Shaping trends of Greater China MarketEli Tidhar, head of China-Israel Corridor, Deloitte

Deloitte Consulting has one of the most established consulting practices in China

Deloitte in China is a top-tier professional services organization for both

multi-national and large local Chinese companies.

Deloitte serves 80% of companies among Fortune Global 500, nearly

50% of China Top 100 companies and one-third of companies listed

on the Stock Exchange of Hong Kong

The first foreign accounting firm to open an office in Shanghai in 1917

Over 13,500 people in 21 Chinese cities

Provides audit, consulting, financial advisory, risk, and tax services

Deloitte Offices in Greater China Region

= Deloitte China offices= Deloitte China offices with Consulting operations

Deloitte China

In China, Deloitte Consulting were honored with the Top 10 Advisory

Consultancy award and CFO‘s Most Trusted Advisory Organization. We

are now the largest consulting practice among the Big Four (by size),

with our revenue growing by more than 50% per annum in the last 3 years.

Staff strength of over 1,200 bi-lingual management consultants located

in 6 cities in Greater China, our charter is to assist organizations to achieve

their business objectives and goals through the following approaches:

• Bring the best and most relevant talent through our multi-disciplinary

approach

• Leverage global networks

• Understand challenges of specific industries within China, bring them

proven solutions and new thinking

Deloitte Consulting in China

Areas for Cross Border Collaboration CN-IL

M&A

• CF/transaction support/M&A services

• Sharing deal flow

• Targeted approach (investors, potential candidates)

Cross Border Audit

• Building cross border teams to capture specific audit

opportunities

Innovation Bridge

• GTA Services - Onboarding Israeli innovation

Consulting Bridge

• IL companies looking to enter or already active in CN

• Services to CN groups active in IL

• G2G

CN ILDeal flow opportunities bridge

Cross border audit

Consulting bridge

innovation bridge

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China – Slowdown & Resilience

GDP growth set at “6.5%” in 2017

0.002.004.006.008.00

10.0012.0014.0016.0018.00

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(%)

Total retail sales of consumer goods: YoY

Booming consumption

-40.00

-30.00

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-10.00

0.00

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(%)

Exports: YoY Imports: YoY

Trade development

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(%)

GDP: YoY

The Chinese 13th 5 year plan (FYP)

Stabilization of growth & economic adjustment

Reduced capacities and inventories

Increased innovation and industrial upgrades

Greener economy

SOE reform with the genuine mixed ownership experiment

Financial reform with a more flexible RMB exchange rate as the PBOC’s basket is being tested now

Labor reform addressing 150 million migrant workers

China – Industry Segmentation

The Life Science and Health Care Industry

Unbalance between supply and demand drives China healthcare market grow rapidly

2004 2013

Healthcare Expenditure

(trillion in RMB）0.76 3.17

Hospital Institutions

840K 970K

Beds3270K 6180K

Healthcare professionals 6330K 9790K

Doctors1580K 2290K

Supply and demand of

healthcare service

Demand for healthcare is growing at a breakneck speed, yet supply-side growth

is sluggish by comparison.

4.2

1.2

1.9

1.5

1.4

X

• Total health spending is expected to reach 5.6 trillion yuan in 2019, 1.76 times in 2013

• China’s enormous healthcare market continues to expand rapidly, driven by an aging population,

economic growth and an expanding basic health insurance

Health Expenditure in China Health Expenditure as Percent GDP （2013）

0.0

10000.0

20000.0

30000.0

40000.0

50000.0

60000.0

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2014e

2015e

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2.4 Trillion in RMB

Strong demand for healthcare services with a huge market space

Patient experience of China’s healthcare system

Increasing healthcare spending and significant gaps in patient care experience fuel the demand for private healthcare services

Healthcare budget per capita (RMB)

Healthcare budget per capita has increased significantly with a CAGR of 15% over last 15years

872

601

318

110

326

1688843

201020051995 2000

HC Budget per Capita in Urban Area

HC Budget per Capita in Rural Area

Accessibility

Care Quality

Availability32% of patients think local

medical services cannot meet their needs

45% of patients find

waiting time before healthcare service is unfavorable

47% of the patients

believe the hospitals are not patient-oriented

Source: Deloitte China Healthcare service survey, press release, Monitor Deloitte Analysis

Healthcare reform to promote the following difficulties in public hospitals

Affordability

Availability

Quality

Removal of drug mark-ups

Payment Reform

IncreasedServices

Talent Retention

Healthcare services will break through the traditional services model

• As the development of China, people are growing more aware of their healthcare needs, demanding more preventive care and a greater diversity of services.

• Heath care will no longer be limited in "disease to medicine“. It will cover health consultation, prevention, rehabilitation and chronic disease management etc.

• Health care model will be innovative, providing a broader development space for m-health, wearable devices and other emerging models.

Private hospitals are developing rapidly, but volume accounts for only 11%

The State Council’s 12th Five-Year Plan explicitly proposed that private hospital service volume should comprise 20% of the total by 2015.

Number of Private Hospitals in China

12,359 13,153

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

50%

11% 13%

0%

20%

40%

60%

80%

100%

Source: Health Statistics Yearbook, Deloitte Analysis

Public and Private Hospitals by Quantity and Service Volume

Policy Reform in Favor of Private Hospital Development

Private capital will boost healthcare sector growth

Investors favor hospitals and hospital management Institutions

Active Merger and Acquisition Activities in Healthcare

VC/PE Investment Amounts and Transaction Quantities

Hospital Acquisitions

Corporation investment in hospitals

The biotech sector has been targeted as key development sector by the government

Healthcare – a trillion dollar market

Healthcare is one of the last big industries in China to open up to foreign investment and technology.In addition to rising demand for the best available treatment from newly affluent consumers, China is facing new challenges, as cancer, heart disease, diabetes, and other chronic diseases afflict more of its population.

Aging population

Demand and policy driving market forward Key market expansion drivers include:

Increasing healthcare expenditure

Healthcare reform

measures

The Technology, Media and Telecommunication Industry

Technology Sector

Online sales in China

Smart City Projects in China (2014-2015)

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