The China Connection What Does It Mean for Business?

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Transcript The China Connection What Does It Mean for Business?

Is China Taking
Over
the World?
International Law of the American Bar Association
2006 Spring Meeting
April 6, 2006
Shirley-Ann George, VP International Policy
Canadian Chamber of Commerce
[email protected]
DRAFT – Mar 1/06
Bottomline:
China’s entry into the global
marketplace fundamentally
changes everything
- and nothing about this is simple
- US global domination may be over
DRAFT – Mar 1/06
WHY?
• History
– Return to position held through out history
• Size
– 1.3B people
• Doubling of global workforce – ½ from China
– 125M middle class; moving to 300M by 2010
• Economic Might
– GDP $1.8T (US$); PPP $8.1T
• Political Structure to Make it Happen
– Sheer Determination to Regain Dominance
– Will not repeat Russia’s messy move to democracy
• But Challenging Mid-term Cracks in the System
DRAFT – Mar 1/06
Global Impact: A New Era
• Not a new phenomenon
• Impacting both domestic-China
trade/investment & global trade/investment
– Driving up prices they consume
– Driving down prices they sell
• Rapidly moving from low cost to high end
– Manufacturing to R&D centres
• Need Offensive and Defensive Strategies
DRAFT – Mar 1/06
Integrative Trade
• Core Business Decision
– Where to locate business components
– Changes Govt’s economic growth strategies
• Need to understand full costs
• Growth Opportunities
– Commodities to feed the boom
– Attracting Chinese investment
.
International
Expansion
• Branch plants replicate domestic
structure
1950s
- Reducing supply chain costs
- New middle-class (Sales & Tourism)
Outsourcing of
Production
• Major manufacturing
functions outsourced
1960s
1970s
Global Value-Chains
• Both production and
services located
according to where
they are most efficient
1980s
21st Century
International Specialization
Outsourcing of Services
• Plants specialize in
• Service inputs now
production
outsourced
Source: International Trade Canada
DRAFT – Mar 1/06
Foreign Investment is Key
• Investment – Trade – Growth Linkages
– Investment in China
– $$ available for Chinese Investment
– Need to aggressively pursue Chinese $’s
• Need for reciprocal access
DRAFT – Mar 1/06
Dealing with the
Chinese ‘weaknesses’
• Human Rights & the Environment
– Different Roles for Government & Business
– Multinationals bring higher voluntary standards
• Need to coordination / standards
– Emerging Role of Investment Funds
• Removing Unfunded, Off-book Liabilities
– Internet provides no place to hide
• IP Protection & the Rule of Law
• Chinese Stability & Regional Asian Stability
• Other Issues
– Currency Manipulation; Corruption; Bank Stability
DRAFT – Mar 1/06
Chinese FDI in Canada
• Minmetals – Noranda
– Proposed Changes to Foreign Investment Protection
Act (?? Name)
• IP Protection
• Need to attract investment
– Competition for Chinese investment
– Dealing with the fears
– Stated Owned Enterprises
• Major investors not driven by market principles
• Where does Canada fit?
–Energy: Oil Sands and Pipeline to B.C.
DRAFT – Mar 1/06
Responding to the Threat
• China is growing the global economy
– Change = Winners & Losers
• Adapt or Perish
– Bigger ‘threat’ than Russians in space
– Where’s your Strategy?
• Govt / Business/ Personal
– Not just China
• Find your globally competitive niche
• Essential to Move up the Value-Chain
– Dramatic increase in Education & Research
– Build business capacity
DRAFT – Mar 1/06
Is China Taking
Over the World?
• No – Today we are gift wrapping
and giving it to them
• Time to wake up
• Response must focus on moving Canada /
US up the knowledge/innovation curve
• China changes everything – up to us to
determine if benefits
North America.
DRAFT – Mar 1/06