china 2010 and beyond
TRANSCRIPT
China 2010 and beyond
Ilan MaorManaging Director (Israel), SHENG-BDO China B.D.
Vice President, Israel – Asia Chamber of Commerce
China Today - The Transformation
Deng
Xiao
Ping
Mao
Ze
Dong
Jack
Ma
Yao
Ming
• 9.9 million sqm
• 1.3 billion people
• 23 Provinces / 5 AR / 4 cities
• New (1949) but Ancient (5,000 years)
Country => Continuity & Nationalism
• The Era of Post Communism
• Changing & developing society: Culture,
Religion, Technology and Economy…
China – The Awakening Giant
GDP: 4.99t US$ (+ 9.1%)
WB 2010 exp.: +10%
FDI: 90b US$ (-2.3%)
1-8/10: 65.96b US$ (+18%)
Foreign trade: 2.21t US$ (-13.9)
1st Global Exporter
3rd Global Importer
Trade balance: +196b US$ (-34.2%)
1-8/10: + 104b US$
FOREX Reserves: 2.65t US$ (2006: 1t)
China – Economic Figures (2009)
China 2010 – The Industry
Strong & Developing Industrial Sector
Diversified Manufacturing Base:
* International OEM & Local brands
* Traditional & Technological products
* Targeting local market & Export
China 2010 – The Industry
The Chinese State Sector have set a list of strategic
sectors: Energy efficiency and saving
New energy
Biological sector
Information Technology
Advanced machinery manufacturing
New materials
New energy powered vehicles
* The investment in the above seven sectors grew
67% in the first half of 2010.
China 2010 – Preferred Industrial Sectors
National & local level effort to improve
technological capability through intensive
support to R&D projects.
2nd largest national investor in R&D. 15-20%
annual growth.
352,000 new engineers graduate every year.
32.7% growth in processed inventions patent
applications in 2009 (total: 194,850)
24% growth in international patent registration
requests in 2009 (total: 6,000)
9.1%
11.1%
12.2%
China’s share in the
global R&D investments:
From Global Factory to Technology
• Global corporate
R&D spending were
cut in 1.9%
• China’s corporate
R&D spending were
increased in 40%!
(EU/JRC report
2010).
Industrial R&D on the growth
Change
in 2009
R&D
expense
CompanyRank
+27.8%1.33b€Huawei Technologies45
+27.4%1.01b€Petro China54
+45.6%625m€ZTE90
+194.0%527m€China Railway Construction106
+11.4%390m€China Petroleum & Chemicals143
+43/9%213m€Dongfeng Motor232
+59.8%177m€China Communications Construction 263
+68.8%173m€China South Locomotive269
-2.6%149m€Lenovo287
+42%148m€Metallurgical Cooperation of China289
NA146m€SAIC Motor293
+15.5%130m€China Coal Energy 322
+12.1%115m€BYD361
+57.2%112m€SMIC369
+11.8%111m€Shanghai Electric Group372
+73.5%97m€Tencent406
+106%65m€China Railway551
+29.3%65m€Dongfang Electric561
+11.2%56m€China Telecom634
Inbound
FDI
63b US$
Inbound vs. Outbound Investments (2006 - 2009)
Outbound
FDI
16b US$
Inbound
FDI
90b US$
Outbound
FDI
56.5b US$
+43%
China Today – Two Ways Investments
China's No. 1 personal computer maker.
China's leading telecom vendor. 45 carriers clients
2009 sales reached 22.3b US$ (+19%)
Number 13th on the list of global highest Int’l
patent filing companies (up 24 places from 2005)
Leading manufacturer of home appliances & electronic
equipment. Largest global supplier of refrigerators. Has
30,000+ outlets around the world.
Re-Branding China
Build Your dream (BYD) was established in 1995 as a
batteries vendor with 20 workers, invested by Warren
Buffer in 2008, and is now a leading electric cars
vendor with 200,000 workers.
CompanyRank
8
11
24
27
51
75
90
Re-Branding China (cont.)
BrandZ Top 100 – 2010 Report
Millward Brown Optimor
BrandZ Top 100 identifies the
world's most valuable brands
measured by their dollar value.
(2 out of the 10 new brands
added this year are Chinese:
PetroChina & Baidu)
China 2010 – The New Consumers Market
Fast growing middle class, estimated
at 250-400 million people
Rising purchasing power, growing
awareness to brands, quality &
service
More than 130 billionaires (2nd
concentration after US).
The Consumer…
China is expected to be the world's
4th largest country with wealthy
households by 2015,(wealthy
households: having an annual
income in excess of 250,000 RMB).
.
420 million internet subscribers (2010)
120.6 million broadband users (2010)
142 E-commerce clients (2010)
39 billion US$ E-commerce sales (2009)
823 million mobile subscribers (2010)
60 million 3G subscribers (est. 2010)
The New Consumer : ICT Services
2.27 billion bank cards (twice the U.S.)
200 million credit cards (2009)
1 trillion US$ purchasing (2009)
Source: JD Power * Under 6 tons
Millions
China Car Sales
U.S.A
.China
Pre
dic
tion
• Expected auto sales in 2010: 17 million (+25%)
• 199 million vehicles on China’s roads (including more than
85 million cars).
• 144 million Chinese holds
driving license (22 million
new drivers every year).
• The number of cars in China
is expected to reach 200
million by 2020.
Car Industry – Industrial & consumer Growth
China 2010 – the challenges
The unemployment (2009: 4.6%)
Potential real-estate bubbles
Stock market reform needed
Need to constantly develop infrastructure, logistics, energy
Growing environmental issues (past and current damages)
Growing gaps between poor/rich & rural/urban (1:3.28)
Need to rebuild the social security and health systems
The color of grey…
China 2010 – Internal Issues
5 Years: +164%
2010: - 6.2%
Shanghai Index
The global financial crisis and the reduces demands
IP issues
Branding & QC
Market opening (WTO)
Yuan (RMB) exchange rate
China 2010 – External Issues
Main points for discussions:
IP in China – A period of transformation?
The Chinese business legal system – about a contract in
China a more…
Technological & investment cooperation with China –
the new main path?
China as an R&D partner.
Gateway China Panel – Myths and reality…
From an old Asian saying…
3 basic rules of doing business in China:
1. It is very difficult to do business in China.
2. With great efforts, patience, and good
connection you can succeed in China
3. If you feel you are making progress and all
goes well – please read rule no. 1 again…
A bit about cultural differences…
The rule of the Party /
Government
Stability & Security
* Duties *
Tradition, Repetition,
Slow Changes
5000 Years of History
Classmates & Guang Xi
The Rule of the Law
Freedom to Choose
* Rights *
Invent yourself…
“Time is Money”
Business X friendship
The Chinese way Western / American Concept
When East Meet West
The Boss!
Networking
Dealing with an
obstacle
Expressing
an opinion
Showing
your anger ?!
The kids...