4. Expensive Yuan. The big opportunityof Romania to become “China of Europe”

Low Cost proposals to help Romanian economy exit the crisis:

(part 1)

The last 10 days had been a disaster for everyone here. Too many problems, too much stress, non stop bad news, non stop bad predictions. Usually I also share with you some of all these. But today we have a new month starting, the second part of this year. Let us not be just grumpy, let us sit down and think a bit positive.

Romanian economy has faced better times than nowadays. While the following period will be difficult for everyone (and especially the weakest ones of us), it is more than necessary to restart the “economic engine” that can move the country. Having this in mind, it is time to choose and implement some simple, low cost proposals in order to see things improving in the following months and the near future.

4. Expensive Yuan. The big opportunity of Romania to become “China of Europe”

Today’s facts
Most of the companies which wanted to reduce their products’ cost moved their production to China, or simply import from there.

During the previous decade, this was the most important advantage of China, which helped its economy boost and multiply its figures just in few years time.

Chinese Yuan was connected to American Dollar. As Dollar had become very cheap, Yuan benefited and became very cheap too, making China an even cheaper producer.
Eastern Europe had also its share, with many companies having chosen this territory in order to expand and lower their costs.

The main advantage of the area is the proximity to Western markets. A product from China reaches there at 4 – 8 weeks time, while from here it can be anywhere in Europe in 12 – 48 hours.

The crisis we live in taught us that speed is very important. The example of Zara is characteristic: Every new product is designed and delivered to each shop in just 3 weeks time since its conception. Noone likes big stocks, everyone prefers speed, good logistics and good prices.

As the crisis in Europe is expected to continue for another 1 – 2 years at least, too many companies and people prepare for a long period of recession. Thus, all managers search for ways to cut costs and Romania may become an excellent option for them.

Romania benefits from a strategic location in the area. Close to Central Europe and the Black Sea too, it started being developed over the last years.

The salaries in Romania are relatively lower than the rest of the area. Even higher than today, they can still sustain healthy investments.

Romania has several territories with citizens who know German, Italian, French etc. It is easier for them to become part of a new company, a new project.

Romanians have a very good potential, once they are focused on work and they are trained about this.

The examples of Renault, Nokia and Ford are characteristic, but not the only ones. Romania attracted over 30 billion Euro Foreign Direct Investments between 2004 – 2008.

The country has not absorbed and distributed European Grants for industry and training of people. The majority of Grants are “to be absorbed”.

On the other hand, there are several problems today. Many people getting involved, asking for money in order to do anything. Most of the projects have been developed without a strategic master plan by the State. The economic environment appears today rather “volatile” than stable and this is not what an investor needs.

• 
  Just few days ago, China decided to let Yuan increase its value, something we have been listening since 2005 or earlier.
• In the same time there are several problems in the Chinese economy, with the Real Estate bubble being ready to burst (according to the experts), the workforce asking for better salaries (or they commit suicides) and many other smaller or bigger issues that have been collected throughout the years.
• It is not by coincidence that several companies already started thinking about relocating to Vietnam and other countries in the area.
• Of course China is a great country but also it is possible that they want to “change direction and shift to a different type of economy”.

Tomorrow:

Proposal: Organize specific industrial zones, stop bureaucracy and promote Romania as a “China at your door” to European industries.