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Email Story to a Friend June 13, 2006 U.S. companies do well globally, says expert Medford native tells Chamber forum India's a hot market By greg stiles Mail Tribune The global enterprise market is growing and U.S. multinational companies remain at the forefront, Medford native Matthew Patten told a Chamber Forum gathering Monday at Rogue Valley Country Club. "U.S. multinationals are taking their fights overseas," said Patten, president of Cutler Investment Group. "The 50 fastest-growing global companies were U.S.-based companies with 2004 revenues of $670 billion. That was equivalent to the 10th largest world economy. The incremental annual growth of $115 billion is greater than the gross domestic product of all but 34 countries in the world." The 1987 South Medford High School graduate spends 80 percent of his time in Asia, evaluating companies for investment. Patten said the nation's current $11 trillion GDP will grow 4 percent over the next 10 years, while the rest of the world's will grow by $11 trillion. Advertisement "Those numbers get more staggering if you think about China growing 8 percent and India by 9 percent," he said. Patten said the great growth in outsourcing call center and technical help to the Indian subcontinent is the result of the dot-com boom and bust. The bandwidth was exported during the boom, then when the dot-coms crumbled, the existing infrastructure led to present investment by American manufacturers. "The Food and Drug Administration just opened its first overseas branch ... in India," he said. "India has 20,000 pharmaceutical companies producing 20 percent of the new drug applications." After investing in Chinese companies for more than a decade, Cutler Investment Group is exiting the world's most populous country for the next big thing — India — hoping to catch another rising tide. Patten said after the forum that Cutler's China Fund has nearly run its course. "We were up to eight companies," Patten said. "Now we're almost out; at some point investors want their money back." He said Cutler Investment Group has earmarked $200 million to invest in India, roughly $10 million stakes in 20 companies. Patten said the attractive pricing American companies first saw in China is eroding. "What you see right now is commodity inflation catching up," he said. "During the great expansion in 2003, 2004 and 2005, when we replaced U.S. manufacturing with Chinese manufacturing, the Chinese absorbed the price increases." But production costs are up and plants are gaining efficiency. "Now there is only one way to pass on costs and that's directly hitting U.S. consumers," he said. Even with manufacturing going offshore, there are still competitive advantages for American companies, Patten said. In China, 52 percent of the country's GDP is attributable to private enterprises. But private enterprise receive 27 percent of outstanding loans from state banks in China. "Whatever the cost of capital is, if you can't get the loans you are reducing the efficiency of the economy and are not able to compete in a capital goods or capital intensive industry," Patten said. "In India, the cost is 12 to 14 percent, while for a manufacturer today in the U.S., it's 8 percent. Because the U.S. has a much higher skilled work force, that gives this country a highly competitive advantage." Patten said the key for local companies is to figure out whether globalization is a threat or an opportunity to their operations. He said Ashland-based 360 Interchange, which hooks up large-scale Chinese manufacturers with buyers around the world, has developed an effective niche. "Travel and communications are major obstacles for Chinese companies," he said. "360 Interchange's major advantage is access." Reach reporter Greg Stiles at 776-4463 or e-mail [email protected] . Mail Tribune Home | Local News | Sports | Business | Obituaries | Life | Opinion AP News | Archives | Site Map | Community | Classified Copyright © 1997-2006 Mail Tribune, Inc. All rights reserved. Privacy Policy | Terms & Conditions | Website Feedback www.bingo.com Home Security Systems Trunks, Footlocker Custom Build Computers Discount Hotel Reservations --> online casinos news Ashley Furniture HomeStore Send Flowers California Casinos GMAT Prep Windermere Van Vleet Sports Equipment Online Casino Reviews Entertainment Guide --> Online Casino Fundraisers Sudoku Online Casinos Canada Online Pharmacy Advertisements Advertisement