Dr' Zhao Chao

1
Opportunities in China for Ballarat ICT Companies
CRIC
Dr. Zhao Chao Shuwei (Steven) Wan
2
Aims of Workshop

• There are significant opportunities in China for
  Australian ICT firms
• What are they?
• How can they be exploited?

3
China A Huge Market for ICT firms
A place in 1980 The same place in 2007
Source from The national Bureau of Statistics of
China
4
China A Huge Market for ICT firms
Source from The Ministry of Information Industry
Australia Trade Report Digital Planet 2008
5
ICT Market Segments in China
Source from The National Bureau of Statistics of
China Australia Trade Report
6
ICT Market Segments in China
Source from The Ministry of Information Industry
7
Location of ICT Market in China
8
Your Potential Partners in China
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Potential Partners in GZ Tianhe Park
Source from GuangZhou Tianhe Software Park
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Potential Partners in GZ Tianhe Park
281 foreign ICT Firms
Huge Market
More than 1000 small and middle sized firms
11
Should you join this gold rush in China???

• Questions to ask yourself
• Do I know China and Chinese?
• How could I find any opportunity for my product
  in China?
• What should be my entry strategy?
• Where should I go?
• How to deal with Chinese partners and customers?
• Should I hire a local CEO?
• ?
• ?
• gt Are you well prepared to do this?

12
How do you know about Guangzhou and Guangdong?

• Demographics Guangdong
• Capital Guangzhou City
• Population 113 millions
• GDP 2007 US422 billion (12.5 of national
  economic output)
• Language Mandarin, Cantonese, Hakka language,
  Teochew,
• Business culture in Guangdong
• Less interested in politics and officialdom than
  Beijingers
• Strong relationship with Hong Kong, Macau and
  overseas Chinese
• Long time trading tradition and history
• Open and free culture tradition
• Risk taker

13
Most complicated diversified business
environment for foreign firms

• the different culture and social structure
• the different religious and ethical systems
• the different language and education system
• the middle way and the balance philosophy
• the indirect competition
• the continuous changing and uncertainty

14
Change Itself is the Feature of China Market
A place in 1980
The same place in 2000
20 Years
And this is Shenzhen, a typical legend of the
economic reform.
15
ThenWhat you can do to seek your dream?

• Possible paths
• Austrade
• Australian organization in China
• Australia- China Business Council
• Australia China Connections
• AustCham
• Possible networks related to China
• Talk to CRIC we can help you
• Make contact
• Establish a relationship
• Examine the opportunity
• Close the deal

16
GUANXI the key to unlock the black box of
China business environment

• In China, network must be modified to Guanxi
• More than connection / network/
  relationship
• Embedded in Chinese system
• Defined by reciprocity and mutual obligation
• Supported by a sense of goodwill and personal
  affection
• Emphasize on family ties and shared experience
• Grounded in trust, mutual obligations, and shared
  experiences
• the chief asset of most Chinese companies
• Fundamental to the world of Chinese business
• More important than financial capital, human
  capital and other social capital
• A way to get reliable information
• The protection from threats and uncertainty
• The business is not a single transaction, but the
  beginning of Guanxi

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How Can We Help You
China Economy Research Team in CRIC
Database of ICT Companies Of the Pearl River
Delta
Doing Business with China Team in CRIC
18
Thanks Questions
19
Never Like a Country But a Continent

• Name
• Peoples Repubilc of China
• Area
• 9.6 Million Square Km.
• 1/15 of World Land
• 3rd Bigest country
• Population
• 1.29 Billion people
• (by Survey 2000)
• 71 years for average living
• Ethnics
• 56 Ethnics, majority Han (91)
• Religions
• Buddhism, Taoism, Islam, Christianity
• GDP Growth
• 9.5 p.a. Since 1980

20
China in Post-WTO Era - Heaven or Hell ???

• Thousands Local and Foreign SMEs died in
  Guangdong province eg. Dongguan / Shenzhen /
  Zhongshan
• Dualism (???) of China economy system SOEs vs.
  SMEs (Lang, 2006)
• Industry structure adjustment promote the
  High-Tech sectors and focus on long-term
  sustainability and environment
• Change itself is the feature in China law /
  policy / rule
• Compete globally in China Market
• Compete with MNEs (Top 500)
• Compete with international SMEs
• Compete with China SOEs
• Compete with local SMEs

21
How complicated China market language
perspective

• Number of Native speakers of the 5 most spoken
  Chinese Dialects
• Mandarin Chinese 836 million
• Wu dialect 77 million - spoken in Shanghai,
  Jiangsu and Zhejiang province
• Cantonese 71 million
• Min dialect 60 million - spoken at the south
  east coast of China
• Jin dialect 45 million - spoken in an area West
  of Beijing

22
Some valuable experiences form pioneer SMEs in
China

• Marks Story JV between the US and China
• Local manager
• Guanxi
• Special resource technology / financial power /
  market and orders
• Roeper Germany in China WOFE in Qingdao
• Control and authorize
• Power Balance between headquarter and China
  branch
• Localization of management team
• B N in China JV between a Canadian high-tech
  agriculture enterprise and China SOE
• Guanxi and China business culture
• Find the right partner

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CRIC TIPs on How Australian ICT SMEs do business
in China

• Step1 resource, capability and network
  assessment
• Step2 market match gt business opportunity
  digging
• Step3 entry mode choice
• Step4 entry time, speed and order
• Step5 application of Guanxi and Localization
  strategy
• Step6 successful start-up
• Step7 building competitive advantage