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A Look Back on the Global Financial Crisis’s Impact on the China Economy

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www.exolus.com Starting in 2008, France Houdard of the Exolus Group was one a very small minority of CEO’s, along with Jing Ulrich, Chairman of JP Morgan, to publically take positions on television and in published reports that the Global Financial Crisis was have very little to no impact on China’s economy. This report is an update of previous reports started in 2008, a look a back over the 5 years in assessing the impact of the crisis on China’s economy.

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A Look Back on the Global Financial Crisis’s Impact on the China Economy

  1. 1. Will China Save or Spoil the World? Global Financial Crisis Series … China’s Real Estate Developers: Stronger or Weaker through Crisis? France Houdard Exolus International Advisory June 2013 (Updated from September 2010) France.houdard@exolus.com M (86 21) 5100.1833 x 1100 M (1) 917.285.6528 (United States)
  2. 2. 2  What does China look like from Space? At Night? 3  Economy: Fastest Growing Large-Scale Economy in History? 4  Wealth: Middle Class now Larger than Populations of most Countries? 5  Migration: Largest Rural-to-City Transformation in History? 6  Urbanization: Emergence of 10+ Cities the Size of Countries? 7  Office Sector 10  Shanghai/Beijing Grade-A Office Supply & Financial Performance 11  Office Demand & Growth Drivers 14  Investor Confidence Continued 18  Hotels & Leisure Sector 19  Hotel Supply – Asia Development Pipeline Comparison 20  Hotel Supply & Financial Performance 21  Hotel Demand & Growth Drivers 26  Retail Sector 29  Shanghai Retail Supply & Financial Performance 30  Retail Demand & Growth Drivers 33  China’s Economic Future…Bust or Boom? 35  Fact Today: Healthy Balance Sheets – Banks, Companies, Households 36  The FUTURE (2020): World Bank Projects China as #1 Economy in World 37  Fact Today: World’s Fastest Growing Major Economy 38 Table of Contents
  3. 3. 3 What does China look like from Space? At Night? Why? Source: NASA (United States – National Aeronautics and Space Administration
  4. 4. 4 0 1 2 3 4 5 6 7 8 9 Source: IMF Economy: Fastest Growing Large-Scale Economy in History? China’s Economy: Doubles every 7 Years … Tripled most Recently 3x 2x 2x China Opens to the World Applied to join GATT Eliminated its dual exchange rate Accepted full convertibility for current account transaction Admitted to WTO Hosts OLYMPIC games China GDP (USD trillion) USD(RealMarketRates)
  5. 5. 5 Foreign Direct Investment: Highest in History through Global Financial Crisis China FDI Inflows Highest in History through Global Financial Crisis Source: China National Bureau of Statistics 0 20 40 60 80 100 120 140 USD Foreign Direct Investment Inflows (1990 – 2012) Global Financial Crisis
  6. 6. 6 Wealth: Middle Class now Larger than Populations of most Countries? Income Structure for Urban Population UrbanPopulation(millions) Urban Household Income (USD – PPP adjusted) Global > US$ 107,800 Affluent US$ 53,801- 107,800 Upper Middle US$ 21,501 – US$ 53,900 Lower Middle US$ 13,500 – US$ 21,500 Poor < US$ 13,500 531 607 684 756 822 239 255 157 106 73 53 170 355 461 525 35 90 99 0 100 200 300 400 500 600 700 800 900 2005 2010F 2015F 2020F 2025F 531 607 684 756 822 Sources: Urbanization Rates and Population Estimates based on United Nations, World Urbanization Prospects 2007; Income Bands based on MGI Consumer Demand 2008. Upper Middle Class Lower Middle Class China’s Middle Class: 400 million (2010) … 500 million (2015)
