suzhou vs wenzhou
DESCRIPTION
A presentation on establishing Chinese enterprises through joint ventures, foreign direct investment and local venture capital investments. Part of a broader series of presentations and research I put together while studying at Shanghai University in 2009.TRANSCRIPT
Suzhou vs. Wenzhou:Enterprise in China
Presented by Meaghan Barbin
China’s Recent Economic Status
FDI and the “Suzhou model”
Domestic Venture Capital◦ “Wenzhou model”
Enterprise to Progress the Economy
Agenda
2007
• 13% growth
2008
• 9% growth
• 4Q08: only 6.8% growth
2009
Economic OutlookChina swells to 3rd largest economy!
1980s◦ Incentives given to foreign investors◦ Set up Special Economic Zones (SEZs)
“Open Cities”◦ Permit joint ventures using foreign capital
Expectations of FDI◦ Global recession means few are able to invest◦ Is this the time to reform?
Foreign Direct Investment
1980s◦ Industrial reforms allow new model of business◦ Chinese production with foreign financing
Suzhou welcomes foreign investment◦ 2001-2005: Suzhou boasts US$20 billion
Most of any city in China China totaled US$286 billion
◦ 2006: 16,000 companies run on foreign investment
Poverty and pollution
“Suzhou model”
Economic stabilization and sustainable growth◦ Less reliant on foreign direct investment
Financial gains◦ Profit at the point-of-sale◦ Financial gains from ROI in Chinese companies
Future of Enterprise?
2007: Enterprise Income Tax Law Adopted◦ Domestic and foreign investment
All companies will pay 25% tax rate
◦ "It marks the maturity and standardization of China's economic system.” Minister of Finance, Jin Renqing
Domestic Venture Capital
Sources for Domestic VC:◦ Government
◦ Large state-owned, cash heavy enterprises
◦ Private enterprises Wenzhou Donghai Venture Capital Limited
Partnership Initial funds reaching RMB500 million
Domestic Venture Capital
Government◦ Largest source of funding◦ Funds are earmarked for economic guidance
Regional Industry
◦ Rigid management and oversight limits profitability
Private Enterprise◦ Relatively small means◦ Short-term focus on profits and control
Hurdles for Domestic VC
Independently run businesses◦ “Biggest manufacturer of small-scale goods”◦ Little government intervention, little FDI
Private sector makes up 95%
3rd highest disposable income in China
Recession: entrepreneurs seek new enterprise◦ RMB$140 billion of private capital to VC◦ Real estate, mineral, cotton, stocks and energy
“Wenzhou model”
China must foster professional domestic venture capital investments.
Lack of VC management institutions◦ VC firms finance and build business◦ Successful entrepreneurs pursue other asset
classes Stock market Real estate
Future of Chinese Enterprise
Suzhou vs. Wenzhou
China Becomes 3rd Largest Economy
FDI
Setting up in Suzhou
Pollution and the Huangpu River
Corporate Taxation
Domestic VC Sources
Domestic VC Sources Chart
Appendix
My paper
http:/www.france24.com/en/20090114-china-becomes-world-third-largest-economy-overtakes-germany-growth/
News release upon China surpassing Germany
China Becomes 3rd Largest Economy
http://www.hiebs.hku.hk/working_paper_updates/pdf/wp1049.pdf
A paper on China’s FDI policies and how FDI has affected China’s industrial growth
Foreign Direct Investment
http://www.chinaeconomicreview.com/cer/2008_01/Setting_up_in_Suzhou.html
Suzhou welcomes FDI General figures on Suzhou’s FDI
Setting up in Suzhou
http://www.who.int/water_sanitation_health/resourcesquality/wpccasestudy2.pdf
Case study of the sanitary conditions of the Yangtze River basin.
Includes maps of the Huangpu and Suzhou River waterways.
Pollution on Huangpu River
http://www.china.org.cn/english/government/203171.htm
Domestic capital on the same level as foreign, with regards to corporate taxation
China & the WTO
Enterprise – One Tax Rate
http://www.zero2ipo.com.hk/china_this_week/detail.asp?id=7230
Much of domestic VC is expected to come from Chinese government
Sources of Domestic VC
Sources of Domestic VC
http://knowledgenetwork.thunderbird.edu/globalcitizenship/2009/01/30/eyeglasses-cigarette-lighters-and-italian-shoes-in-china/
Wenzhou is explored as a supplier and city of entrepreneurship.
Wenzhou: City of Entrepreneurs
http://www.zibb.com/article/4510961/Wenzhou+Private+Capital+Eyes+VC+PE+Investment
Wenzhou’s private entrepreneurs move to make more profits in the global recession
Wenzhou turns to VC