Transcript China - bYTEBoss

Presentation on
China
Study Abroad 2001
Economic Conditions
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Since 1978 - transition to a market-based economy
has led to incredible GDP growth, average of 8%
Openness to trade and foreign investment
Let go of small State Owned Enterprises
Major government reorganization - less
involvement with commercial activities
Financial trouble in East Asia has posed a problem
for China’s exports
Policy News: 12/21/00
Government policies established to support
small and medium-sized enterprises
 Will speed up development of technological
ventures, foreign fund investment or joint
ventures, simplifying accounting
 Improved legal environment

State Economic Trade Commission: Li RongRong, Vice Minister
SETC
Culture & Business
 “It’s
not what you
know but who you
know.”
 Know how to deal with
who you know.
Do’s & Don’ts


Know how to
build
relationships
(inside and
outside of the
business
relationship)
Show respect for
local
institutions.


Don’t impose
western
standards
(political).
Do not cause
anyone to lose
face.
Government Influence on
Doing Business in China
From the perspective of:
Marion Zhang
Steve Young
The People’s Republic of China
Recent Government History:

Pre-1976: Communist Party led by Mao Zedong
 Business completely controlled by government

1976-1990: New Communist Leader instigated more
moderate policies
 Small steps toward private enterprise and a more liberal
economy

Last 10 years: Government released control of most
businesses
 Private Sector booming
Effects of Privatization
“Westerners view business
opportunities in China as huge
diamonds just sitting there, but as
they venture closer to pick them
up they find mine-fields
surrounding each diamond.”
Diamonds: masses of people with lots
Beijing barely recognizable
after a one-year absence
of money who want to buy your product
Mine-fields: business’ inseparable
connection to government and culture
Current Influence of Government on
Business in China
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Maintains strict regulations
 Product registration requirements (3 mo- 2yrs)
 Price Control branch of government
Subsidizes some local entrepreneurs
 Structures policy to enable success
Completely owns the banks and media
 Raising capital can be a large obstacle
 Relationships and good favor become critical
 Meetings with Government Officials
 Annual Reports
Stick to the policy of
opening up in all
directions and
expanding foreign trade
in all forms.
Foreign Direct Investment
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
Foreign-capital Enterprises
Joint Venture Companies
Stock Exchanges – 2 types of Indices
 A-Shares – PRC Citizens
 B-Shares – Foreign Exchanges
1. Shenzen B-Share
2. Shanghai B-Share-Shang
Encouragements for Foreigncapital Enterprises
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FCE’s are under the protection and jurisdiction
of Chinese Law.
FCE’s must be conducive to the development of
China's national economy and be capable of
gaining remarkable economic results.
FCE’s shall make their own managerial
decisions, within the approved scope of
business operations, and shall not be subject to
intervention.
Constraints on Foreign-capital
Enterprises

No Foreign-capital enterprise in the Following:





Restrictions in the following trades:



