Many Arizona residents and people across the country generally have likely paid more than a scant bit of attention to what’s going on financially in China these days, given the real-world effects wrought by dislocations in that country’s economic system.
Recently, for example, many Americans assumed that the U.S. Federal Reserve would be imminently raising interest rates. Sudden instability in China, coupled with that nation’s crashing stock market, has been pointed to by many commentators as being a primary reason why American regulators have held off on that decision.
A recent Phoenix Business Journal article addressing China’s impact on select Arizona businesses duly notes that China’s economy trails in size only that of the United States and that, “What happens in China doesn’t stay in China anymore.”
For a host of reasons, notes the article, Arizona companies that have business arrangements with Chinese counterparts focused on either importing products from or exporting goods to that country need to be especially prudent in their decisions these days.
At a recent economic forum in Phoenix, a spotlight was placed on China’s current economic volatility and the consequences that it can have for local businesses. Many Chinese companies are short on cash, for example, and are demanding payments from American companies buying their goods more quickly than has customarily been the case. Moreover, they are guaranteeing prices for shorter periods than previously.
A principal speaker at the forum states that such moves materially shift risks to Arizona businesses importing Chinese goods.
And with the dollar having strengthened against China’s yuan, many American exporters are also on thin ice currently, given that the goods they previously supplied to China are now more expensive.
An Arizona company that negotiates and executes contracts with a foreign business for goods or services is always subject to some singular risks and concerns, of course.
China is a prime example of that presently, which underscores the need — as voiced by the above-cited forum participant — for Arizona businesses to “manage finances carefully when dealing with Chinese imports or exports.”
Call Cook & Price, PLC today at 480-407-4440 or email us through this website.