China and the World:                Trade, Innovation, and                 Its Role in the WTO       Dr. Stephen K. Kwan  ...
3
The World Trade Organization (WTO) is the only globalinternational organization dealing with the rules of tradebetween nat...
Trade in HistoryExchange between the Laplanders and Russians by Olaus Magnus, 1555                              Kwan 2012 ...
Silk Road – Trade between East and West                                                     ** Chris Lau, 2012            ...
Broad Areas of Trade:                 Goods                 Services                 Trade-related Aspects of Intellectual...
Different Types of Trade in Services                                                      Cloud                      Adapt...
Quick Facts about US Service Sector   World’s Large Labor Forces                                                        US...
China’s Service Sector         Kwan 2012       10
China  Innovation in Modern Services In its 11th Five-Year Plan, China had targeted an increase of the service sector’s o...
Service Sector in China        $419 billion                                                    6/23/2012          In 2011 ...
Service Sector in China                           WenJiabao                          PRC Premier         Kwan 2012        ...
Estimated China Per Capita National Income                     25000                     20000                            ...
Guangdong vs. China  China’s Internal Market for Services                Kwan 2012                15
What happened in the last few years?      Attempts at Purilateral AgreementsWTO Doha Round of TradeTalks with goals of    ...
Doha Talks AftermathWith plurilateral agreements derailed,nations are now engaged in more (inefficient)negotiations for• B...
Doha Talks AftermathG20 and APEC meeting in November 2008  agreed on a “standstill” policy:• revive Doha talks• no imposit...
Global Financial Crisis•Less imports, less exports• less consumption, particularly for services (less disposable income)• ...
Doha Talks might be out of reach               20
Potential Problems for US Trade in Services• Complacency – “We have a huge trade surplus…. We are doing fine…”• Other coun...
G-20 Ministers Meeting in Korea               22
Growth of Protectionist Measures                         Global Trade Alert:                     G20 members passed over 1...
Russia’s Accession to the WTO              24
August, 22nd, 2012Russia’s Accession to the WTO              25
26
27
World Trade in Services Imports vs. Exports           28
US Services Surplus with China                        US $ 3.7 Billion                        Trade surplus               ...
Problems of doing business in China        “2009 Joint Commission on Commerce and Trade (JCCT)        Input on Standards a...
Technical Barriers to Trade (TBT)Technical regulations and product standards may vary fromcountry to country. Having many ...
China maturing in the Standards game               Research         Completed               Directions        Service     ...
More Complaints against China              33
China – Complainant and Respondent               Kwan 2012             34
US – Complainant and Respondent             Kwan 2012            35
Service Sector Challenges          Kwan 2012         36
Innovation혁신創新          Innovation resides at the intersection            of invention and insight, leading to the创新      ...
Some Thoughts on Innovation“Creativity can be taught. Innovation can be learned.”                           David Blakeley...
Levels of Innovation                     Radical Innovations   Major Innovation: new service that customers did not    kn...
Indigenous Innovation in China自主创新              Kwan 2012           40
Innovation in China       Kwan 2012      41
Current Issues     Kwan 2012   42
Current Issues     Kwan 2012   43
?                Greater China                                    2012 – 2013? How can Service Science HelpChina develop i...
Conclusion•US cannot become complacent – real/potential trade barriers• Learn from (non-protectionist) best practices in o...
Upcoming SlideShare
Loading in …5
×

