STRATECA "Profit from CHINA - L INDEX
From Made-in-China to Sold-to-China
Leading C-level Executive surveys show China is on their agenda list. Recent facts about China: fast GDP growth, WTO regulatory compliance, reforms on accounting standards in financial treatments, Beijing hosting the Olympics in 2008, Shanghai hosting the World Expo in 2010 are all catching the attentions of business executives.
"A worldwide survey of 497 senior executives conducted by the Economist Intelligence Unit for AT&T shows that 42% of firms will be deriving half or more of their revenue from foreign markets (those outside their home base) in two years time. This compares to 30% of firms who can claim this today. China, the United States and India are the overseas destinations of greatest interest to firms. One-fifth of surveyed executives consider China to be the focus of their company’s growth strategy, while 13% cite the United States and 10% mention India."1
Tom Peter and Roger Martin, two management gurus of the 21st Century infamous for their visionary strategies, stated in their watershed assessment of the North American economy that North American enterprises had two options: either blaze a new trail based on innovative and globally competitive products and services, or continue along the path of least resistance – stay domestic and loose competitive and cost advantage in a graceful decline.
If your answer is to stay globally competitive, then take the advice from those who benefited from globalization: “the surest way to enter the big leagues is to join them. Global trade and foreign investment are crucial to being globally competitive…. By outsourcing, off-shoring and manufacturing abroad, companies can lower costs and boost productivity, resulting in higher profit margins and higher wages. Foreign exposure not only allows companies to access new markets and new technologies, but it hones competitive skills, driving innovation and nurturing managerial know-how.”
CALL TO ACTION ::
It is the people who you partner with that makes the difference It is the vision that you believe in that paves the way for future success. Let STRATECA be your pathfinder in China and develop a go-to-market strategy that fits into your overall business. Our local business connections and industry knowledge will go a long way when it comes to developing and implementing your strategies in China.
You will have a dedicated "Country Manager" assigned to your firm when you use our CHINA Business Services. Your Country Manager can provide you with the insight and expertise which draw upon all of STRATECA's experiences and connections in China. We can help you define the critical success factors when entering the vast marketplace in China, including:
- Realistic market assessment for your products or services based on market dynamics in China
- Developing Route-to-Market strategies that attract and retain quality channel business partners who can further your reach and entrenchment into the local marketplace
- Building, fostering, and maintaining positive working relationships with your local business partners and stakeholders
- Search, develop and localize management talents that can be quickly integrated into your corporate environment
FACTS on CHINA ::
China: inside the economic powerhouse***
China will be the world’s largest economy by 2040. By now everybody is familiar with the numbers: 1.3 billion consumers, the economy growing by 10% a year, a fast expanding middle class. Inward investment in China is hot, as more and more of the world’s production moves there to take advantage of the labour, skills and economic ambition of its people.
Try booking a flight to China at the moment and you get a feeling for the rush among business people to get out there and grab a share of the potential. Yet the rules of doing business in China are complicated. Pursuing ambitions in local markets are even more difficult to achieve because of labyrinthine distribution networks, made up of state-owned enterprises and small private wholesalers.
Anyone trying to break into the Chinese market has to face the cultural differences. It’s simply impossible to understand and respond to local markets without spending significant time among the people you hope will become your customers.
Second largest trading partner to Canada
Second largest trading partner to the USA
15% annual average growth in foreign trade
9% real GDP growth over 25 years
2nd largest economy In the world with a GDP of US$1.7trillion
US$1 billion per week of foreign inbound investment
Increasing strong demand for consumer and industrial goods and services
Domestic market of 1.3 billion people
- STRATECA*Coverage in the Greater China Region:
- People's Republic of China, Hong Kong, Taiwan, Singapore
- > China’s building blitz**:
Unprecedented in scale and pace in human history
US$375 billion/year on construction or 16% of GDP
Using 54.7% of world’s production of concrete, 36.1% of world’s steel, and 30.4% of world’s coal
- * Asian Development Bank, 2009
* Consensus Economics
** The McGraw-Hill Companies, Architectural Records, China 2009
- *** CHINA*QUESTAlliance
Brazil, Russia, India and China constitute the BRIC countries. STRATECA believes that an opportunity for strong growth exists over the next decade or two in these emerging countries based upon the unique resources and growth prospects of each economy. As seen in the above figure, the combined average annual GDP growth of BRIC countries has outpaced that of the leading nations over the past ten years. And according to the June 2006 issue of
The Capital Speculator, this type of growth is expected to continue for decades to come for BRIC countries::
“Last year, for the first time, the combined GDP of the BRIC nations
exceeded that of Japan, the world’s second-biggest economy. The
BRICs are reportedly growing at an average nominal rate of 10%, or
more than three times as fast as Japan.”