The press, publication, broadcasting, television and movies.
Domestic commerce, foreign trade, and insurance.
Post and telecommunications.
Other, as prescribed by the PRC.
Public utilities, Communications and Transportation.
Real Estate, Trust Investment, and Leasing.
Foreign-capital enterprise may not cause injury to
national security, sovereignty, social or economic
conditions, or cause pollution to the environment.
F D I in C hina by Secto r, 1999
Secto r
F arming, F o restry, Livesto ck F arming,
F ishing
N umber o f
P ro jects
A mo unt
C o ntracte
d
A mo unt
Utilized
($ millio n)
($ millio n)
762
1,471.70
710.15
130
322.21
557.14
12,042
25,331.80
22,603.34
T extiles
535
1,198.52
1,370.89
C hemicals
867
1,758.74
1,919.28
P harmaceuticals
198
692.62
684.41
Ordinary M achinery
485
904.47
976.69
Special Equipment
500
743.33
509.95
T eleco mmunicatio ns Equipment
P o wer, Gas, and Water P ro ductio n and
Supply
922
3,942.71
3,145.72
116
1,635.19
3,702.74
C o nstructio n
Geo lo gical P ro specting and Water
C o nservancy
T ranspo rtatio n, Sto rage, and P o st and
T eleco mmunicatio ns Services
247
1,096.19
916.58
10
53.97
4.52
205
1,114.01
1,551.14
Who lesale, R etail, and F o o d-relatedServices
825
1,204.13
965.13
3
37.08
97.67
669
4,177.85
5,588.31
1,474
3,016.80
2,550.66
H ealthcare, Spo rts, and So cial Welfare
28
67.27
147.69
Educatio n, C ulture, and the A rts
29
60.72
60.72
Scientific R esearch Services
62
133.72
110.13
316
1,488.52
752.68
16,918
41,223.02
40,318.71
M ining
M anufacturing
Electro nic and
F inance and Insurance
R eal Estate
So cial Services (including H o tels)
Others
T o tal
N OT E : Totals may not add up because of rounding.
So urces : PRC National Bureau of Statistics, China Monthly Statistics, China Statistical Yearbook,
2000; Ministry of Foreign Trade and Economic Cooperation
Foreign Direct Investment by Area, 1999 (in
Billions)
Other*
Zhejiang
Yunnan
Xinjiang
Tianjin
Sichuan
Shanxi
Shanghai
Shandong
Shaanxi
Qinghai
Ningxia
Liaoning
Jilin
Jiangxi
Jiangsu
Inner Mongolia
Hunan
Hubei
Henan
Heilongjiang
Hebei
Hainan
Guizhou
Guangxi
Guangdong
Gansu
Fujian
Chongqing
Beijing
Anhui
0
5000
10000
15000
Top Ten Foreign Direct Investors,
1999(In Billions)
$18
16.36
$16
$14
$12
$10
$8
1.04 0.88
ce
1.371.27
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China’s Labor Force
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Population: 1.26 Billion people
Age structure:
0-14 years: 25% (male 52%; female 48%)
15-64 years: 68% (male 52%; female 48%)
65 years and over: 7% (male 47%; female 53%)
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Population growth rate: 0.9%
 Birth rate: 16.12 births/1,000 population
 Death rate: 6.73 deaths/1,000 population
Labor Force: 700 million
 agriculture 50%
 industry 24%
 services 26%
GDP per capita: $3,800
Capital
Foreign Investment
 Capital stock growth – 7% per yr.
 New machinery
 Better technology
 Infrastructure
 Productivity growth – leading the way for
China’s economy
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Capital / Labor Tradeoff
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Labor-intensive processes
60% work for State Owned Enterprises
 Inefficient – too many employees
 Business – provide jobs
 Government slowly trying to modernize
Changing trend – leaner and meaner
 Less state control - privatization
 More entrepreneurship
 Foreign direct investment
Problems
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Communist party
Role of state
Job security / uncertainty
Transfer of Technology
into China
Uncertainties, Risks and Reasons
Military Advancement
U.S. Supercomputers have helped China
Achieve significant advancements in missile
technology
 China has threatened Taiwan and may
threaten other countries
 China has the largest army in the world and
continues to increase the number of soldiers
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Copyrighted Material
The Chinese government has not enforced
U.S. copyright laws
 Software can easily be bought and
exchanged in China
 U.S. Software companies have lost
significant amounts of money
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The Chinese Market
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China’s economic growth and sheer size make the
country one of the most attractive markets in the
world
AT&T has entered into several joint ventures with
Chinese countries to enter the telecommunications
market in China
Many other companies are trying to penetrate the
market thereby offering China improved
technologies
Highlights of Church History in China
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1852 – Brigham Young sent first
missionaries.
1921 – David O. McKay dedicated China for the preaching
of the gospel in Peking.
1949 – Mathew Cowley offered a prayer from the highest
point in Hong Kong to officially open missionary
work.
1996 – President Hinkley became the first President of the
Church to visit mainland China.
1997 – Hong Kong Temple Dedicated.
Current Status of Church in China
Four Expatriate branches
 Chinese citizens can only attend authorized
churches.
 Chinese citizens that are members have to
attend church in Hong Kong.
 Chinese citizens can mingle socially with
members of the church.
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Church’s Future in China
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When the Church enters officially
 Large missionary need
 Large growth is likely
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Economic Development
 More expatriates
 Western Influence