Doing Business in China: Updates and Opportunities

Transcription

1 Doing Business in China: Updates and Opportunities September 29, 2006 Andrew M. Pan North American Representative Office of Shenzhen, China (NAROS)

2 Outline China Economic Developments China Regional Economy China Economic Update New Economic Plan Most Recent Developments Emerging Market Opportunities Domestic Market Momentum: Service and Distribution Manufacturing in China Purchasing from China Business Process Outsourcing (BPO) Acquisition of SOE Industrial Zones Shenzhen and the Pearl River Delta Facts and Figures Features and Characteristics NAROS and Our Services 2

3 China Economic Developments 3

4 China Regional Economy West and Central Regions Northeast Region China Beijing Tianjin Dalian Beijing-Tianjin- Hebei Region Xian Chongqing Suzhou Shanghai Yangzi River Delta Region Chengdu-Chongqing Region Guangzhou Macau Shenzhen Hong Kong Pearl River Delta Region 4

5 Economic Update China s economy grew 9.9% in 2005 China s GDP US$ 2,279 billion world s 4 th largest Foreign direct investment (FDI) US$ 60.3 billion Foreign trade volume US$ 1,422.1 billion Foreign currency reserve US$ billion Total household savings in banks US$ 1,838.1 billion Source: China State Statistics Bureau,

6 New Economic Development Plan China s 11 th 5-year Socioeconomic Development Plan ( ) Establish a harmonious society Coordinate growth among different regions Stimulate development of the agricultural sectors Facilitate healthy growth in urban areas Transform from export-processing to higher-technology-content products Convert from a manufacturing driven economy to a more diversified domestic services economy Targets by end of 2010 Double 2000 GDP per capita by 2010 Reduce energy consumption per GDP unit by 20% from 2005 level 6

7 Most Recent Developments Tianjin set to become China s next Pudong Corporate income tax rate for FIEs to be harmonized with that of domestic enterprises A Beijing court overturned China IP Bureau s ruling on Viagra patent; a Shanghai court backed Starbucks claim against a local coffee shop called Starbucks in Chinese China controls the inflow of foreign capital into speculated real estate market in order to cool housing prices New M&A regulation effective from September 8, 2006 China adopts new anti-corruption efforts 7

8 Emerging Market Opportunities 8

9 China Market Momentum Recent survey conducted by PwC Survey of 1,410 CEOs from 45 countries Projected overseas investment ( ) 55% of respondents will invest in China (vs. 36% in India, 33% in Brazil) 75% of respondents are attracted by China domestic market opportunities 48% are attracted by lower manufacturing costs Source: PricewaterhouseCoopers 9

10 American Chamber of Commerce Survey: Number One Goal for China Business Produce goods or services for other (non-china, non- US) market Serve as regional headquarters 5% Others 5% 3% Q: No.1 goal of the US investment in China? A: China domestic market opportunities. (62%+ 11% = 73%) Export to China 11% 14% 62% Produce goods or services in China for the China market Produce goods or services in China for the US market 100% = 345 companies 10 Source: 2005 AmCham-China and AmCham-Shanghai Member Questionnaire

11 Domestic Service and Distribution WTO opens the door of China domestic service and distribution market Distribution: retail, wholesale, franchising and direct marketing Banking, consumer lending and insurance Telecommunication and content driven providers Freight forwarding, transportation and package delivery service Customer service Entertainment: film and TV production, audiovisual products distribution, movie theatres Construction engineering and consultation Hotels and restaurants Education Professional services: legal, accounting, tax, medical, dental, management consulting and advertising services etc. 11

12 Manufacturing, R&D in China Take advantage of low cost, skillful labor force and collegegraduated engineers, lower cost Incentive income tax rates and other tax holidays For some products, Chinese government only allows those manufactured and/or R&D in China to enter into China domestic market Covering almost all industrial sectors of consumer and capital products 12

13 Purchasing from China Access to a larger manufacturer and supplier base Deal directly with manufacturers with lower purchasing cost Better quality control Better supply chain management 13

14 Business Process Outsourcing (BPO) State-of-art infrastructure Well educated labor force Much improving English speaking capability Government support and tax incentives Services can be outsourced/offshore: Data entry and backup Call center/customer service Back-office business process service IT Software outsourcing 14

15 Acquisition of SOE Industries from banking, infrastructures, public utilities to retail chain stores, machinery equipments etc. A good solution for US companies to expand their China operation without a substantial front-end cash investment A shortcut for US companies to expand their China operation and enter China domestic market May allow US companies to access China domestic regulated market segment Some SOEs are down-sizing/spin off to increase efficiency at a fair low cost Endorsed by central and local governments with various incentives (case-by-case) 15

16 Industrial Zones Industrial zones provide various incentives and opportunities for US companies with different business models Special Economic Zone (SEZ) Economic and Technological Development Zone (ETDZ) Free Trade Zone (FTZ) High-Tech Park Export Processing Zone (EPZ) Bonded Logistics Zone (BLZ) Bonded Port 16

17 Shenzhen and the Pearl River Delta 17

18 Shenzhen in Greater China Shenzhen 18

19 Shenzhen and Pearl River Delta 19

20 Shenzhen and Pearl River Delta 20

21 Facts and Figures City founded in 1979 Became China s first SEZ in million population, average age about 30 Only city in mainland China borders on Hong Kong GDP in 2005 USD 61.5 billion, ranks 4 th among all mainland China cities Average GDP growth rate over 25% per annum from 1980 to 2005 Export in 2005 USD 115 billion, ranks the 1 st among all mainland China cities for 13 consecutive years Hong Kong, US and EU ranks the top 3 trade partners FDI in 2005 USD 3 billion, total USD 40 billion since

22 Facts and Figures 120+ Global Fortune 500 companies have operations in Shenzhen The home for Shenzhen Stock Exchange and the regional financial center in Southern China Shenzhen Port-the 4 th largest container terminal in the world, 16.2 million TEUs in 2005 Shenzhen International Airport-the 4 th busiest airport in China The corporate headquarters for Huawei, ZTE, China Merchant Bank, Ping an Insurance and many other local China big private companies 10+ five-star hotels, 10 world class golf courses. Mission Hills Golf Club is the biggest golf club in the world 22

23 Shenzhen in

24 Shenzhen Today 24

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26 Features and Characteristics Major Industries Consumer products manufacturing Technology products manufacturing and R&D Imp./Exp. trade city in mainland China Logistic center for Southern China-a port city Regional financial center A young, vigorous migrant city with the culture of creativeness and entrepreneurship A coastal city with excellent infrastructures and utilities China s first SEZ with the most open market economy and a pro-business government Much lower operation cost compared with Shanghai, Beijing and Hong Kong One of the best living cities in mainland China (air quality, green space, foods and entertainment) 26

27 NAROS and Our Services Set up in 2001 Based in Los Angeles, CA Shenzhen s only investment and trade promotion office in North America Our FREE services: Provide China general/business information Consult on China business policies and incentives Facilitate business setup and transaction Build up Chinese government connections Support daily operations 27

28 Thank You! If you need more information about doing business in China, especially in Shenzhen, please contact Tel: Fax: andrewpan@shenzhenoffice.org Web: