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GROWTH OF CHINA

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GROWTH OF CHINA & DOING BUSINESS WITH CHINA ARVIND SINHA * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * In many organizations, someone ... – PowerPoint PPT presentation

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Title: GROWTH OF CHINA


1
GROWTH OF CHINA DOING BUSINESS WITH
CHINAARVIND SINHA
2
SOME OF THE FACTS WE MUST KNOW ABOUT CHINA
  • China snatches the No. 1 slot on economic fronts
  • China overtakes the USA as the worlds largest
    Automobile market
  • The country has the highest number of mobiles
    phones in the world
  • China has the second largest banking system in
    the world after USA. India stands at No. 3
  • China has maximum number of ATM machines
  • High speed rail network set to take global lead
  • Production begins on Chinas Jumbo Jet
  • Record grain output to stabilize global price
    food consumption has gone up by 40
  • Chinese farmers per capita income hits 735

3
  • China 2nd only to US in research Report
  • China starts health care reform
  • China launches 1st environment industry fund
  • China opened the world's longest bridge over
    water
  • China launches mission to moon successfully
  • Out of the 15 longest bridges in the world, 11
    belong to China
  • There are many more achievements that they are
    constantly achieving and thus creating landmarks.

4
Some of the interesting pictures I would like to
show you all about China
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Joey enjoys the changing scenery outside her
window.
9
Western cuisine is available on the menu.
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12
Lhasa Rail Station
Lobby
13
Lhasa Rail Station Exit
Court
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15
PHOTOS OF THE LONGEST BRIDGE
16
BULLET TRAIN RUNNING FROM BEIJING TO SHANGHAI
17
A CHINESE AIRCRAFT CARRIER
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LATEST STEALTH BOMBER NEXT TO USA
20
RUSSIAN AIRCRAFT CARRIER KIEV CONVERTED INTO A
HOTEL
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24
THE STORY OF CHINAS EMERGENCE
As the worlds workshop starts with the story of
one of its most enthusiastic customers the
United States of America. In the aftermath of
World War II, American officials decided that the
countrys foreign policy interests were best
served by helping to rebuild the global economy.
Policymakers were convinced of the economic and
security benefits of free trade, and U.S.
businesses wanted markets for their products
overseas. Washington poured money into
reconstruction of industry in Europe and Japan
and encouraged imports to recreate foreign
economies through trade, not aid. Reversing
earlier policies that protected American industry
by keeping import tariffs high, postwar officials
lowered them. President Truman reassured the
public that American labor
25
can now produce so much more than
low-priced foreign labor in a given days work
that our workingmen need no longer fear, as they
were justified in fearing in the past, the
competition of foreign workers. Over the
following years, the American government
continued to promote free trade. By the time
China emerged from three decades of relative
isolation in 1978, American consumers were
accustomed to seeing foreign labels on their
shoes, clothing and toys. And American
manufacturers were in the habit of fighting
back.
26
China didnt have a labor law until 1994.
Since it came into effect the following year, the
law has mandated an average 44 hour workweek,
with no more than 36 hours of overtime per month.
However flexibility was provided in the labor
law where workers and owners can come to flexible
terms for longer working hours. Partly as
a result of these factors, there is competition
in the production of many simple consumer
products. Log on to Alibaba.com, a leading Web
site that connects buyers with factories in
China, and type in any item. A search for lamp
finds more than 5,800 companies making every kind
of lamp you could want.
27
More than 5,500 will make you an MP3
player. More than 11,000 companies produce
T-shirts. Check back in six months and these
numbers will have risen. Why is it so tough to
do business in China? Because you dont have one
or two competitors, you have 1000 to 5000
manufacturers who are competing among themselves.
The Canton Fair, which had started in 1957,
was Chinas window to the world which is very
widely attended and it is eye opener for anybody
who is in the fair and it shows the development
speed of the China. 
28
Canton, the old name for
Guangdong, had been a trading hub as far back as
the Song dynasty, which lasted from 960 to 1279.
China devalued the RENMINBI , and lifted
taxes on the parts used to assemble exports.
Hoping to replicate the success of
market-oriented reforms in the countryside, the
government gave managers more power to control
production and where they bought materials.
Enterprises were allowed to keep more profits
and given more freedom in hiring, firing and
promotingworkers.  
29
China, the largest populated
nation that has over the last two decades
successfully embraced what it calls a socialistic
market economy, has notched up one more
distinction. Its FOREX reserves, mainly in US
dollars, recently crossed the one-trillion mark.
China has been registering double-digit GDP
growth rates in the recent past due to a host of
favorable factors. Its cheap labor and flexible
investment policies have been attracting huge
Foreign Direct Investment consistently. It is no
surprise that 40 percent of FDI inflows going
into emerging markets reach China. 
30
Part of the reason for this is that
Chinas arrival as a mass producer of consumer
goods coincided with a dramatic shift in
manufacturing processes with the adoption of new