  7. 7. 7 Migration: Largest Rural-to-City Transformation in History? China’s Urban Population versus Rural Population 1.4 billion 1.3 billion 1.2 billion 1 billion 245 381 531 684 822822 833 782 705 624 0 200 400 600 800 1,000 1,200 1,400 1,600 1985 1995 2005 2015 2025 57%49%40%31%23% 1.45 billion Source: World Urbanization Prospects 2007 Urbanization Urban Population (million) Rural Population (million) China’s Urban Population: 600 million (2010) … 700 million (2015)
  8. 8. 8 Urbanization: Emergence of 10+ Cities the Size of Countries? Continental-Size Population … Hyper-Density Expansion 10+ Country-Sized Cities/Corridors E-merging … Populations averaging 60 Million  Urbanization  Cities: 120 cities populations larger than 1 million people today.  10+ Country-Sized Cities & Corridors: Emergence of 60+ MM Populations  Infrastructure  World-Class Super- Infrastructures, Integrated Hubs: Historically unprecedented levels of investment, concentrated in hubs.  Planned - Political - Economy  Full Authority: to Plan Nationally – and Implement  Confucian -> Socialist -> Capitalist Mountains Steppe People
  9. 9. 9 Context: What do Geography, Demographics, Cultural History tell Us?  Structural Geography  Landmass: 3% larger than the Landmass of United States  2/3 Country Un-inhabitable: 2/3 of Country Covered by Mountains, Deserts, thus Un-inhabitable  Continental Demographics  Population: 1.3bn (4.3x Larger than US Population)  Density: 90% of Population Concentrated in Eastern Pockets – away from Mountains/Deserts  Migrants: 200 Million Floating Population  Cultural Diversity  Cultural Distances: Extreme Diversity: Cultural, Languages (298), Economic, Geographic. Source: The Global Land One-km Base Elevation (globe) Project; ETOPO 2 Worldwide Bathymetry; The Ethnologue, Languages of the World 70% Un-inhabitable … 1.3 bn People … Density … Diversity … Wealth … Migration Mongolia Russia Federation Kazakhstan India Myanmar Thailand N Korea S Korea JapanCHINA
  10. 10. 10 0 50 100 150 200 250 300 350 400 450 2005 2010 2015 2020 2025 millionssq.m Shanghai Beijing Wuhan Guangzhou Chengdu Structural Hyper-Density Requires: 1.2 1.2 8.2 16.4 25.9 7.0 8.2 9.5 11.2 - 5 10 15 20 25 30 35 40 2005 2010F 2015F 2020F 2025F billionssqm Supply New Additions Estimated Cumulative China New Construction Estimated Cumulative New Construction (Select Cities) Source: MGI 2008 40 billion sq m of Additional Supply by 2025 High-Density Infrastructure, Transportation, Linkages
  11. 11. 11 Office Sector Developing the World’s Fastest Growing CBD’s ….. Shanghai 1993 Shanghai 2014
  12. 12. 12 Shanghai Grade-A Office Supply Major Grade-A Office Supply, Absorption, Vacancy 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 0 200 400 600 800 1,000 1,200 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ‘000sqm Grade-A office supply (LHS) Grade-A office net absorption (LHS) Vacancy Rate Source: Knight Frank
  13. 13. 13 Beijing Grade-A Office Supply Major Grade-A Office Supply, Absorption, Vacancy 0% 5% 10% 15% 20% 25% 0 200 400 600 800 1,000 1,200 1,400 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ‘000sqm Grade-A office supply (LHS) Grade-A office net absorption (LHS) Vacancy Rate Source: Knight Frank
