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PRA Global Business Development PRESENTATION TO Global Business Club of Mid-Michigan MSU Henry Center, Lansing, MI 17th November 2011. MAXIMIZING BUSINESS OPPORTUNITIES IN EMERGING MARKETS A COMPARISON OF BUSINESS OPPORTUNITIES IN CHINA INDONESIA BRAZIL.

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PRA Global Business Development PRESENTATION TO Global Business Club of Mid-Michigan


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    1. PRA Global Business Development PRESENTATION TO Global Business Club of Mid-Michigan MSU Henry Center, Lansing, MI 17th November 2011

    2. MAXIMIZING BUSINESS OPPORTUNITIES IN EMERGING MARKETS A COMPARISON OF BUSINESS OPPORTUNITIES IN CHINA INDONESIA BRAZIL

    3. TO “COMPARE” OPPORTUNITIES, YOU NEED SOMETHING TO “COMPARE” AGAINST. I HAVE CHOSEN THE USA, AS WE ARE ALL SOMEWHAT FAMILIAR WITH OUR HOME TURF. I WILL ALSO CROSS-RELATE EACH OF THE THREE COUNTRIES TO EACH OTHER THE OBJECTIVE IS FOR YOU ALL TO HAVE AN “OPPORTUNITIES PERSPECTIVE” BY THE END OF THE DISCUSSION.

    4. THIS IS A LARGE TOPIC TO COVER IN 30 MINUTES. THERE WILL BE LITTLE OR NO TIME FOR QUESTIONS AT THE END OF MY SESSION. THEREFORE, PLEASE WRITE YOUR QUESTIONS DOWN OR THEY MAY BE FORGOTTEN. IF WE DO NOT GET TO ANSWER YOUR QUESTION, SEEK ME OUT, EMAIL ME OR CALL ME. THIS PRESENTATION IS NOT OVER UNTIL YOU HAVE ALL HAD YOUR QUESTIONS ANSWERED.

    5. WHERE ARE YOUR GROWTH OPTIONS? Today the Developed Markets of the USA, Canada and the EU are not really growing, they are just idling along. There are however, plenty of “Growth Markets” that are growing quickly, creating an increasing “Middle Class”, and generating significant demand. We in PRA-Global however, don’t think or talk about the “Middle Class”, we only think about the amount of “Disposable Income” Disposable Income is money they can spend on something other than just living or on a “Better Quality of Living” We submit that for US Companies to grow significantly, our future lies in Globalizing our Perspective and going after opportunities in these and other “Growth Markets”

    6. WHERE ARE YOUR GROWTH OPTIONS? While there are an increasing number of “Growth Markets”, usually referred to as the “Emerging Markets” today I am only going to concentrate on: China Indonesia Brazil

    7. “Our Comparison Model” Let’s start with our BASELINE of the USA. A few basic statistics to allow us to compare

    8. “OUR COMPARISON MODEL”

    9. “OUR COMPARISON MODEL” USA Basic Data: Size……………9.4 Million Square Kilometers Population……309 Million GDP………….$14.1 Trillion GDP/Head….$46,350 Imports………$2.1 Trillion From: China 17%, Canada 16%, Mexico 10% Exports………$1.3 Trillion To: Canada 20%, Mexico 12%, China 6%

    10. CHINA

    11. EMERGING MARKET “CHINA” Geography of China

    12. EMERGING MARKET “CHINA”

    13. EMERGING MARKET “CHINA”

    14. EMERGING MARKET “CHINA”

    15. EMERGING MARKET “CHINA” Political Reality of China

    16. THE POLITICAL REALITY OF CHINA THE FREE WORLD IS JUSTIFYABLY “PARANOID” ABOUT COMMUNISM, BUT CHINA IS NOT A COMMUNIST COUNTRY ……… IN ANYTHING BUT NAME. CHINA , IN REALITY, IS A “CAPITALIST AUTOCRACY” THE EMPEROR HAS JUST BEEN REPLACED BY THE PARTY! TWENTY ONE OF THEM WHO PULL THE STINGS OF “Hu Jin Tau” and “Wen Jia Bao” LIKE MANY POLITICIANS, THEY ARE PRIMARILY ……..LOOKING OUT FOR THEMSELVES.

