Transcript China - School of Business Administration

China
An IT Perspective
By
Indubala Morri
Nitin Walia
Shravan Panuganti
Agenda
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Geography
Population
People
Culture
Politics
Education
Economy
Transportation
IT statistics
IT strengths and weaknesses
E-Government
Foreign Investment
E-commerce
Shanghai
China Vs Vietnam
Recommendations
2
History
• The Ancient Dynasties
 shang dynasty 1700- 1270 B.C
 Zhou Dynasty 1027-221 B.C
 The Great wall was built
 Han (206 B.C.-A.D. 220).
 China was reunified in A.D. 589 by the shortlived Sui dynasty (A.D. 581-617)
 Ming Dynasty
3
History contd…
• Emergence of Modern China
– The Treaty of Nanjing (1842)
– On March 10,1911 in Beijing, Yuan Shikai was sworn in
as provisional president of the Republic of China
• Republican China
– In late 1931 Mao was able to proclaim the establishment
of the Chinese Soviet Republic under his chairmanship in
Ruijin Jiangxi Province.
– “Transition to socialism” corresponded to China's First
Five-Year Plan (1953-57)
• People’s Republic of China
– In 1958 the CCP launched the Great Leap Forward In
1958 the CCP launched the Great Leap Forward
4
Geography
•
Eastern Asia,
bordering the
East China Sea,
Korea Bay,
Yellow Sea, and
South China Sea,
between North
Korea and
Vietnam
•
China has a land
border of
22,143.34
kilometers long
and is bordered
by twelve
countries.
5
US - China
3.68 million square
miles
3.69 million square
miles
75% of the Americans
live in suburban areas.
74% of China lives in
rural areas
40% of the U.S. land
can be cultivated
11% of China's land is
arable
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(http://afe.easia.columbia.edu/china/geog/maps.htm#1a
US – China cont…
7
Population
• In the early days of the People's Republic, Chairman Mao urged
Chinese to bear as many children as possible to "make China
stronger."
• The population nearly doubled from 1949-1979.
• In 1979, China implemented a "one-child policy" in an effort to
control population growth.
• 94% living in the southeastern part of the country.
• China's total population of 1,252,800,000 nearly exceeds the
COMBINED populations of Europe (579,700,000) and South
America (311,500,000) and the United States (272,573,000) and
Japan (125,200,000).
• Life Expectancy is 71.86
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Age Distribution
9
People
• Population below poverty line: 10%
(2001)
• Labor force: 778.1 million (2003)
• Labor force - by occupation:
agriculture 50%, industry 22%,
services 28% (2001)
• Exchange rates: yuan per US dollar 8.277 (2003)
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China
Key Model
Level of
Economic
Growth
Political
System
Key
KeyMIS
MIS
Management
Management
Issues
Issues
Multinational
Business and
IT Strategy
Culture
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Culture and Social
Relationships
• The continuous primary theme in social structure among
Chinese throughout history is the centrality of the family
(Chin, 1996; Kim, Yang, Atkinson, Wolfe, & Hong, 2001;
Tong & Spicer, 1994). From the centrality of the family (Kim
et al, 2001) arise:
• Filial piety (or duty)
• Conformance to norms
• Family recognition through achievement
• Emotional self-control
• Collectivism
12
Hofstede’s Cultural
Dimensions
China
United States
Distribution of family income
Gini index
40 (2001)
13
Social structure
• 56 ethnic groups
Han Chinese 91.9%, Zhuang, Uygur, Hui, Yi,
Tibetan, Miao, Manchu, Mongol, Buyi, Korean, and other
nationalities
• Multi-religious country.
– Buddhism, Taoism and Islam are the three major
religions.
• There are seven major Chinese language groups.
• Communication is complex and is based on
context, social status, intuition, and other
matters not readily discernible to Westerners.
(Chang, 1999; Chin, 1996; Kagawa-Singer & Blackhall, 2001).
14
Chinese Linguistic
Groups
15
Same Body Language in Chinese
and American Cultures, but with
Different Meaning
Meaning in China
Body Language
Meaning in U.S.
Anger, irritation, frustration,
remorse
Stamping one’s foot
Impatience
Thank you; mutual positive
feelings
Speaker or performer
clapping at the same time
audience applauds
Applauding oneself;
improper, immodest
Curiosity, sometimes
surprise
Staring, gaping
Considered impolite; makes
people embarrassed, selfconscious
Disapproval, hissing
“Shoo”
Calling for silence
Seldom used; occasionally
adults may pat head of
children to show affection;
patting the head of a
teenager or adult would
cause displeasure and can be
insulting
Pat on head
Giving comfort, consolation
or encouragement; also
shows affection
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Different Body Language,
Same Meaning
Body Language in China
Body Language in U.S.
“Come here” (beckoning some
to come)
Hand extended toward person,
open palm, palm down, with all
fingers crooked in a beckoning
motion
Hand extended toward person,
closed hand, palm up, with
forefinger only moving back
and forth (in China, this same
gesture would be considered
offensive by many)
“Shame on you!” (semi-joking
gesture)
Forefinger of one hand