  14. 14. 14 Office Financial Performance (Rentals) – Shanghai Vs. Beijing Steady Growth over Past 8 Years 50 70 90 110 130 150 170 190 210 Shanghai Beijing Q1 2003 = 100 Source: Knight Frank 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  15. 15. 15 HISTORICAL: Office Demand & Growth Drivers Global Structural’ Cost Reduction … Revenue Growth Cost Reduction RESOURCES Sales Engineering R&D Sourcing Production Distribution Marketing Shared Services IT HR F&A Procure DRIVING Shareholder Value RESEARCH & DEVELOPMENT SHARED SERVICE CENTERS CONTRACTS, PARTNERSHIPS PRODUCTION / SOURCING SALES & MARKETING Revenue Growth Innovation
  16. 16. 16 FUTURE: Office Demand & Growth Drivers PRODUCTION / SOURCING DRIVING Shareholder Value SALES & MARKETING RESEARCH & DEVELOPMENT SHARED SERVICE CENTERS (SSC) CONTRACTS, PARTNERSHIPS RESOURCES SSC IT HR F&A Pro’c Sales Engineering R&D Sourcing Production Distribution Marketing Cost Reduction Revenue Growth Innovation
  17. 17. 17 Office Demand & Growth Drivers  Cost Reduction  China Wages 5 to 10 times Cheaper than Wages in Western Countries  Margin and Cost Pressures from Customers  Consolidation of Buying Power in Retailing and other Industries  Easier Access for Customers to Alternative Sources of supply around Globe  Revenue Growth  GDP growth a 8%+ per annum for past 10 years  China Fastest Growing Large Economy in World; Stagnant or Low-Growth in Home Markets  Following customers to China; preserving critical customer relationships  Asset Efficiency (Innovation)  China Graduates 600,000 Engineers per Year; US Graduates 50,000 per Year  Access to larger global talent pool, with relevant skills for product localization  R&D - Pressure to introduce new products, faster, better, cheaper Fundamentals … WEALTH, TALENT, LOW COST, INFRASTRUCTURE, STRONG FINANCIAL SYSTEM Unprecedented Pressures to Reduce COSTS, Grow REVENUES, Drive INNOVATION? Revenue Growth Asset Efficiency DRIVING Shareholder Value Cost Reduction
  18. 18. 18 Office Demand & Growth Drivers China FDI Inflows Highest in History through Global Financial Crisis Source: China National Bureau of Statistics 0 20 40 60 80 100 120 140 USD Foreign Direct Investment Inflows (1990 – 2012) Global Financial Crisis
  19. 19. 19 … Investor Confidence Continued … Investor Confidence in China #1 in World Source: World Investment Prospects 2012 - 2014 Top 14 Most Attractive Destinations for Future Investment (2012 – 2014) PercentofResponses 0% 10% 20% 30% 40% 50% 60% 70% China United States Germany United Kingdom France Japan India Spain Canada United Arab Emirates Brazil
  20. 20. 20 Hotels & Leisure Sector Developing the World’s Largest, Lowest, Highest ….. Lowest Altitude Hotel Highest Altitude Hotels Largest Golf Complex
  21. 21. 21 Hotel Supply – Asia Development Pipeline Comparison Over ½ of All Asia Hotel Developments are in China Source: Lodging Econometrics China Construction Pipeline Q2 2012 Project Stage Projects Rooms Under Construction 1,202 306,473 Start Next 12 Months 133 36,641 Early Planning 167 63,366 Total Pipeline 1,502 406,480 Asia Pacific Construction Pipeline Q2 2012 Region Projects Rooms China 1,502 406,480 India 379 66,867 SE Asia & Other Countries 436 88,349 Total Pipeline 2,317 561,696
