Transcript THINK!DESK China Research & Consulting

The Chinese Challenge
Competitiveness Strategies for Turkey
Istanbul, 8. November 2005
The Multi-purpose China-Chart
x
t
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Agenda
I. What drives the Chinese Economy: Trends and Developments
II. The Competitive Setting: China and Turkey in China
III. The Way Ahead for Turkey
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Agenda
I. What drives the Chinese Economy: Trends and Developments
II. The Competitive Setting: China and Turkey in China
III. The Way Ahead for Turkey
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4
‚Unexhaustable‘ Supply of Unqualified Labour
1.100
1 hour of labour
in manufacturing
has a price of:
China
India
Thailand
Mexico
Poland
Hungary
CzechRep.
Spain
USA
Germany
0,80 US$
1,12 US$
1,96 US$
2,45 US$
2,70 US$
3,53 US$
3,64 US$
12,32 US$
21,86 US$
30,60 US$
Source:BCG
1.000
900
800
Low variant
700
Medium variant
High variant
600
Constant Fertility variant
500
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
Source: United Nations
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The Savings – Investment Nexus
60
50
China‘s Savings Rate
has Jumped to Nearly
50% of GDP
Fixed Asset
Real Estate
- Priv. Households: 16% 
40
- Government: 11% 
30
20
10
Retail Sales
20
10
20
05
20
04
20
03
20
02
20
01
20
00
19
99
0
19
98
in %
- Corp. Sector: 23% 
0
2005
2004
2003
2002
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Absorption of technologies and business models
Share of
foreign invested enterprises in
gross industrial output value
Share of
foreign invested enterprises in
China‘s exports to the EU
35
33,4
31,2 31,4
30
28,1
27,8
24,0
25
22,5
FIE
45,24
18,6
20
%
14,3
15
15,1
54,76
11,3
other
9,2
10
7,1
5,3
5
2,3
20
04
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
0
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China has Been Able to Sell a Story to the Global Investors‘ Community
Going China …
... for ressources …
… pushed by
oligopolistic
competition ….
and
... dreaming of
1.3 bn. customers
...
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China – Asia‘s Interface to the Global Economy
China has become
a ‚must‘ stop for all
supply chains
touching (South)
East Asia
China‘s import- and
export-quotas are
at about 45% of
GDP each
Global supply chain
value-added in
China is on average
about 25%
0 0 0 'S
15
0 0 0 'S
15
10
10
5
5
0
0
-5
-5
-10
-10
1998
1999
2000
C N tr a d e b a l. w . D E
C N tr a d e b a l. w . N Am
C N tr a d e b a l. w . As ia
2001
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2002
2003
2004
2005
So u r c e : D ATASTR EAM
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China‘s two Worlds
Accumulated
FDI-Inflow in % of
the national total
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What moves China? – major trends and pospects
Inward FDI counterbalanced
by outward FDI
Rising demand for sustainable
social security system
From a dominance of foreign brands
to a dominance of Chinese brands
Increasingly influencing
global prices
From a technology/standards receiver
to a technology/standards creator
Using party/government assets
to promote active presence in
world economy
Increasing regional disparity
Being shaped by global business
in the past to actively shaping
the global economic setting
Major net demand of world resources
Growing environmental
degradation
From political underdog to a global power
Rise of national
champions
Growing nationalism
Stronger role in international trade disputes
What are the underlying driving forces of the current and future developments?
