4,5/4,5 CM Sociedade Portuguesa de Inovação An Overview of the Chinese Market Sara Medina, Miguel Taborda and Deng Xiaojun Innovation Knowledge Resource

4,5/4,5 CM 4,5/4,5 CM 4,5/4,5 CM 4,5/4,5 CM

Sociedade Portuguesa de Inovação

An Overview of the Chinese MarketAn Overview of the Chinese Market

Sara Medina, Miguel Taborda and Deng Xiaojun

Innovation Knowledge Resource Centre - SPI

30.11. 2005

An Overview of the Chinese MarketAn Overview of the Chinese Market Sara Medina, Miguel Taborda and Deng Xiaojun

IndexIndex

Part I – China at a GlancePart I – China at a Glance

Part II – SPI’s Beijing Representative OfficePart II – SPI’s Beijing Representative Office

Part III – Project ExamplesPart III – Project Examples


Part I – China at a glancePart I – China at a glance

i – China Basic Factsi – China Basic Facts

ii – Economic Overviewii – Economic Overview



i - China Basic Factsi - China Basic Facts




China is the most populated country in the world (1.3 billion) and has a territory similar to the United States (9.6 million sq km);

Its population grows at an average of 0.6% per year;

60 % of the population lives in rural areas and it is estimated that 10% of the population is below the poverty line;

Its unemployment rate is 9.8% in urban areas (an estimated 760.8 million in 2003);

Substantial unemployment and underemployment in rural areas at 20% (estimate).




Agriculture accounts for 49% of the labour force, Services 29% and Industry 22%;

Inflation is currently 4%;

Major crops and products are (by order of importance): rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples, cotton, oilseed, pork, fish;

Main export trading partners are: US, Japan, South Korea and Germany;

Main import trading partners are: Japan, Taiwan, US and Germany;




China is the 4th worldwide touristic destination

In the last 25 years China became the 4th world economy

2020: Estimated to be the first: 130 million tourists/year

China: - 20 % of world population USA: - 5% of world population

- 5% of production - 20% of production

- 70% of toys, bikes and DVD players.

- 60% of digital cameras

- 50% of laptop computers

- Until 2010 half of textiles consumed worldwide

Annual growth: 9,5%

Central Planning Economy Market Economy



More than 23,5 millions of Chinese work for foreign companies

About 20 millions of Chinese students in Higher Education Institutions

4 million of new graduates entered the job market: 2004• A lot work to foreign bosses

With low salaries, the best Chinese engineers are hired

China has 10,000 multinationals

Chinese are extremely open to foreign products

i - China Basic Facts i - China Basic Facts



DumplingsBeijing Opera

Chinese calligraphyChinese calligraphy

Chinese paintingChinese painting

Chinese tea

The game of go

i - China Basic Facts i - China Basic Facts Chinese CultureChinese Culture



220 B.C. - The Great Empire Qin united China and

established Qin dynasty, followed by almost 2000

years of federal dynasty;

1912 - Manqing Dynasty (Last Dynasty) replaced by a Republic;

1949 - Founding of the People's Republic of China (Mao Zedong);

1958 - Great Leap Forward (mobilize the peasant masses to increase crop production by collectivizing the farms and use the excess labor to produce steel), resulting serious damage to productivity;

1959 -1961 – Great Famine (consequence of the Great Leap Forward);

1966 - 1976 – Great Proletarian Cultural Revolution (Mao Zedong);

ii – Economic Overview (Key Milestones)ii – Economic Overview (Key Milestones)



1971 – China joined in the United Nations

1978 –Launch of economic reforms and opening-up policy, which were implemented first in agricultural sector and then expanded to manufacturing and Science & Technology sectors;

1989 – Tian’anmen Square Event;

1992 – Deng Xiaoping’s tour to South China – Transform the planned system to market-oriented economy;

2002 – Join WTO – Further opening-up to foreign trade and investment and participation in international competition.

ii – Economic Overview (Key Milestones)ii – Economic Overview (Key Milestones)



ii – Economic Overview (GDP)ii – Economic Overview (GDP)

GDP has quadrupled since 1978 (USD 1.6 billion in 2004; by comparison USA: USD 10 billion);

In 2004 China was the second largest economy in the world after the USA (although in per capita terms the country is still poor);

Average Annual Growth Rate of GDP: 9.5% since 1978;

Increased GDP has reduced the number of people below the poverty line by 400 million since 1979.


