China slowdown negatively affecting tech - Crave - Computers ...

Economy slowdown or not, there are going to be showgirls at tech fairs in China.
(Credit: Jeff Eisenhauer/CNET Asia)

I've tried to put a positive attitude on about the economy here in China. I've even tried to ignore the stories I see believing that they don't know what they're talking about because they don't know what China's really like. For the most part it's hard to see the economic slowdown in the day-to-day life here in China, but the signs are there if you look for them.

I recently read that technology sector will feel the rub more than most. Reuters did an analysis and found that technology earnings are expected to vastly underperform--growing only 2.3 percent instead of the 13.1 percent predicted on July 1. That spells bad news for companies like Intel and AMD with a large presence in China and the APAC region. Over the last three months, AMD's quarterly earnings are down 21 percent.

Many tech firms depend on the economically friendly environment for cheap manufacturing and expanding source of revenues. A slower economy raises those manufacturing costs as energy prices climb.

A tech firm I know in Shanghai seems to be experiencing some of the symptoms, as customers are unwilling to commit to any significant investment with unfamiliar circumstances compared with previous years. In the past, companies were growing so fast and were eager to acquire the latest technology to give their business an advantage because the companies often had flexibility in their budget. Now, those companies still appear strong, but have been less willing to take a risk given the global economic uncertainty that is now affecting China.

Like most places around the world, China has developed a bit of an economic gut and needs to trim the fat. The slower economy seems to be a knock-on effect of struggles with other parts of the world that can no longer consume all that China has to export. It is a necessary growing pain as China takes the next powerful step into an innovation economy that dreams up the next gadgets as opposed to simply manufacturing them.

Source: http://asia.cnet.com/china-slowdown-negatively-affecting-tech-62218982.htm

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