  22. 22. 22 Hotel Supply – Global Comparison Incl. 84 five-star hotels / over 35,000 rooms* Incl. 68 five-star hotels / over 25,500 rooms* Total Hotel Rooms in Selected Major Cities 2010 0 20 40 60 80 100 120 140 160 Las Vegas Beijing Tokyo London Paris New York City Shanghai Hong Kong Dubai Singapore Seoul Sydney (000' Rooms) Beijing/Shanghai now 2 of the Largest Urban Hotel Markets in World Source: Data collected from various sources (Some data variance may exists between key sources)
  23. 23. 23 Hotel Supply Growth Shanghai - 5 10 15 20 25 30 35 40 ThousandsRooms CAAG 11.1% CAAG 13.5% - 5 10 15 20 25 30 35 40 45 ThousandsRooms CAAG 6.1% Olympics Beijing CAAG 10.6% WORLD EXPO Overall China Growing at Over 1,000 Hotels per Year 5-Star Hotel Supply (Rooms, 2000 – 2012) Source: China National Tourism Association (CNTA)
  24. 24. 24 Hotel Financial Performance Hotel Average Room Rates - Selected Major Cities (YTD Sep 2010, USD) 0 50 100 150 200 250 300 Paris New York London Hong Kong Beijing Shanghai* Buenos Aires Berlin Los Angeles Hotel Occupancy - Selected Major Cities (YTD Sep 2010) 0% 20% 40% 60% 80% 100% New York London Hong Kong Paris Los Angeles Buenos Aires Berlin Beijing Shanghai* Average Room Rates (ARR) Comparison Source: STR Global
  25. 25. 25 Hotel Financial Performance Performance of Top Hotels in Shanghai (YE Nov 2010) Notes: Occ - Average Annual Room Occupancy; ARR - Average Room Rate in USD; RevPAR - Average Room Revenue Per Available Room in USD; PAR - Per Available Room Among Highest in World on a Total Revenue Basis Distribution of Revenues YE November 2010 (Top 10 Shanghai Hotels) Rooms: USD155 54% Other: USD24, 8% F&B: USD108, 38% Shanghai Occ ARR RevPAR Total Revenue PAR Top 3 Hotels 58% 336$ 195$ 394$ Top 5 Hotels 56% 329$ 184$ 362$ Top 10 Hotels 58% 269$ 156$ 263$ No.: Top 10 Hotels (by RevPAR, YE Nov 2008) Rooms 1 Grand Hyatt 555 2 Shangri-la Pudong 950 3 JW Marriott 342 4 Four Seasons Hotel 439 5 Westin Shanghai 570 6 Marriott Hongqiao 313 7 Jing An Hilton Shangai 720 8 Le Royal Meridien Shanghai 761 9 The St. Regis Shanghai 328 10 Okura Garden 492 Performance of Top Hotels in Shanghai
  26. 26. 26 912 736 605 564 540 531 526 522 460 458 400 392 392 379 353 334 328 307 305 285 67% 69% 71% 55% 69% 54% 66% 70% 68% 74% 72% 58% 65% 53% 51% 58% 68% 54% 52% 63% - 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400 ShanghaiBeijingQ ingdaoShenzenSanya G uangzhou HangzhouChengduDalian JinanNanjingXiam ien XianTianjinSuzho Dongguan Chongqing ZhengzhouW uhanUrum qi RMB 0% 10% 20% 30% 40% 50% 60% 70% 80% RevPAR ARR Occ Hotel Financial Performance – Major Cities 2010 (5-Star Hotels) , Source: China Tourist Hotel Association / STR Global China 5-Star Hotels Performance (Major Cities across China, 2010) Strong Performance Across Major Cities Average RevPAR in US *RMB 450)
  27. 27. 27 Demand Segments: 5-Star Hotels in China, Beijing, Shanghai CORPORATE RELATED DEMAND: 63-64% FOREIGN DEMAND: 35-53% 31.0% 20.0% 13.0% 15.0% 15.0% 7.0% 26.3% 24.2% 12.8% 20.8% 10.9% 5.1% 15.6% 33.5% 13.9% 19.5% 9.2% 8.3% 0.0% 10.0% 20.0% 30.0% 40.0% Domestic Business Traveler & Government Foreign Business Traveler MICE Foreign Leisure Domestic Leisure Other China Beijing Shanghai Hotel Demand & Growth Drivers Sustained Corporate Business Activity and Strong Consumer Incomes to Underpin Growth Source: China Hotel Industry Study 2010