extended, tip touches one’s
own face several times quickly;
similar to scratching, but with
the forefinger straight (usually
with the remark “Shame on
you!”)
Forefinger of each hand
extended, palms down in front
of one’s body; one forefinger
makes several brushing
movements over the back of
the other forefinger
“I’m very full” (after a meal)
One or both hands open,
lightly patting one’s own
stomach
Hand raised to throat, fingers
extended, palm down (often
with the remark “I’m full up to
here”)
Meaning
17
Political picture
• The Communist Party is the sole party in power.
• Founded in 1921, the Communist Party of China
(CPC) established the People’s Republic of China
in 1949 through years of armed struggle.
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34 major political divisions.
23 provinces.
4 municipalities (Beijing, Shanghai, Tianjin, and Chongqing)
5 autonomous regions.
• 1 Special Administrative Region (SAR)
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(http://www.china-inc.com/education/geography/)
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Education: Facts, Figures
• Literacy: 90.9%
• Number of graduates from colleges and universities in
2004: 2.8 million
• Number of foreign students in China is over 350,000, and
this number is approximately the same as the number of
Chinese students studying abroad.
• China carries out the nine-year compulsory education
program.
• Figures: The rate of children completing primary schooling
and attending middle schools jumped from 74.6 percent in
1990 to 95.5 percent in 2001.
• The enrolled number of people into colleges and universities
rose from 609,000 to 2.683 million over the same period.
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Literacy Rate
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Economy
Chronology of events
• 1958-”The Great Leap Forward”
• 1959-Sino-Soviet relationship
deteriorated
• 1960- Soviets withdrew from China
• 1960-61- famine
• 1978- market-oriented system
• 2003- second-largest economy in the
world
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Economy - GDP
• $6.449 trillion (2003)
• GDP growth highest in last 20 years
China382% , India105%, United States56%
real growth rate : 9.1% (official data) (2003)
• Per capita: PPP - $5,000 (2003)
• Composition of economy by sector (2003) :
agriculture:
14.8%
industry and construction:
52.9%
services:
32.3%
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GDP – Growth by year and
industry
23
THE BIG MAC INDEX
What a Dollar would buy you in different countries?
24
Growing Economy
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Economic zones
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For developing the foreign-oriented economy, generating
foreign exchanges through exporting products and
importing advanced technologies and of “radiators” in
accelerating inland economic development.
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China has established special five economic zones are
foreign-oriented areas which integrate science and
industry with trade, and benefit from preferential policies
and special managerial systems.
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15 free trade zones, 32 state-level economic and
technological development zones, and 53 new- and hightech industrial development zones have been established
in large and medium-sized cities.
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Shanghai Pudong was considered as a new zone, In 1999,
Pudong GDP is 80 billion Yuan and output value is 145
billion yuan.
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Foreign - Trade
• Canton Fair , China Sourcing Fair : Electronics and components
• 2004: EU becomes China's largest trading partner in first five
months of 2004 valued at 65.7 billion dollars in the first five
months of 2004, up 35.9 percent on the same period last year,
• Exports - partners:
US 21.1%, Hong Kong 17.4%, Japan 13.6%, South Korea 4.6%,
Germany 4% (2003 est.)
• Imports - partners:
Japan 18%, Taiwan 11.9%, South Korea 10.4%, US 8.2%,
Germany 5.9% (2003 est.)
• Chinese exports rose 33.4 percent to 207.6 billion dollars in the
first five months of the year, while imports jumped 41 percent to
216.3 billion dollars
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Transportation
• The total length of highways 1.4 million km 37,000 km of newly
built highways, 1,487 km of which are
expressways.
• 507 airports opened to civil airplanes more than 80 could
accommodate large airplanes such as Boeing 777s, 767s, 757s,
747s and 737s and A340s
• The total length of civil air routes is 1.506 million km, 10.1 times
that in 1978 and 1,122 air routes had been opened, 131 of which
were international air routes.
• Asia and Europe are linked by railways from Linayungang in China
to Rotterdam in Holland
•
1989 to 2001, the Chinese government poured 6.3 trillion yuan (US$761
billion) into 1,553 infrastructure projects, covering sectors: transportation,
postal and telecom services and other public services.
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2008 Beijing Olympics

