ASIA RISING: OPPORTUNITIES FOR ONTARIO

Transcription

1 ASIA RISING: OPPORTUNITIES FOR ONTARIO Yuen Pau Woo, President and CEO Asia Pacific Foundation of Canada Presentation to the Asia Pacific Global Export Forum Toronto, Ontario September 23 rd 2013

2 Canada s Top Export Markets, 2012 Rank Countries Canadian Dollars, 2012 % of all 2012 Exports 1 United States (U.S.) 317,183,593, % 2 China 19,036,100, % 3 United Kingdom (U.K.) 18,083,651, % 4 Japan 10,219,027, % 5 Mexico 4,868,016, % 6 Netherlands 4,300,198, % 7 South Korea 3,656,316, % 8 Germany 3,283,434, % 9 France (incl. Monaco, French Antilles) 2,950,807, % 10 Brazil 2,452,275, % 11 India 2,290,811, % 12 Norway 2,287,078, % 13 Hong Kong 2,256,431, % 14 Belgium 2,213,203, % 15 Australia 1,849,176, % 16 Indonesia 1,631,115, % All other countries 28,687,803, % Compiled by Asia Pacific Foundation of Canada; Source: Statistics Canada

3 Canada s Top Ten Asian Export Markets In Billions of CAD, 2012 Compiled by Asia Pacific Foundation of Canada; Source: Statistics Canada

4 Canadian Exports to Asian Countries by 2008 Proportion 2012 All other Countries 25% China 26% Hong Kong 5% All other Countries 20% China 40% Hong Kong 4% India 6% South Korea 10% Japan 29% India 5% South Korea 8% Japan 22% Compiled by Asia Pacific Foundation of Canada; Source: Industry Canada

5 Ontario s Current Exposure to Fast-Growing Economies: Export Market Opportunities Notes: Bubbles represent destination markets share of Ontario merchandise exports in * Advanced economies include Australia, France, Germany, Italy, Japan, Netherlands, Norway, Switzerland and U.K. ** Fast-growing economies include Argentina, Brazil, China, Hong Kong, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey. Source: 2013 Ontario Budget; Oxford Economics and Statistics Canada

6 Percent % Share of Total Merchandise Exports to Fastest- Growing Economies (2012) Ontario Canada U.K. Germany U.S. Japan Australia Notes: Fastest-growing economies include Argentina, Brazil, China, Hong Kong, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey. Data for Ontario and Canada are actual values. Other countries are Oxford Economics estimates. Source: 2013 Ontario Budget, Oxford Economics and Statistics Canada

7 US$ Trillion GDP of Selected Asia-Pacific Countries, GDP In USD, not adjusted for inflation Compiled by Asia Pacific Foundation of Canada; Source: World Bank

8 Projected Size of Asian Economies to 2025 US$ Trillions Japan Korea China India Indonesia 5 0 *Current US$, PPP Compiled by Asia Pacific Foundation of Canada; Source: OECD Database

9 OECD s Long-Term Baseline Projection of GDP Growth US$ Trillions Australia Japan Korea United States China India Indonesia 20 0 *Current US$, PPP Compiled by Asia Pacific Foundation of Canada; Source: OECD ilibrary

10 GDP per Capita Japan Korea China India Indonesia *2005 US$, PPP Compiled by Asia Pacific Foundation of Canada; Source: OECD Database

11 India s GDP Projection in the Long-Run In US$ Trillions * GDP in current PPP Compiled by Asia Pacific Foundation of Canada; Source: OECD Database

12 India: Current Economic Conditions Slowest GDP Growth since 2008 recession Reform process at critical testing point 8.00 Services sector growth (esp. IT) showing 6.00 limitations CA deficit 5% of GDP 4.00 Rupee fell 9% in Aug 2.00 Strong investment interest in Canada 0.00 GDP Growth Annual % ( )

13 Top 10 Canadian Exports to India (C$000s) Rank Edible vegetables, roots and tubers 504,393 2 Aircraft and spacecraft 283,266 3 Pearls, precious stones or metals 182,889 4 Paper and paperboard 179,705 5 Mineral fuels, oils 161,892 6 Fertilizers 153,654 7 Woodpulp; paper or paperboard scraps 148,813 8 Boilers, mechanical appliances, etc. 120,279 9 Iron and steel 99, Ores, slag and ash 87,156 Top 10 Total 1,921,894 Compiled by Asia Pacific Foundation of Canada; Source: Industry Canada

14 Japan Japan is Canada s third-largest trading partner overall and second largest in Asia. Even with its aging population and shrinking economy, Japan will continue to be one of the world s biggest and richest economies for years to come. The economy is dominated by the highly diversified manufacturing sector, where heavy industry co-exists with cutting-edge robotics manufacturing and engineering GDP Growth Annual % ( ) Compiled by Asia Pacific Foundation of Canada; Source: World Bank

15 7.00 Korea GDP Growth Annual % ( ) Korea is Canada s third largest trading partner in Asia and seventh largest trading partner overall. Canada s exports to Korea are 1.6 times larger than its exports to India Compiled by Asia Pacific Foundation of Canada; Source: World Bank

16 Southeast Asia Singapore GDP Growth (Annual %) Indonesia: GDP Growth (Annual %) Malaysia: GDP Growth (Annual %) Thailand: GDP Growth (Annual %) Compiled by Asia Pacific Foundation of Canada; Source: World Bank

17 The Chinese Economy: Economic Slowdown and Structural Change Two big questions: Will China s economy face a hard landing or a happy landing? What will be the new drivers of economic growth?

