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1、CHINA OUTLOOK 2009,1,NPV CHINA Business Consultingis an opportunity maker in the SINO-EUROPEAN Gateway.Being an opportunity maker we support both multinational and Chinese companies in developing their activities in China,generating relationship,looking for investment opportunities and identifying t
2、he resources(tangible,intangible and human)they need to achieve their business goals.,2,2,AGENDA,Executive SummaryChina at a GlancePolitical StructureNational AccountsBalance TradeChina DiversityNational Economic PlanIndustry DistrictIndustry OrganizationLegal Structure for Foreign Enterprise,3,3,Ch
3、ina,with its 1.33 billion population,is the country with the largest potential for growth in the world and thus must represent an essential part of each companys strategy,either as a production base or as a final marketThe economy has been growing at average rates of 10.8%between 2001 and 2008 and i
4、s now 3rd largest in the world,accounting for 6%of global GDP;foreign trade has been growing dramatically(an average of 25%CAGR between 2004 and 2008),and foreign investment has kept pouring in to the country with actually utilized foreign capital of 92.4 billion in 2008,up by 23.6%For Italian compa
5、nies,China represents an extremely important opportunity on any of the following 3 fronts:Sale:as a final market with more than 1.33 billion consumersDelocalization:as a low cost production basePurchasing:as a sourcing baseExchange rate:RMB/USD stood at 6.83 at the end of 2008,with a 6.9%appreciatio
6、n of the end of 2007RMB/EUR stood at 9.61 at the end of 2008,with an 9.8%appreciation of the end of 2007Inflation:CPI in 2008 surged to 5.9%mainly due to the soar of food price.Other factors such as increase of energy price and excess liquidity in the financial market may keep the momentum of CPISto
7、ck Market:SSE composite index plunges 2/3 from the beginning of the year;whether the government should intervene is under intense debateThe new LAW OF THE PEOPLES REPUBLIC OF CHINA ON EMPLOYMENT CONTRACTS came into effect in 1st Jan,2008 towards more protection of the employeesThe 29th Olympic Games
8、 was held successfully in Beijing in August,2008.,EXECUTIVE SUMMARY,Source:China Statistical Yearbook,China National Statistics Bureau,NPV analysis,4,4,AGENDA,Executive SummaryChina at a GlancePolitical StructureNational AccountsBalance TradeChina DiversityNational Economic PlanIndustry DistrictIndu
9、stry OrganizationLegal Structure for Foreign Enterprise,5,5,By 2050 it is expected that China will be the worlds number one economy,Source:BRIC Report,Goldman Sachs,CHINA AT A GLANCE,2025 USD bn,2050 USD bn,The largest economies in Asia in 2025,The largest economies in the world in 2050,6,6,Source:C
10、hina Statistical Yearbook,NPV analysis,Country profile,CHINA AT A GLANCE,7,7,AGENDA,Executive SummaryChina at a GlancePolitical StructureNational AccountsBalance TradeChina DiversityNational Economic PlanIndustry District Industry OrganizationLegal Structure for Foreign Enterprise,8,8,POLITICAL STRU
11、CTURE,Source:http:/afe.easia.columbia.edu/china/gov/chart.htm,NPV analysis,Government and Communist Party Structure,9,9,BEIJING,SHANGHAI,TIANJIN,CHONGQING,HONG KONG,MACAU,XINJIANG,TIBET,QINGHAI,GANSU,SICHUAN,YUNNAN,INNER MONGOLIA,GUIZHOU,GUANGXI,HUNANI,HUBEI,SHAANXI,SHANXI,NINGXIA,HENAN,HEBEI,GUANGD
12、ONG,JIANGXI,FUJIAN,ANHUI,ZEJIANG,SHANDONG,HAINAN,LIAONING,JILIN,HEILONGJIANG,TAIWAN,JIANGSU,Municipality,Autonomous region,Special administrative region,Source:China Statistical Yearbook,NPV analysis,Administrative Division,23 ordinary provinces(including Taiwan)4 Municipalities:Beijing Chongqing Sh