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China is moved by three Mega-Trends as underlying driving forces
interdependency
economic
socio-economic
politico-economic
Major net demand of world resources
From a technology/standards receiver to
a technology/standards creator
Being shaped by global business in
the past to actively shaping the
global economic setting
From a dominance of foreign brands to a
dominance of Chinese brands
From political underdog
to a global power
Increasing regional disparity
Rising demand for sustainable
social security system
Using party/government assets to
promote active presence in world
economy
Rise of National Champions
Stronger role in international trade
disputes
Growing environmental degradation
Growing nationalism
Increasingly influencing
global prices
Inward FDI counterbalanced
by outward FDI
Mega-Trend I
Mega-Trend II
Mega-Trend III
From passive recipient
to active global player
Internalization of external effects
Continuing political grip
on economic developments
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Agenda
I. What drives the Chinese Economy: Trends and Developments
II. The Competitive Setting: China and Turkey
III. The Way Ahead for Turkey
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Exports to EU-15 by «Factor Endowments»
Labour-intensive industries
Technology driven industries
50
50
40
30
1995
20
2003
Percent
Percent
40
10
30
1995
20
2003
10
0
0
Turkey
China
Turkey
Capital-intensive industries
Marketing driven industries
50
50
40
30
1995
20
2003
10
Percent
40
Percent
China
30
1995
20
2003
10
0
0
Turkey
China
Turkey
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China
14
Exports to EU-15 by «Labour Quality»
Low-skill industries
80
70
60
50
40
30
20
10
0
1995
2003
Turkey
Percent
Percent
High-skill industries
80
70
60
50
40
30
20
10
0
Turkey
80
70
60
50
40
30
20
10
0
China
Medium-skill / white-collar workers industries
1995
2003
Percent
Percent
2003
China
Medium-skill / blue-collar workers industries
Turkey
1995
80
70
60
50
40
30
20
10
0
China
1995
2003
Turkey
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China
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Origin of products/
industry & subgroups
1996 2003
2003
in Mio
€
Share
of total
exports
Aagr
in%
Similarity Index
1995
2003
China
Total IT goods
25019
34.7
31.2
Computers, IT
consumer goods
22651
31.4
33.4
50.1
28.7
Turkey
Total IT goods
1657
6.8
29.3
Computers, IT
consumer goods
1594
6.6
30.8
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Origin of products/
industry & subgroups
1996 2003
2003
in Mio
€
Share
of total
exports
Aagr
in%
Similarity Index
1995
2003
China
Textiles
9103
12.6
11.5
Fabrics and knitted
apparel
1279
1.8
14.7
84.0
87.4
Turkey
Textiles
9643
39.6
7.2
Fabrics and knitted
apparel
1927
7.9
5.3
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Origin of products/
industry & subgroups
1996 2003
2003
in Mio
€
Share
of total
exports
Aagr
in%
Similarity Index
1995
2003
China
Automotive industry
Car parts
3330
4.6
35.4
294
0.4
38.1
31.9
20.2
Turkey
Automotive industry
Car parts
4034
16.6
29.5
968
4.0
22.3
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Knowledge Economy Index 2004
Western Europe
Poland
Estonia
Hungary
Czech Republic
Slovenia
Lithuania
Latvia
Slovak Republic
Cyprus
Bulgaria
Romania
Turkey
China
0
1
2
3
Econ. Incentive Regime
Education
4
5
6
7
8
9
Innovation
Information Infrastructure
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Agenda
I. What drives the Chinese Economy: Trends and Developments
II. The Competitive Setting: China and Turkey
III. The Way Ahead for Turkey
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The Growth Game
The Turkish Issues:
 Level the playing field between players of the formal and traditional sectors by
improving the enforcement of legal obligations
 Promote good governance and invest in the creation of trust
(i.e. secured expectations) in long-term stable economic development
 Do not suppress existing comparative advantages
(lessons to be learned from East Germany)
 Activate the full productivity potential of Turkey (hidden reserve of plus 80%)
by integrating the traditional sector in the formal economy
The European / International Issues:
 Open all sectors to international competition
 Integrate into Europe‘s strongest and most stable industry networks
 Define a slot for Turkey in the global supply chains (beyond labor cost calculus)
 Dress up for more and better FDI
 Communicate achievements to the international investors‘ community
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Prof. Dr. Markus Taube
Director, Institute for East Asian Studies
Chair of East Asian Economic Studies / China
Lotharstrasse 63
47057 Duisburg
- Germany -
Prof. Dr. Markus Taube
Dr. Christian Schmidkonz
Dr. Matthias Schramm
THINK!DESK China Research & Consulting
Merzstrasse 18
81679 München
- Germany www.oawi-china.uni-duisburg.de
[email protected]
www.thinkdesk.de
[email protected]
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