WORLD TRADE GROUP. LLP. 1 WORLD TRADE GROUP, LLP and Rogers Towers, P.A. China Trade & Business 2003 Year in Review Present.

11 WORLD TRADE GROUP. LLP.

WORLD TRADE GROUP, LLPWORLD TRADE GROUP, LLPand and

Rogers Towers, P.A. Rogers Towers, P.A.

ChinaChina Trade & BusinessTrade & Business

2003 Year in Review2003 Year in Review

Present



44

2003 2003 Economic OverviewEconomic Overview


-5

0

5

10

15

20

25

Annual G

row

th R

ate

s GDPCPIUrban IncomeRural Income

China Economic China Economic IndicatorsIndicators

66 WORLD TRADE GROUP. LLP.-2

0

2

4

6

8

10

China Aisa-Pacificw/o China

US World

An

nu

al G

DP

Gro

wth

(%

)

2000

2001

2002

2003

Comparative GDP GrowthComparative GDP Growth( China = 3.9 % of global GDP ( China = 3.9 % of global GDP

15 % of global growth ) 15 % of global growth )


Asia-Pacific Economic Asia-Pacific Economic GrowthGrowth

-4

-2

0

2

4

6

8

10

Annual %

GD

P G

row

th

2000200120022003


Manufacturing – 35% of GDPManufacturing – 35% of GDPExports – 26% of GDPExports – 26% of GDPInfrastructure expansionInfrastructure expansionForeign investmentForeign investmentDomestic consumptionDomestic consumptionCapital MarketsCapital Markets

Market sectors driving Market sectors driving growthgrowth


Foreign Corporate Foreign Corporate Expansions Expansions

• WalmartWalmart

• Kfc / Pizza HutKfc / Pizza Hut

• Heinz / P&GHeinz / P&G

• MacDonaldsMacDonalds

• Office 1 SuperstoreOffice 1 Superstore

• Home DepotHome Depot

• Honda / Toyota / VW Honda / Toyota / VW GM / Ford / GM / Ford / MitsubishiMitsubishi

• IntelIntel

• MicrosoftMicrosoft

• DellDell

• MotorolaMotorola

• Computer AssociatesComputer Associates

• DuPontDuPont

• RockwellRockwell

• ToshibaToshiba


New Milestones -- 2003New Milestones -- 2003

9% GDP growth – largest globally9% GDP growth – largest globally 16% increase in domestic investment16% increase in domestic investment #1 in foreign investment - $53.5 #1 in foreign investment - $53.5

billionbillion #1 in cell phone users – 258 million#1 in cell phone users – 258 million #2 in computer sales - $11 Bil.#2 in computer sales - $11 Bil. #2 in Internet users – 80 million#2 in Internet users – 80 million #3 in auto sales – 3.2 million#3 in auto sales – 3.2 million Foreign investment in stock marketsForeign investment in stock markets Allowing investment outside ChinaAllowing investment outside China


Foreign Direct Investment Foreign Direct Investment (FDI)(FDI)• Form of investmentForm of investment

– WFOE’s ……… ……………….60%WFOE’s ……… ……………….60%– Equity JV’s…………………… 30%Equity JV’s…………………… 30%– Contractual JV’s……………. 10%Contractual JV’s……………. 10%

• Project typesProject types– Factories (2/3)Factories (2/3)– Infrastructure projectsInfrastructure projects– WTOWTO– 2008 Olympics2008 Olympics

1212

China Foreign TradeChina Foreign Trade


China’s Big 3 Big Three Trading China’s Big 3 Big Three Trading CentersCenters

Beijing / Tianjin

Shanghai / Jiangsu /ZhejiangGuangdong / Shenzhen

Other

Rogers Towers Bailey Jones & Gay


China’s Trade with the China’s Trade with the WorldWorld

(Billion USD)(Billion USD)

0

50

100

150

200

250

300

350

400

1999 2000 2001 2002 2003

Exports

Imports


US Trade with ChinaUS Trade with China

0

20

40

60

80

100

120

140

160

180

1999 2000 2001 2002 2003

US Exports

US Imports


02468

101214

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Florida Trading Partners (yr.2003 exports)


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2

4

6

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Perc

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Annual GDP Growth 1990-2000

Annual GDP Growth 2000-2010

Florida Trading Partners: GDP Growth


China’s Major Exports - China’s Major Exports - 20032003

• Apparel, clothing & footwearApparel, clothing & footwear

• Electrical equipment & partsElectrical equipment & parts

• Machinery & partsMachinery & parts

• Textiles & yarnTextiles & yarn

• Chemical industrial productsChemical industrial products

• Furniture, house waresFurniture, house wares

• toys, handicraftstoys, handicrafts

• Food stuffsFood stuffs


China’s Major Imports - China’s Major Imports - 20032003

• Electrical equipment & partsElectrical equipment & parts

• Machinery, parts & transportation equip.Machinery, parts & transportation equip.

• Crude oil and fuelsCrude oil and fuels

• Iron and steelIron and steel

• AirplanesAirplanes

• Plastics and plastic articlesPlastics and plastic articles

• Services ??Services ??


