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