Transcript Economic Zone - The Federation of Hong Kong Business Associations

Springboarding Technology for
Commercial Success
Dr. K.B. Chan
Chairman and Managing Director
Surface Mount Technology Ltd.
November 21, 2005
1
Content
• China’s growth & major economic zones
• Opportunities - Automotive and
electronics
• Partnership with Hong Kong
• Summary
2
Major Economic Zones
Growth 2005>9%
05/10 > 7.5%
Bohai Economic Zone
7+2
CHINA
Yangtze River Delta (YRD)
6+1
Pan-Pearl River Delta (PPRD)
9+2
3
Strength of Economic
Zones
Economic Zone
2004
GDP
(US$B)
% of the
Greater
China*
Annual
GDP
growth
Population million
% of the
Greater
China*
Pan-Pearl River
Delta (PPRD)
735
34%
13%
463
36%
Yangtze River
Delta (YRD) 1
687
32%
16%
394
30%
Bohai
Economic Zone
632
29%
16%
350
27%
2,054
95%
1,207
93%
Total
1 Includes eastern China, *Includes China, Hong Kong and Macao
4
Source: China Statistics Bureau, Hong Kong Census & Statistics Dept, Macau Statistics and Census Service
Bohai Economic Zone – 7+2
Diversified economy:
• Political, culture, R&D center - Beijing
• Export, manufacturing base - Tianjin
Major industries/sectors:
• Heavy industry, machineries, steel, military
Central Government designates as Third Wave
5
Yangtze River Delta – 6+2
Industry and investment-oriented:
• Shanghai as the regional leader – banking and
finance, industrial manufacturing, tourism
• becoming more internationalized
Major industries:
• Very diversified
• Automotive & auto parts, electronics equipment
and parts, textile, chemicals,
6
Pan-Pearl River Delta – 9+2
Export-oriented:
• external trade of Guangdong accounts for over
30% of China’s total
• large numbers of foreign-invested manufacturers
in Guangdong, with a high concentration of Hong
Kong-invested companies> 60,000
Major industries/sectors:
• consumer goods, light Industries, petrochemical,
• > 40% are electronic related
7
Opportunities : Automotive &
Electronics Industry
8
Electronics Production in China
• China is Factory of the World
• Advantage – Low cost & huge domestic market
• Electronics market – forecast by 2007
300 Billion US$
20% of world output
Growth rate 12%, double of world’s
• Largest market – hand set, DVD, TV,
• Top 5 – PC, home appliance,
Source: isuppli, 03/2004
9
Electronics Output in Major
Economic Zones
• Electronic is major industry, highest growth
Electronics
Output (2003,
US$B)
% of the
China’s
Total
Pan-Pearl River Delta
92
43%
Yangtze River Delta
71
33%
Bohai Economic Zone
43
20%
Economic Zone
206
Total
96%
40% of PPRD GDP,Over 80% from
Guangdong
Source: China’s Electronic Information Industry Yearbook
10
EMS in China to Increase
70
Electronics Manufacturing Services (EMS) Production
China
Billion of US Dollar
60
50
40
Mexico
30
(E) Europe
20
US
10
0
2001
Source: iSuppli, June 2003
2002
2003
2004
2005
2006
2007
11
Automotive Industry in China
2003 Sales > 100 Billions US$ ; Vehicle Output (Units)
Started
> 200 thousand
1953
1971
1980
> 100 thousand
> 3 million
2000
2002
> 2 million
> 5 million
2003
2004
> 4 million
Vehicle Sales (Million Units)
13.2
15
2004 World Ranking
10
5
0
• 4th largest producer
6.3
4.4
2003
• 3rd largest market
2005
2010
Source: State Information Center – China Economic Information Network
12
Automotive Electronics in China
China's Automotive Electronics Market
35
30.1
USD Billion
30
25
20
15
12.0
10
5
0
6.6
2.0
2000
2003
Source: FOURIN China Auto Weekly
2005
2010
13
Trend in China’s Automotive
Components Industry
• Automotive Output – could exceed 10 M vehicles
by 2010
• Automotive Components – over 30% growth
• Share of automotive electronic components in a
car will increase from 10% to 30% by value
• Foreign/ JV auto makers to procure local low-cost
and high quality parts and components
• Domestic brands increase from 25% to over 50%
14
Partnership with Hong Kong
The Advantages
15
Position of Hong Kong
• Major economic engine of the Pan-Pearl River
Delta, finance and service center
• Over 40% of China’s Foreign Direct Investment FDI is from Hong Kong
• HK companies operate more than 60,000 factories
in Southern China - employing > 10 million workers
• 40% of HK Manufacturing GDP is electronics
16
Source: Hong Kong Trade Development Council
Advantages of Hong Kong
• Cosmopolitan city – large number of foreign company
• Excellent infra-structure, transportation, telecom
• Sound legal and tax system, center for arbitration
• Mature equity market
• Efficient government with no corruption
• Easy communication, English, Chinese
• Risk Management
• IP Rights protection
• Currency management - RMB
17
HK - R&D – Technology Developments
• Administer under ITC – Innovation & Technology
Commission – Funding ~ 4 Billion HK$
• 8 Universities
• Establish 5 R&D centers from 2006
Auto parts, logistics, textile, nano tech, IT & telecom
• ASTRI – Apply Science and Technology Institute
• HK Science & Technology Park – IC design, photonics
• Cyber Port – Digital entertainment
• HK Productivity Center
18
Guangdong/HK Technology
Co-operation Funding Scheme
• Joint funding efforts between the 2 Government to
support R&D projects
• 2004> US$ 40 m in 6 areas
RFID , Auto-parts, elctronics & IT, energy tech
new materials, precision equipments
• 2005> US$ 67 m in 6 areas
communication, medical & bio tech, new materials
green manufacturing, agriculture,
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HK Companies as Partners
• Understand both International and Chinese
cultures, acting as a bridge
• Historic link with multinational companies, and
foreign countries
• Substantial business experience in China,
know “what not to do”
• Fast response
• Strong business integrity
20
Summary
• The 3 major economics zones will be China’s
economy growth engine > 90%
• Pan Pearl River Delta – Super Economic Zone
• Bohai Economic Zone is the Third Wave
• Electronics and automotive will be the leading
industries
• Partnership with Hong Kong companies for
outsourcing or entering the China market
21
Thank You
22