    17. THE BUSINESS REALITY OF CHINA ALSO REMEMBER: CONTRARY TO POPULAR OPINION, COUNTRIES DO NOT DO BUSINESS ! POLITICIANS DO NOT DO BUSINESS ! EVEN COMPANIES DO NOT DO BUSINESS ! ONLY PEOPLE “DO BUSINESS” One on One IF WE WANT TO “DO BUSINESS WITH THESE CHINESE PEOPLE, LETS PUT A FACE ON THEM So……………….Who exactly are these Chinese People ?

    18. THE PEOPLE REALITY OF CHINA OUTLINE OF THE SIGNIFICANT CULTURAL DIFFERENCES BETWEEN CHINA AND THE WEST Firstly, the Chinese are not a homogenous Nation ……………………any more than the West. There are distinct regional differences They speak different languages (Seven of them) however, they write with one common set of characters They are not brainwashed with ideological preconception ……….at least, not any more than we are! They are very nationalistic and proud of China They are very well educated They are fundamentally honest and trustworthy They are peaceable, and China is virtually crime free for us

    19. THE PEOPLE REALITY OF CHINA OUTLINE OF THE SIGNIFICANT CULTURAL DIFFERENCES BETWEEN CHINA AND THE WEST They are exceedingly family oriented The women are far from under-privileged! They work very well in teams and collaborate easily They save money …….as much as 40% of their income They are very selective about what they buy They love to eat, drink and sing songs together They have an excellent sense of humor They are very, hard working They are excellent business people …..and rightfully deserve what they have built over the past 20 years

    20. THE BUSINESS REALITY OF CHINA BUSINESS TRAITS No word in Chinese for YES, ………. and no word for NO! Relationships are still Important Chinese Sense of Time and Schedule is Different Motivation and End Objective can be very Different Negotiation techniques are different and vary from region to region. Know what you need! Do not listen only to what is being said…. ….listen for what is not being said! Always be respectful to the older person, even if they do not appear to be the leader In a tense situation, a little humor can make the difference— …….but aim the joke at yourself! The Chinese count in units of 10,000. Confusing…….? Get them to write the number down!

    21. EMERGING MARKET “CHINA” Industrial Base of China

    22. EMERGING MARKET “CHINA” Economy of China

    23. “CHINA COMPARED TO THE USA” USA Basic Data: CHINA: Size……………9.4 Million Square Km 9.6 M- M/Sq/Km 102% Population……309 Million 1.34 Billion 434% GDP………….$14.1 Trillion $5.33 38% GDP/Head….$46,350 $3,270 7% Imports………$2.1 Trillion $1.1 Trillion From: China 17%, Canada 16%, Mexico 10% Japan 13%, EU 12% Kor 11% Exports………$1.3 Trillion $1.4 Trillion To: Canada 20%, Mexico 12%, China 6% EU 21%, USA 19%, HK 13%

    24. BUSINESS IN CHINA OVERVIEW OF BUSINESS CLIMATE IN THE CHINA MARKET AS OF THE 1st QUARTER OF 2011 China Economy is expected to have grown at 9.3 % during 2011 Industrial Production grew at 18.5% as of December 2010 GDP $5.33 Trillion They have overtaken Japan as #2 in the World. Inflation 2.4% Consumer Prices were down 0.8% Unemployment rate was 10.2% SUMMARY: In the past years there was a surge in Bank Lending and there is now a fear of a Stocks and Property asset bubble. However, measured against any scale, the China Economy is still growing significantly and the demand for all products is grows within the China market! Industrial, Manufacturing, Food, Beverages and Luxury items are particularly valued.

    25. BUSINESS IN CHINA The Economy is based on Manufacturing and that grows significantly every year. The Automotive Sector predominates, and like the USA creates multiple other business opportunities and spreads the wealth. China have set their sights on everything from Power Stations to Aircraft and they intend to be the principle manufacturing base in the World Why? The politicians need to keep their people under control, and work, opportunity, and progress is the best way The Confucian “Mandate of Heaven” is still alive and well in China The next step is to make China internally self sufficient so that the local population buy the majority of the manufacturing capacity.

