Doing Business In China

Transcription

1 Doing Business In China INVENTIS INVESTMENT HOLDINGS 1

2 Who am I?? Singapore name : Yong Kwek Ping Chinese name :??? My experience in China : Living in China for 8 years Managing a holding company with more than 30 subsidiaries in China Completed more than 10 M&A and restructuring deals in China Set up more than 10 business entities in China 2

3 What you will hear today Myths? About China How free is China? Importance of China to EU Sino Italy relationship Opportunities for Italian companies Dealing with China How to enter China Revisiting the myths Conclusion 3

4 Myths? China is unsafe Corruption is everywhere No copyright protection No freedom China is a huge market China is backward Bad legal system Quality of products is bad Communication is difficult Difficult to do business 4

5 About China Surface Area : 32 times of Italy Population : 1242 million > Italy s population Population of farmers : million Ex farmers moving to cities for labour work : million China is currently in the stage of Transition from planned economy to market economy Emerging business opportunities during transition But how long is this transition going to be? China is a diverse and constantly changing country 5

6 How free is China? Is media tightly controlled? Are the local Chinese free to speak up? Only propaganda of Communism? 6

7 You can see this in the newspaper 7

8 You can also see this in the newspaper 8

9 East meets West 9

10 Free to speak, but not these.. Taiwan Fa Lun Gong (??? ) It s a taboo to talk about Taiwan issue and Chen Shui Bian. A political cult? 10

11 Importance of China to EU Real business opportunities could be found. 4 th largest trading nation 2 nd largest importer of oil Produces 20 times more steel than the European Union Consumes about 40 per cent of all the world s cement But contribute only about 5.6% world GDP 11

12 A Complement of interest The EU is the world's largest developed economy with ample capital, advanced science and technology and a high degree of internationalization. China would be a good entry point to maximise profits China, on other hand, has huge market potential and abundant human resources to receive new industries and technologies from EU This also helps China to combat poverty and elevates the farming issues 12

13 China connects EU to other Asian countries China accounts for a third of the growth of South Korean and Japanese exports to all destinations around the world It also accounts for two-thirds of the growth of Taiwan s exports. It forms a China-centric web of trade arrangements throughout the region, therefore linking EU to other Asian countries as well. To include China in G-8 to become G-9? 13

14 Sino Italy Relationship The bilateral trade volume is US$14.4 billion in 2003, which is a 26% increase from previous year. A joint declaration is signed to promote bilateral cooperation on 9 June Chinese Prime Minister Wen Jiabao (L) embraces his Italian counterpart Silvio Berlusconi at the end of their meeting at Confindustria, the Italia association of industrialists, in Rome, May 7, 2004, 2 days before they sign the joint declaration. [Reuters] 14

15 Italian companies in China Giuseppe Zanotti Salvatore Ferragamo Beijing Fendi Giorgio Armani Shanghai Hongkong Gucci FIAT motors 15

16 Ferrari drive lights 'open' sign on Shanghai's F1 track 6 th June 2004 Fiat Group Fiat Palio automobile a 50/50 joint venture between Fiat and the Yuejin Motor Group 13 th April

17 Eni holds a 16,33% stake in the CACT Consortium (CNOOC/Agip/Chevron/ Texaco). The Eni Group is now present in Beijing, Shekou, Dunhuang and Hong Kong. Eni is in close relationships with all 3 major Chinese oil companies in China, namely PetroChina, China Petroleum Company and China National Offshore Oil Corp 17

18 Opportunities for Italian companies Hot in big cities. Fashion FMCG Food & Beverage Supermarket Low cost leader.. Manufacturing Services Competitive.. Infrastructure Automobile Energy & Power 18

19 Why Dealing with China? Sell Make Buy Invest 19

20 Sell Market size: depends on industry but not 1.3 billion Affordability: with disposable income of less than RMB 2,000 Target : the working population, teenagers, rich, poor or all of them? Eg. Selling toothpaste at 0.20 euro may target more than 200 million people Eg. Selling a car may target only 4 million people of the overall population. The market, however, is growing. 20

21 Giuseppe Zanotti is selling footwear in Shanghai and some other cities. 21

22 Make (Manufacture) Cheap labour, as low as 50 euros a month Cheap land OEM for other brands Benetton apparels 22

23 Buy (Sourcing) Sourcing products in China and selling in Italy. Eg. Laptops are OEMed in China Invest Joint Venture with Chinese companies Acquiring equity from listed companies through direct investment Funds with interest in China 23

24 How to enter China? Homework and careful planning are important factors for success. 24

25 Homework Understand China (Geography, politics, history, etc) Understand the people, their way of thinking and culture Learn how to communicate Conservative budgets Conservative sales forecast Understand all tax issues Learn how to recruit and train staff 25

26 Planning Make a minimum 5-year strategic plan Choose the best executives to run your business in China Patience is a necessity Deep pocket (idle money if you have) Wholly owned or joint venture? 26

27 Revisiting the Myths True Untrue China is unsafe Corruption No copyright protection No freedom China is a huge market China is backward Bad legal system Quality of products is bad Communication is difficult Difficult to do business?????????? 27

28 Conclusion Understand China (Politics, history, etc) Learn how to communicate Patience is required A good place to source and manufacture products A potential market to sell your products Doing business is difficult China is in transition phase Business opportunity is real 28

29 / Inventis Investment Holdings China 29