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International Law

: China Hearsay

How KFC Benefits From China Health Care Spending

By Stan

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China biz newbies may wish to check out this article by Slate business columnist Daniel Gross. The content is quite familiar — the usual talk about the huge potential of the China market for foreign companies. However, Gross does a decent job of updating the subject with talk of government health care spending and connecting that to China’s savings rate and domestic consumer spending.

Gross’s article also tells us that this sort of thing is much more mainstream in the American press these days than it used to be. Certainly the “if my company could just sell one widget to every Chinese person once a year, my company would be immediately in the Fortune 500″ story is nothing new. But a mainstream discussion of the linkage between domestic government spending in this country and the effect of this on US companies by way of consumer spending is much more sophisticated analysis than we’ve seen from the typical China business story in years past.

Cool.

To be honest, I have an ulterior motive in linking to this article. My eye was drawn to the last paragraph, which if nothing else makes reading the entire article worthwhile. After his discussion of the linkage between health care spending, the savings rate, and consumer spending, Gross concludes that if Chinese citizens feel more comfortable with the social safety net here, their spending will increase. This includes both domestic and foreign products.

He sums up with this gem of a concluding sentence:

In other words, the fact that China’s population may soon be insulated from some of the ill health effects of eating KFC and driving Buicks might free up more cash for middle-class workers in Shenzhen to eat more KFC and buy more Buicks.