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  • ssam ssam Jan 25, 2007 1:42 AM Flag

    where should Dow cut cost

    Glad we at least agree on something. Dow should spend more money to build more facilities in China to catch the growth there. I am sure China will exceed Germany as the largest oversea market for Dow within few years. IMHO, Dow is already late in the game due to last 15 years of siding the competition and now there is concern of over build since chemical facility takes time to build and takes longer to run at full capacity. Blame those so call "China Expert" who happyly lived like a king but did nothing besides highlight China's risk for making themself looking important. There is no need to worry about RMB appreciate against USD, because China will buy more in volume when RMB appreciates. Our difference really comes to who should be cut when keeping the sales activities in country like India and China. I am more looking at the "regional center" like HK. For your info., the cost of Sun Hung Kai Center where Dow's office located has rent of over $2/sqm per day while the cost of most expensive office in SH is only 1.5, let alone that Dow's zhangjiang facility is not the most expensive land in Shanghai. Starting salary of China's most prestigious college graduate is about $450-$500 while a HK graduate will makes 4-5 times as much. Giving the difference , I am not worried about 10% salary increase in China if it is true. You may argue that folks in HK are experienced in finance and legal, but the truth is tht Dow's asia entity is complicated enough that there is no reason to make it more complicated. All those folks siting in HK doing is what we call staff captured exercies which added absolute no value to Dow's core. I also agree to you that Dow shoudl cut the expats in shanghai, regardless where they come from Midland or HK. If they want to explore that part of the world, it is fine, but live like a local and work like a local. Life in shanghai is comfortable enough for them want to go there or they should really butt out.
    Beyong the cost cut, I think management did a poor job promoting Dow in street. Dow is always considered as cyclic, which lead the low P/E. However, Dow's product portfolio had really changed in the 90s. You do not see Dow gets negative earning even in the bottom of the cycle. The value of Dow stock does not reflect this change so far. Maybe it is better to break up Dow into few smaller pieces to increase shareholder value. We can certainly have Kipp Smith to run the Special Chemical and give the basic chemical to Jim Kirsh -:)> Let Bob Wood run the performance side if current CEO still think it is too big to handle -:0

 
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