Headline China: Great Expectations Great Contradictions

Transcription

1 Headline China: Great Expectations Great Contradictions Bildbeschreibung

2 German Centre Tenants 130 companies and commercial tenants 100 % occupancy ( gross sqm) German States: North Rhine-Westphalia (20 companies) Baden-Württemberg (14 companies) Bavaria (13 companies) Lower Saxony (7 companies) August

3 German Centre Concept The GC is a platform, a network Information and Service Centre Competence Centre Event Centre Offices, apartments, shops, restaurants A home away from home The House of Convenience Idea: Living, Working & Leisure August

4 Impressions August

5 China: Yesterday Today China 10 years ago Today GDP worldwide 7 th place 2 nd place Global banks ranking acc. to market capitalization, profits and deposits RMB ranked among global transaction currencies Not listed Ranked 1 st, 2 nd, 6 th, 9 th, 30 th, 37 th, 40 th, 42 nd, 50 th and 53 rd (of 60) ONE year ago: 20 th 7 th (2 nd for trade currencies) Currency reserves 1 st place (USD 240 bn.) 1 st place (USD 3,66 trillion) Biggest market for... Percentage of world population Steel (since 1996), concrete, EU: 7.0% China: 20.2% cars, smartphones, gold, personal computers, pork, beer, EU: 7.1% China: 19.1% August

6 Tomorrow: Model? Model USA Free Market Economy Freedom, Democracy Human Rights Property Military Protectionist Power Reserve Currency World Police Model China Socialist Market Economy Central Communist State Basic Rights Chinese Style Land Use Rights Trade Currency August

7 The 5 th Generation Xi Jinping + Peng Liyuan President + Spouse Successor of Hu Jintao Li Keqiang + Cheng Hong Prime Minister + Spouse Successor of Wen Jiabao August

8 Expectations Contradictions Infrastructure High speed trains, highways, subway systems Curbed internet capacities Car Industry car market is economic factor Traffic gridlock, exhaust fumes Currency Environment Job Market RMB is int l trading currency Big banks highly profitable Increase alternative energy use from 21% to 30% Rise in basic salary: 13%/year One-Child-Policy Not freely convertible Mountain of bad loans Air pollution of more than 500 Reduction of jobs Aging society Society Harmonious Society Rich cities, poor countryside Soccer Passionate fans, Stadiums, Funds Scandals, disappointing sportive performance August

9 Great Expectations Harm Bergen, Licensegarden August

10 HR Cost Calculation Base for Social Security in Shanghai ,235 RMB 4,331 RMB 4,692 RMB 5,036 RMB* * EUR Minimum Monthly Salaries 2014 Shanghai Beijing Chongqing Shaanxi RMB 1,820 RMB 1,560 RMB 1,150 1,250 RMB 970 1,280 August

11 Individual Income Tax China IIT Formula: Level Category IIT % Calculation Deduction (gross salary tax free) x IIT% - calculation deduction = payable IIT 1-3% - Example for RMB 40,000: 2 1,500 10% 105 (40,000 3,500) x 30% - 2,755 = 8, ,500 20% ,000 25% 1, ,000 30% 2, ,000 35% 5, ,000 45% 13,505 * * * * * * * * Tax Free: RMB 3,500 August

12 2 nd Tier Cities Source: China Daily online Source: The China Business Review online August

13 Taicang Jiangsu Province; 80km northwest of Shanghai 947,000 inhabitants (400,000 migrants) 823 km 2 area; only natural Yangtze port with 39km coastline 3,500 foreign invested companies; highest concentration of German companies in China (200) 2012 GDP: 15.3 bn USD (Shanghai: 321.2) Economic growth in 2012: 10.3% (Shanghai: 7.5%) August

14 August

15 China s Currency Fixed exchange rate with USD until 2005 at 1:8.33 Since mid-2005 based on basket of currencies; 4 main currencies: USD, EUR, JPY, KRW. Exchange rate with USD still strongly controlled. Mid-2008 mid-2010 CNY USD kept stable as form of crisis intervention. Since then gradual appreciation against USD Exchange rate of August 08, 2014: 1 USD = 6.16 RMB; 1 EUR = 8.25 RMB Multiple currency agreements, e.g. with: Argentina, Australia, Brazil, Hong Kong, Indonesia, Iceland, Japan, Kazakhstan, Malaysia, Mongolia, New Zealand, Pakistan, Russia, Singapore, South Korea, Thailand, Turkey, Uzbekistan, UAE, Belarus Main objective: become an international trading currency Daily RMB trading band against USD doubled to 2% on March 16, 2014 August

16 China Invests: 2012: China becomes 3 rd most important investor abroad (77 bn USD) 13% of Chinese Foreign Investment is in Europe; 55% of which in Eastern Europe, 29% in Western Europe, 12% in Southern Europe and 4% in Northern Europe. Asia: ca. 65% 54% of Chinese companies in Europe concentrated in 10 cities 28% of those in Bucharest 4 of these are German: Hamburg, Düsseldorf, Frankfurt, Berlin 2013: of 7,148 Chinese companies in Europe 82% are invested by individual / family investors; 18% by corporate investors. Of those, 15% by privately owned enterprises; only 3% by state owned enterprises. 2013: 86% of Chinese companies in Europe work in the service sector; 3% in high-tech production, 3% in low-tech production and 8% in knowledge intensive services 47% posted losses, 53% turned profits Source: Euro-China Investment Report 2013/14, Antwerp Management School August

17 Germany Invests: August

18 New Pudong Free Trade Zone: China (Shanghai) Pilot Free Trade Zone; officially opened on 29 Sept Areas affected: Approval processes Currency convertibility Trading transactions Access to information August

19 Which Contradictions Remain? Communist Party economic success Unequal chances harmonious society Copyright infringements innovative abilities Strict birth control provision for old age Modern society traditional values Small people big cars China: big, well-known, good Germany: specialized niche high-tech Pilot projects legal certainty Int l / German investment needed reduction of economic dependencies August

20 Conclusions I Trend: Growing revenues & HR cost, sinking margins Growing importance of 2 nd & 3 rd tier cities as locations / motor for growth German companies will have to pay better attention to Chinese competition Growing competitiveness of Chinese companies; active in EU markets in the medium term Overblown budget expectations must be reduced Increased efficiency becomes important objective China moves up the value creation chain August

21 Conclusions II Chinese brands still weak; hampers international competitiveness Environmental pollution a burden for China as investment location RMB must be counted on medium term New FTZ: Politically motivated pilot project; direction specified by gov t Size of the country makes contradictions in economy & society inevitable Despite all contradictions & differences confidence prevails August

22 Quote on Foreign Policy It was the greatest contribution towards the whole of the human race, made by China, to keep its 1.3 bn people from hunger. [ ] There are some bored foreigners, with full stomachs, who have nothing better to do than point fingers at us First, China doesn t export revolution; second, China doesn t export hunger and poverty; third, China doesn t come and cause you headaches, what more is there to be said? Vice President Xi Jinping, February 2009 Quote on The Economy Economic growth is key to every issue at hand. Without growth, we will see no increase in employment nor in people s incomes. The government should leave what can be handled by the market to the market and create a fair environment for enterprises to release market vitality and social creativity. Prime Minister Li Keqiang, March 2014 August

23 Delhi Gurgaon Mexico Indonesia Thank You! Beijing Singapore 谢谢 Moscow Shanghai August