china's winning strategies

8/8/2019 China's Winning Strategies

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CHINA


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Fact file of China

Area: 9,596,960 square kilometres.

Population: 1.2 billion.

Capital City: Beijing.

People: Han Chinese 93%, other immigrants (including Mongol, Zhuang, Manchu and

Uighur) 7%.

Main Language: Mandarin (Beijing dialect).

Religion: Officially atheist; Confucianism, Buddhism, Taoism. Also Islamic and Christian

communities.

Major Industries: Iron, steel, coal, machinery, textiles, etc.

Currency: Renminbi (RMB)


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Par ticulars 1990 2010

GNP Rs 16,59,200 Cr Rs 80,52,000 Cr

POPULATION 1.14 billion 1.38 billion

PER CAPITAGNP Rs 14,554 Rs 58,347

EXPORTS Rs 3,02,560 Cr Rs 19,54,200 Cr

PER CAPITA INDIVIDUAL CONSUMPTION Rs 4,267 Rs 20,836

PER CAPITA RURAL INCOME N.A. Rs 47,222

PER CAPITA URBAN INCOME N.A. Rs 1,18,055

CONTRIBUTION OF PRIMARY INDUSTRY INGNP

28.4% 12.7%

CONTRIBUTION OF SECONDRY INDUSTRY ING

NP

43.6% 51.3%

CONTRIBUTION OF TERTIARY INDUSTRY INGNP

28% 36%

WORKFORCE IN PRIMARY INDUSTRY 340.49 Million 287 Million

WORKFORCE IN SECONDRY INDUSTRY 121.58 Million 179.38 Million

WORKFORCE IN TERTIARY INDUSTRY 105.33 Million 251.13 Million

AVERAGE ANNUAL FOREIGN INVESTMENT Rs 10,161.8 Cr Rs 4,54,170 Cr

FACTS OF CHINESE ECONOMY 1990-2010


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Chinas Winning Strategy

An authoritarian government

High savings rate

Investment in models and showcases

A consistent and thoughtful marketing effort

Creation of zones and infrastructure for businesses


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Chinas Winning Strategy (condt)

The business-above-all attitude

A passionate Diaspora

A strong manufacturing base

Ability to respond quickly

Putting Chinese interests above everything else


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The Chinese Economy Today

East Asia is the fastest-growing region in the world over the past two decades.

China is the fastest growing country in East Asiaapproximately 9% p.a. sincebeginning of economic reform (1979) and 7.9% over the past five years.

Despite the SARS epidemic, the rate of growth of real GDP in 2003 was 9.1%, the

highest since the mid-1990s.

Between 1979 and 2003, Chinese real GDP grew from $177 billion to $1.41

trillion (6th largest GDP in the world).

China is the 4th largest exporting country (behind Germany, Japan and the U.S.)and the 3rd largest importing country (behind U.S. and Germany) in the world


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Exports, Imports and Foreign Exchange Reserves

In 2003, exports of goods totaled US$438.4 billion and imports of goods totaled

US$412.8 billion, with a trade surplus of US$25.5 billion, compared to US30.4billion in 2002.

The exchange rate of the Renminbi vis--vis the U.S. Dollar has remained stablesince 1994 (in fact, there has been a slight appreciation from 8.7 Yuan/US$ to

8.28 Yuan/US$) and is expected to remain so.

China has become Japans second largest export market, after the United States;Greater China (including Mainland China, Hong Kong, Macau and Taiwan) has

become Japans largest export market in 2003.


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Privatization

Provincial and local governments can dispose of their shares in the local enterprises,

including selling them to other investors, both domestic and foreign.

The central government maintains control over approximately 190 large state-

owned enterprises under its recently established State Assets ManagementCommission.

The central government will issue rules on the sale of government shares.

A more promising target for merger and acquisition activities is the foreign-investedenterprises, either joint ventures or wholly-owned.


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The Eleventh Five-Year Plan (2006-2010)

Doubling of real GDP between 2001 and 2010, with an implied rate of growth of

7.2% p.a.

An inflation target of less than 3% p.a.

Indirect (macroeconomic) control of the economy using instruments such as money

supply, interest rate and exchange rates rather than direct (microeconomic) controlthrough administrative directives, commands and central planning with mandatory

targets


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Foreign Direct Investment (FDI)

FDI, at approximately US$60 billion a year (US$53.5 billion in 2003, should have

been higher if it were not for SARS), amounts to approximately 11% of the annualChinese aggregate gross domestic investment of approximately US$560 billion.

Cumulative FDI at year end 2002 amounted to US$ 448.17 billion.

Qualitatively, FDI is probably more important because it brings in technology, know-how, business methods, management techniques and markets that will otherwise be

unavailable in China.

China became the Worlds leading recipient of FDI for the first time in 2002, with

US$52.7 billion, overtaking the United States with approximately US$44 billion.

FDI has been responsible for most of the growth of exports (and imports).


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Conclusion

The prospects for continued rapid growth of the Chinese economy are excellent.

The high domestic savings rate implies a high rate of capital accumulation. The

abundant supply of surplus labor implies a low and steady real wage rate and

keeps the marginal productivity of capital high. A continuing high rate of growth

of real output is the result.

The low external debt (coupled with capital control) and the existence ofsignificant state-owned assets minimize the probability of a major crisis.


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china's winning strategies

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