China Stock exchange volatility, a great opportunity !
Posté par ITgium le 12 janvier 2016
As evidenced by the today stock exchange volatility, the Chinese economy is experiencing a slowdown.
From my point of view, there is nothing to worry about.
This situation represents a great opportunity as well as an outstanding challenge for many Chinese young entrepreneurs and for well-established companies ready to rejuvenate their activity.
Obviously, the priority for solving the current crisis and preventing its recurrence is to the restore investor confidence.
How can we turn a troublesome situation into a successful strategy?
First of all, it is vital to clarify that financial solutions will have a limited effect to make the economy once again highly operational.
Instead of random financial solutions, it is far better to focus on the real economy and accordingly to launch business initiatives tailored for the future generations.
Today, the stakes are multiple, among them, the environment issue.
In recent years, global warming and the combat against pollution have altered the hierarchy of priorities. 2015 United Nations Climate Change Conference, COP 21, backed this concern. This goes hand in hand with the Chinese government orientation that has issued a series of policies to support the development of the environmental protection industry and the industry of energy conservation and environmental protection.
Mandatory measures
In China as well as in many countries, the public expectation is an immense one as is shown by the increasingly aspirations for a better life, far away from any healthy risk mainly linked with the pollution impact and the food chain somewhat contaminated.
However, there is a mismatch between this concern and the public action to be taken.
The general objective of restructuring the economy is not that simple for the following reasons.
- Environmental projects are unprofitable at the short run.
- Their implementation is often complex and complicated.
- Because of this, environmental project costs are sometimes beyond control. Therefore, the company’s margins are often squeezed.
As a result, a greater awareness of environmental problems can be a heavy burden sometimes. A huge task lies before the authorities and how speed up the process of changing mindsets can be.
Let’s take the example of the construction industry that shows signals of a slowdown compared to previous decades.
Until now large scale construction-oriented, this sector may turn into building major renovations and Eco-Building integrating the latest high tech environmental equipments.
From this perspective, the “building construction business model” has to be redefined in order to boost and to stimulate the economy.
Mandatory measures, the only way.
The setting up of compulsory rules and their compliance are the basic prerequisite in determining the success of such orientation.
Through the world, people everywhere are mostly the same in their difficulty to assimilate the change and to pay for it.
Unless legally binding measures are taken obliging the managers of property, public or private sectors, to enhance there habitat, nothing will happen. The law should be implacable, a relentless fight against those who neglect to do so. The law must be enforced.
As it has happened in some western countries, only mandatory measures including fine for unachieved quotas or goals gave rise to a real move.
Thanks to that, since the 1990s, building construction companies in Europe that innovate have been much more successful in comparison to the traditional ones.
This is an example of what might happen in China.
Based on this approach, all spheres of activity are forced to complete their obligations with no exception.
It is good for the real economy.
Thanks to that, for the companies that are developing products able to mitigate negative environmental impacts, the market will go up, bring them a major source of earnings in the future.
Likewise, energy efficiency improvement in buildings points the way towards a substantial turnover for the companies proposing concrete solutions.
At the same time, such provisions help to decrease the Chinese dependence on fossil fuels as well as to reduce the emissions of greenhouse gases.
As a reminder, residential energy consumption (REC) in China is the second largest energy use category (12%) although it lags behind the industry by far.
This general orientation constitutes an interesting perspective for the owners of real estate. Thanks to the environmental work undertaken in their building, the equity of those ones will further consolidate in the decades to come. At the end, it boosts morale and encourages the consumption.
The setting up of constraining environmental measures has the potential to help the revitalization of the economy.
François de la Chevalerie
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