  28. 28. 28 World’s Leading Foreign-Inbound Destination Source: World Tourism Organization (UNWTO) International Overnight Tourist Arrivals Top 10 Countries 2009 81.9 59.2 56.0 54.7 43.7 30.7 24.4 23.1 22.2 21.4 84.8 0 20 40 60 80 100 France Spain United States Mainland China Italy United Kingdom Germany Ukraine Turkey Mexico China incl . HK & Macao Millions Arrivals 100M by 2015 China's Inbound Tourism 2000-2015F 0 20 40 60 80 100 120 2000 2001 2002 2003 2004 2005 2006 2007 2008 2015F InboundOvernightVisitors(millions) Overnight Visitors Increase 6.9% * 9.5% * Hotel Demand & Growth Drivers – In-Bound Tourism to China
  29. 29. 29 Inbound, USD41.6 million, 24.5% Domestic, USD128.3 million, 75.5% China's Domestic Tourism 2000-2015F (billion person times) Tourism Recipients by Source Market (2010) Exploding Domestic Chinese Travel Source: China National Tourism Administration (CNTA) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2015F DomesticTourists(billionperson-times) Visitor Trips Increase 11.9% * 7.4% * * Compound Average Annual Growth Hotel Demand & Growth Drivers – Local Chinese Tourism
  30. 30. 30 Retail Sector Developing the World’s Largest … Leading Retail Formats World’s Largest Flagship World’s Largest Flagship The Place Barbie Louis Vuitton Nokia
  31. 31. 31 Shanghai Retail Supply: Shopping Center Major Shopping Center New Supply, Absorption, Vacancy 0.0% 4.0% 8.0% 12.0% 16.0% 20.0% 0 100 200 300 400 500 600 2004 2005 2006 2007 2008 2009 2010 2011 2012 ‘000sqm New supply Net Absorption Vacancy Rate Source: Colliers International Shanghai (CIS) Research
  32. 32. 32 0 10 20 30 40 50 60 2006 2007 2008 2009 2010 2012 Rents of Overall Market Rents of Prime Area Rents of Inner Ring Area Rents of Decentralized Area Shanghai Retail Financial Performance (Rentals) Shopping center Ground Floor Rental Trend RMB per sq. m per day Source: Colliers International Shanghai (CIS) Research
  33. 33. 33 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Retail Financial Performance Sustained Retail Sales Growth … Huge Shift in Discretionary Spend Personal Expenditure 12.9% Growth (2012) 3.0 Retail Sales Growth USDTrillions 54 12 7 9 11 4 2 1 0 10 20 30 40 50 60 70 80 90 100% 1990 29 9 11 6 15 5 9 16 2010  Consumer Goods  Health Care  Housing  Clothing  Education  Transport & Communications  Food  Home Appliances Source: China National Bureau of Statistics
  34. 34. 34Sources: Urbanization Rates and Population Estimates based on United Nations, World Urbanization Prospects; Income Bands based on MGI Consumer Demand. 300 MM Middle Class Today … 500 MM in 6 Years Middle Class as % of Urban Population UrbanizationPopulation(millions) Urban Household Income (USD – PPP adjusted) Global > US$ 107,800 Affluent US$ 53,801- 107,800 Upper Middle US$ 21,501 – US$ 53,900 Lower Middle US$ 13,500 – US$ 21,500 Poor < US$ 13,500 531 607 684 756 822 239 255 157 106 73 53 170 355 461 525 35 90 99 0 100 200 300 400 500 600 700 800 900 2005 2010F 2015F 2020F 2025F 531 607 684 756 822 Upper Middle Class Lower Middle Class Retail Demand & Growth Drivers
  35. 35. 35 Total Urban Household Income (PPP - Adjusted Income) Per Capita Annual Income (USD, PPP-Adjusted) Heilongjiang Jilin Liaoning Hebei Beijing Tianjin Inner Mongolia Shandong Jiangsu Shanghai Zhejiang Fujian GuangdongGuangxi Hainan Hunan Jiangxi Anhui Hubei Henan Guizhou Yunnan Sichuan Chongqing Gansu Ningxia Shaanxi Shanxi Qinghai Xinjiang Tibet 0–17,500 17,500–20,000 20,000–25,000 25,000–30,000 30,000–40,000 >40,000 Retail Demand & Growth Drivers Source: China National Bureau of Statistics 20010 Wealth Patterns Emerging … Highest in Coastal Regions
  36. 36. 36 China’s Economic Future … Bust or Boom?
