How China Will Change How China Will Change Your BusinessYour Business

Kaihao ZhengKaihao ZhengYe ZhangYe Zhang

Ted C. Fishman

Current Situation of China’s Current Situation of China’s EconomyEconomy

The GDP in 2011 was 7.497 trillion The GDP in 2011 was 7.497 trillion USD, increase 9.2% in this year.USD, increase 9.2% in this year.

The grossimport in 2011 was 1.7435 The grossimport in 2011 was 1.7435 trillion USD, the total export in 2011 trillion USD, the total export in 2011 was 1.898 trillionwas 1.898 trillion

The inflation in 2011 was 5%The inflation in 2011 was 5%

Effect’s of China’s Economy growthEffect’s of China’s Economy growth

PositivePositive low cost make products have low price.low cost make products have low price. Huge import and export brings lots of Huge import and export brings lots of

benefits for both country.benefits for both country. Promoting global economic integration.Promoting global economic integration. Enhance the global economic Enhance the global economic

developmentdevelopment

Effect’s of China’s Economy growthEffect’s of China’s Economy growth

NagativeNagative Pollution : The industrialization of China Pollution : The industrialization of China

is producing more pollutants and using is producing more pollutants and using more raw material.more raw material.

Unemployed: low labor price Unemployed: low labor price competitive edge make lots of people competitive edge make lots of people lots their work and lots of company lots their work and lots of company bankruptcy.bankruptcy.

China’s economy is much larger China’s economy is much larger than the offical numbers show. than the offical numbers show.

In 2003, ChinaIn 2003, China’’s official GDP was $1.4 s official GDP was $1.4 trillion but that measure is suspect. trillion but that measure is suspect. Because of government measures only Because of government measures only

ChinaChina’’s legal economy, illegal business s legal economy, illegal business is enormous but uncountable.is enormous but uncountable.

China uses the massive power of its China uses the massive power of its foreign currency reserves to keep the foreign currency reserves to keep the world price of the yuan marching in world price of the yuan marching in lockstep with the dollar. lockstep with the dollar.

The growth of China's economy has no equal in modern history.

The country is closing in on a 30-year The country is closing in on a 30-year run during which its economy has run during which its economy has doubled nearly three times. doubled nearly three times.

Since China set about reforming its Since China set about reforming its economy a generation ago, its GDP economy a generation ago, its GDP has expanded at an annual rate of has expanded at an annual rate of 9.5%. 9.5%.

China is winning the global competition for investment

capital.

According to Japan's Research According to Japan's Research Institute of Economy, Trade and Institute of Economy, Trade and Industry, one-third of China's Industry, one-third of China's industrial production was put in place industrial production was put in place by the half-trillion dollars of foreign by the half-trillion dollars of foreign money that has flowed into the money that has flowed into the country since 1978. country since 1978.

More than half of China's trade is More than half of China's trade is now controlled by foreign firms. now controlled by foreign firms.

China can be a bully

China now makes 40% of all furniture China now makes 40% of all furniture sold in the U.S.. Because of the sold in the U.S.. Because of the competition in price and quality the competition in price and quality the work force at America's wooden-work force at America's wooden-furniture factories dropped by furniture factories dropped by 35,000, or one of every three 35,000, or one of every three workers in the trade. workers in the trade.

China's economy is an entrepreneurial economy.

For a world fretting over Chinese For a world fretting over Chinese economic competition, the entities to economic competition, the entities to fear are not government planners fear are not government planners but enterprises that spring on the but enterprises that spring on the scene lean and mean, planned and scene lean and mean, planned and financed by investors who want to financed by investors who want to make money quickly. make money quickly.

The most daunting thing about China is not its ability to make

cheap consumer goods. As the Chinese developing, China can As the Chinese developing, China can

not only processing low technology not only processing low technology products, but also high-tech products products, but also high-tech products like Manned spaceship can be built.like Manned spaceship can be built.

China is closing the research and development gap -- fast.

Last year, China spent $60 billion on Last year, China spent $60 billion on research and development. The only research and development. The only countries that spent more were the countries that spent more were the U.S. and Japan, which spent $282 U.S. and Japan, which spent $282 billion and $104 billion, respectively. billion and $104 billion, respectively. But China still has a long way to go.But China still has a long way to go.

China now sets the global China now sets the global benchmark for prices benchmark for prices

For now China has set the For now China has set the benchmark for prices of products just benchmark for prices of products just like the Wal-mart, price and quaily is like the Wal-mart, price and quaily is the key that make consumers have a the key that make consumers have a better value and life. better value and life.

““live better and save moneylive better and save money”” High consumer demand make the High consumer demand make the

low price as possible, hard to find low price as possible, hard to find competitors for short period.competitors for short period.

China's growth is making raw materials more expensive.

As China's economy has been As China's economy has been expansion, the world of raw materials expansion, the world of raw materials is also facing a shortage in the states is also facing a shortage in the states of affairs. Constantly competition of affairs. Constantly competition make the price of raw materials had make the price of raw materials had increase a lot. Acctually China is not increase a lot. Acctually China is not the only country who needs raw the only country who needs raw materials. materials.

There are hidden costs associated with doing business

in China. Companies that engage with China have Companies that engage with China have

to expect pressure to transfer their to expect pressure to transfer their technology which causes them to create technology which causes them to create their own competition in the country. their own competition in the country.

More than 40% of the Chinese domestic More than 40% of the Chinese domestic handset market now belongs to local handset market now belongs to local companies.companies.

Piracy is a problem Piracy is a problem

Foreign companies have little Foreign companies have little defense against even outright theft defense against even outright theft of their technology in China. of their technology in China.

Microsoft is a good example in China, Microsoft is a good example in China, China have over 1.4 billion China have over 1.4 billion population and less than three population and less than three people every have a computer but people every have a computer but legal copy of Microsoft software no legal copy of Microsoft software no less then 1/5.less then 1/5.

China's heavy buying of U.S. debt has lowered the cost of

money in the U.S. In the first half of 2004, China had a In the first half of 2004, China had a

foreign exchange reserve of $460 billion.foreign exchange reserve of $460 billion. ChinaChina’’s heavy buying of U.S. debt on the s heavy buying of U.S. debt on the

other hand has remitted the negative other hand has remitted the negative effect of subprime crisis in U.S.effect of subprime crisis in U.S.

Americans and Chinese have Americans and Chinese have become reliant on each other's become reliant on each other's

most controversial habits. most controversial habits. Without the U.S. to buy Chinese goods, China Without the U.S. to buy Chinese goods, China

cannot sustain its growth; without China to lend cannot sustain its growth; without China to lend money to the U.S., Americans cannot spend. money to the U.S., Americans cannot spend. Without the twin engines of the U.S. and China Without the twin engines of the U.S. and China stoking the fortunes of other nations, the rest of stoking the fortunes of other nations, the rest of the world might also sputter the world might also sputter

The Chinese need a low-priced currency to keep The Chinese need a low-priced currency to keep their export machine going and create jobs. But their export machine going and create jobs. But maintaining the yuan's low price also means that maintaining the yuan's low price also means that Chinese consumers are stuck with a currency Chinese consumers are stuck with a currency that would otherwise buy more for them on the that would otherwise buy more for them on the world market. world market.

http://www.inc.com/magazine/20050301/china_pagen_7.html

http://iask.sina.com.cn/b/4768124.html

http://chinaslm.blog.hexun.com/23818643_d.html

http://boyichayuan.blog.hexun.com/28675628_d.html

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