technology and this allowed vide variety of goods
to be divided in tiny standardized steps that
could be performed by multiple companies. This
shift has also made it easier for companies that
control the supply chains-often the Western
brands and retailers-to speed up the production
process. In industries such as toys,
manufacturers are introducing new models faster
to take advantage of rapidly changing technology
or to stimulate consumer demand.
31
Many Chinese factories are
smaller, shakier institutions. The
commodification of manufacturing and the Chinese
governments emphasis on economic growth has made
it easier to gain a foot-hold in the global
supply chain. Foreign investors enjoy greater
privileges. In the name of promoting economic
growth, local governments will go out of their
way-even violating their own laws-to help them.
Officials will set aside land, build factories
and find workers. They will slash taxes, offer
rent-free periods and waive fees.
32
SOME INTERESTING POINTS TO CONSIDER
WHILE DEALING WITH CHINA China says it is
evolving into a "socialist market economy with
Chinese characteristics." While critics consider
this difficult to digest however, this is the
result of long and complex transition from a
planned economy to more of a market economy.
Figuring out how to navigate this transition is
obviously complex. Foreign executives are
usually naive. Not aware of Chinese politics,
Chinese systems and Chinese thinking. If you come
across 100 people who are dealing with China
everybody will have different experiences and
variation would be tremendous. This is because
Chinese are very focused and for them World is
the market and never say no to the business.
33
Foreigners are often not aware of
competing interests among central, provincial and
municipal levels of government, and on each level
among diverse commissions, ministries, agencies,
departments and bureaucracy with overlapping
interests. On the personal level lack of
awareness is often worse. Foreign executives
imagine that if they have a pleasant meeting with
the CEO of a state-owned company or surely if
they are encouraged by a government official
responsible for that industrial sector, then
they have a high likelihood of achieving their
goals. They do not appreciate the disparate
personal loyalties that thread through most
Chinese organizations or customary mechanisms of
decision- making that usually require agreement
at multiple levels.  
34
In many organizations, someone quite
low in the power structure, someone surely
unknown to the foreigners, may maintain effective
veto power. Using Powerful ToolsPolitics
used properly can be a powerful tool for getting
deals done and keeping joint ventures on track.
In structuring one very large joint venture in
China, a European manufacturing multinational
found itself at a standstill after long
negotiations. It decided to take a risk by
inviting the most senior provincial leader-the
Party secretary- to participate in the
discussions.
35
Involving the senior leader directly
could be ill-advised because there's typically no
appeal of whatever decision he makes. However,
the foreign company had done its homework and
knew that in the Party secretary's previous
position (in Guangdong province), he had shown
great innovation.The gamble worked. To this day
the Party secretary speaks of this high-profile
successful deal as a source of personal pride.
In a case that highlights the importance of
personal relationships, a Japanese multinational
sought entry into an industry requiring a special
license by engaging a large state-owned company
in a similar industry as its partner. After
months of futility, the Japanese executives
realized that  
36
Although their Chinese partner was in
their same industry, it was less powerful than
the Chinese partner chosen by the Japanese
company's chief international rival. As a
result their license application was
blocked.After doing sensitive political
analysis (using politically savvy consultants),
they were introduced to a much smaller Chinese
company in a different industry, but one whose
executives had deep personal relationships, going
back to college, with key regulators. The
Japanese then got the license.  
37
Obviously, foreigners cannot discern all
the politics around and within Chinese
organizations, and indeed most foreign executives
do business in China without ever appreciating
it. What happens, though, is that the
politically naïve never understand why their deal
is delayed or aborted-or how negotiations can be
successful, problems averted and issues resolved.
 
38
  • Very Important Dos and Dont Dos for Conducting
    business in China
  • Conduct (quietly) analyses of those you're
    dealing with. Assess political factions and
    alliances between individuals within government
    agencies, partners, suppliers, customers and
    competitors who can affect your business.
  • Build relationships with key people, personal as
    well as professional. Discern their real
    objectives and understand their
    background-education, hometown, family, prior
    jobs, relationships and aspirations.

39
  • Cater to the most senior executive or official in
    every meeting. Chinese organizations are still
    built on strict hierarchies, and foreign
    executives must be sensitive to that.
  • Align your interests with those of your Chinese
    partners and managers. Structure and organize
    your business to be as self-regulating as
    possible (as if there are neither legal contracts
    nor internal controls).
  • Awareness is critical. Once politics are
    understood, companies can utilize reputable
    advisers professionals with long experience in
    China whose track record and relationships
    can be independently assessed. Beware of
    individuals claiming to be related to a
    government official.