  37. 37. 37 Fact Today: Healthy Balance Sheets – Banks, Companies, Households Insulation of Financial System … USD2 trillion Foreign Reserves … Low Inflation  China’s Financial System Healthy, Benefits from Insulation, Abundant Liquidity  China banks cleaned up in 1990s: Non-performing loans in 1997 averaged 40 – 50%; only 6% in 2007.  China’s financial system relatively insulated; imposed capital controls; modest exposure to sub-prime assets.  Forex Reserves Quadrupled in only 4 Years (‘03 – ‘07): US$ 2 trillion  The Central Bank has accumulated over USD2 trillion in foreign reserves.  The accumulation of large external surpluses means financial system enjoys abundant liquidity.  Clean Balance Sheets for Corporates and Households  State Owned Enterprise net profits as share of GDP has grown from (-1%) in 1997 to (+4.3%) in 2007.  Record corporate profit growth over past 5 years (industrial profits rose 38% per annum); liability ratios declined.  Urban incomes have nearly doubled in past 10 years.  CPI Inflation Low, has Fallen to 4%  Food price increases fading out, raw commodity prices continue to drop, as well as price of oil. Source: Deutsche Bank; Standard Chartered; UBS; IMF; Other
  38. 38. 38Source: The World Bank The FUTURE (2020): World Bank Projects China as #1 Economy in World 2009 GDP* 6,4 trillions de $ 3,6 trillions de $ $4.1 tr $3.8 tr$9.1 tr $14.2 tr US China India $14.1 tr JapanJapan EU-27 France UK Germany 2020 GDP* $30.0 tr$13.4 tr$28.8 tr $6.8 tr$29.6 tr US India China Japan EU-27 France UK Germany GDP* PPP-adjusted GDP* PPP-adjusted
  39. 39. 39 Fact Today: World’s Fastest Growing Major Economy GDP Growth (% per year) Source: The World Bank Growth 2 to 5-times Faster than Major Western Economies for Past 20 Yrs -6 -4 -2 0 2 4 6 8 10 12 14 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 China India US Japan
  40. 40. 40 Fact Today: Stimulus Plan Well Structured, Strong Ability to Implement Monetary Stimulus $586 billion $700 billion GDP (PPP) $7.8 trillion $14.3 trillion GDP $4.2 trillion $14.3 trillion Stimulus/GDP 14% 5.10% National Debt/GDP 20% 76% Trade Surplus (Deficit)/GDP 10% -4% Past Stimulus/GDP 47% (‘90’s) 3% (’81-’91) China Stimulus DistributionEconomic Stimulus - Comparative Source: National Development and Reform Commission China Stimulus Roughly Same Size as US … USD586 billion … Authority to Deploy China has USD2 trillion in Foreign Reserves 4% 25% 9% 5% 9% 38% 10% Housing RuralDevelopm ent Infrastructure Healthcare,Education Environm ent Innovation & IndustrialRestructuri Disaster Reconstruction 4% 25% 9% 5% 9% 38% 10% Housing RuralDevelopm ent Infrastructure Healthcare,Education Environm ent Innovation & IndustrialRestructuring Disaster Reconstruction 4% 10% 38% 9% 5% 9% 25% Housing Infrastructure Rural Development Healthcare, education E nvironment Innovation & Industrial Restruct Disaster Reconstruction
  41. 41. 41 Contributions to GDP (percent of GDP PPP) Fact Today: Focus on Consumption as % of GDP Shifting to Service/Consumption Economy … Major Growth Potential Source: IMF, DESTATIS CIA World Fact book $7.8 tr $2.8 tr $14.3 tr 10% 37% 39% 6% 56% 19% 18% -4% 71% 19% 14% Government Consumption Investment Private Consumption Net Trade GDP (PPP) China Germany United States 14%
  42. 42. 42 Fact Today: Exports Dependency Less than Neighbors Reports on China’s Exports & Impact on Economy -- Often Significantly Overstate Dependence on Exports  Degree of China’s Export-Dependency and in Driving GDP Less than that Often Reported  The degree to which a slow-down in trade might impact GDP seems to result in frequent overstatements of China’s export dependency.  China’s dependency on exports is much less than its neighbors, Singapore and Korea, and roughly equal to that of Japan.  The overstatements of China’s export dependency might be rooted in a focus on China’s gross exports (approximately 40% of GDP); which is actually not used in calculating the export-portion of GDP.  The export-portion of GDP is actually calculated based on the sum of value-add exports (only approximately 18% of GDP)  Implications of Slow-Down in Exports  Slow down in trade does result in a decrease in GDP relative to previous years.  In last four years a very steep jump in China’s trade position added a bonus of as much as 3% on top of China’s GDP growth, resulting in the extremely high GDP growth figures of 10 to 12%  In absence of that steep jump in China’s trade position, the 3% bonus on previous GDP growth would disappear.  Estimates on job losses from the economic slowdown in trade sector could result in a loss of anywhere between 5 and 10 MM people – mostly migrant workers from the rural countryside – and thus has little impact on internal urban economy.  Urbanization impact. Moderate impacted on urbanization due to return of migrant workers from the trade sector and related construction sector. Source: Deutsche Bank; Standard Chartered; UBS; IMF; other