— The Capital Speculator, June 2006
1. An AT&T survey and white paper in co-operation with the Economist Intelligence Unit
CASE IN POINT ::
STRATECA CHINA*QUEST WinnerCircle
Below are success cases of some leading innovative companies that have capitalized on expanding into China:
> Mitchell Mill Systems: "We never would have gotten these[business] connections just being in domestic..Being in China has been so beneficial to the company..we are now recognized more as an international company..The company has grown by leaps and bounds, with more business than Mitchell Systems know what to do with.
> SNC-Lavalin: "The difference between being in the driver’s seat and becoming a casualty of the commodity is the ability to source talents, cost-effective materials and technologies internationally….[Globalization] allows companies to keep their head offices here and to focus on value added components, such as design, branding, and managerial knowledge, that keep them one step ahead of the competition. We have to see ourselves as managers of a global supply chain, and we have to keep moving up that chain.” Says Michael Novak, VP of SNC-Lavalin.
> CREO Digital Printing (bought out by Kodak in 2005): Founder Michelson navigated Crev’s ballsy breakout of domestic markets and ventured into China…sales grew from US$20M in 1995 to US$800M.
> BMO Financial Group: "Some of the leading multinational US companies are going to China big time, and other small medium businesses also need to be there to support their key domestic US clients, whether it's the auto industry, banking, whatever..We need to be there because we are [all] part of the North American fabric..We need to do that to protect ourselves, to survive, to increase our business not only in China, but also domestically." Neil Tate, Special Adviser to the Bank of Montreal on Asia.
> Husky Injection Molding Machines: China changes the whole world. The drive for speed, the quick decision-making, it’s really a very ruthless business approach. If you don’t compete in China, you will not compete globally. It is the new benchmark now of global competition. Husky will be able to maintain its technological leadership only for so long.” Robert Schad, Retired CEO and founder of Husky Injection.
> If you don’t conceive of anything beyond the North American market, …then you are essentially a failure of imagination. Peter Warrian, Senior Research Fellow at the University of Toronto’s Munk Center
> China’s rising prominence in the United States is perhaps the most tangible indication of its emergence as a global powerhouse and its pivotal role in the ongoing revolution sweeping the global economy. The World Bank estimates that by 2050 the developing world will represent 40% of global GDP, up from 18%. Goldman Sachs predicts the future membership of the G8 will be almost unrecognizable from the current line-up: China, India, Russia and Brazil will eclipse all other major industrial countries in size, with the exception of the United States and Japan. A. Mandel-Campbell, Author and Media Fellowship from the Asia Pacific Foundation of Canada.
EXPANDING into China ::
Synerject L.L.C., a supplier of engine systems and components with a plant in Delavan, said Friday that it has established a subsidiary in China to serve a growing Asian customer base.
Synerject, Newport News, Va., is a joint venture of Germany's Siemens VDO Automotive Corp. and Orbital Engine Corp., Perth, Australia. Synerject supplies engine management systems, modules and components for the marine, recreational, motorcycle and industrial markets.
The Synerject plant will be located within Siemens VDO's automotive electronics production plant in Changchun, China. It's expected to begin operations in the spring. Synerject also plans to open a sales and application engineering support center in Chongqing in early 2007.
Synerject's Delavan plant is the former electronics components factory of BRP US Inc., the manufacturer of Johnson and Evinrude outboard motors that has a plant in Sturtevant. Synerject purchased the 40,000-square-foot factory earlier this year for an undisclosed price. The Business Journal of Milwaukee, Friday, November 10, 2006
The information in this article was current at 06 Dec 2011