2008 Olympics projects demands total
investment of about 20.5 billion yuan (2.48
billion USD)
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Beijing Olympic Preparations are Big Business
with anticipation at the prospect of the largest
marketing event ever taking place in the world's
most populous nation, as preparations for the
2008 Olympic Games in Beijing are in full swing.

2008 Olympics is a better opportunity for china
in terms of human rights.
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Tourism in China
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China is huge and has many wild places for people to
explore. It has 56 minorities which all have their own
culture, music and traditional customs.
Traveling in China from north to south, from east to
west, you can enjoy exploring in beautiful nature,
seeing different people living different lifestyles, and
hearing the different dialects.
Beijing , Nanjing , Xian has great architecture, etc.
There are many historical sites in those cities.
China has many E-tourism web sites offering great
packages to see china.
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IT Strengths and
Weaknesses
• Strengths
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

Government policies
High Market Demand
Highly skilled low Labor Cost
Access to export markets
Favorable cost structure
Infrastructure
Macroeconomic climate
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Financial Systems (Banking)
Piracy and Intellectual Property
Deregulation
E-Commerce
Language
• Weaknesses
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E-Government
•
By 1998, China has set up 145 gov.cn domain names in China.
•
720 governmental departments has their own www websites.
According to the CNNIC annual report, the number of gov.cn
domain names has grown up to 5864.
•
The “government online project” includes:
1. Online electronic information exchange
2. Online government procurement bidding
3. Online welfare payment
4. Electronic delivery
5. Information centre
6. Electronic document manage and publish
7. Electronic tax
8. Digital ID
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2003: Bring in “LaoWai”
• Government
– 1 millions copies of Java Desktop
System for Chinese governments in
2004
• Waving Linux as a stick in the face of
Microsoft
• Leverage the eGov purchasing power
• RedFlag Linux/RedOffice 2000 for
Beijing Municiple Government
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Outsourcing to China
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China as the world’s leading manufacturer and fastestgrowing consumer market.
China will become a major supplier of offshore outsourcing
services.
Changes in the country are creating a perfect economic
storm for outsourcing. They include the liberalization of
laws and policies, a burgeoning middle class and a new
emphasis on education.
The offshore manufacturing already in China has created
the support services infrastructure necessary for
outsourcing.
China's proximity to Japan and South Korea, as well as its
common culture and similar language, make it a natural
for offshore outsourcing to those two large economies.
Piracy of Intellectual property and Language barriers
Lack of management skills among Chinese employees
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http://www.outsourcing-asia.com/china.html
Policies for FDI

China had set up complete legal system. In 1979 the National
People's Congress issued The Law of the People's Republic of
China on Chinese-Foreign Equity Joint Ventures.

