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Sunday, August 14, 2005
(Via Economist) Baidu will have to compete with Google, already the second-biggest search engine in China. Unlike Google, in its main market Baidu faces an unpredictable government, determined to maintain strict control over the internet and the media in general.Its recent crackdown on the content of mobile-phone text messages, for example, hit the profits and shares of several Chinese online firms listed in America, including SMS provider Linktone and portals Sohu and NetEase. In all, the 23 mainland technology firms that have floated on NASDAQ since 2000 enjoyed a median first-day gain of 13% only to see their shares record a median decline of 34% one year on, according to Straszheim Global Advisors, a consultancy that focuses on China. With more Chinese firms preparing for overseas listings—such as A-Max Technology, which makes MP3 music players, China Medical Technologies, and Focus Media, which sells advertising space on liquid-crystal display screens—that should give foreign investors pause for thought. As the Song poets realised long ago, the achievement of perfection requires judgment as well as enthusiasm.In contrast,Indian stocks have in general done well after going through stability period in U.S bourses. A businessweek analysis of financial data from shows Indian corporations are getting more bang for their money. Indian businesses have, with a few exceptions, outperformed their Chinese counterparts on return on equity (ROE) and return on invested capital (ROIC).Indian companies perform better across various industry groups because they face greater market pressures. Despite plenty of government regulation, India is by and large a well-functioning market economy. This leads businesses to focus more on profits and performance. When it comes to free markets, China is a work in progress. China's government has big stakes in most publicly listed companies, so managers must be mindful of government agendas. investors beware!
Category :China & India |
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