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China in 2011: Navigating the “New” China

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  1. China in 2011: Navigating the “New” China David Edmiston 邓大为, International Trade SpecialistU.S. Commercial Service Minneapolis China Business Information Center www.export.gov/china

  2. Presentation Outline www.export.gov

  3. The “New” china

  4. CHINA NOW • Historical GDP Growth: Value chain shifting w/ 48% industry, 40% service, and 12% agriculture • Economic Size: World’s 2rd largest economy • Consumes 33–50% of world’s coal, cement, steel, iron ore • China: US.’ #3 Foreign Export Market • 2010 Trade Surplus $273 B • 2010 U.S. Exports to China $91 B • Foreign Exchange Reserves =$2.622 T

  5. CHINA NOW • Income Disparity • Urban Disposable Income $2,895 • Rural Disposable Income $897 • Healthcare • 200 M uninsured • 1/10 of population carrying hepatitis B Education • State schools-no funding for migrant students

  6. A More Realistic Picture… Unemployment • Official 4.3% • Unofficial 9% • 39th in the world • Pollution • 70% Electricity from coal • #1 Emitter of fossil fuels • 10,000 deaths per year HK, Macau and So China caused by air pollution • price of pollution $968 million/yr in health and productivity loss

  7. Market Drivers • Urbanization • 2005 43% • 2010 47% • 2025 Migration 400 M • Newly Emerging Markets • Top 14 = 50% US exports • Middle Class Surge • 2009 5% of population • 2020 40% of population

  8. Second Tier Growth Markets Highest growth: ‘06-’09 Zhengzhou, Chongqing, Hefei, Kunming

  9. Xinhua Reuters Driver: Emerging Consumer Culture • Lifestyle Indicators • Mobile Phones: 800 million subscribers • Internet Usage: 457 million users • Private Vehicles: 26 million cars • Outbound Travel: 40 million tourists Xinhua Xinhua

  10. China’s 12th Five-Year Plan “New Magic 7” • New energy • Energy-saving and environment protection • Biotechnology • New materials • Clean-energy vehicles • High-end manufacturing • Next generation info tech

  11. 12th Five-Year Plan • Environment & Clean Energy • Environmental Protection RMB up 10 % • Energy consumption cut by 16 % • Energy Consumption from Non-fossil fuel = 11.4 % • Carbon dioxide emission cut 17 % • Water consumption/unit value-added output cut 30 %

  12. WHAT THIS MEANS FOR Alaska COMPANIES

  13. Alaska Global Exports • Alaska Global Exports in 2010: $4,154,626,473 • Export Growth: Exports in 2010 were up 27% from 2009 figures and 15% from 2005 • Top 5 Export Markets in 2010: • Japan • China • South Korea • Canada • Switzerland Foreign Trade Division, U.S. Census Bureau

  14. Alaska Exports to China • Alaska2010 Exports to China: $921,276,201 • China Export Growth: Exports in 2010 were up 57% from 2009 figures and 173% from 2005 Foreign Trade Division, U.S. Census Bureau

  15. China: Partner or Competitor?

  16. Top 5 challenges for the Coming Years

  17. Positive Business Outlook Companies in China • 71% expect increase revenue • 90% are “optimistic” for the future AmCham Shanghai 2010- 2011 China Business Report • 85% will increase investment in 2011 China Business Climate Survey 2011

  18. Performance Improving • 87% companies reported revenue growth • 79% companies “very profitable” • 61% increase market share for China products/services AmCham Shanghai 2010-2011 China Business Report

  19. Emerging Markets China’s Imports From U.S. 2009 Tianjin Railway (634%) Xi’an Electrical Machinery (118%) Wuhan Chemicals (110%) Guangzhou Aircraft; Spacecraft (404.2%)

  20. Sector Specific Opportunities(a few examples….) • Healthcare: 122 Billion USD to provide basic medical coverage • Transportation: Goal to build 13,000 km high-speed rail by 2012, reaching 170 cities by 2025 • Smart Grid: $7.3 billion invested in 2010 vs. $7.1 billion in U.S., $590 billion total planned investment • Environment: China will invest $303 billion in water projects in the next 5 years. $11 bil for wastewater treatment in 12th 5-year plan • Travel & Tourism: U.S. is 4th largest market, up 40% in 2010, average tourist spending $6,000, 100 million tourists projected for 2015 • Education: Chinese graduate applications up 19% in 2009 (up 7% worldwide); 98,000 Chinese students in the US in 2009, up 21%

  21. Water • 20% unusable for industry • $303 B through 2016 • Rural wells/ Urban Wastewater/ • Key Water Body Pollution • $11.5 B to curb heavy metal pollution (over next 5 years) • . Why Green Tech is Growing • Air pollution • Deaths/year 400,000