18 Economic Slowdown Old drivers: foreign direct investment and exports to America and Europe Domestic credit-driven growth China now accounts for 31% of global growth Source: McKinsey Insights China Macroeconomic model update (March 2011); Global Insight

19 Percentage Points 14 China GDP Annual Growth Rate Aug-13 Composed by the Asia Pacific Foundation of Canada, Source: TradingEconomic.com; National Bureau of Statistics China

20 Contributors to China s Economic Growth 100% 90% 80% 70% 60% 50% 40% Consumption Investment Net Export 30% 20% 10% 0% Source: CEIC and OECD

21 Economic Growth Rate ( ) and the 10 Sources of Growth Contribution from total factor productivity Contribution from capital 4 Contribution from labour Chinese Economy by 2030 composed by Li Shantong, Liu Yunzhong, et al, published by the Economic Science Press, 2011.

22 China s Housing Index

23 China New Car Registrations In 10 Thousands

24 Business Confidence in China: Purchasing Manager Index (PMI)

25 Consumer Confidence in China * Index measures consumer confidence on a scale of 0 to 200, where 200 indicate extreme optimism, 0 extreme pessimism and 100 neutrality Composed by the Asia Pacific Foundation of Canada, Source: TradingEconomic.com; National Bureau of Statistics China

26 China s New Economic Drivers Mass urbanization Rise of the Chinese consumer Expansion of Services Sector Innovation-driven growth

27 The Four Approaches to Urbanization Supercities a small number of very large cities with population of 20 million+ (ex. Beijing) Hub and spoke clusters of medium-sized and small cities around larger cities (ex. Shanghai and the Yangtze River Delta) Distributed growth a large number of cities with populations of 1.5 million to 5 million Townization many small cities across the country with populations of 500,000 to 1.5 million SOURCE: McKinsey Insights China

28 Concentrated Urban Growth In concentrated urbanized cities scale effects and productivity gains are greater than in dispersed growth scenarios up to 20% higher. More efficient use of energy energy productivity is about 20% higher in concentrated urbanization models Lower rate of loss of arable land More efficient mass-transit More effective control of pollution Greater availability of talent

29 Just How Big Is China s Consumer Clout? SOURCE: Global Insight, February 2009; MGI China Model, February 2009; MGI

30 Growth of the Urban Middle Class Poor (<$3,500) Climber ($3,500 to $6,000) Middle class ($6,000 to $15,000) Affluent (>$15,000) % of urban population E 2015E 2020E SOURCE: MGI national forecast model; McKinsey Asia PFS Survey 2007

31 Shares of Global Middle Class Consumption, Source: OECD Development Centre Working Paper No.285

32 3 Billion New Middle Class Consumers Fuelling Demand for Goods Global consuming class 1 Billions of people Sub-Saharan Africa Middle East and North Africa 1.85 Central and South America North America 0.34 Europe 0.66 Asia billion Consuming class = $10 or more daily disposable income or $3,600 annual income (constant 2005 USD at purchasing power parity) SOURCE: McKinsey Global Institute

33 What Urban Consumers Value Urban households have higher rates of dualincome and higher-income single person households that demand quality quick-food solutions 10% annual growth rate in packaged food and beverage market Safety and quality in food and consumer products Quality of life / lifestyle goods Education, business and professional services

34 Development of Services Sector: Logistics, Tourism, Conventions, New Materials, New Resources, Environment, Transportation Source: National Academy of Economic Strategy,Chinese Academy of Social Sciences

35 China s move up the value-chain: Emerging Strategic Industries State Council s Seven Strategic Emerging Industries (2010) Energy-saving and environment protection New-generation information technology Biology high-end equipment manufacturing new energy new materials new-energy cars Eurasia Group New energy Environmental protection New materials Advanced equipment manufacturing New generation information technology Alternative energy vehicles Biotechnology PwC New energy New materials Information technology Biotechnology Energy conservation Environmental protection Aerospace Marine Advanced manufacturing Hi-tech services

36 Agri-food Opportunities in Asia Seafood Cantonese cuisine Canada is China s 5 th largest source for lobster and 1 st largest source for crab Ice Wine Consumers new to wine prefer the sweeter taste of icewine to red wines Canadian icewine exports to China have risen by more than 1000% since 2004 China is the sixth largest wine consumer market in the world Shanghai is the most promising market for wine in China Dairy due to health concerns over domestic brands Chinese consumers prefer foreign producers such as Canada for trusted dairy products Infant formula Health products nutraceuticals

37 Clean Technology In Asia Waste water treatment Solar photovoltaic power generation Wind power generation Hydrogen and fuel cells Solar and geothermal heating Biofuels/Biomass Air pollution de-dusting, de-sulfurisation, vehicle emissions control

38 Information and Communication Technology Telecom Gaming and Animation Photonics E-learning platforms Expenditures on education account for 5.2% of Chinese families total expenses, while in the US it s only 2.45% and in Canada it s 1.3%

39 Automotive Industry Supply of essential automotive components Manufacturing equipment tool, mold, die Automotive aftermarket Maintenance and repair services Clean energy vehicle technologies Hybrids, pure electric, fuel-cell

40 IMAX in China In June 2013 IMAX announced a deal with CJ CGV South Korea s largest cinema chain to add 35 new theatres in China and South Korea To date IMAX has 133 cinema s open in China and another 117 in the pipeline Within 10 years IMAX will have more cinemas in China than in the United States IMAX has positioned itself as a premium consumer brand in China the Starbucks and Lululemon of cinemas