China’s Leading MarketsChina’s Leading Markets

US

HK

JAPAN

EU

OTHER


China’s Work ForceChina’s Work Force


0.61

3.52

5.41

9.16

16.02

21.33

0 5 10 15 20 25

China

Mexico

Taiwan

Korea

Canada

USA

2003 Manufacturing Wages

Hourly Compensation Costs


2003 Annual Wages (USD)2003 Annual Wages (USD)China Major Cities v. MexicoChina Major Cities v. Mexico

Guangzhou $ 2,750

Shanghai $ 2,630

Beijing $ 2,313

Tianjin $ 1,728

Chongqing $ 1,150

Mexico $ 7,322


China’s Work Force China’s Work Force AllocationAllocation((percentage of work forcepercentage of work force))

0

10

20

30

40

50

60

Industry and commerce

agriculture and forestry

other


China’s Labor SupplyChina’s Labor Supply

19991999 20002000 20012001 20020022

20032003

Labor costLabor costUSD / hourUSD / hour

0.420.42 0.440.44 0.440.44 0.500.50 .61.61

Recorded Recorded UnemploymeUnemploymentnt**

5.505.50 7.07.0 6.06.0

????????8.08.0

????????10.010.0

????????

* Does not include 150 mil. Underemployed in rural areas


Labor Over-SupplyLabor Over-Supply

At current GDP growth rate: At current GDP growth rate:

8 million new jobs / 8 million new jobs / yryr

Current annual rate of new workers:Current annual rate of new workers:

12 million / yr.12 million / yr.


Internal DevelopmentsInternal Developments


New LeadershipNew Leadership• Hu JintaoHu Jintao

– President & Chairman of Central CommitteePresident & Chairman of Central Committee– Rejuvenation of PartyRejuvenation of Party– Continuation of private sector expansionContinuation of private sector expansion– ““Spreading the growth” to inner ProvincesSpreading the growth” to inner Provinces– Social security and health care benefitsSocial security and health care benefits– Fighting corruptionFighting corruption– Expanding influence in World politicsExpanding influence in World politics– TaiwanTaiwan


Major Government Major Government InitiativesInitiatives

• Public HousingPublic Housing

• Private Home ownershipPrivate Home ownership

• TransportationTransportation

• Telecom / InternetTelecom / Internet

• Water / sewer / garbageWater / sewer / garbage

• Environmental clean-upEnvironmental clean-up

• 3-Gorges Dam3-Gorges Dam

• Gas PipelineGas Pipeline


Continued WTO – Related Continued WTO – Related ChangesChanges

• TariffsTariffs

• Quotas and other non-tariff barriersQuotas and other non-tariff barriers

• Anti-dumping / overproductionAnti-dumping / overproduction

• Enhanced IP protection and enforcementEnhanced IP protection and enforcement

• Transparency rules and systemsTransparency rules and systems

• Accelerated Clean up of banking and Accelerated Clean up of banking and securities marketssecurities markets

• Service industries – continued expansionService industries – continued expansion


Expanding ServicesExpanding Services

• Sales and Sales and distributiondistribution

• 33rd rd party Logisticsparty Logistics

• TelecomTelecom

• Banking and financeBanking and finance

• InsuranceInsurance

• Construction and Construction and developmentdevelopment

• Project consultingProject consulting

• EngineeringEngineering

• ArchitectureArchitecture

• Environmental Environmental

• Legal servicesLegal services

• Education / trainingEducation / training

• Travel servicesTravel services

• Employment Employment agenciesagencies

• FranchisingFranchising


Continuing ChallengesContinuing Challenges• Resistance & confusion re WTO changesResistance & confusion re WTO changes

• WTO Transition -- economic impactWTO Transition -- economic impact

• Clean up of Banks and SOE’sClean up of Banks and SOE’s

• Enforcement - Open markets / IPEnforcement - Open markets / IP

• Legal system overloadLegal system overload

• Labor abusesLabor abuses

• Currency evaluationCurrency evaluation

• Economy overheatingEconomy overheating

3434

Succeeding in ChinaSucceeding in China


Conducting Market AnalysisConducting Market Analysis

• Government info – MOFTEC, NBS, etc.Government info – MOFTEC, NBS, etc.• US Dept. Commerce - FCSUS Dept. Commerce - FCS• US Dept. of State – background notesUS Dept. of State – background notes• US Industry GroupsUS Industry Groups• Private consultantsPrivate consultants

– Analytical studiesAnalytical studies– Surveys and Questionnaires Surveys and Questionnaires – Investigation & IntelligenceInvestigation & Intelligence– Sampling & Taste TestsSampling & Taste Tests


Legal Representation in Legal Representation in ChinaChina• Domestic law firmsDomestic law firms

• Foreign law firmsForeign law firms

• Law firm networks and affiliatesLaw firm networks and affiliates

Advice: Advice: Deal with who you know !!Deal with who you know !!


Miscellaneous IssuesMiscellaneous Issues

• Who am I really dealing with ?Who am I really dealing with ?

• Referrals to “Friends”Referrals to “Friends”

• Who is in charge ?Who is in charge ?

• Public corruptionPublic corruption

• Language & document translationLanguage & document translation

• “ “Contract” = a living documentContract” = a living document

• Cultural differencesCultural differences


SuccessSuccess in China = in China = ………..the ………..the PANDAPANDA formula formula

• Lots ofLots of Patience Patience

• The The Assistance Assistance of qualified prosof qualified pros

• A trusted A trusted NetworkNetwork of friends and of friends and alliancesalliances

• Attention to Attention to DetailDetail

• The right The right AttitudeAttitude


WORLD TRADE GROUP, LLPWORLD TRADE GROUP, LLPand and

Rogers Towers, P.A. Rogers Towers, P.A.

ChinaChina Trade & BusinessTrade & Business

2003 Year in Review2003 Year in Review

Present

WORLD TRADE GROUP. LLP. 1 WORLD TRADE GROUP, LLP and Rogers Towers, P.A. China Trade & Business 2003 Year in Review Present.

Documents

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