Ninth Five-Year Plan (1996-2000), the objective is to attract
foreign investment, which featured high speed, large scale, and
improved industrial structure and utilization of the investment.

Tenth Five-Year Plan (2001-2005) focuses on developing the
infrastructure and industrialization projects of software industry.

About 180,000 foreign-invested enterprises are in operation,
employing around 20 million people, equivalent to 10% of
China's non-agriculture labor force. Foreign-invested enterprises
have become a key component, an increase point and a driving
force of China's national economy.
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FDI In China
• Exports have grown rapidly over past twenty years.
China was ranked 4th in Exports in the World
Merchandise Trade.
• Foreign investment pumped into Shanghai surged
51.4 per cent in the first two months of 2004. 10%
increase from the previous year.
• 2004 - the number of foreign-funded enterprises in
China reached 482,636, and the amount of contractual
and actually-used foreign investment stood at 100.037
billion and 527.38 billion US dollars respectively.
• In the five months, China approved the setting up of
17,359 foreign-funded enterprises which involved 57.24
billion US dollars of contractual foreign investment, up
14.39 percent and 49.76 percent respectively.
http://english.people.com.cn/200406/16/eng20040616_146553.html
China. FDI and Exports
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Current Foreign Investors in
China
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Intel plans to have a second chip plant in china

General Motors is moving its Asia-Pacific
headquarters to Shanghai, reflecting the
importance of China's fast-growing car market.