China's GDP and GDP per capita


ii – Economic Overview (GDP)ii – Economic Overview (GDP)



ii – Economic Overview (International Trade)ii – Economic Overview (International Trade)

In 2004, China was the 3rd largest merchandise trader in the world after United States and Germany;

The largest source of imports is Japan;

The second largest trade partner for the European Union after the United States;

China replaced Mexico as the second largest supplier in 2003 for the United States market after Canada;


2003 Export Value of Principal Commodities



Main export trading partners are: US, Japan, South Korea and Germany.


2003 Import Value of Principal Commodities



Main import trading partners are: Japan, Taiwan, US and Germany.



ii – Economic Overview (Emerging Corporations)ii – Economic Overview (Emerging Corporations)

Not only labor-intensive products are emerging;

Huawei (Telecommunication): Selected by British Telecom (BT) as one of 8 preferred suppliers of communications equipment for BT's 21st Century Network strategy;

Lenovo (PC): Acquired IBM Personal Computer Division creating the world's third largest PC manufacturer;

TCL (Consumer Electronics): Acquired Alcatel’s Mobile Phone business and Thompson’s TV Business;



China National Offshore Oil - CNOOC (Petroleum): Bid for Unocal with $18.5 billion CASH, a premium of approximately $1 billion above Chevron;

Alibaba.com (B2B E-commerce): World’s largest online marketplace;

GEELY (Car Manufacturer): China’s own brand GEELY has presented its own models at the Frankfurt Auto Show 2005 (established a factory in Malaysia and develops new models in Hong Kong).

ii – Political and Economic Overview (Emerging Corporations)ii – Political and Economic Overview (Emerging Corporations)



ii – Economic Overview (Education and ii – Economic Overview (Education and Technology Transfer)Technology Transfer)

Technology transfer - Adoption of the latest technologies as part of an upgrade of the infrastructure is accelerating productivity. Local worker productivity in China is benefiting from knowledge transfer by foreign companies as well as from competitive pressures resulting from foreign investment.

Education - Education standards are improving but still have room to rise. In 2001 less than 70% of Chinese received a secondary education and only 13% received a tertiary education.



Top 10 UniversitiesTop 10 Universities

University of Beijing

Tsinghua University

University of Nanjing

University of Fudan (Shanghai)

University of Zhejiang (Hangzhou)

University of Nankai (Tianjin) Xian Jiaotong University Shanghai Jiaotong University Chinese University of Science and Technology (Hefei) University of Zhongshan (Guangzhou)

ii – Economic Overview (Education)ii – Economic Overview (Education)



i – Chief Representativei – Chief Representative

ii – Mission and Objectivesii – Mission and Objectives

iii - Typology of Servicesiii - Typology of Services

iv - Actions and Activities - 2005iv - Actions and Activities - 2005

v - Key Partner Organisationsv - Key Partner Organisations


SPI’s Beijing Representative Office began its activities in 2002. Its major activities include: offering consulting services to SPI China’s clients, conducting EU projects in China and providing market-entry service to clients who are interested in developing business in China.



Chief RepresentativeChief Representative


Mr. Deng Xiaojun is responsible for representing SPI in the Chinese market. He has developed expertise in a range of activities, including information technology, innovation and technology transfer. Previous to SPI, Mr. Xiaojun worked for several years in the IT sector.

Mr. Xiaojun has a Bachelors degree in Electronic Engineering from the Beijing Transportation & Communication University, and an MBA degree from the School of Economics & Management of Tsinghua University in Beijing.




• Beijing is the capital of the People's Republic of China, with 10.6 million permanent residents. The city is the center of politics, culture, and international exchanges, as well as one of the largest metropolis of industry, finance and trade.

• Beijing has a semi-humid climate with clearly cut seasons. Spring and autumn are short while winter and summer are long. The average annual temperature amounts to 13 degrees Celsius.



A modern city



View for traveler

Summer Palace

Tian’anmen Square

Great Wall

Tiantan Imperial Palace















SPI China has as its mission the offering of high quality consulting services to establish or increase the effectiveness of international activities and improve the overall competitiveness of:

Portuguese companies that want to enter or sustain their presence in the Chinese market

Chinese companies that want to approach the US and EU markets

Chinese government agencies and other organizations that want to develop their links with US and European counterparts

International donor organisations supporting Chinese development programs

Portuguese higher education institutions that want to develop their relations with China

ii - Mission and Objectivesii - Mission and Objectives


SPI China established in 1999: Shanghai Beijing


Support the development of business opportunities in China

Represent Portuguese companies in the Chinese market

Organize missions to China

Suppport Chinese companies in approaching the US market

Organize BioGMP seminars in China

iii - Typology of Servicesiii - Typology of Services

Present proposals to FP6 and other National and International Programmes



Office location: Tsinghua University Central Business District: January 2005

Mr. Deng Xiaojun became SPI’s Beijing Chief Representative: September 14th 2005

Sara Medina and Miguel Taborda: bridge with SPI China Office


Submission of several proposals involving China:

