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Industrial Analysis of the Greater Pearl River Delta Region

Industrial Analysis of the Greater Pearl River Delta Region. Prepared by: Boon Han, Tabitha and Tyki. Agenda. Background of PRD Recent Economic Data Governmental Policies Industries Electronics Toys Garment/Textiles Conclusion. PRD Background. History Economic Reform in 1978

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Industrial Analysis of the Greater Pearl River Delta Region

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  1. Industrial Analysis of the Greater Pearl River Delta Region Prepared by: Boon Han, Tabitha and Tyki

  2. Agenda • Background of PRD • Recent Economic Data • Governmental Policies • Industries • Electronics • Toys • Garment/Textiles • Conclusion

  3. PRD Background • History • Economic Reform in 1978 • Shifting trend of manufacturers to PRD • Human capital • General labor costs • Abundant availability in labor • Skill level

  4. PRD Background • Geography • Strategic location with multiple ports

  5. PRD Economic Data • Attracting foreign investments after declaring PRD as Special Economic Zone (SEZ) • Special tax and regulations preference • Lower costs of production

  6. PRD Economic Data • GDP (2004) • $1,357 billion Yuan • $ 164 billion USD • Specialized Town • Self-augmented • Export Oriented

  7. Regional Specialized Town • Shenzhen (High-Tech Industries) • Computer accessories • Electronics • Petrochemical • Guangzhou (Heavy Industries) • Automobile Parts • Leather Products • Electronics • Foshan • Electronics • Textile • Furniture • Toys

  8. Government Involvement • From Special Economic Zone to PRD to GPRD to Pan-PRD • CEPA • “Closer Economic Partnership Arrangement” • CEPA I & II & III

  9. Electronic Industry - Definition • Electronic Industry • Telecommunications, Computers and Other Electronic Equipment Manufacturing • Including: • Telecommunications Manufacturing • Broadcast Equipment Manufacturing • Computer Manufacturing • Electronic Element and Component Manufacturing • Home Audiovisual Manufacturing • Other Electronic Manufacturing • References: • International Standard Industrial Classification of all Economic Activities--(ISIC Rev. 3.1) – Section D: Manufacturing • 中華人民共和國國家統計局行業分類標準(GB/T 4754-2002) —— C 製造業

  10. Electronic Industry - 2004 Statistical Data • Gross Output Value of Electronic Industry in PRD • Total: 734,131million yuan • Percentage of total industry gross output value in PRD: 31.37% • Number of Industrial Enterprises of Electronic Industry in PRD • Total: 1725 units • Percentage of total number of industrial enterprises in PRD: 8.45% • Percentage of total number of electronic enterprises in China: 25.99%

  11. Electronic Industry - Other Info • Famous PRD Electronic Product Chain: “珠三角塞車，全球斷貨” • Gross computer components manufacturing output value is more than 10% of that total value around world • PRD has 24 Top100 Electronic Enterprises of China

  12. Electronic Industry • Main manufactory location • Shenzhen • Dongguan • Huizhou • Guangzhou

  13. Electronic Industry • Advantages: • GPRD integration • Convenient and efficient traffic network • Well-developed product chain • Drawbacks • Mostly export & processing oriented • Only “manufacture”, no “creation”: lack of key technology • Lack of “green manufacturing” – RoHS

  14. Toy Industry • Current Status • Second largest importer of toys in the world • 34% of buyers prefer to purchase in PRD region (Survey done at Hong Kong Toys and Games Fair 2005) • Exported $5.5 billion in toys in 2005 (China Customs Statistics) • U.S. market for China exports started from 70.6% in 2000 to 98.4% in 2004 (U.S. International Trade Commission)

  15. Toy Industry • Benefits • Cost • Manufacturing in China with other departments elsewhere • Consolidation of buyers for direct purchase rather than through a third-party • Lower minimum wage • Relatively low value of ‘Yuan’ • Growth Potential • Domestic market • Increased interest in electronic and educational games

  16. Toy Industry • Current Practices • Supply directly to retailers • Reduce the need for intermediaries • Appoint distributors to establish network • Reduce business risk • Reduce the need to deal with problematic issues • Provide small quantity frequently • Agree to ample supply of goods, prompt delivery, and mandatory exchange of defects

  17. Toy Industry • Arising Issues • Shortage of experienced distributors • Poor relationship for each component in value delivery network • Serious monetary issues (i.e. bad debt and overdue payments) • Potential inventory backlog • High transportation costs • Weak forecast for future sales and production • Increased demand of laborers lead to higher labor costs

  18. Garment and Textile Industry • Textile Clusters • Hu Men (Dong Guan) • Xi Qiao (Nan Hai) • Industry Performance (2004) • Export • USD $95 billion • + 21% • Import • USD $17 billion • +8%

  19. Top 10 Chinese Exporters / Importers

  20. Industry Performance

  21. Current Problems • Istanbul Letter • Request to postpone quota-lifting date by US and EU • Rising costs of production • Competition • Turkey, Pakistan, and Vietnam

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