If You Can't Beat 'Em, Sell to Them Instead!

It may sound more like a spy novel than real life, but the White House leveled charges that Chinese government-controlled hackers are behind a slew of cyber attacks against U.S. government, media and business websites.

Cyber security watchdog Mandiant claimed that it has traced recent cyber attacks to a non-descript, 12-story ex-Army building on the outskirts of Shanghai — where hundreds, if not thousands, of hackers are based.

Mandiant claims that this base of hackers, called “Advanced Present Threat 1,” is a branch of Unit 61398 of the Chinese Army.

“We believe that APT1 is able to wage such a long-running and extensive cyber espionage campaign in large part because it receives direct government support,” Mandiant said.

The Chinese government called those claims “groundless accusations” and said that China itself has been a victim and claimed that most of its cyber attacks originated in the United States.

Who are these hackers going after?

Some of it is garden-variety intellectual property theft and corporate espionage, which has been going on for decades.

Others are media sites — such as the New York Times, Washington Post and Wall Street Journal — who have run stories critical of the Chinese government.

Those are just some of the more-publicized cyber attacks, but some of the targets are more-crucial, such as critical parts of U.S. infrastructure including gas pipelines, chemical plants, water utilities and even nuclear power plants.

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Some legislators are proposing serious trade sanctions against China, and the White House has picked up the rhetoric.

In his State of the Union address, President Obama pledged: “We cannot look back years from now and wonder why we did nothing in the face of real threats to our security and our economy.”

Cyber attacks are serious, but trade sanctions against China could hurt the U.S. economy more than help it. Here’s why:

The latest trade data shows that China just passed the U.S. as the largest international trader in the world; $3.87 trillion to $3.82 trillion.

Our politicians like to blame China for much of our economic woes, but the U.S. is losing import/export ground with much of the rest of the world.

Over the last five years, China has become the largest trading partner for much of the world.

As recently as 2006, the U.S. was the largest trading partner for 127 countries versus only 70 for China. By 2011, the two countries swapped places: China is now the largest trading partner for 124 countries, while the U.S. is No. 1 for only 76 countries.

The sad reality is that the U.S. is not the export giant that it used to be.

The more-important issue is how the U.S. may be shooting itself in the foot if it imposes trade sanctions against China because China buys huge amounts of U.S. products.

China is becoming a giant import market. In 2012, China imported $1.82 trillion worth of goods. Yup, almost $2 trillion.

In January, China imports rose 28.8% from the same period a year earlier.

China is especially hungry for U.S. natural resources, technology and designer labels, and is now a key market for many U.S. exporters.

What U.S. Companies are Exporting the Most to China?

Below are the Top 10 U.S.-listed companies ranked by how much of their revenues come from Asia.

Warning: These numbers may shock the heck out of you.

10. DuPont (23% of sales come from Asia)

9. Emerson Electric (23%)

8. IBM (24%)

7. Applied Materials (27%)

6. 3M (31%)

5. Freeport McMoRan (42%)

4. Phillip Morris Int'l (56%)

3. Intel (67%)

2. Texas Instruments (73%)

1. Qualcomm (77%)

A mutual fund that gives exposure to big U.S exporters is the Fidelity Export & Multinational Fund (FEXPX), which invests in U.S. companies that are expected to benefit from exporting or selling their goods or services outside of the United States.

Its top holdings include Apple Inc. (AAPL), Chevron Corp. (CVX), General Electric Company (GE), U.S. Bancorp (USB), The Coca-Cola Company (KO), Dr. Pepper Snapple Group (DPS), M&T Bank Corp. (MTB), Wells Fargo & Co. (WFC), Pfizer Inc. (PFE) and Google Inc. (GOOG).

Most U.S. companies fall into one of two broad categories: companies that have made China a key part of its growth strategy or companies that are competing against low-cost Chinese companies in a no-win fight.

Just ask the steel or furniture or auto industries how tough it is to compete against Chinese competition.

Don’t fight ‘em; sell to them instead.

Best wishes,

Tony

P.S. My colleague Rudy Martin has identified 4 HUGE global mega-trends that are powering the markets right now, and he expects that companies that protect both our national AND our personal data stand to benefit in a big way.

Get all the details on these international money-making opportunities — click here to access his new global profit report — and find out how to get in on his newest trades right away!


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Posted 03-03-2013 6:17 PM by Tony Sagami
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