ChinaFoodNet – Optimising Safe and High Quality Food Supply Chains between Europe and China - February 2005 EuroChinaFoodNet – Optimising Safe and High

Quality Food Supply Chains between Europe

and China - September 2005 ChinaLink – Establishment of Emerging IST

Communities on an International Level with China

- September 2005



ChinaFrontier – China’s Realities from a Frontier Research Perspective (FP6 – NEST):

New projects:


ChinaAgroPlat – Promoting new R&D partnerships and identifying means of implementing and supporting successful cross-border agro-food R&D collaborations between Portugal and China (POCI).

EuroChinaFoodNet – Optimising Safe and High Quality Food Supply Chains between Europe and China (POSC).


ChinaFrontier – China’s Realities from a Frontier Research Perspective (POSC).


v - Key Partner Organisations v - Key Partner Organisations

China National Food Industry (Group) Corporation

Chinese Academy of International Trade and Economic Cooperation – Ministry of Commerce (CAITEC)

Torch High Technology Industry Development Center, MOST

Tsinghua University


Beijing Unirule Institute of Economics

China Centre for Business Cooperation and Coordination (CCBCC)

Shanghai Jiaotong University

Beijing Huabang Food Co., Ltd. (BHF)


The Program promotes the commercialization, industrialization and internationalization of high and new technology in conformity with the orientation of the market economy.


Torch High Technology Industry Development Center

TORCH, mandated by the Ministry of Science and Technology, is in chargeof the administration of the Torch Program.

The Torch Program is a national guiding program designed to develop new and high technology industries in China. The program was approved by the State Council and was implemented by the Ministry of Science and Technology.



GLORAD’s mission is to advance progress in science and management in the areas of international R&D management, global technology, and

transnational innovation.

Principal research areas:• R&D and innovation in China• Transnational R&D management and organization• Global innovation, incubation, and technology-based entrepreneurship


Research Center located at Tsinghua University, P.R. China.

Research Center for Global R&D Management (GLORAD)

v- Key Partner Organisations v- Key Partner Organisations


NFIPC is linking enterprises, institutions, and governments in food industry sectors in China.


China National Food Industry (Group) Corporation (CNFIC)

One of the largest Chinese state owned food industry corporations.

National Food Industry Promotion Centre (NFIPC) belongs to the CNFIC, and is supported by the Ministry of Science and Technology.

NFIPC and CNFIC provide consulting services in Chinese food industry sector, helping SMEs increase productivity and developing in overseas market.



Environmental Impact of Trade Liberalization in China: A Case Study on Agricultural Products.

Production and Marketing of Green Food Products in China after Entrance into WTO.


Chinese Academy of International Trade and Economic Cooperation – Ministry of Commerce (CAITEC)

CAITEC is a think-tank of the Ministry of Commerce, engaging in research inthe fields of macro and micro economy, trade, investment.

CAITEC has been involved in different food safety related projects:




Beijing Unirule Institute of Economics (UIE)

Unirule Institute of Economics was founded in July 1993 and aims at promoting, supporting and also conducting high quality research in economics and other social sciences

Since its foundation, Unirule has been unequivocally pursuing thepractical approach in its research, as opposed to being purely theoretical.

Unirule provides research in public utilities for state and local governments.



Since 2001, it has been listed as Pivot Head Enterprise of Agro- Industrializationin Beijing.


Beijing Huabang Food Co., Ltd. (BHF)

Founded in April of 1995, Beijing Huabang Food Co., Ltd. is a large enterprise specializing in the production of fruit juice, with an annual production capacity of 100,000 ton.

The first food and beverage company in China, which has simultaneously appliedand obtained ISO9001: 2000, ISO14001 and HACCP certificates.



Part III – Project Examples Part III – Project Examples

i – ChinaPartsi – ChinaParts

ii – ChinaFrontierii – ChinaFrontier

iii - ChinaAgroPlatiii - ChinaAgroPlat

iv - Approach Strategies to the Chinese Marketiv - Approach Strategies to the Chinese Market


The focus of the project is to:

Enhance S&T co-operation with China within the Asia-Europe Meeting (ASEM) framework;

Exchange experiences in the S&T field;

Build bridges between the European Union and China's agro-food processing sectors.


i - ChinaParts (http://www.spi.pt/chinaparts/)


Long Term impact of ChinaParts:

Providing Chinese companies with a clear path to improve product quality to meet the import requirements of the European Union;

Establishing stronger networks within the food chain;

Strengthening synergies between European and Chinese agro-food stakeholders.




