Remember back in the old days when companies in sorta-lawless, developing economies (like China) traded at a discount to well-established peers? Well, those days have been gone a while, with everyone jumping on the China bandwagon, and repeating tattered justifications such as the old "... if we can just get 3% of China ..." or "... think of the costs of labor ...".

While such excuses have been used to try and inflate iffy enterprises from alternative power -- Solarfun (NASDAQ:SOLF) and "Canadian" Solar (NASDAQ:CSIQ) -- to electronics manufacturers of all types, a short article in the latest BusinessWeek is a good reminder of why investors should be wary of the dragon.

Turns out "old" manufacturers like Motorola (NYSE:MOT) and Nokia (NYSE:NOK) have dealt effectively with upstarts like Ningbo Bird. The Taiwanese semiconductor biz is compact and centralized, while local politics in China encourage businesses to spread out, hampering management. Even Lenovo Group, which had a huge head start, has struggled, though it builds ex-IBM (NYSE:IBM) ThinkPads. Dell (NASDAQ:DELL), Hewlett-Packard (NYSE:HPQ), and other global powerhouses are tough to beat. They can afford to outspend the Chinese on newer, more efficient plants.

It's something every overseas investor needs to keep in mind as the Chinese markets continue to attract more and more speculation.

Seth is a member of the Motley Fool Global Gains team, which scours the world for the best investment opportunities. A free trial will show you what they're watching.

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At the time of publication, Seth Jayson had no positions in any company mentioned here. See his latest blog commentary here. View his stock holdings and Fool profile here. Dell is a recommendation of Motley Fool Stock Advisor and Inside Value. Fool rules are here.