China and the World: Trade, Innovation and its role in the WTO

743 views

Published on

Published in: Business
  • Be the first to comment

  • Be the first to like this

China and the World: Trade, Innovation and its role in the WTO

  1. 1. China and the World: Trade, Innovation, and Its Role in the WTO Dr. Stephen K. Kwan 関嘉龄 博士 Professor, Service Science 服务科学Management Information Systems 管理信息系统科 教授College of Business Administration 商业管理学院San José State University, CA, USA 美国加州圣荷西州立大学 http://www.sjsu.edu/ssme Contact:stephen.kwan@sjsu.edu Prepared for UNVS 196 Provost’s Honors Seminar September, 2012
  2. 2. 3
  3. 3. The World Trade Organization (WTO) is the only globalinternational organization dealing with the rules of tradebetween nations. At its heart are the WTO agreements,negotiated and signed by the bulk of the world’s tradingnations and ratified in their parliaments. The goal is to helpproducers of goods and services, exporters, and importersconduct their business. 157members Kwan 2012 4
  4. 4. Trade in HistoryExchange between the Laplanders and Russians by Olaus Magnus, 1555 Kwan 2012 5
  5. 5. Silk Road – Trade between East and West ** Chris Lau, 2012 Less Complex – Need Less Rules Kwan 2012 6
  6. 6. Broad Areas of Trade: Goods Services Trade-related Aspects of Intellectual Property RightsRanging from architecture to voice-mail telecommunications and tospace transport, services are the largest and most dynamiccomponent of both developed and developing country economies.Important in their own right, they also serve as crucial inputs into theproduction of most goods. Their inclusion in the Uruguay Round oftrade negotiations led to the General Agreement on Trade inServices (GATS). Since January 2000, they have become thesubject of multilateral trade negotiations. Kwan 2012 7
  7. 7. Different Types of Trade in Services Cloud Adapted from WTO definitions Computing?Modes of TradeSome ExamplesCross Border Trade Software, Insurance, tele-diagnosis from country B into AConsumption Abroad A’s residents obtain education or hospital treatment in BCommercial Presence Bank, telecommunications firm, hospital from B set up subsidiary in AMovement of Natural Persons Engineers, doctors from B provide services in AThe World is now more complex in Politics and Commerce. Kwan 2010 8
  8. 8. Quick Facts about US Service Sector World’s Large Labor Forces US shift to service jobs A = Agriculture, G = Goods, S = Service 2010 2010 Nation Labor A G S 40yr Service (A) Agriculture: % % % % Growth Value from harvesting nature China 25.7 49 22 29 142% India 14.4 60 17 23 35% (G) Goods: U.S. 5.1 1 23 76 23% Value from making products Indonesia 3.5 45 16 39 34% (S) Service: Brazil 3.0 20 14 66 61% Value from enhancing the capabilities of people and their ability Russia 2.4 10 21 69 64% to interconnect and co-create value Japan 2.2 5 28 67 45% Nigeria 1.6 70 10 20 19% Bangladesh 2.1 63 11 26 37% Germany 1.4 3 33 64 42% Employment Change CIA Handbook, International Labor OrganizationNote: Pakistan, Vietnam, and Mexico now larger LF than Germany Numeric change in wage-salary employment by industry sector, projected 2004-14 The largest labor force migration in human (Thousands) history is underway, driven by global communications, business and technology Professional and business service4566 growth, urbanization and Healthcare and social assistance4303 regional variations in labor and infrastructure costs and capabilities. Kwan 2012
  9. 9. China’s Service Sector Kwan 2012 10
  10. 10. China  Innovation in Modern Services In its 11th Five-Year Plan, China had targeted an increase of the service sector’s output to 43.3% of GDP by 2010, up from 40.3% in 2005 In its 12th Five-Year Plan, China had targeted an increase of the service sector’s value-added output to 47.3% of GDP by 2015, up 4%. Member since December 2001 Kwan 2012 11
  11. 11. Service Sector in China $419 billion 6/23/2012 In 2011 4th largest in world ≈ 43% GDP + 11%“Products will need moresupport from service providerssuch as marketing, brandingand packaging, so as to fetch abetter price.An underdeveloped servicesector will hinder the technicalupgrading of the manufacturingsector.”Qiu Hong, assistant commerce minister Kwan 2012 12
  12. 12. Service Sector in China WenJiabao PRC Premier Kwan 2012 13
  13. 13. Estimated China Per Capita National Income 25000 20000 20000Maslow 15000 10000 8500 5000 4400 0 350 1000 1990 2000 2010 2020 2030 Disposable Income & Desire for Services Needs vs. Wants Kwan 2012 14
  14. 14. Guangdong vs. China China’s Internal Market for Services Kwan 2012 15
  15. 15. What happened in the last few years? Attempts at Purilateral AgreementsWTO Doha Round of TradeTalks with goals of Reduce Trade Barriers Open Market Access….“..fundamental disagreements between the developed nations and the major developing countries…” BIC nations… R S 16
