That fiscal cliff? Dow Chemical says China's a bigger worry
By Ernest Scheyder
NEW YORK (Reuters) - Many executives say they're anxious about the U.S. fiscal cliff negotiations, but Dow Chemical Co's (DOW.N: Quote) chief executive says he's more bothered by the messy Chinese leadership transition, which he believes is wreaking greater harm on global markets.
"Markets have, in a holistic sense, really been suffering more from China's slowdown than any slowdown here in the United States," Andrew Liveris said during the company's investor day in New York on Monday.
China, Dow Chemical's second-largest market by sales, unveiled its new leaders in November after months of speculation about who would assume top roles, as well as controversy about widespread corruption among government officials and the cooling growth of the country's economy.
The leadership transition has been "very uncomfortable" for the Chinese and has "created a disruption to their supply chains and created a pause" in economic growth rates, Liveris said.
"We'd been used to double-digit growth rates in plastics now in China now for the better part of a decade, and now that's slowed to stopped in this last six months."
Dow has about 2,000 employees and more than seven manufacturing sites in China. The company doesn't break out specific sales numbers by country, but the Asia Pacific region posted sales of $10.55 billion in 2011, roughly a sixth of total revenue.
Dow Chemical has seen sales of packaging and other consumer products begin to improve in China in recent weeks, but for 2013 the company expects Chinese GDP growth of only 6 percent to 7 percent, "which is way lower than it normally is," Liveris said.
"We're not planning on any big bounce back (in China), because inventories are staying low," he said. "But there is the beginning of a return to buying power." Continued...