1、CHINA OUTLOOK 2009,1,NPV CHINA Business Consultingis an opportunity maker in the SINO-EUROPEAN Gateway.Being an opportunity maker we support both multinational and Chinese companies in developing their activities in China, generating relationship, looking for investment opportunities and identifying
2、 the resources (tangible, intangible and human)they need to achieve their business goals.,2,2,AGENDA,Executive SummaryChina at a GlancePolitical StructureNational AccountsBalance TradeChina DiversityNational Economic PlanIndustry DistrictIndustry OrganizationLegal Structure for Foreign Enterprise,3,
3、3,China, with its 1.33 billion population, is the country with the largest potential for growth in the world and thus must represent an essential part of each companys strategy, either as a production base or as a final marketThe economy has been growing at average rates of 10.8% between 2001 and 20
4、08 and is now 3rd largest in the world, accounting for 6% of global GDP; foreign trade has been growing dramatically (an average of 25% CAGR between 2004 and 2008), and foreign investment has kept pouring in to the country with actually utilized foreign capital of 92.4 billion in 2008, up by 23.6%Fo
5、r Italian companies, China represents an extremely important opportunity on any of the following 3 fronts:Sale: as a final market with more than 1.33 billion consumersDelocalization: as a low cost production basePurchasing: as a sourcing baseExchange rate:RMB/USD stood at 6.83 at the end of 2008, wi
6、th a 6.9% appreciation of the end of 2007RMB/EUR stood at 9.61 at the end of 2008, with an 9.8% appreciation of the end of 2007Inflation: CPI in 2008 surged to 5.9% mainly due to the soar of food price. Other factors such as increase of energy price and excess liquidity in the financial market may k
7、eep the momentum of CPIStock Market: SSE composite index plunges 2/3 from the beginning of the year; whether the government should intervene is under intense debateThe new LAW OF THE PEOPLES REPUBLIC OF CHINA ON EMPLOYMENT CONTRACTS came into effect in 1st Jan, 2008 towards more protection of the em
8、ployeesThe 29th Olympic Games was held successfully in Beijing in August, 2008.,EXECUTIVE SUMMARY,Source : China Statistical Yearbook , China National Statistics Bureau, NPV analysis,4,4,AGENDA,Executive SummaryChina at a GlancePolitical StructureNational AccountsBalance TradeChina DiversityNational
9、 Economic PlanIndustry DistrictIndustry OrganizationLegal Structure for Foreign Enterprise,5,5,By 2050 it is expected that China will be the worlds number one economy,Source : BRIC Report , Goldman Sachs,CHINA AT A GLANCE,2025 USD bn,2050 USD bn,The largest economies in Asia in 2025,The largest econ
10、omies in the world in 2050,6,6,Source : China Statistical Yearbook, NPV analysis,Country profile,CHINA AT A GLANCE,7,7,AGENDA,Executive SummaryChina at a GlancePolitical StructureNational AccountsBalance TradeChina DiversityNational Economic PlanIndustry District Industry OrganizationLegal Structure
11、 for Foreign Enterprise,8,8,POLITICAL STRUCTURE,Source : http:/afe.easia.columbia.edu/china/gov/chart.htm, NPV analysis,Government and Communist Party Structure,9,9,BEIJING,SHANGHAI,TIANJIN,CHONGQING,HONG KONG,MACAU,XINJIANG,TIBET,QINGHAI,GANSU,SICHUAN,YUNNAN,INNER MONGOLIA,GUIZHOU,GUANGXI,HUNANI,HU
12、BEI,SHAANXI,SHANXI,NINGXIA,HENAN,HEBEI,GUANGDONG,JIANGXI,FUJIAN,ANHUI,ZEJIANG,SHANDONG,HAINAN,LIAONING,JILIN,HEILONGJIANG,TAIWAN,JIANGSU,Municipality,Autonomous region,Special administrative region,Source : China Statistical Yearbook, NPV analysis,Administrative Division,23 ordinary provinces (inclu
