such as Brazil are excellent places to find good investments in natural resource rich companies. As the inflation takes hold of China's economy one will likely see great opportunities emerging from other markets as other countries scramble to gain a competitive edge as the world's major exporter begins to lose its grip on the top position. Keep an eye on countries such as Vietnam although many companies have seen a setback this year in Vietnam is still poised to become a major exporter to the United States and Europe. Also keep an eye on India, despite the impact of a strong rupee wage inflation in China along with appreciating currency and a reduction in export subsidies will give companies in India significant pricing power to compete in the world's market. Often in these emerging markets and investor will often finds quasi-monopolies these companies perform well in inflation environments because they have amazing pricing power. Furthermore, due to Peak oil investing into energy companies particularly in emerging markets is an excellent way to tap into the growth of these markets, as new manufacturing bases will require energy from such companies.
