What Dow’s Results Portend for the Tech Industry

As a company that provides basic ingredients used in a wide range of products that ultimately are sold to consumers, Dow Chemical Co.’s financial performance is seen as a barometer of consumer sentiment.

If the company’s latest quarterly results and guidance are reliable indicators, developed economies in North America and Europe will remain torpid well into 2010.

What growth Dow is seeing now comes from Asia Pacific, primarily China. That’s not surprising considering China’s robust growth, driven largely by the government’s stimulus spending on large-scale infrastructure projects.

Meanwhile, many export-driven nations seem concerned about the steadily declining value of the U.S. dollar. But, given the overall context, the dollar’s decline is perfectly understandable, perhaps inevitable.

Unfortunately, though, these export-driven industrial nations don’t seem to have grasped what’s happening to the global economy. Countries and corporations no longer can count on a river of exports to American consumers and businesses. If those days haven’t ended, they are close to their terminus.

American consumerism has reached its limits. The entire world, and not just American consumers and businesses, will have to adapt to a new reality.

While a near-term danger exists that the Chinese economy might overheat, the long-term trend is for greater consumer and industrial demand to emanate from China and other developing economies, with relatively less demand coming from the U.S. and Europe.

Information-technology companies must acknowledge the changing dynamic, too.

China is committed to establishing a healthy, sustainable consumer base to support the continued expansion of its own industrial sector. In the past, frugal and often impoverished Chinese consumers represented theoretical buyers of goods and services rather than practical, real-world consumers, especially in relation to the comparatively luxurious products consumed by their counterparts in developed economies.

All that is about to change now, and technology companies will have to be prepared for the tectonic shifts, which appear to be arriving sooner than most of us imagined.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s