13、ding Taiwan)4 Municipalities : Beijing Chongqing Shanghai Tianjin5 Autonomous regions : Guangxi Inner Mongolia Ningxia Tibet Xinjiang2 Special administrative regions :Hong Kong Macau,POLITICAL STRUCTURE,China administrative divisions,10,10,Source : Chinese Government, NPV analysis,Central Government
14、,Municipalities,Provinces, Autonomous Regions,Special Administrative Regions,Districts,Counties,Cities,Autonomous prefectures,Counties, Autonomous Counties,Districts,Counties,Cities,Counties,Autonomous Counties,Townships,Ethnic townships,Towns,POLITICAL STRUCTURE,China administrative divisions,11,11
15、,AGENDA,Executive SummaryChina at a GlancePolitical StructureNational AccountsBalance TradeChina DiversityNational Economic PlanIndustry DistrictIndustry OrganizationLegal Structure for Foreign Enterprise,12,12,China is the 3rd largest economy in the world in 2008, 6% of gross world product (2007) C
16、onsidering the GDP per capita, China is the 106th in the world in 2008 ( at $3,315 )Chinese economy grows consistently reaching a 10% annual growth rate during the latest five years. Chinas urban households per capita disposable income growth has consistently been higher than CPI inflation, indicati
17、ng a positive real growth in the peoples living standard.,China GDP 2004 - 2008,Peoples Income and CPI 2001-2008,RMB Bn,NATIONAL ACCOUNTS,Source :China National Economic and Social Development Report, China Statistical Yearbook, NPV analysis,13,13,Secondary industry is the dominant force in driving
18、economy forward accounts for almost 50% of GDP, with CAGR 18.12% from 2000 - 2008Tertiary industry grows with CAGR 17.61% from 2000 -2008,GDP Breakdown 1978-2008,Source : China National Economic and Social Development Report, China Statistical Yearbook, NPV analysis,NATIONAL ACCOUNTS,14,14,Average G
19、DP per capita in 2008: 3,315 USDShanghai is the richest province level area with a per capita GDP of 10, 922 USD in 2008.ZHEJIANG, JIANGSU, and GUANGDONG are the TOP 3 richest provinces43.1 % of populations GDP per capita is higher than averageChina has reduced 62 million, 53% extreme poverty during
20、 the past 20 years. In 1985 China had 116 million people living under $1 dollar-a-day poverty level.(*),GDP per capita ( USD ),(*) MGI China consumer demand model,NATIONAL ACCOUNTS,Source : China National Economic and Social Development Report, China Statistical Yearbook , NPV analysis,Over 4,000 US
21、D/person 464 million,Below 2,500 USD/person347 million,Over 2,500 USD/person489 million,Average,15,15,AGENDA,Executive SummaryChina at a GlancePolitical StructureNational AccountsBalance TradeChina DiversityNational Economic PlanIndustry District Industry OrganizationLegal Structure for Foreign Ente
22、rprise,16,16,BALANCE TRADE,Bn USD,Foreign trade China Rest of world (2001-2009),+ 27%,+ 25%,CAGR 02-09E,Source : China National Economic and Social Development Report, China Statistical Yearbook, *Economist Intelligence Unit, NPV analysis,509.7,620.8,851,1154.5,1422,1760.4,2173.8,2561.6,3231.8,17,17
23、,BALANCE TRADE,Chinas Foreign trade by region / country in 2007,% of total imports,65%,15%,8%,5%,4%,3%,100%,% of total exports,47%,24%,21%,4%,3%,2%,100%,Top 3 countries by region,Imports: country and % of region trade,JapanKoreaTaiwan,GermanyRussiaFrance,USACanadaBermuda,BrazilChileArgentina,AngolaS
24、outh AfricaSudan,AustraliaNew ZealandNew Guinea,USAHong KongJapan,22%17%16%,32%14%10%,86%14%0,0%,36%20%12%,35%18%11%,91%5%2%,19%15%8%,Hong KongJapanKorea,GermanyHollandUK,USACanadaBermuda,MexicoBrazilPanama,South AfricaEgyptNigeria,AustraliaNew ZealandMarshal Island,JapanKoreaUSA,32%18%10%,17%14%11%
25、,92%8%0,1%,23%22%11%,20%12%10%,85%10%2%,14%11%7%,Exports: country and % of region trade,Billion USD,Source : China Statistical Yearbook 2008 (end of 2007 Data), NPV analysis,18,18,AGENDA,Executive SummaryChina at a GlancePolitical StructureNational AccountsBalance TradeChina DiversityNational Econom