40
  • Seek natural allies. Identify institutions and
    individuals who will benefit from your success
    and seek to engage them. Similarly, identify any
    who will benefit from your failure and seek to
    neutralize them.
  • Don't neglect any level of government- central,
    provincial, local. All but the very largest
    businesses depend on the support of local and
    provincial government, and that support (or lack
    of hindrance) is often instrumental in corporate
    success.
  • Don't underestimate the importance of personal
    relationships. China is changing, but
    personal relationships continue to play a role
    in generating trust and assuring loyalty.

41
  • Don't overestimate the importance of personal
    relationships. In other words, don't rely on any
    one person in a Chinese institution, government
    agency or state-owned business-not even the top
    person. People get promoted, demoted or
    transferred, sometimes suddenly.
  • Don't think that if the boss agrees, the deal is
    done. Organizations, particularly government
    agencies and state-owned enterprises, often have
    multiple lines of allegiances that even CEOs
    cannot overrule.

42
  • Don't assume that all Chinese are on the same
    side. Chinese people, like all people, are
    interested in their own private careers,
    opportunities and financial benefits.
  • Don't forget Chinese history particularly as it
    may affect the attitudes and sensitivity of
    people who affect your business.
  • Don't depend on a change in law or regulations.
    Politics are complicated, mired in competing
    interests. Time estimates for government action
    can mean little.

43
The Great Power of China and Chinese
Commitment Chinese pride invites itself into
diverse policy debates. Rarely does it dominate
and determine decisions but often it affects and
influences them. Consider China's spaceflight
programs, including the manned spacecraft and
lunar missions, both an apparent luxury in a
country still fighting vast poverty, but both
supported by majority of the people.
44
Pride expresses the feelings of the
people whose civilization of culture and
technology led the world for centuries, only to
be humiliated by foreign invaders. Now that China
has regained its position at the high table of
the great nations of the world and is involved
in every important aspect of economic and
international affairs, the Chinese people are
proud of their achievements and global
position.
45
In every aspect of human life from
business to culture, Olympic athletes to space
assonants, music and art to modern science and
ancient philosophy, China seeks its fair share of
world leaders. For example, in every industry of
importance, China's senior leaders expect its
corporations to become among the largest and
most successful in the world. When Haier stated
in the middle 1990s that Haier's goal was to
become a leading global company, foreign analysts
barely noticed. Today, Haier is the world's
second- largest manufacturer of refrigerators
(after Whirlpool), among the top 1,000
manufacturers in the world, and its brand name
has just joined the prestigious list of the
World's 100 Most Recognizable Brands.
46
China is proud that the market
capitalizations of its companies in energy,
telecommunications and banking are among the
largest in the world. Although economic
improvement a higher standard of living,
financial success, luxuries of life is goals in
every country, there is extra energy to achieve
these goals in China. The motivation goes
beyond material benefits the Chinese want to
show the world that they are in every way a
modern nation and in every sense a great power.
If this demonstration requires material wealth,
technological prowess, military strength, a
world-class aerospace program, then these are
what they must and will achieve.
47
The change in the economic lives of
the Chinese people has been staggering Since
1978, when reforms where initiated in China,
China's GDP per capita has increased more than
40-fold. The Chinese economy is now the second-
largest in the world, and in next 10 years it may
well be the largest. Average salaries are low by
Western standards, but prices are also low, so
that most people, even rural farmers, are
living far better than the income statistics
indicate. Over 1 billion people have access to
television three decades ago only 10 million
did. In 1978 there were 200 foreign companies
doing business in China today there are hundreds
of thousands. In fact, China absorbs more foreign
investment than any country in the world except
the U.S. Chinese corporations are selling
Internet routers and refrigerators competitively
around the world, and Chinese
48
entrepreneurs have built strong private
businesses on the Internet. China has tremendous
success in dealing with non-English speaking
countries such as Brazil, Russia, Iran etc. where
they are importing minerals and exporting
consumer products. Friends, advantage of China
is available to everybody, Chinese capacities are
available to anyone and everyone in the world.
They are conducting business without any
boundaries and reservations and goods are
available at your desired price. They are making
best products and the products matching your
pockets.
49
  • Thank you for your attention.
  • Sourced and Compiled by
  • Mr. Arvind Sinha
  • CEO Chief Advisor
  • M/s. Business Advisors Group
  • Cell No. 9820062612
  • Email arpsinha09_at_gmail.com
  • lionasinha_at_gmail.com
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