13、anghai Tianjin5 Autonomous regions:Guangxi Inner Mongolia Ningxia Tibet Xinjiang2 Special administrative regions:Hong Kong Macau,POLITICAL STRUCTURE,China administrative divisions,10,10,Source:Chinese Government,NPV analysis,Central Government,Municipalities,Provinces,Autonomous Regions,Special Admi
14、nistrative Regions,Districts,Counties,Cities,Autonomous prefectures,Counties,Autonomous Counties,Districts,Counties,Cities,Counties,Autonomous Counties,Townships,Ethnic townships,Towns,POLITICAL STRUCTURE,China administrative divisions,11,11,AGENDA,Executive SummaryChina at a GlancePolitical Structu
15、reNational AccountsBalance TradeChina DiversityNational Economic PlanIndustry DistrictIndustry OrganizationLegal Structure for Foreign Enterprise,12,12,China is the 3rd largest economy in the world in 2008,6%of gross world product(2007)Considering the GDP per capita,China is the 106th in the world i
16、n 2008(at$3,315)Chinese economy grows consistently reaching a 10%annual growth rate during the latest five years.Chinas urban households per capita disposable income growth has consistently been higher than CPI inflation,indicating a positive real growth in the peoples living standard.,China GDP 200
17、4-2008,Peoples Income and CPI 2001-2008,RMB Bn,NATIONAL ACCOUNTS,Source:China National Economic and Social Development Report,China Statistical Yearbook,NPV analysis,13,13,Secondary industry is the dominant force in driving economy forward accounts for almost 50%of GDP,with CAGR 18.12%from 2000-2008
18、Tertiary industry grows with CAGR 17.61%from 2000-2008,GDP Breakdown 1978-2008,Source:China National Economic and Social Development Report,China Statistical Yearbook,NPV analysis,NATIONAL ACCOUNTS,14,14,Average GDP per capita in 2008:3,315 USDShanghai is the richest province level area with a per c
19、apita GDP of 10,922 USD in 2008.ZHEJIANG,JIANGSU,and GUANGDONG are the TOP 3 richest provinces43.1%of populations GDP per capita is higher than averageChina has reduced 62 million,53%extreme poverty during the past 20 years.In 1985 China had 116 million people living under$1 dollar-a-day poverty lev
20、el.(*),GDP per capita(USD),(*)MGI China consumer demand model,NATIONAL ACCOUNTS,Source:China National Economic and Social Development Report,China Statistical Yearbook,NPV analysis,Over 4,000 USD/person 464 million,Below 2,500 USD/person347 million,Over 2,500 USD/person489 million,Average,15,15,AGEN
21、DA,Executive SummaryChina at a GlancePolitical StructureNational AccountsBalance TradeChina DiversityNational Economic PlanIndustry District Industry OrganizationLegal Structure for Foreign Enterprise,16,16,BALANCE TRADE,Bn USD,Foreign trade China Rest of world(2001-2009),+27%,+25%,CAGR 02-09E,Sourc
22、e:China National Economic and Social Development Report,China Statistical Yearbook,*Economist Intelligence Unit,NPV analysis,509.7,620.8,851,1154.5,1422,1760.4,2173.8,2561.6,3231.8,17,17,BALANCE TRADE,Chinas Foreign trade by region/country in 2007,%of total imports,65%,15%,8%,5%,4%,3%,100%,%of total
23、 exports,47%,24%,21%,4%,3%,2%,100%,Top 3 countries by region,Imports:country and%of region trade,JapanKoreaTaiwan,GermanyRussiaFrance,USACanadaBermuda,BrazilChileArgentina,AngolaSouth AfricaSudan,AustraliaNew ZealandNew Guinea,USAHong KongJapan,22%17%16%,32%14%10%,86%14%0,0%,36%20%12%,35%18%11%,91%5
24、%2%,19%15%8%,Hong KongJapanKorea,GermanyHollandUK,USACanadaBermuda,MexicoBrazilPanama,South AfricaEgyptNigeria,AustraliaNew ZealandMarshal Island,JapanKoreaUSA,32%18%10%,17%14%11%,92%8%0,1%,23%22%11%,20%12%10%,85%10%2%,14%11%7%,Exports:country and%of region trade,Billion USD,Source:China Statistical
25、 Yearbook 2008(end of 2007 Data),NPV analysis,18,18,AGENDA,Executive SummaryChina at a GlancePolitical StructureNational AccountsBalance TradeChina DiversityNational Economic PlanIndustry District Industry OrganizationLegal Structure for Foreign Enterprise,19,19,Eastern RegionShanghaiBeijingTianjinG