Microsoft, Dell, Kiyocera, TCS, Wipro,Infosys

41 multinational setup their HQ’s in Shanghai
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E-Commerce
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Only 10% of China’s 90 million web surfers buy things
on the Internet compared with 38% in the US
The Payment network-Online consumers in China often
browse through a sales website only to find they must
pay by mail or walk down the block to provide payment
in person. This makes e-commerce more timeconsuming, more costly, and less predictable than a
traditional purchase. And it is a sure way to kill the
prospects for internet business.
Telecom hurdles-Telecom costs remain an impediment
to the development of e-commerce in China.
Outmoded shopping concepts and methods-Chinese
customers shop by looking at, touching, listening to and
tasting products.
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Tele-density
China 1995 : 44.3 million telephone subscribers (40.7 million fixed,
3.6 million mobile) ,(US –1950)
China 2003 : 532 million subscribers (263 million fixed and 269 million
cellular )
US
2003 : 341 million subscribers (182 million fixed and 159 million
cellular )
In 2003 111 million new telephone lines were installed in China.
first 4months of 2004 50 million lines brought into service
- an average of over 200 lines a minute, day and night, seven
days a week.
China Telecom, China Mobile, China Netcom and China Unicom
Ranked by subscribers.
China Mobile is the biggest mobile operator in the world, providing
service to well over 150 million users .
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Tele-Density . Cont..
41
IT GrowthInternet Users
http://english.people.com.cn/200408/11/eng20040811_152529.html
By June 30, 2004,Internet users in China had reached
87.0 million, which increased by 27.9% over a 12 month
period , 45 million via dial up
90,000
85,000
80,000
70,000
Total user
87 million - 2004
60,000
50,000
40,000
30,000
22,500
16,900
20,000
10,000
0
620
1997.11
1,175 2,100
1998.12
4,000
8,900
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1999.12
2000.12
2004.6
IT GrowthWWW Sites
Beijing, south China's Guangdong Province, east China's Zhejiang Province and
the economic hub of Shanghai were the top four areas for numbers of websites,
accounting for 56.8 percent of the total
700,000
600,000
500,000
A total number of 382,000 www
预计2001年上网
sites under .cn and 627,000 sites
机器总数1,700万
in general 2004
627,000
400,000
382,000
300,000
265,405
200,000
180,500
100,000
0
8,600
1,500
1997.11
People’s Daily Online
64,000
34,500
20,700
9,906
5,300
3,700
1998.6
1998.12
1999.6
94,900
27,289
15,153
1999.12
under .cn
2000.6
general
39,500
2000.12
2001.12
2004.6
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IT Growth-Total Bandwidth
to the Outside World
20,000
18,599
18,000
16,000
A total bandwidth of 18,599
mbps to the outside world
2004
14,000
12,000
10,000
8,000
6,000
4,000
2,799
2,000
0
18
1997.11
84
143
1998.12
241
351
1999.12
1,234
2000.12
2004.6
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Shanghai - Geography
• Shanghai, called "Hu" for short, is a
bustling metropolis located at the
mouth of the Yangtze River. Connected
with Jiangsu and Zhejiang provinces
in the west, the city is exposed to the
East China Sea in the east
• It consists of two basic districts, Puxi
(western town) and Pudong (eastern
town) which face each other across the
Huangpu River. As a general rule, Puxi
is the embodiment of 'Old Shanghai'
and Pudong is the embodiment of a
'New Shanghai'
• It is one of China’s biggest cities.
• Main financial center of china
45
Things you need to know
about Shanghai
• Municipalities are directly under the administration of
central government. A municipality has the same
political, economical and jurisdictional rights as a
province.
• Total area of 6,341 square kilometers (about 2,448
square miles) .
• Population of 13 million .
• Very safe city; very little if any serious crime, streets
are safe.
• Many festivals take place on the streets.
• Visitors are appreciated and respected.
46
This is a picture
of the Pearl
Tower,
the tallest tower
in Asia and
Shanghai’s
Pride and joy.
The Bund or Waitan, Shanghai’s most
Famous and scenic downtown sight.
47
Shanghai’s 2003 statistics
• Shanghai has only 1 percent of China's
population
• The city accounts for more than 11 %
of China's exports, 15 % of China's
imports, and more than 11 % of
contracted FDI through the third
quarter of 2003
• Shanghai's exports during 2003 grew
more than 20 percent faster than the
national average.
48
Economy
Shanghai Vs China
49
Shanghai Zhangjiang HiTech Park
• Vision : To be the top Hi-tech park in China and be
well-known worldwide by 2010
• Mission : To create a series of complete Hi-tech
industry chains
• Shanghai Zhangjiang Hi-Tech Parki- was established in
July of 1992 as a national-level park designated for the
development of new and advance technology.
