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Connect China, Mainland CONNECT China A smart guide to shipping This is your quick guide to help you connect with customers and businesses across China. It’s here to help you understand the local culture, shipping requirements, regulations and key commercial opportunities to expand your business. united problem solversTM Contents CONNECT China Visit UPS.com China Overview 03 > Find out the most important facts about the markets to help you assess the potential for your business. Economic Potential 05 > Learn about what sells where and the most popular exports and imports that may be relevant to your sector. Business Culture 11 > Pointers on how to build successful relationships with local businesses and consumers. Tips and Advice 12 > Useful information and directory to help you ship to and from China. Connecting with UPS 14 > A quick overview of UPS capabilities and experience and how we can help connect your business with customers across China. O2 Contents China Overview Economic Potential Business Culture Tips and Advice Connecting with UPS China Overview CONNECT China Visit UPS.com Open your new trade No other country on earth represents a bigger business opportunity than China. Its customer base is vast – over 1.4 billion people, with a fast emerging middle class expected to reach 70% of the population by 2030. To manufacturers, retailers and route to China. eCommerce companies, the opportunity is immense. China is the world’s 2nd largest economy and the world’s largest National facts and figures* emerging market economy. China The transformational emergence of a new middle class in China is fueling a longer-term move Capital Beijing towards a ‘new normal’ - a slower, yet more sustainable GDP growth, with consumption and the service sector set to become key engines of the economy. The opportunities for companies trading Population 1,373,485,388 (July 2016 est.) with China are on a scale we’ve never seen before. Land Area 9,596,961 km2 The Chinese Government officially recognizes 56 ethnic groups. Language • Standard Chinese or Mandarin – official • Zhuang – official in Guangxi Zhuang • Yue – official in Guangdong Harbin • Mongolian – official in Nei Mongol • Uighur – official in Xinjiang Uygur • Kyrgyz – official in Xinjiang Uygur Beijing • Tibetan – official in Xizang (Tibet) Major Urban Centers & 1 Shanghai 34.0 Population (Millions) 2 Guangzhou 25.0 3 Beijing 24.9 Jinan 4 Shenzhen 23.3 Xi’an 5 Wuhan 19.0 6 Chengdu 18.1 Shanghai 7 Chongqing 17.0 8 Tianjin 15.4 Hangzhou 9 Hangzhou 13.4 Chengdu Wuhan Chongqing 10 Xi’an 12.9 11 Changzhou 12.4 Shantou 12 Shantou 12.0 13 Nanjing 11.7 14 Jinan 11.0 Shenzhen 15 Harbin 10.5 * WorldAtlas, April 2017 O3 Contents China Overview Economic Potential Business Culture Tips and Advice Connecting with UPS China Overview CONNECT China Visit UPS.com China’s future, your business opportunity. China – the world’s largest exporter and second largest importer A plan to make China the world’s No.1 economy According to China Customs statistics, in 2016 China’s foreign trade volume stood at 6 areas of reform are embodied in the 5 year plan (2016-2020): RMB24.33 trillion. Exports decreased by 2% to RMB13.84 trillion and imports grew by 1. Strengthen financial markets. 0.6% to RMB10.49 trillion. 2. Increase the economic efficiency of state-owned enterprises (SOEs) Economy in transformation and government projects. The Chinese economy is undergoing a huge transformation from an export 3. Major revamp of social welfare. dependent manufacturer of low margin trinkets to a consumption driven economy 4. Increase industrial innovation. powered by its own internal growth. 5. Improve demographics – abolition of one child policy. Consistent GDP growth exceeded 7% over the past 3 decades. 6. Improve environmental regulations. The country’s consumption is expected to grow at an annual rate of 10% in 2017. The proportion of the population earning upper-middle and high incomes in China will expand from 10% to 35% by 2030. Development and technological innovation A key part of China’s 5 year plan is to lead the way by developing ICT (Information and Communications Technology) and linking national goals to the progress of technology and internet-based industries. O4 Contents China Overview Economic Potential Business Culture Tips and Advice Connecting with UPS Economic Potential CONNECT China Visit UPS.com Unlocking your China urbanization and strong export growth are creating faster growth in disposable income for the middle class, leading to consumption growth at 9% annually through 2020. potential. China’s urbanization program is an important China shaping a sustainable economy part of CN structural reform to narrow the China’s urbanization programme is also the way to rural-urban gap, to accelerate transition to an a sustainable economic future for the country. It is a economy with consumer-led growth, and to unique opportunity to create and develop its cities in a