Warsaw Agricultural UniversityWarsaw Agricultural University PolandPoland

SPISPI PortugalPortugal

China National Food Industry China National Food Industry (Group) Corp.(Group) Corp.

P. R. ChinaP. R. China

Universidad Politecnica de Universidad Politecnica de ValenciaValencia

SpainSpain

Beijing Huabang Food Co. Ltd.Beijing Huabang Food Co. Ltd. P. R. ChinaP. R. China

UnileverUnilever P. R. ChinaP. R. China

ENSIAENSIA FranceFrance

Campden & Chorleywood Food Campden & Chorleywood Food Research AssociationResearch Association

United KingdomUnited Kingdom

University of MilanUniversity of Milan ItalyItaly

China Agricultural UniversityChina Agricultural University P. R. ChinaP. R. China

Ministry of AgricultureMinistry of Agriculture P. R. ChinaP. R. China




www.spi.pt/chinaparts/



ii - ChinaFrontierChina’s Realities from a Frontier Research Perspective


Frontier research refers to research that goes beyond the boundaries of current ideas – “speculative research”.

Objective: To research China’s science & technology realities as they pertain to the frontiers of research.

Project Partner: TORCH High Technology Industry Development Center

Subcontracted services: Research Center for Global R&D Management



Specific Objectives:

Identify relevant Chinese S&T entities and conduct interviews with leading Chinese stakeholders

Map Chinese policies and programmes established to foster research activities that represent the frontiers of research

Establish a basis for the European Research community to monitor research activities in China that go beyond the boundaries of current ideas

Disseminate findings to NEST representatives, relevant DG Research representatives and the European Research community to encourage cross-border networking

Stronger relationship between the European and Chinese research communities




Dissemination Activities:

Project Brochure

Project Website

Network of Key Chinese Stakeholders Database

China Project Workshop

European Project Workshop

Emailing Activities

Project Seminar



iii - ChinaAgroPlat

Direct result of a successful cooperation started with an international project entitled ChinaParts, which was coordinated by SPI

Build bridges between the Portuguese and the Chinese agro-food sectors, while further developing existing scientific and technological knowledge



iii- ChinaAgroPlat

Establish a cross-border agro-food R&D platform strategy, aimed at promoting new R&D partnerships and identifying means of implementing and supporting successful cross-border agro-food R&D collaborations between Portugal and China;


Planned activities are structured into the following workpackages:

• Project Workshop in Portugal;

• R&D Platform Communication Structure;

• Support to the Establishment of R&D Cross-Border Collaborations;

• Portuguese Delegation Mission and International Workshop in China;

• Cross-Border Agro-Food R&D Platform Strategy.



Assist clients interested in initiating or strengthening international activities and establish a presence in foreign markets;

Support clients in reaching new international markets, partners or collaborators, supporting their business needs;

Perform comprehensive market studies that provide the necessary information for clients to make market decisions with a high degree of confidence;




Identification of Chinese cork stoppers buyers and establishment of the first contact for future cooperation;

Organization of a visit to China, allowing the Portuguese company to contact directly the potential Chinese buyers;

Provided all the support and accompany the Portuguese company to the meetings with the potential Chinese buyers.

Support promotion and commercialization of cork products in China



Approach Strategies to the Chinese MarketApproach Strategies to the Chinese Market



Porto - Portugal

Edificio “Les Palaces”

Rua Júlio Dinis, no. 242, 208

4050-318 Porto, PORTUGAL

Tel: 22 607 64 00

Fax: 22 609 91 64

[email protected]

TagusPark

Núcleo Central, 232

2780 - 920 Oeiras, PORTUGAL

Tel: 21 421 22 49Fax: 21 421 12 01

[email protected]

Beijing – P.R.China

China Garments Mansion, No. 915

Jianguo Rd., ChaoYang Dist. Beijing 100020

CHINA

[email protected]

California - USA2102 Business Center Drive, Suite 220E

Irvine, CA 92612 USA

Tel: +1 949 253 5702

Fax: +1 949 253 5703

[email protected]

Maryland - USA5523 Research Park Drive, Suite 325

Baltimore, MD 21228 | USA

Tel: +1 443 543-5530

Fax: +1 443 543-5533

[email protected]

Lisbon - Portugal

www.spi.pt

Documents

4,5/4,5 CM Sociedade Portuguesa de Inovação An Overview of the Chinese Market Sara Medina, Miguel Taborda and Deng Xiaojun Innovation Knowledge Resource