26、uangdongShandongZhejiangJiangsuFujianHainanHebei,Central RegionShanxiHenanHubeiHunanAnhuiJiangsu,Northeastern RegionHeilongjiangJilinLiaoning,Not IncludedTaiwanHong KongMacau,Western RegionInner MongoliaShaanxiNingxiaGansuChongqingSichuanGuizhouYunnanGuangxiQinghaiXinjiangTibet,Source:Chinese Nation
27、al Development and Reform Commission,NPV analysis,CHINA DIVERSITY,Division of regions,20,20,Population by Urban and Rural Residence and Region,Source:China Statistical Yearbook 2008(end of 2007 Data),NPV analysis,CHINA DIVERSITY,21,21,GDP and GDP Per Capita by Region,Source:China Statistical Yearboo
28、k 2008(end of 2007 Data),NPV analysis,CHINA DIVERSITY,GDP and GDP Per Capita by Region,22,22,Annual Income and Expenditure Per Capita by Region,RMB,CHINA DIVERSITY,Source:China Statistical Yearbook 2008(end of 2007 Data),NPV analysis,23,23,Western,Northeastern,Central,Eastern,Urban Household Expendi
29、ture Breakdown,Food,Clothing,Transport and Communication,Education,Cultural and Recreation Services,Miscellaneous,CHINA DIVERSITY,Source:China Statistical Yearbook 2008(end of 2007 Data),NPV analysis,Urban Household Expenditure Breakdown,24,24,Western,Northeastern,Central,Eastern,Rural Household Exp
30、enditure Breakdown,Food,Residence,Transport and Communication,Education,Cultural and Recreation Services,Miscellaneous,CHINA DIVERSITY,Source:China Statistical Yearbook 2008(end of 2007 Data),NPV analysis,Rural Household Expenditure Breakdown,25,25,Note that Tier 3b is also referred to as Tier 4.Our
31、 reference to Tier 3 combines 3a with 3b for a total of 620 cities,CHINA DIVERSITY,Pyramid of Chinas tier cities,41 cities occupy:49.9%of GDP23.0%of Population56.6%of Market Sale of Consumer Goods,BeijingShanghaiGuangzhouShenzhen,ChongqingTianjinWuhanHangzhouNanjing,FoshanChengduShantouXianShenyangJ
32、inan,DongguanWenzhouTaizhouNingboZhongshanSuzhouChangzhou,WuxiZhuhaiXiamen,FuzhouQingdaoChangshaYantaiPutianZhengzhou,TaiyuanKunmingTangshanChangchunShijiazhuangGuiyang,HuaianHarbinZiboDalian,LinyiNanchangZaozhuang,XuzhouXiangfanBaotou,UrumchiHuizhouLanzhou,JilinDaqingHuzhou,QuanzhouJinhuaJiaxingDon
33、gyingJinzhou,ShaoxingZhoushanYueyangQuzhouNantong,ShaoguanLiuzhouBaodingXianyangZhuzhou,PingdingshanXinxiangHengyangBaoshanHuludao,BengbuZhengjiangLangfang,Example cities,Tier 1-“Big Four”,4 largest cities with highest income,large population base,and largest GDP scale,Tier 2a-“Climbers”(11 cities),
34、Large population base,high incomeand large GDP,Tier 2b-“Niches”(10 cities),Wealthy consumer,but relatively small overall market size,Tier 2c-“Mainstream”(16 cities),Relatively low income,but large population base,Tier 3a-“Next frontier”(136 cities),Growing markets with population larger than 1 milli
35、on,Tier 3b-“Poor cousins”(484 cities),Small cities with urban population smaller than 1 million,Source:City National Economic and Social Development Report 2008,NPV analysis,26,26,Source:China Statistical Yearbook,NPV analysis,Region,No.of cities,Eastern,29,Central,3,Western,5,Northeastern,4,CHINA D
36、IVERSITY,Geographical distribution of Chinas tier 1 and tier 2 cities,27,27,Source:City National Economic and Social Development Report 2008,NPV analysis,Breakdown of China market,CHINA DIVERSITY,28,28,AGENDA,Executive SummaryChina at a GlancePolitical StructureNational AccountsBalance TradeChina Di
37、versityNational Economic PlanIndustry DistrictIndustry OrganizationLegal Structure for Foreign Enterprise,29,29,Source:The Outline of the 11th Five-Year Plan,NPV analysis,THE FIVE-YEAR PLAN,The Five-year plan is a guideline for Chinese economic and social development from 2006 to 2010,it was approve