  22. Oil Consumption

  23. Renewable Energy Opportunities

  24. Clean Transportation • Automobile Market • 2009 13.5 M vehicles • 2030 200 M vehicles • New Energy Vehicle Program • 2012 Goal 60,000 electric • vehicles

  25. How we can help

  26. Are You China Ready? Take a “China Ready” Assessment Survey : www.export.gov/china

  27. Practical Tips

  28. Commercial Service in China • 19 Cities • 5 CS Offices • 14 Secondary Markets • 140+ Officers & Trade Specialists

  29. Core Market Services

  30. Gold Key Matching Service • Pre-screened appointment schedule arranged for you before you travel overseas • Customized market and industry briefings with our local trade specialists • Timely and relevant market research • Post-meeting debriefing with our trade specialists and assistance in developing appropriate follow-up strategies • Help with travel, accommodations, interpreter service, and clerical support SME: $700 first day, $300 each additional day; Large Company: $2,300 first day, $1,000 each additional day

  31. International Company Profile (ICP) • Determine whether an overseas company or individual is a suitable partner: • Management details • Business activities • Product/service lines • Financial condition • Credit-worthiness • Trading experience • Market coverage • Business connections in the target country * SME: $600; Large Company: $900

  32. Trade Events Single Company Promotion • The Single Company Promotion service offers support and event facilities which will allow you to engage your target audience through: • Product launches • Sales seminars • Staff training • Networking receptions Facilities available include: exhibition halls, auditoriums, meeting rooms, hotels and even the residences of some US Ambassadors. * Cost vary depending on event and market

  33. Trade Shows/Trade Missions • International Trade Shows • U.S. pavilions put you in the best int’l trade shows with access to thousands of buyers. • Our team of Commercial Specialists arrange one-on-one meetings with potential buyers. • International Buyer Program (IBP) • U.S. Department of Commerce selects leading domestic trade shows to promote through its global network of offices and contacts. • U.S. Commercial Service staff in our Embassies and Consulates abroad recruit and bring delegations of qualified buyers, prospective representatives and distributors to domestic trade shows. U.S. Commercial Service staff then facilitates meetings between buyers and exhibitors. • International Trade Missions* • Opportunity to meet with distributors, government and industry officials, prospective customers, and U.S. Embassy officials. * Costs vary depending on the mission

  34. Market Intelligence • Country Commercial Guides (CCG) • Leverage reports, prepared annually by U.S. Embassy staff, containing information on the business and economic situation of foreign countries and the political climate as it affects U.S. business and investments. • Trade Data and Analysis • Obtain the latest annual and quarterly trade data by country, state, commodity, and year. • Find industry-specific trade data and analysis. • Get country-specific tariff and trade agreement information. • Customized Market Research* • Get specific answers to your specific international business questions. * Cost vary depending on research preformed

  35. Consulting and Advocacy Advocacy Center • Exporting today means more than just selling a good product at competitive prices, it can also mean dealing with foreign governments and complex regulations. The Advocacy center helps companies by putting the resources and authority of 19 U.S. government agencies behind your company to help resolve problems such as: • Contracts pursued by foreign firms who receive assistance from their own governments to pressure a customer into buying their product or service • Unfair treatment by government decision makers, preventing a U.S. company from competing for a project • Tenders tied up with bureaucratic red tape, resulting in lost opportunities and unfair advantage to other competitors http://export.gov/advocacy/

  36. Trade Compliance Center • Ensures that: • Trade agreements entered into by the U.S. are properly monitored • Compliance issues are addressed promptly • U.S. exporters are provided access to information on the opportunities created by U.S. government market opening initiatives • Two Main Functions: • Data Systems Management - Use the information superhighway to provide data and government assistance directly to businesses • Compliance Analysis - Analyzes foreign compliance with trade agreements by reviewing legal, economic and policy issues http://www.tcc.mac.doc.gov

  37. IPR and Trade Compliance Assistance The US Embassy IPR Toolkit • http://www.beijing.usembassy-china.org.cn/ipr.html China IPR Advisory Program - 1 hr free consultation • http://www.abanet.org/intlaw/china_program2.html USPTO: free China conferences (www.stopfakes.gov) IP webinar series • http://www.stopfakes.gov/events/china_webinar_series.asp National Institute of Standards and Technology • http://www.nist.gov/notifyus Case Example: Client Video

  38. Contact Us: Alaska U.S. Export Assistance Center www.export.gov/alaska 907-271-6237 CHINA China Business Information Center at chinabic@trade.gov export.gov/china Contact me at: david.edmiston@trade.gov