way that supports economic growth, preserves the develop a more productive and service based environment, delivers the highest possible quality of economy. life for its citizens, and results in a stream of valuable new technologies. The scale of urbanization These developments will not just affect China but will also have profound implications for the rest of the With 56.5% of the population living in the urban Currency Renminbi (RMB) 21st century. areas, China will continue to build out its cities over the next 20 years to achieve a 70% urbanization rate GDP (US$) Purchasing Power Parity: China’s challenges in terms of environment, energy, sustainability, infrastructure, transportation, social by 2030. $21.27 trillion (2016 est.) services and city administration are enormous. So Major Industries: Electrical and other machinery, including are the opportunities for technology providers and data processing equipment, apparel, consultants. telephone handsets, textiles, integrated circuits Total Exports 2.06 trillion (2016) (US$): Top Export U.S. 19%, Hong Kong 14%, Japan 6.3%, Partners: South Korea 4.6% (2016) Total Imports 1.32 trillion (2016) ) (US$): Top Import South Korea 12%, Japan 11%, U.S. 10%, Partners: Germany 6.5%, Australia 5.4% (2016) O5 Contents China Overview Economic Potential Business Culture Tips and Advice Connecting with UPS Economic Potential CONNECT China Visit UPS.com Purchasing power. China’s growing group of middle class consumers have high standards for the The growing power of young consumers products and services they want to buy. They demand increasing levels of quality The young generation of Chinese spend more than their elders (average 40% higher and brand, and they love products that require the kind of high-end, sophisticated spending). engineering and design skills that many local suppliers can’t offer yet. These are amazing opportunities that your company could connect with. Young Chinese also tend to be more sophisticated consumers than those older than 35. They are more brand conscious than older Chinese and U.S. consumers of the Consumer economy same age. China’s consumption economy continues its growth, projected to expand 55%, and reach US$6.5 trillion by 2020. 81% of China consumption growth through 2020 will come from households with an annual income of more than US$24,000. eCommerce drives 42% of total consumption growth with 90% of that growth coming from mobile eCommerce. Consumption growth is estimated at 9% annually through 2020 Demand for services, including premium goods and services that enhance a personal sense of well-being such as healthy foods, education, and travel will overtake goods (daily necessities), accounting for 51% of incremental growth over the next 5 years. O6 Contents China Overview Economic Potential Business Culture Tips and Advice Connecting with UPS Economic Potential CONNECT China Visit UPS.com eCommerce revolution. In 2010, online transactions made up only 3% of total private consumption. Right now more than 40% of people involved in online shopping participate in cross-border eCommerce by buying a product or service from a foreign company. In 2017, this figure is expected to reach 50% and Between 2010 and 2016, online shoppers in China grew to 410 million, as has the amount that the by the end of 2020 almost 25% of the whole country’s population will buy foreign products through average consumer spends online. online retailers. Online channels now account for 15% of private consumption. Private online consumption is projected to surge by 20% annually through 2020, compared with 6% Reasons for growth annual growth in off-line retail sales. Key factors that propel the growth of eCommerce imports: A quarter of China’s population will buy foreign products online • The average income per person is increasing. by 2020! • The middle- and upper-class groups in China prefer foreign brands (especially fashion). • Lack of trust for local retailers who are selling replicas of high-quality brands. In 2015, Chinese people spent US$40 billion to purchase foreign products. This accounted for 6% of total • Low prices when they buy directly from the parent company and warranty directly from the online sales in the consumer eCommerce market in that year. manufacturer. In 2016, cross-border online shopping reached the US$ 80 billion mark and in 2017 it is expected to grow • When buying products from foreign countries, the laws of duty and tax are very favorable for more. It can even surpass US$ 100 billion with foreign companies providing special discounts in China to customers. increase their sales. Percentage of population who buy foreign products through on-line retailers. 6% 25% 2015 2020 O7 Contents China Overview Economic Potential Business Culture Tips and Advice Connecting with UPS Economic Potential CONNECT China Visit UPS.com Sector highlights. China is one of the world’s most important manufacturers and industrial producers.
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