38、d by the Tenth National Peoples Congress in March,2006It is based on two lines of strategic thinking:the scientific concept of development and the building a socialist harmonious society,30,30,Expansion of domestic demand:,Investment and export,Consumption,investment,domestic and foreign demand comb
39、ined in a balanced manner,Optimizing industrial structure:,Industry and quantitative expansion,Balanced development of the primary,secondary and tertiary industry and by structural optimization and upgrading,Economic Growth,Resource conservation and environmental protection:,Large amount of resource
40、s consumption,Improvement of resources utilization efficiency,Source:The Outline of the 11th Five-Year Plan,NPV analysis,Economic Growth,Economic Growth,Still heavy dependence on investment and export;but consumption contributes more than past years,Second industry dominates;tertiary industry loses
41、its share,Water utilization efficiency increases considerably;resource consumption is heavy;forests are planted,The basic policy orientation 1/2,THE FIVE-YEAR PLAN,State of the art 2007,31,31,Enhancing independent innovation capability:,Input of capital and substance factor,Science and technology ad
42、vancement and human resources.,Deepening reform and opening up:,Administrative intervention,Giving more play to the fundamental role of the market in allocating resources under guidance of macro regulation and control,The people-centered approach,improving living standard:,Accumulation of material w
43、ealth,Overall development of the people as well as the balanced economic and social development.,Economic Growth,Economic Growth,Economic Growth,R each level education enrollment increases,Soaring inflation and high volatility in financial markets urge more skilled and proper level of macro controls
44、,Increasing health institutions and cultural facilities;peoples income grows with GDP;poverty reduces,The basic policy orientation 2/2,THE FIVE-YEAR PLAN,State of the art 2007,Source:The Outline of the 11th Five-Year Plan,NPV analysis,32,4 Trillion Yuan Investment plan to Stimulate Domestic Market,S
45、ource:,33,10 Industries Promotion Plan in 20091/3,Auto Industry From 20th/Jan to 31st/Dec,impose 5%purchase tax on auto less than 1.6L emission Promote the reintegration of auto industry,support M&A of big auto group In future 3 years,Chinese government will arrange 10 Bln RMB to support self-creati
46、on and technology re-construction Chinese government will arrange subsidy fund to promote the energy-saving and new-energy auto in big and middle-sized cities Encourage auto company to develop brand,fasten the exporting bas,better auto consuming credit,Steel Industry Strict control on steel producti
47、on,eliminate the project with singular purpose to increase the production capability Take advantage of leading force of big group,encourage M Deepen the technology reconstruction,research and importing,create the specialized fund in annual budget to promote the steel industry technology progress,adj
48、ust the product categories composition,Ship building The policy to promote financial institute enlarge the buyers credit for ship exporter till 2012,Textile Increase the textile exporting VAT refund from 14%to 15%Give credit support to textile company with operational and financial difficulty Encour
49、age the financial support for small and middle-sized enterprise,reduce the burden of textile company Central government,local authorities and enterprise enlarge the cotton purchase,34,10 Industries Promotion Plan in 20092/3,Equipment productionSupport famous equipment producer to M&A,and promote the
50、 hyper group with capabilities of engineering contracting,system integration,international trading and finance Push structure adjustment,transform the method of industry growthFasten product standards system,develop modern production service industry.,Light IndustryStimulate the consuming of both ur
