WORLD TRADE GROUP. LLP. WORLD TRADE GROUP, LLP and Rogers Towers, P.A. China Trade & Business Putting the Pieces Together Present

WORLD TRADE GROUP. LLP.

WORLD TRADE GROUP, LLPWORLD TRADE GROUP, LLPand and

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

ChinaChina Trade & BusinessTrade & BusinessPutting the Pieces TogetherPutting the Pieces Together

Present


WORLD TRADE GROUP, LLP.


WORLD TRADE GROUP, LLP.

2003 2003 Economic OverviewEconomic Overview


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China Economic China Economic IndicatorsIndicators


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Asia-Pacific Economic Asia-Pacific Economic GrowthGrowth

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Year 2003 Comparative Year 2003 Comparative DataData

ChinaChina IndiaIndia GermanyGermany JapanJapan USUS

GDP GDP (bil)(bil)

$5,700$5,700GDPGDP

$2,660$2,660GDPGDP

$2,184$2,184GDPGDP

$3,550$3,550GDPGDP

$10,400$10,400

GDP ppGDP pp

$ 4,400$ 4,400GDP ppGDP pp

$ 2,540$ 2,540GDP ppGDP pp

$ 26,600$ 26,600GDP ppGDP pp

$ 28,000$ 28,000GDP ppGDP pp

$ 37,600$ 37,600


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


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 billion#1 in foreign investment - $53.5 billion #1 in cell phone users – 258 million#1 in cell phone users – 258 million #2 in Internet users – 60 million#2 in Internet users – 60 million #4 in auto sales – 3.2 million#4 in auto sales – 3.2 million Foreign investment in stock marketsForeign investment in stock markets Allowing investment outside ChinaAllowing investment outside China


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 Expansion into ChinaNew Expansion into China

• MultinationalsMultinationals

• Second-tier OEM manufacturersSecond-tier OEM manufacturers

• Mid-sized and small manufacturersMid-sized and small manufacturers

• Start-ups Start-ups

• Service sectorService sector

China Foreign TradeChina Foreign Trade


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(Billion USD)(Billion USD)

0

20

40

60

80

100

120

140

160

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1999 2000 2001 2002 2003

US Exports

US Imports


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


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Florida Trading Partners: GDP Growth


China’s Work ForceChina’s Work Force


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0 5 10 15 20 25

China

Mexico

Taiwan

Korea

Canada

USA

2003 Manufacturing Wages:2003 Manufacturing Wages:Hourly Compensation CostsHourly 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

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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

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* 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

Succeeding in ChinaSucceeding in China


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 & BusinessPutting the Pieces TogetherPutting the Pieces Together

Present


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


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

Beijing / Tianjin

Shanghai / Jiangsu /ZhejiangGuangdong / Shenzhen

Other

Documents

WORLD TRADE GROUP. LLP. WORLD TRADE GROUP, LLP and Rogers Towers, P.A. China Trade & Business Putting the Pieces Together Present