1、,A new environment,A small consumer market,0,500,1000,1500,2000,2500,China,Brazil,Australia,South Korea,Italy,UK,0,50,100,150,200,Cars, 000 units, left axis,Life insurance, US$m, right axis,1998,Source: EIU, Swiss Re,A significant consumer market,0,500,1000,1500,2000,2500,3000,China,Brazil,Australia
2、,South Korea,Italy,UK,0,50,100,150,200,250,Cars, 000 units, left axis,Life insurance, US$m, right axis,2003,Source: EIU, Swiss Re,A large industrial market,Source: WTO,An accessible market,Much better hard infrastructure Sophisticated telecoms network Improved transport network Both internal and ext
3、ernalImproved soft infrastructure Improved international connectivity Domestic economic reform WTO entry,MNCs go deeper,Different FDI IT-related More than 60%of Taiwans IT production is made in ChinaCapital-intensive industries Petrochemicals, semiconductor Service sectors Financial services, retail
4、,More FDI,Source: EIU,MNCs are important to China,Source: EIU,China is important to MNCs,Source: EIU, Euromonitor, company reports, estimates.,MNC attitudes to China,Reporting lines 55% have direct access to the global boardChina is “critical to global strategy” - 50% “strategically important” - 41%
5、CEO visits in last year 80% said global CEO had visited at least once,The question of profitability,MNCs are making money in China Car companies Amcham membersBut they are making more money from China Export base Global sourcing centre,Addressing the market,The competition,Guanxi + Operating in grey
6、 areas + Official and unofficial protection + Access to cheap bank capital + Lack of corporate governance = PRICE!,MNCs - brand and marketing,Source: Nielsen Media Research,Going local,Financing Borrowing from domestic banksProduction Moving to cheaper areas inland Sales Increasing volumes to lower
7、average costsResearch and development Lower costs and local tastes,Mergers and acquisitions,Buying out joint venture partnersTraditional M&A Basic market access and expansion Stealing a march on foreign competition Eliminating local competition Acquiring new abilitiesNot mainstream yet Regulations,
8、Corporate governance Price,Persistent headaches,Chinas business environment,Source: EIU,Infrastructure and distribution,Over-burdened physical infrastructure Transport congestion Electricity shortagesLack of sophistication Poor integration of different transport modes Regulations on distributionThe
9、way forward The east coast is better Work around regulations Piggyback on chain stores,Regulation and corruption,Regulation Central government restrictions Local government protectionism Red tapeCorruption Serious problem for foreign businessesThe way forward WTO opening Lobbying,Skills shortages,So
10、urce: World Bank,Serious wage inflation,Source: EIU, Hewitt Associates,Intellectual property theft,Improving laws and regulationsInadequate enforcementAn unavoidable costSurvival strategy: self-preservation,Corruption causes most concern,Source: EIU,Conclusions,China is coming of age for MNCsMNCs can build real business in ChinaOperating issues are no longer decisiveThe biggest challenges are strategicThere is a real need to think about China,,
