china in 2011: navigating the “new” china david edmiston 邓大为, international trade...

China in 2011: Navigating the “New” China

David Edmiston 邓大为 , International Trade SpecialistU.S. Commercial Service MinneapolisChina Business Information Center

www.export.gov/china

1.

•The “New” China

2.

•Market Drivers

3.

• What this Means for Alaska Companies

4.

•How We Can Help

Presentation Outline

www.export.gov

THE “NEW” CHINA

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

Income Disparity

• Urban Disposable Income $2,895 • Rural Disposable Income $897

CHINA NOW

2007 2008 2009 20100

5001,0001,5002,0002,5003,0003,5004,000

Urban per capitaRural per capita

Healthcare• 200 M uninsured• 1/10 of population

carrying hepatitis BEducation • State schools-no funding for migrant students

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

Urbanization2005 43%2010 47%

2025 Migration 400 M

Newly Emerging Markets

Top 14 = 50% US exports

Middle Class Surge2009 5% of population 2020 40% of population

Market Drivers

Second TierGrowth Markets

Highest growth: ‘06-’09Zhengzhou, Chongqing,Hefei, Kunming

ReutersXinhuaXinhuaXinhua

Lifestyle Indicators• Mobile Phones: 800 million subscribers• Internet Usage: 457 million users• Private Vehicles: 26 million cars• Outbound Travel: 40 million tourists

Driver: Emerging Consumer Culture

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

Environment & Clean Energyo Environmental Protection RMB up 10 %o Energy consumption cut by 16 %o Energy Consumption from Non-fossil fuel =

11.4 %o Carbon dioxide emission cut 17 %o Water consumption/unit value-added output cut

30 %

12th Five-Year Plan

WHAT THIS MEANS FOR ALASKA COMPANIES

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

Alaska Exports to China

• Alaska 2010 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

China: Partner or Competitor?

Top 5 challenges for the Coming Years

Bureaucracy

Human Resource Constraints

Unclear Laws & Regulations

Unclear Regulatory Interpretations

IP Rights Infringement

Positive Business Outlook

Companies in China• 71% expect increase revenue

• 90% are “optimistic” for the futureAmCham Shanghai 2010- 2011 China Business

Report

• 85% will increase investment in 2011

China Business Climate Survey 2011

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

Xi’anElectrical Machinery (118%)

TianjinRailway(634%)

China’s Imports From U.S. 2009

Guangzhou Aircraft; Spacecraft (404.2%)

WuhanChemicals(110%)

Emerging Markets

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%

Why Green Tech is Growing 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)

.

Air pollution Deaths/year 400,000

Oil Consumption

Renewable Energy OpportunitiesWind

• Largest Producer

• 2009 33% World Investment

• 2010 Install Capacity 10 GW

• 2020 Target 150 GW

Solar Power

• PV Production 90% exported

• 2009 Capacity 8 GW

• 2020 Target 20 GW

Clean Transportation

Automobile Market •2009 13.5 M vehicles•2030 200 M vehicles

New Energy Vehicle Program •2012 Goal 60,000 electric

vehicles

HOW WE CAN HELP

Are You China Ready?

Take a “China Ready” Assessment

Survey :

www.export.gov/china

Export Experience

Senior Level Commitment

Financial Resources

Due Diligence

Regulatory Issues

IP Strategy

Practical Tips

Understa

nd the Market

•View China as many different markets

•Consider Regulations and Standards

•Visit often – “mind the shop”

Protect

Your Interests

•Due diligence

•Register IP

•Seek legal counsel

•Exit strategy

Realistic

Expectations

•Avoid “Chinaforia”

•Overnight success is uncommon

•If it sounds too good….

19 Cities ◦5 CS Offices◦14 Secondary Markets

140+ Officers & Trade Specialists

Commercial Service in China

Core Market Services

Business Facilitation• International Partner

Search• International Company

Profile• Gold Key Matching

Service• Single Company

Promotion

Trade Promotion Events• International Buyer

Programs• Trade Shows & US

Pavilions• Trade Missions

Customized Programs• Platinum Key Service• Advocacy & Trade

Disputes• Market Research

Market Research• Market Research Library• Country Commercial

Guide (CCG)• Customized Market

Research

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

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

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.

Trade Events

* Cost vary depending on event and market

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

• 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.

Market Intelligence

* Cost vary depending on research preformed

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/

Consulting and Advocacy

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

IPR and Trade Compliance AssistanceThe 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

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