    26. EMERGING MARKET “CHINA” Business Opportunities in China

    27. BUSINESS OPPORTUNITIES in CHINA MANUFACTURING FINISHED PRODUCT FOR CHINA MARKET Specifically target the China Market Design the product for the local market. Critically important. Own and invest in a Chinese Operation, run by your Chinese managers, for the China market Set up a Marketing Strategy, local distribution and establish sales and demand, before you invest in an operation If necessary, import into China from existing operations, even at a loss, to prove out the market. Less expensive than an investment mistake! Plan to dominate a market segment and focus on that success……….you can always grow once your first operation is profitable.

    28. EMERGING MARKET “CHINA” WHY CHINA?

    29. EMERGING MARKET “CHINA”

    30. EMERGING MARKET “CHINA” 1.4 Billion

    31. HOWEVER, BEWARE

    32. Old Chinese Proverb: “Just because two of you sleep in the same bed, doesn’t mean you are having the same dream”

    33. You do not have to “Work Alone” and there is no need for your China Business to be a Nightmare!

    34. INDONESIA

    35. EMERGING MARKET “INDONESIA” Geography of Indonesia

    36. POLITICAL REALITY OF INDONESIA Democratic government faces many challenges after years of military dictatorship (Sukarno and then Suharto) and social turmoil: Military Dominance and Separatist Tensions Devastating tsunami in 2004 in Banda Ache Target of terrorist bombings in 2005 in Bali Member of OPEC but left in 2008 when oil ran out Now forced to grow export earnings as an emerging low cost country

    37. Tsunami Recovery is slow Terrorist Bombings 2002 and 2005 President Susilo Bambang Yudhoyono

    38. THE CULTURAL REALITY OF INDONESIA OUTLINE OF THE SIGNIFICANT CULTURAL DIFFERENCES BETWEEN INDONESIA AND THE WEST Firstly, the whole country is made up of 17,000 islands with multiple cultures, languages and objectives. Only about 6000 islands are occupied. Each of the regions is very different in terms of business attitudes and tolerance for commercialization. There have been forced relocations to remote areas, and there are still tensions between the new comers, who did not want to be there, and the locals, who do not want them there. Indonesia is dominantly a Muslim country, however, they have proven to be intolerant of “Violent Islam” The Bali Bombers were executed, and the country did not revolt. However, Chinese Businesses and Christian locations are still targeted during social unrest.

    39. THE CULTURAL REALITY OF INDONESIA OUTLINE OF THE SIGNIFICANT CULTURAL DIFFERENCES BETWEEN INDONESIA AND THE WEST Java is the center of Government and Western Business, however there are many opportunities, in the other islands, all over the country. The local populations everywhere are very young, keen to move up economically, vary significantly in beliefs and needs, but all are friendly and welcoming of foreigners. All are welded together by the “Lingua Fanca” of “Bahasa Indonesia”. Everyone gives you the impression that they are desperate for growth and modernization. Although many are reasonably well educated, English is still not universal They are thoroughly likeable people who are fundamentally honest and trustworthy

    40. EMERGING MARKET “INDONESIA” Economic Reality of Indonesia

    41. “INDONESIA COMPARED TO THE USA” USA Basic Data: Indonesia: Size……………9.4 Million Square Kilometers 735,000 Sq/Km 20% Population……309 Million 234 Million 76% GDP………….$14.1 Trillion $511 Billion 3.6% GDP/Head….$46,350 $2,250 5% Imports………$2.1 Trillion $129 Billion 6% From: China 17%, Canada 16%, Mexico 10% Sin 13%, China 12% Jap 12% Exports………$1.3 Trillion $137 Billion To: Canada 20%, Mexico 12%, China 6% To Jap 20%, US 10%, Sin 9%

    42. ECONOMY OF INDONESIA OVERVIEW OF BUSINESS CLIMATE IN THE INDONESIAN MARKET AS OF THE 1st QUARTER OF 2011 Indonesian Economy is expected to grow at 5.5 % during 2011 Industrial Production grew at 1.8% as of December 2010 GDP $511 Billion (Up by 4.6% on 2010) Inflation 5.1% Consumer Prices were up 4.8% Unemployment rate claimed to be 8.1% but under-employment is rife SUMMARY: A strong domestic market and low trade dependency helped them weather the global slump. Difficult economics and ongoing political machinations will hold up progress but the country is a strong contender as a low cost labor country. I believe it will quickly take its place as one of the worlds economic player.

    43. EMERGING MARKET “INDONESIA” Industrial Base of Indonesia