Chinese Market 2006: Dispelling Myths

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Chinese Market 2006Dispelling Myths

• Dr. Chen Yang
• The China and Transitional Economy Research
  Centre
• Northampton Business School
• University of Northampton

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Controversial Views on China

• World factory super manufacturing power
• Positive comments
• low cost Chinese goods helped to keep inflation
  flat in the UK
• reflects the virtue of globalisation
• Negative views
• an increasing threat
• enlarging gap between the rich and poor reflects
  the evil side of globalisation globalisation
  without a human face

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Surging consumerism

• Exciting
• super rich worlds largest emerging luxury goods
  market
• 2002, Rolls-Royce opened its China garage
• booming middleclass
• Once the lion awakens, she will travel the world
• 2002, China became VWs largest overseas market

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Controversial Views on China

• Concerns
• environmental sustainability
• shortage of energy
• Optimistic view 2025 China will overtake America
• Pessimistic View China will collapse

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• 1st Myth
• To what extent does cheap labour remain the main
  determinant of Chinas competitive advantage in
  manufacturing?
• Has the nature of growth changed? Is it the one
  with or without a human face?

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Manufacturing Labour Costs
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Snapshot OneTextile Manufacturer Younger Group
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Textile Manufacturer Younger Group

• Technology-driven growth
• CAD / CIMS
• Automatic production lines
• Environmental friendly growth
• Knowledge based growth
• High calibre working force
• Compliance with international standards
• Working conditions
• Workers welfare package
• Environmental concerns
• International purchaser as a driving force
• Younger growth with a human face

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Youngers International CooperationA win-win
scenario?

• Create International brand, Construct 100 years
  Enterprise
• Strength
• Manufacturing power
• Weakness
• Low value added producer
• No internationally recognised core brand
• Weak in areas that demand creative thinking
• Threat
• Increasing level of competition
• Thin profit margin
• Hostile trade protection policy against Chinese
  textile products

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International CooperationA win-win scenario?

• Opportunity manage the threat positively
• Nurture creative thinking / international
  recruitment
• Strategic joint venture to establish core brand
  in Japan
• Strength of Britain in the areas demand creative
  thinking
• Strong arts design department at University of
  Northampton
• International award winning students and staff
  work with top designers
• Creative thinking recycle designs for the
  industry
• Unique degree in fashion marketing

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International CooperationA win-win scenario?

• Entrepreneurial initiatives
• a JV?
• create high-value added job opportunities

• The role of the China Centre
• Identify opportunity
• A bridge in between

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• 2nd Myth
• Industrialisation and urbanisation of China in
  the age of Information Technology (IT)
• The role of knowledge based New Economy in the
  growth of Chinese economy
• Opportunities for big players only?

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Multinational Giants in Chinas Telecommunication
Industry
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Chinese Newcomers
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www. Alibaba. com

• Ma Yun self made IT entrepreneur and his magic
  Alibaba
• 1999 a school teacher with a brilliant idea
• 2001 on the edge of collapse
• 2002 received the first American venture capital
  investment
• 2003 lobbying British venture capital to invest
  in Alibaba
• 2005 Alibaba took over Yahoo China

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• 3rd Myth
• Has politics followed economics?
• Change of Chinese society
• Business opportunity embedded in the change
• Culture, sports, leisure sectors new engine for
  further growth

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The social impact of Informatisation

• The lead character gets devoiced after his wife
  discovers an SMS message from his mistress on his
  cell phone
• Difficulties in maintaining privacy in the
  technological age
• China moves towards a more open society in the
  age of Informatisation.

Feng Xiaogangs Cell Phone 2004
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The social impact of Informatisation

• Chinas SMS market is an estimated 25 times
  bigger than its movie industry
• 12 billion SMS messages were exchanged during 7
  days Chinese new year holiday in 2006

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International Icons
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Culture, Sports and LeisureNew Engine for Growth

• Multimillion pounds images
• Sponsorship management
• Merchandising and image licensing
• Professional team behind these images
• Agent
• PR team
• Image consultant
• Speech coach / English teacher / Media Control
• IT specialist / Blog manager
• Psychiatrist
• Physiologist / Dietician

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One World One Dream