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Austin Zhao

Doing Business with China. Austin Zhao . Special Presentation for SWCA. © PATHWAY TO CHINA 2011. November 10, 2011. Brief Introduction. Pathway to China : Consulting -- China-business services Over two decades of hands-on experience Targeting Clients: US manufactures & distributors .

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Austin Zhao

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  1. Doing Business with China Austin Zhao Special Presentation for SWCA © PATHWAY TO CHINA 2011 November 10, 2011

  2. Brief Introduction • Pathway to China: • Consulting -- China-business services • Over two decades of hands-on experience • Targeting Clients: US manufactures & distributors

  3. Business Model The Old Way $ Broker ￥ Chinese Co. US Co. Pathway to China Chinese Co. US Co. PTC

  4. Core Offerings • Marketing & Selling to China • Direct Sourcing from China • Training & Coaching of Chinese Business Culture

  5. China “Let her sleep, for when she wakes, she will shake the world.” Napoleon Bonaparte

  6. Facts & Figures of China • Economy: 2nd largest economy in the world (2010) Source: CIA World Factbook, 2010 • Foreign Exchange Reserves: about $3.2 trillion (Jun. ‘11) • US Debt Purchased: $1.14 trillion (Aug. ‘11), #1 buyer

  7. Facts & Figures of China • Middle Class: 150 million (2010), exceeding the combined population of the U.K. and France. 400 million more in the next 10 years, • Colleges produce: 400,000 engineers and scientists per year, more than U.S, Japan and Germany combined. • Largest car market:18 million car sales (2010). • Largest Internet users:485 million (end of June. ’11) - more than a third of the entire population. • Mobile phone subscribers: 927 million (end of Aug. ’11). • Biggest consumer of steel, copper, and cement.

  8. Growth in US Imports from China 23.1% ↑ -12.3% 5.1% ↑ Year 2010 11.7% ↑ 18.2% ↑ 23.8% ↑ 29.1% ↑ 21.7% ↑ 22.4% ↑ Not including Hong Kong, 4 Bs. Source: USITCDatabase

  9. Growth in US Exports to China 32.1% ↑ Year 2010 -2.6% 9.5% ↑ 18.1% ↑ 32.0% ↑ 20.5% ↑ 22.2% ↑ 28.9% ↑ 14.7% ↑ Not including Hong Kong, 27 Bs. Source: USITC Database

  10. US – China Trade in General Year 2010 US Statistics China Statistics US & China – 2nd largest trade partner of each other Source: USITC Database and Ministry of Commerce of China

  11. Driving Force of the Growth • Political Stability • Economic System Reform • The People & the Culture • Hard-working & Self-sacrifice • Education • Discipline • Financial Prudence

  12. Downside/Problems • Increasing gap between the rich and the poor →Inequality • Increasing Labor Cost • Ageing Population • Environmental Pollutions

  13. What We Buy from & Sell to China • Buy • Consumer electronics, appliances • Computers & components • Telephone Sets & Cell phones • Toys & games • Furniture • Footwear • Apparel • Leather & travel goods • Lamps & Lights • Plastics Articles  Sell Soybeans Scraps (Metal, Paper & Plastic) Aircraft & Components Computer parts, Communication equipment Chemicals Cars Cotton Plastics Machinery & equipment, components Optics & medical equipment Source: USITC Database

  14. Chemical Trade with China • Import • Rubber Articles (Tires & Gloves) • Plastics & Plastic Articles • Urea • Crude Oils and Oils obtained from bituminous minerals • Kerosene-type Jet Fuel • Liquid Caustic Soda • Paraffin Wax • Artificial Corundum • Iron Oxides and Hydroxides • Sulfuric Acid Export Petroleum Coke Polyethylene Plastic Scrap Polyvinyl Chloride Diammonium Phosphate Polypropylene Acetone Ethylene Glycol Acrylonitrile Fuel Oil #5-7  52.03% of All Chem. Exp. 65.71% of All Chem. Imp. Source: Ministry of Commerce of China &USITC Database

  15. Brief on China Chemicals • More than 36,700 manufactures with 6.9 million employees in the chemical industry • # 1 producer in nitrogenous fertilizer, phosphorous fertilizer, soda ash, caustic soda, sulfuric acid, calcium carbide, pesticide, dyestuff, tire, methanol and synthetic fiber • #2 producer in ethylene, synthetic resin, synthetic rubber

  16. Brief on China Chemicals • 2nd largest in chemical production • 2010: $1.20 trillion in 2010, 15% of whole world chemical demand • 2nd largest in chemical consumption • 2010: $1.25 trillion, (import: $185.5 billion, 14.8% of total China’s consumption) • US Export to China: $17 billion - 33.84% increase in 2010 • US Import from China: $13.4 billion - 29.8% increase in 2010

  17. Challenges/Risks A man ordered size 14.5 slipper and got size 1450 (82.7” x 51.2” x 25.6” )

  18. Challenges/Risks • Quality Inconsistency • Risk in Advanced Payment • Bureaucracy & Corruption • Cultural Differences

  19. Conclusion • Everything is possible • Nothing is easy • When you are very optimistic, please refer Point # 2 • Before you give up, please refer to Point # 1

  20. Thank You! Austin Zhao Pathway to China www.pathwaytochina.com austin@pathwaytochina.com Tel: 713-954-4878 Fax: 281-966-1878 Cell: 281-630-6666

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