26、ic PlanIndustry District Industry OrganizationLegal Structure for Foreign Enterprise,19,19,Eastern RegionShanghaiBeijingTianjinGuangdongShandongZhejiangJiangsuFujianHainanHebei,Central RegionShanxiHenanHubeiHunanAnhuiJiangsu,Northeastern RegionHeilongjiangJilinLiaoning,Not IncludedTaiwanHong KongMac
27、au,Western RegionInner MongoliaShaanxiNingxiaGansuChongqingSichuanGuizhouYunnanGuangxiQinghaiXinjiangTibet,Source : Chinese National Development and Reform Commission, NPV analysis,CHINA DIVERSITY,Division of regions,20,20,Population by Urban and Rural Residence and Region,Source : China Statistical
28、 Yearbook 2008 (end of 2007 Data), NPV analysis,CHINA DIVERSITY,21,21,GDP and GDP Per Capita by Region,Source : China Statistical Yearbook 2008 (end of 2007 Data), NPV analysis,CHINA DIVERSITY,GDP and GDP Per Capita by Region,22,22,Annual Income and Expenditure Per Capita by Region,RMB,CHINA DIVERSI
29、TY,Source : China Statistical Yearbook 2008 (end of 2007 Data), NPV analysis,23,23,Western,Northeastern,Central,Eastern,Urban Household Expenditure Breakdown,Food,Clothing,Transport and Communication,Education, Cultural and Recreation Services,Miscellaneous,CHINA DIVERSITY,Source : China Statistical
30、 Yearbook 2008 (end of 2007 Data), NPV analysis,Urban Household Expenditure Breakdown,24,24,Western,Northeastern,Central,Eastern,Rural Household Expenditure Breakdown,Food,Residence,Transport and Communication,Education, Cultural and Recreation Services,Miscellaneous,CHINA DIVERSITY,Source : China S
31、tatistical Yearbook 2008 (end of 2007 Data), NPV analysis,Rural Household Expenditure Breakdown,25,25,Note that Tier 3b is also referred to as Tier 4. Our reference to Tier 3 combines 3a with 3b for a total of 620 cities,CHINA DIVERSITY,Pyramid of Chinas tier cities,41 cities occupy:49.9 % of GDP23.
32、0 % of Population56.6 % of Market Sale of Consumer Goods,BeijingShanghaiGuangzhouShenzhen,ChongqingTianjinWuhanHangzhouNanjing,FoshanChengduShantouXianShenyangJinan,DongguanWenzhouTaizhouNingboZhongshanSuzhouChangzhou,WuxiZhuhaiXiamen,FuzhouQingdaoChangshaYantaiPutianZhengzhou,TaiyuanKunmingTangshan
33、ChangchunShijiazhuangGuiyang,HuaianHarbinZiboDalian,LinyiNanchangZaozhuang,XuzhouXiangfanBaotou,UrumchiHuizhouLanzhou,JilinDaqingHuzhou,QuanzhouJinhuaJiaxingDongyingJinzhou,ShaoxingZhoushanYueyangQuzhouNantong,ShaoguanLiuzhouBaodingXianyangZhuzhou,PingdingshanXinxiangHengyangBaoshanHuludao,BengbuZhe
34、ngjiangLangfang,Example cities,Tier 1 - “ Big Four ”,4 largest cities with highest income, large population base, and largest GDP scale,Tier 2a - “ Climbers ” ( 11 cities),Large population base, high incomeand large GDP,Tier 2b - “ Niches ” ( 10 cities),Wealthy consumer, but relatively small overall
35、 market size,Tier 2c - “ Mainstream ” ( 16 cities),Relatively low income, but large population base,Tier 3a - “ Next frontier ” ( 136 cities),Growing markets with population larger than 1 million,Tier 3b - “ Poor cousins ” ( 484 cities),Small cities with urban population smaller than 1 million,Sourc
36、e : City National Economic and Social Development Report 2008, NPV analysis,26,26,Source : China Statistical Yearbook, NPV analysis,Region,No. of cities,Eastern,29,Central,3,Western,5,Northeastern,4,CHINA DIVERSITY,Geographical distribution of Chinas tier 1 and tier 2 cities,27,27,Source : City Nati
37、onal Economic and Social Development Report 2008, NPV analysis,Breakdown of China market,CHINA DIVERSITY,28,28,AGENDA,Executive SummaryChina at a GlancePolitical StructureNational AccountsBalance TradeChina DiversityNational Economic PlanIndustry DistrictIndustry OrganizationLegal Structure for Fore
