Two Tests for Chinese Giants
In diverse fields—trains and telecommunications—we'll soon learn whether some of China's leading companies can win business on the global stage.
The next six months will test the power of China's global champions—and their limitations on the world stage.
First, sometime in early 2011, California is expected to decide which company will build a high-speed rail link between Los Angeles and San Francisco. France's Alstom (OTC: ALSMY), which built Amtrak's disappointing high-speed Acela, and the Japanese companies that built their country's pioneering Shinkansen bullet trains will go head to head with Chinese rivals that nobody in this market had heard of ten years ago.
The ability of Japanese and European companies to beat Chinese upstarts on the relatively neutral ground of California would speak volumes about China's ability to win dominant positions in new global markets.
Second, the success—or lack of success—of Huawei, China's champion in the telecommunications gear industry, in breaking into the US market will tell investors exactly how big a handicap the ties that bind China's biggest companies to the Chinese government, and, in particular, the People's Liberation Army, will be as these companies try to move onto the global stage.
Between them, what happens with California's bullet train and Huawei's attempts to break into the US market will show investors the lay of the competitive terrain as the next generation of corporate and government spending speeds up and the global economy returns to whatever "normal" is after the Great Recession.The Golden State Prize
Every manufacturer of high-speed trains in the world will take its best shot at winning in California.