Doing Business in China
Xylina Wu Director of Business Development , Greater China May 7, 2010 Presentation Outline
China Overview China Business Environment Business Models MA-China: MOITI’s Services
2 China Overview Fast Facts
• 3rd largest country in the world by area; • Population: 1.3 billion people / 20% of the world population; Shenzhen n • Capital: Beijing; • Official Language: Mandarin Chinese; • 23 provinces, 5 autonomous regions, four municipalities under the central government and the special administrative regions of Hong Kong and Macau; • Over 90% population are of Han ethnicity, and there are 55 ethnic minorities; • Currency is Renminbi (RMB):1 Dollar = 6.82 Yuan China Overview Fast facts
• 10% average GDP annual growth for 30 years; • Economy grew to 33.54 trillion RMB (4.91 trillion USD) in 2009, -3rd largest in the world; • Top trading nation; • The world'slargest exporter; • 130 billion USD capital inflow In 2007, 1/10 of the global FDI, #1in developing countries for 17 years; • 851 billion USD retail annual sales value in 2007, the second largest in Asia behind Japan; • The third largest luxury goods Top 5 Trading Countries market in the world behind Japan Description ANNUAL 2007 ANNUAL 2008 ANNUAL 2009 and the United States, and is expected to become the second TOTAL 13,836,761,937,102.00 15,622,220,194,062.00 9,209,630,356,249.00 largest market for luxury goods China 1,496,380,552,682.00 1,663,312,736,069.00 973,406,618,446.00 by 2015; Germany 1,278,377,731,305.00 1,393,063,742,889.00 937,997,868,144.00 USA 1,121,449,135,606.00 1,225,200,112,063.00 630,398,137,332.00 Japan 753,420,805,823.00 795,965,783,547.00 406,003,439,185.00 France 547,543,623,768.00 588,927,689,705.00 397,612,297,796.00 www.wisertrade.org 2nd Tier Cities: Top Growth Markets
Harbin,
* North East • Jilin , • Heavy Industry
Dalian * North • Pharmaceuticals • Beijing, Tianjin • Intellectual, government • Mobile phones Qingdao * Central • Light industry • Xian, Wuhan •Vehicles • Agricultural, textiles Nanjing • Machinery •Aircarft/Spacecraft * East • Shanghai, Shuzhou, Wuxl * West Chongqing • Electronics, telecom. * Aautomobile Zhuhai * Medical Equipment •Medical Device Xiamen * South •IT • Pearl River Delta, Guangzhou • Consumer electronics • Light industry, textiles China’s 6 Prominent Biomed-Regions
* North East • Jilin, Liaoning • Pharma, TCM
Central * North • Xian, Wuhan * • Beijing, Tianjin • Pharma • Pharma, TCM • Medical Devices West * * East • Chongqing • Shanghai, Hangzhou • TCM • Pharma, Biotech TCM China’s 3 genome centers: •Medical Devices •Components Beijing * South Shanghai • Pearl River Delta, Guangzhou • Biotech, TCM Hangzhou • Medical Devices China Overview Changes in 30 Years
2Ashburton
A Street Market in Beijing in 1978 World Expo in Shanghai, 2010 China Business Environment Social Characteristics
General Structure of Chinese Government
• 5 layers of Chinese government • Central Government • Provincial Government • City Government • County Government • Township Government China Business Environment Social Characteristics
Current Central Government
General Secretary of the Communist Party of China's Central Committee Hu JinTao
Political Bureau of the 16th CPC Central Committee Wu Bangguo ,Wen Jiabao ,Jia Qinglin ,Zeng Qinghong Huang Ju ,Wu Guanzheng ,Li Changchun ,Luo Gan
President of the People's Republic of China Hu JinTao
Vice-president of the People's Republic of China Zeng Qinghong
Premier of the State Council of the People's Republic of China Wen JiaBao
Vice-premiers of the State Council (4) Li Keqiang, Hui Liangyu , Zhang Dejiang, Wang Qishan 9
Ministers (22) China Business Environment Cultural Characteristics
Confucianism: a Chinese ethical and philosophical system adopted by emperors of different dynasties to rule the country
Confucius ideology: Humanity Ritual Loyalty Filial Piety Relationships The Gentlemanship The Rectification of Names
Relationships: Social harmony—the great goal of Confucianism—therefore results in part from every individual knowing his or her place in the social order, and playing his or her part well.
Confucius: “There is government when the prince is prince, the minister is minister, the father is father, and the son is son.” 10 China Business Environment Cultural Characteristics
Social Hierarchy • Group vs. Individual Country Organization Family Individual Government over Individual Superior over Subordinate Father over Son Older Brother over Younger Brother Man over Woman China Business Environment Cultural Characteristics
China Way:
Official Agreement
Relationship
Localization
Successful Business
“ When in Rome do as the Romans ” ---Microsoft: Change strategy following initial failure ---Motorola: “pure Chinese company” Business Model Administrative Measures on Foreign Investment in Commercial Sector
Company Style Application Duration Business Scope Register Capital lowest: RMB 30 trade and counseling, within Joint Venture 6 months thousand (Corporations the limits permitted by law Law)
Rep Offices 25-30 working days no trade, contact work only None
lowest: RMB 30 trade and counseling, within Wholly Owned Foreign Offices 6 months thousand (Corporations the limits permitted by law Law) New Rules for WOFE Office: • Effective December 11, 2004 • Qualified WOFE is permitted to engaged in – commission agency – wholesale – retail – franchising • Terms of operations – 30 years in Eastern / Southern China – 40 years in Central/ Western China MA-China: Partnerships and Alliances (Protocol)
MOU with Heilongjiang Province
Beijing Office
MOU with Hebei Province Beijin MOU with China Investment Promotion Agency Shanghai Shanghai Office Letter of Intent with Guangzhou Zhangjiang Hi-Tech Park
Sister State with Guangdong MA-China Trade Shows
China Medical Equipment Fair April , Shenzhen Conventional Center
Invest in USA, CIFIT September, Xiamen, China
China Hi -Tech Fair Oct., Shenzhen Conventional Center
China Overseas Investment Fair Nov, 3-4 2009, Beijing MA-China Trade Mission
December 1-8, 2007
Mission statement: to explore opportunities to strengthen collaboration around clean energy, life science , education and transportation MA-China Inbound FDI Gateway to MA---single point of connection Work closely with Industry Councils, Chambers of Commerce, Universities, Legislators, Professional Service Firms, Foreign Consulates---in state /abroad
Site Selection Tax Incentives & Grant programs Financing Options Workforce Training Fund MA-China MA-Technology Center
• Promote brand awareness
• Attract foreign investment to Massachusetts
• Provide a beachhead for Massachusetts companies to enter into the booming China market in a fast, safe and cost-effective way MA-China Other Services
– Offer timely, unbiased advice – Basic due diligence – Basic market research – Trade counseling – Agent distributor searches Take Home Message
ANYTHING x 1.3 BILLION IS A BIG NUMBER – China is a great market filled with profit potential for companies with suitable products and services – Reasonable expectation – Have an exit strategy Massachusetts International Office of Trade and Investment MOITI : MA’s window to the world
Xylina Wu Director of Business Development, Greater China [email protected] http://www.mass.gov/moiti
Daniel Ding Director of China Office [email protected] http://www.mass.gov/moiti