contemporary economic & business issues in china laura yang shanghai university of...
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Contemporary Economic & Business Issues in China Laura Yang Shanghai University of International Business & Economics May, 2013. 1. Transition into Modernization. “ I don’t care if the cat is black or white as long as it catches the mice.” - PowerPoint PPT PresentationTRANSCRIPT
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Contemporary Economic & Business Issues in China
Laura Yang
Shanghai University of International Business & Economics
May, 2013
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Transition into Modernization
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Time’s 1978 Personof the Year
“I don’t care if the cat is black or white as long as it catches the mice.”
Deng Xiaoping (1904–1997), head of China’s Communist Party and pioneer of “Socialism with Chinese characteristics”
Background
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Started from 1979
Economic reform towards Market Economy, reduce government interference
Opening up to outside world
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Economic Achievements
Source: MOFCOM
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China’s GDP Growth
China surpassed Japan to be world No. 2 economy in 2010
Country GDP (million dollars)United States 14,582,400
China( PRC) 5,878,629
Japan 5,497,813
Germany 3,309,669
France 2,560,002
SOURCE: World Bank
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Import and Export of China Total foreign trade increased by 85 times
from US$ 20.6 billion in 1978 to US$ 2972.76 Billion in 2010.
China became the world largest trading power in 2012 (according to US Department of Commerce).
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Foreign Economic & Trade Relationships of China
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Bilateral & Multilateral Trade Relationships
Mainland ECFA Taiwan Sept., 2010
HK Macao1/1/04 1/1/04
ASEANJan. 2010Free Trade
APEC(Founded in 1989 and China became a member in 1991)
WTOTrade without discrimination
Freer trade
Predictability
Encouraging development and economic reform
CEPA
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Multinational Companies in China?
over 400 of Fortune 500 have invested in China Nearly 60% of China’s exports are processing trade by foreign companies investing in China 1990-2005, foreign investors’ profit remittance from China
totaled $280 billion
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Selected Largest Exporting FIEs (2006)
Source: http://www.fdi.gov.cn/pub/FDI_EN/Statistics/AnnualStatisticsData/AnnualFDIData/FDIStatistics,2006/t20071008_85470.htm
LG Philip LCD (Nanjing)
Canon Zhuhai
Fuji Xerox
Shenzhen Samsung Kejian Mobile
LG Electronics (Tianjin)
Toshiba Info Machine (Hangzhou)
Maxtor Tech (Suzhou)
Wuxi Sharp Electronic Component
Kingston Tech (Shanghai)
996
1,000
1,016
1,038
1,164
1,307
1,441
1,495
1,646
1,686Suzhou Samsung
LG Electronic (Huizhou)
Tianjin Samsung
BenQ
Dell (Xiamen)
Intel Tech (China)
Beijing Sony & Ericsson Putian Mobile
Hangzhou Motorola Mobile Telecomm
Samsung (Suzhou) Semiconductor
Nokia Shouxin Mobile Telecomm
1,850
2,054
2,157
2,306
2,770
2,822
3,789
4,076
5,912
6,174Motorola (China) Electronics Ltd
Export Volum
e ($mill.)Enterprise
Export Volum
e ($mill.)Enterprise
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China Market
Opportunities in China market
Opportunities in China market
If current trends continue, nearly one billion people will live in China's cities by 2025.
The urban population will grow by some 350 million people-more than the population of the United States today.
Some 240 million of China's city dwellers will be migrants.
China will have 221 cities with more than one million inhabitants-compared with 35 in Europe today-of which 23 cities will have more than five million people.
Characteristics of Chinese Consumers
Functional buying factors dominate
Pay for safety
Characteristics of Chinese Consumers
Characteristics of Chinese Consumers
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Economic reform & market economy provided ground for entrepreneurship in China
Breaking of the “Iron Rice Bowl”: allow employment freedom
Increased market opportunities: provide the “soil” for cultivating SME
More entrepreneurs encouraged: greatly help the employment in the long run
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Local Entrepreneurs Western Best
PracticesTraditional Chinese Serve the stockholdersServe the familyObjective: Transparent and
auditedPrivate and secretiveFinancial
data: Investment bankers, stock exchanges
Family and friendsFinancing source:
Mergers, consolidations, battles for control
Not for sale; family obligations
Longevity:
Based on building brands
Based on family networks
Sales: Professionals rewarded
based on meritNepotism (with
approval by patriarch)Executive
recruitment: Quarterly profits for
stockholdersLong-term view for
family prestigeTime horizon:
*Source: Ming-Jer Chen, Inside Chinese Business: A Guide for Managers Worldwide (Harvard Business School Press, 2001) http://www.quickmba.com/mgmt/intl/china/
When Business is All in the Family*
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Local Entrepreneurs (Cont’d.)
*Source: http://www.hurun.net/listreleaseen25.aspx
China’s 2007 Billionaires*
1,0501,1001,2001,3001,3001,3001,6001,7001,8001,8501,8501,8501,9002,0002,2003,0005,300
17,500
LonghuHaixin GroupYangzijiang ShipbuildingITAT TextileTransfield ER GroupShandaChina DongxiangNorth China ShippingHuabaoSanlian GroupLiye GroupHidili IndustryAntaYinyi GroupKWG PropertySuning UniversalLDK SolarCountry GardenCompany
Wealth US$mill.
Wu YajunLi ZhaohuiRen YuanlinOu TongguoMo FengChen TianqiaoChen YihongGao YanmingZhu LinyaoXian YangLin LiXian YangDing Shizhong & familyXiong XuqiangKong Jianmin & familyZhang GuipingPeng XiaofengYang HuiyanName
Real estateArtificial textile and knitwearShipbuildingRetailShippingOnline GamingSports apparelShippingInternational Fragrances & FlavouringCokeInsurance
Coal and coke and coal-related chemicalsSports apparelReal estateReal estateReal estateSolar panel componentsReal estateIndustry
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Local Entrepreneurs (Cont’d.) Example: Shanda Interactive Entertainment*
Founded in 1999 with family and classmates, sold “massive multiplayer online role playing games” (MMORPG) to become China’s largest entertainment company
2003, Japan’s Softbank and Cisco invested $40 mill., sold its 20-25% shares on NASDAQ in 2004 for $100 mill., became one of the Nasdaq’s biggest success stories Introduced EZ Pod TV set-top boxes to deliver movies, music and content online … but
heavily regulated and little broadband for coach potato audiences 2005, switched from “come-pay-stay” model to “come-stay-pay” (CSP) platform
where gamers play for free but pay for virtual accessories or expansion packs Stock crash caused founder and CEO Chen Tianqiao to lash out at Wall Street analysts
for not understanding Chinese market When sued by S. Korea game developer, SNDA bought its parent
Over 500 mill. registered accounts and 1/3 China’s market, 2007 revenues around $300 mill. with market growing 30%/year through 2011.
*Source: http://www.businessweek.com/magazine/content/04_46/b3908040.htm; http://english.people.com.cn/200312/03/eng20031203_129569.shtml; http://www.financeasia.com/article.aspx?CIaNID=61660; http://www.forbes.com/markets/2007/05/15/shanda-entertainment-closer-markets-equity-cx_jl_0515markets16.html; http://www.forbes.com/markets/2007/08/28/shanda-online-gaming-markets-equity-cx_jc_0828markets01.html; http://seekingalpha.com/article/23375-investing-in-china-s-online-gaming-sector; http://thechinablogger.blogspot.com/2006/09/wsj-article-on-shanda-i-think-if.html
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Thank You!