MATI II Greater China Report Yi Gao December 2, 1999

MATI II Greater China ReportMATI II Greater China Report

Yi Gao

December 2, 1999

MATI II Greater China 2

Executive SummaryExecutive Summary• Geographical segments in Greater China

– Singapore– Taiwan– P.R.China

• Industry Roadmap in

P.R. China

• Corporate Roadmap in P.R.China

• Future trends in competition and cooperation




• Industry Roadmap in P.R. China





SingaporeSingapore

• From manufacturing to e-commerce– Shrinking printed circuit-board business– Vision for high value added, high-tech

technology center.– Future threats and uncertainties


TaiwanTaiwan

• Leading position in manufacturing– PC motherboard, FPD, LCD production– Shifting technology in modem industry


P.R.ChinaP.R.China

• PC boom– Zhong Guan Cun in Beijing

• Burgeoning manufacturing center– NEC / Huahong in Shanghai– Legend Group

• Dynamic market of the future– More than doubled internet usage since last year.– Will surpass Australia in 2001 as Asia’s top

internet user.








Industry Roadmap in ChinaIndustry Roadmap in China• 3 Stages in business development

• Critical issues in business development– Market data collection– Regulatory and legal issues– Intellectual property issues– Technology standard setting issues


Stages of high-tech MNC business-building in China

Opportunistic experimenter

Strategic investor

Dominant local playerPrimary

objectives •Small local presence

•Learn about market

•Learn how to operate and manage in China

•Build broader multi-regional or national presence

•Preempt competitors by seizing first-mover advantages

•Develop substantial local management capability

•Secure dominant share of market within industry sector

•Shape industry structure and conduct to achieve sustained superior returns

Level of commitment

Low Very high Extremely high

Source: McKinsey Quarterly: Second generation MNCs in China

Stage I Stage II Stage III





Quality / Availability of DataQuality / Availability of Data

• High cost of market information– Reason 1: Less efforts to collect market data– Reason 2: Distortions of national statistics– Reason 3: Non-disclosure of market data– Reason 4: Higher cost market research because

of the fragmented, locally oriented economy





Regulatory & Legal IssuesRegulatory & Legal Issues

• High-tech regulations– Singapore’s regulations and policies– P.R.China’s government regulations

• On foreign investment

• On high-tech product pricing

• On joint-venture establishment

• Entry to WTO’s impact on high tech industries

• Drivers for high-tech regulations


Regulatory & Legal IssuesRegulatory & Legal Issues

• High-tech regulations

• Drivers for high-tech regulations– Maintenance of tight ideological control– Protection of local industries– Recent WTO efforts by Chinese government– Lobbying effects by foreign investors



• Critical issues in business development– Market data collection– Regulatory and legal issues– Intellectual property issues

• Microsoft vs. Haisida & Min’an

– Technology standard setting issues• Patent issue

• Competition




• Corporate Roadmap in P.R.China– Technology management and planning– Growth strategies in China

• Grow through acquisitions

• Grow through partnering

• Joint venture establishment

– Networking and trust-building





• Corporate Roadmap in P.R.China– Technology management and planning– Growth strategies in China

• Grow through acquisitions

• Grow through partnering

• Joint venture establishment

– Networking and trust-building



Technology ManagementTechnology Management• From early development to more complicated

landscape– Transfer of mature technology

• Lucent

• Cherokee

– Tailored technology for local market• Microsoft

– Two-way technology sourcing• Legend



landscape– Transfer of mature technology

• Lucent

• Cherokee



landscape– Transfer of mature technology– Tailored technology for local market

• Microsoft - Venus



landscape– Transfer of mature technology– Tailored technology for local market– Two-way technology sourcing

• Microsoft & Ufsoft

• Legend use ESS as Video Internet Computer Chip set for Venus


Growth Strategies in ChinaGrowth Strategies in China• Grow through acquisitions

– Jabil Circuit vs. GET


Growth Strategies in ChinaGrowth Strategies in China• Grow through partnering

– Different stages, different strategies– Monsanto


China Seed IndustryChina Seed IndustryNational China Seed Co.

County Seed Co.

Township

Retailer

Breeding

instituteProvincial Seed Co. Provincial Seed Co.

County Seed Co. County Seed Co.

Township

Retailer

Township

Retailer

Township

Retailer

Farmers

1 National Co.:

Adm./Import

function

30 Provincial

Co.: hybrid

seed

production/dis

tribute

2200 County

Co., seed

distribute,

Variety Seed

Production

50000 retailers

Source: CCAP Policy Brief 98-06


China Seed IndustryChina Seed Industry


Benefits: 1. Easier for management and communication.

National China Seed Co.

County Seed Co.

Township

Retailer

Provincial Seed Co. Provincial Seed Co.


Township

Retailer

Township

Retailer

Township

Retailer

Farmers

1 National Co.:

Administration./Import functionMTC

2. Access to high level policy making

Costs: 1. Still need provincial approval.

2. No access to local distribution


China Seed IndustryChina Seed Industry

County Seed Co.


MTC National China Seed Co.

Township

Retailer

Provincial Seed Co. Provincial Seed Co.


Township

Retailer

Township

Retailer

Township

Retailer

Farmers

30 Provincial Co.: hybrid seed

production/distribute

Benefits: 1. Easier to get provincial approval.

2. Access to local distribution channel

Costs: 1. Manage and Communicate province by province.


Partnering Strategic SolutionPartnering Strategic Solution

Regulatory approval province by province

Province by Province Rollout

Form partnership with local seed authorities and businesses in key provinces (MTC/D&PL/Local)

Local partner contributions- Local influence in regulatory

and business- Access to distribution

D&PL contributions- Bring varieties with Bollgard- Seed production expertise

MTC contributions:- Technical support

- Marketing, planning and analysis



– Microsoft’s Venus

KANKA



– Different stages, different strategies– Microsoft’s Venus

• Joint venture establishment– Relationships and its cost/benefit– Networking and trust-building


Future Trends in Competition Future Trends in Competition and Cooperationand Cooperation

• Emerging local competitors in standard setting– HDTV– Hopen - Chinese-developed OS

• Collaborative R & D– Singapore

• IBM, HP and Compaq

– China• Bell lab, Texas Instruments


Executive Summary RevisitExecutive Summary Revisit• Geographical segments in Greater China




Everything is possible, Everything is possible, nothing is easy.nothing is easy.

Dr. Wei Wang CEO of Siniwest Holdings

Documents

MATI II Greater China Report Yi Gao December 2, 1999