38、ign Enterprise,29,29,Source: The Outline of the 11th Five-Year Plan, NPV analysis,THE FIVE-YEAR PLAN,The Five-year plan is a guideline for Chinese economic and social development from 2006 to 2010, it was approved by the Tenth National Peoples Congress in March, 2006It is based on two lines of strat
39、egic thinking: the scientific concept of development and the building a socialist harmonious society,30,30,Expansion of domestic demand:,Investment and export,Consumption, investment, domestic and foreign demand combined in a balanced manner,Optimizing industrial structure:,Industry and quantitative
40、 expansion,Balanced development of the primary, secondary and tertiary industry and by structural optimization and upgrading,Economic Growth,Resource conservation and environmental protection:,Large amount of resources consumption,Improvement of resources utilization efficiency,Source: The Outline o
41、f the 11th Five-Year Plan, NPV analysis,Economic Growth,Economic Growth,Still heavy dependence on investment and export; but consumption contributes more than past years,Second industry dominates; tertiary industry loses its share,Water utilization efficiency increases considerably; resource consump
42、tion is heavy; forests are planted,The basic policy orientation 1/2,THE FIVE-YEAR PLAN,State of the art 2007,31,31,Enhancing independent innovation capability:,Input of capital and substance factor,Science and technology advancement and human resources.,Deepening reform and opening up:,Administrativ
43、e intervention,Giving more play to the fundamental role of the market in allocating resources under guidance of macro regulation and control,The people-centered approach, improving living standard:,Accumulation of material wealth,Overall development of the people as well as the balanced economic and
44、 social development.,Economic Growth,Economic Growth,Economic Growth,R each level education enrollment increases,Soaring inflation and high volatility in financial markets urge more skilled and proper level of macro controls,Increasing health institutions and cultural facilities; peoples income grow
45、s with GDP; poverty reduces,The basic policy orientation 2/2,THE FIVE-YEAR PLAN,State of the art 2007,Source: The Outline of the 11th Five-Year Plan, NPV analysis,32,4 Trillion Yuan Investment plan to Stimulate Domestic Market,Source: ,33,10 Industries Promotion Plan in 20091/3,Auto Industry From 20
46、th/Jan to 31st/Dec, impose 5% purchase tax on auto less than 1.6L emission Promote the reintegration of auto industry, support M&A of big auto group In future 3 years, Chinese government will arrange 10 Bln RMB to support self-creation and technology re-construction Chinese government will arrange s
47、ubsidy fund to promote the energy-saving and new-energy auto in big and middle-sized cities Encourage auto company to develop brand, fasten the exporting bas, better auto consuming credit,Steel Industry Strict control on steel production, eliminate the project with singular purpose to increase the p
48、roduction capability Take advantage of leading force of big group, encourage M Deepen the technology reconstruction, research and importing, create the specialized fund in annual budget to promote the steel industry technology progress, adjust the product categories composition,Ship building The pol
49、icy to promote financial institute enlarge the buyers credit for ship exporter till 2012,Textile Increase the textile exporting VAT refund from 14% to 15% Give credit support to textile company with operational and financial difficulty Encourage the financial support for small and middle-sized enterprise, reduce the burden of textile company Central government, local authorities and enterprise enlarge the cotton purchase,