  43. 43. 43 SUMMARY: What are Developers looking for through Global Crisis? Economic Robustness, Growth … Strong Institutions … Strong Stimulus … Strong Fundamentals  Economic Size and Growth Potential  Strong Institutional, Banking, Financial Stability, Access to Capital  Stimulus – Impact on Construction, Infrastructure, Urban/Rural Development  Strong Underlying Fundamentals and Drivers across Classes  Office – Corporate Investment/Expansion – Production, Distribution, R&D  Hotel – Corporate, MICE, Leisure (foreign/domestic)  Retail – Urban/Rural Income Growth, Expenditures
  44. 44. 44Copyright © 2013 Exolus. All rights reserved.. For a Comparative Perspective with the other BRIC Countries Please Refer to the Following Research Reports Found on Slideshare @ http://www.slideshare.net/Exolus/china-2010-2020-v58slideshare http://www.slideshare.net/Exolus/india-2020-what-india-will-look-like-in-the-future http://www.slideshare.net/Exolus/brazil-2020-what-will-brazil-look-like-in-the-future http://www.slideshare.net/Exolus/russia-2020-what-will-russia-look-like-in-the-future Download Reports @ www.exolus.com/en/knowledge/research.html India 2020 Brazil 2020 Russia 2020China 2020
  45. 45. 45Copyright © 2013 Exolus. All rights reserved.. Global Expansion Strategy & Cross-Border Investment Execution (Greenfield, M&A, Joint Ventures, Outsourcing) About Exolus: Exolus is a hybrid management consulting and transaction advisory firm. We work with management teams in the development of their global expansion strategies, across the range of investment formats: Greenfield, M&A, Joint Ventures and Outsourcing. As well, we deploy against global strategies by providing program management across all phases of cross-border investment projects, from candidate searches and evaluation, through investment structuring and negotiations. The founders of Exolus have spent the past two decades in the global service space and have direct experience operating in nearly all of the major investment destinations in the world (40+ countries). The team has served clients of all sizes, both public and private, on projects that ranged in investment size from USD10 million to greater than USD1 billion. We have served clients across all of the following industry segments: Life Sciences, Manufacturing, Automotive, Technology, Retail, Consumer Business, Real Estate, Public Sector. Follow Exolus at: www.exolus.com Need Further Information: info@exolus.com Want Copies of our Reports: www.exolus.com/en/knowledge/research.html
  46. 46. 46Copyright © 2013 Exolus. All rights reserved.. Disclaimer In writing we benefit from standing on the shoulders of others and, in the process, we strive to make our own contributions to the market of ideas. As well, we are always tremendously grateful for the many, often selfless, contributions that are availed in the process. The opinions represented herein were prepared for information purposes only, at the time of publication. The information represented herein is believed to be reliable, at the time of publication, and was obtained by various public sources also believed to be reliable. The opinions were considered to be accurate at the point of creation, and further, any views, forecasts, or estimates contained herein may be subject to change at anytime without notice. The opinions expressed or implied herein may not be the opinions of the author, also Exolus, or any associated affiliates. This report and the information contained herein collectively, is not offered as, and should not be regarded as, used or relied upon as advice on any matter. It shall not constitute or be construed as a recommendation or solicitation on behalf of the author, and no legal commitment or obligation shall arise by reason of this document. Thus, the reader shall make an independent assessment of opinion’s stated herein that shall not be considered a substitute for obtaining advise from the readers’ advisors. The author shall not accept responsibility, express or implied, with regards to the accuracy and completeness of the information herein, and the author shall not be liable whatsoever and howsoever arising in connection to this publication. The author shall not accept, and hereby disclaim, all responsibility and liability to all persons, entities, or organizations for all consequences arising out of any use or reliance on the whole or any part of this publication. This publication should not be reproduced or distributed without the author’s consent and is not intended for distribution in any jurisdiction in which this would be prohibited.
  47. 47. 47Copyright © 2010 Exolus. All rights reserved..Copyright © 2010 Exolus. All rights reserved.

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