Transcript How Does China Change Your Business

How Does China Change Your
Business?
Mat Morrison
Ryan Osman
Sean Tripi
China
• Worlds most rapidly changing large economy
• Increasing presence in our every day lives
– Shipping Lanes
– Financial Markets
– Telecommunications
– Globalization
U.S. Reaction
• Mixed feelings from Americans
– Concerns about inequality in trade
• China sells significantly more to the U.S. than they buy
– Concerns over outsourced jobs
– Americans consumers continue to welcome
inexpensive products from China
Deception in Economy
• China’s economy is much larger than official
numbers show
– In 2003 GDP was reported at 1.4 Trillion Dollars
– Actual GDP was 6.6 Trillion Dollars
• Incentive to under report growth
– Competition for development funds
• Measures legal economy and ignores large
underground
Economic Growth
• Extraordinary Growth
– In a 30 year run, economy has doubled 3 times
– GDP expanded at annual rate of 9.5%
– Neither Japan nor South Korea’s post war boom is
anything close to China’s economic surge
China Can Be A Bully
• Dictate wages, put competitors out of work
• China makes 40% of wooden furniture sold in
the U.S.
• In 2003 China export grew from 360 Million to
1.2 Billion resulting in 35,000 laid off
employees or 1 in every 3 in the trade
Global Price Benchmark
• The term “China Price” is interchangeable
with “Lowest Price”
• China Price assumes that the production of
anything can be moved to China for lower
prices and sometimes higher quality
• GM gives suppliers 30 days to find the China
Price on their goods or risk contract
termination
Piracy is a Problem
• Very loose enforcement of intellectual
property laws
• Underground market is worth hundreds of
billions of dollars to China’s businesses and
people
• By investing in China’s manufacturing
infrastructure, we enable them to assemble
the most successful illegal manufacturing
complex in the world
• Iphone vs. Phone
Costs of Raw Materials
• Demand for raw materials increases price
– Copper price increased 37%
– Oil increased 33%
• China consumed 7% of the worlds oil in 2003
• Trend looks for more consumption and higher
prices in the future.
Questions
• Do you agree with President Obama’s plan to
eliminate tax breaks for companies
outsourcing to foreign countries?
• Do you feel that the U.S. dependency on China
is a good or bad thing for our economy?