• The Park’s two leading industries are information
technology and modern biotechnology and pharmaceuticals,
and its principal focus is to develop innovation and
entrepreneurship.
• By 2005 Zhangjiang will be one of the nation’s top hi-tech
parks, with an innovative and educational atmosphere and
state-of-the-art technology.
50
Shanghai Zhangjiang
Hi-Tech Park
In the first eight years, the Park has already become the home to
various national-level bases, including the State Bio-Tech and
Pharmaceutical Base (Shanghai),
the National Information Technology Industry Base, and
the National Science and Technology Innovation Base.
From July, 1992 to December, 2003
•Registered Companies : 3009
•Attracted Investment • USD 10.8 Billion
•Contracted Foreign Capital •USD 6.33 Billion
•Fixed Asset Investment • • USD 41.2 Billion
•Developed Area •17 km2 (25km2)
•Supported by 15 Universities in Shanghai's region
Shanghai Zhangjiang HiTech Park
52
Shanghai Pudong Software
Park
http://pudong.shanghaichina.org/infrastructure.html
• Shanghai Pudong Software Park intends to build up a
favorable environment for R & D, production, marketing,
service and investment that helps information industry to
grow.
• In April 1990, the Chinese government began the
development of Pudong (Pudong New Area), an area
adjacent to the urban districts of Shanghai.
• The state has extended special preferential policies to the
Pudong New Zone that are not yet enjoyed by the special
economic zones. preferential policies of reducing or
eliminating Customs duties and income tax, common to the
economic and technological development zones and certain
special economic zones, the state also permits the zone to
allow foreign business people to open financial institutions,
and run tertiary industries
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Shanghai Pudong Software
Park
•Over 982 software enterprises have registered and with 220
companies having moved in, including: Citibank, Sony(Software),
Kyocera, Microsoft.net , Bearing Point, TCS, Satyam, Infosys
UnionPay
•To become the software export base, IC design center and the
platform for value-added software industry
54
Profitable Investments in
Shanghai
 Technology-intensive manufacturing
industries in the suburbs and industrial
parks
 Bio-pharmacy
 Electronics and telecom equipment
 Automobiles
 Shipbuilding
 Petrochemicals
 Fine steel
 China Movie Industry
55
China vs Vietnam
China
Vietnam
Currency
Renminbi (RMB) yuan
new dong (D)
Exchange rate
8.3 yuan=US$1
14,020 new dong (D)= US$1
GDP
10,239.8 billion yuan (at the
end of 2002)
$143.1 billion
Population
1295.33 million
Population growth rate
10.55%
1.49%
Ethnic groups
China has 56 ethnic groups.
2 major ethnic groups
Government type
Communist state
Communist state
34 provinces
58 provinces
80,226,000
56
GDP growth rate
China
Vietnam
7.5%
GDP growth of 8.5% in 1997 fell to 4% in
1998 and rose slightly to an estimated
4.8% in 1999
FDI
$62.66 billion
GDP per capita
Foreign direct investment has fallen
dramatically, from $8.3 billion in 1996
to about $1.6 billion in 1999.
$1,850
Population below poverty
line
10%
37%
Inflation rate
1.2%
4%
Unemployment rate
9%
25%
Labor force
$778.1 million
38.2 million
Exports:
$325.6 billion
$11.5 billion
Imports:
$295.2 billion
$11.6 billion
External debt
$184 billion
$7.3 billion
Railways
57,600 km
2,652 km
Highways
1.278 million
km
93,300
Waterways
238,000 km
17,702 km
Airports
140
48
Telephones - main lines in
use:
263 million
842373
Problems
1.War image
57
2.Illicit drug trafficking
3. Border conflicts with lot of countries
Recommendations
Invest In ITIndustry
Merits
Demerits
Software Dev.
• Potential of a vast local market.
• Favorable govt. polices
• Skilled workforce
•Deregulation
•Software Piracy
Hardware Dev.
& Manufacturing
• Good Infrastructure
• Availability of Capital
• Growing Domestic and world
demand
• High Competition
•Need govt. approval
Bio-Pharmacy
• Skilled Work Force
• High tech parks
•Recent Wage Increases
E-Commerce
• Large future market
•Limited Infrastructure
•low Penetration
Automobiles
• Highly Skilled Work Force
•Potential demand for economy
cars
•Government Policies
•Language
Sources
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http://english.people.com.cn
http://www.people.com.cn/
http://www.cia.gov/cia/publications/factbook
http://www.american.edu/carmel/jw6194a/Korea_files/software.ht
m
http://www.american.edu/initeb/cc9979a/hongkong.htm
http://geography.about.com/library/cia/blcsouthkorea.htm
http://www.state.gov/www/background_notes/southkorea_0006_b
gn.htm
http://www.amcham-china.org.cn/
http://www.cbw.com/business/exhib/cantonfair/
http://english.epochtimes.com/news/4-10-8/23643.html
http://www.chinesetradepartners.com/Chinese-Transportation.html
http://cn.yahoo.com
http://www1.bejieng.olympic.org.cn
http://www.globalsources.com/TRADESHW/CSF/INDEX.HTM
http://www1.beijing-olympic.org.cn
video clip
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