  16. 16. Doha Talks AftermathWith plurilateral agreements derailed,nations are now engaged in more (inefficient)negotiations for• Bilateral agreements• Regional agreements – e.g., NAFTA – to be renewed soon• Sector/Sector Agreements – US has service sectoragreements with Japan and EU• Free Trade Agreements (FTA) – US has FTA (orpending) with Australia, AndeanCountries, Bahrain, CAFTA, Chile, Colombia, FTAA, Korea, Israel, Jordan, Malaysia, Morocco, Oman, Panama, Peru, Singapore. 17
  17. 17. Doha Talks AftermathG20 and APEC meeting in November 2008 agreed on a “standstill” policy:• revive Doha talks• no imposition of new trade barriers• 12 months Global Financial Ineffective Crisis 18
  18. 18. Global Financial Crisis•Less imports, less exports• less consumption, particularly for services (less disposable income)• stimulus of domestic markets (more protectionist measures) “The US Service Sector contracted for the 11th straight month, …” “Global trade is expected to shrink 10% in 2009.” 19
  19. 19. Doha Talks might be out of reach 20
  20. 20. Potential Problems for US Trade in Services• Complacency – “We have a huge trade surplus…. We are doing fine…”• Other countries that are “top-down” will catch up or exceed US in theirservice sector abilities• No Intellectual Property protection on Service Concepts – no patents• Very little International Service Standards – potential for national anddomestic standards development• Continued weak economy – shrinking of global trade• Loss of confidence in US services – e.g., financial services 21
  21. 21. G-20 Ministers Meeting in Korea 22
  22. 22. Growth of Protectionist Measures Global Trade Alert: G20 members passed over 100 “blatantly discriminatory measures”. WTO reported 53 new measures this year.Everyone sinned a little, or a lot… 23
  23. 23. Russia’s Accession to the WTO 24
  24. 24. August, 22nd, 2012Russia’s Accession to the WTO 25
  25. 25. 26
  26. 26. 27
  27. 27. World Trade in Services Imports vs. Exports 28
  28. 28. US Services Surplus with China US $ 3.7 Billion Trade surplus with China in 2007 29
  29. 29. Problems of doing business in China “2009 Joint Commission on Commerce and Trade (JCCT) Input on Standards and Conformance Issues in China” cited the following concerns:•Transparency – national “GB” standards are easily accessible but not sowith regulatory agencies, local/provincial, professional, decrees, etc.• Uneven Enforcement – inadequate enforcement for localcompanies, tedious procedures put US companies at a competitivedisadvantage, etc.• Conformity Assessment Policies – only by designated Chinesebodies, does not recognize external certifications, etc.• Revisions to “China Compulsory Certification” Program• Foreign Participation on Chinese Technical Committees Will what happened to Manufactured Goods going to happen with Services? 30
  30. 30. Technical Barriers to Trade (TBT)Technical regulations and product standards may vary fromcountry to country. Having many different regulations andstandards makes life difficult for producers and exporters.If regulations are set arbitrarily, they could be used as anexcuse for protectionism. The Agreement on TechnicalBarriers to Trade tries to ensure thatregulations, standards, testing and certification proceduresdo not create unnecessary obstacles. Conformity Assessment Problems 31
  31. 31. China maturing in the Standards game Research Completed Directions Service Standards 32
  32. 32. More Complaints against China 33
  33. 33. China – Complainant and Respondent Kwan 2012 34
  34. 34. US – Complainant and Respondent Kwan 2012 35
  35. 35. Service Sector Challenges Kwan 2012 36
  36. 36. Innovation혁신創新 Innovation resides at the intersection of invention and insight, leading to the创新 creation of social and economic value.革新 National Innovation Initiative CREATING Innovation can happenSOMETHING anywhere on the Value Chain! (business NEW model, organization, environment, proce ss, technology, etc.) Kwan 2012 37
  37. 37. Some Thoughts on Innovation“Creativity can be taught. Innovation can be learned.” David Blakeley, Director“Incremental Innovation vs. Radical Innovation” Judy Estrin “Closing the Innovation Gap”“Open innovation argues that the futurebelongs to those who do the best job ofintegrating the best of their internal ideasand capabilities with the best external ideasand capabilities. Designing andorchestrating a global network of capabilitiesis the basis for a brighter future for us all.”Henry Chesbrough Kwan 2012 38
  38. 38. Levels of Innovation Radical Innovations Major Innovation: new service that customers did not know they needed. Start-up Business: new service for underserved market. New Services for the Market Presently Served: new services to customers of an organization. Incremental Innovations Service Line Extensions: augmentation of existing service line. Service Improvements: changes in service delivery process. Style Changes: modest visible changes in appearances. Kwan 2012 39
  39. 39. Indigenous Innovation in China自主创新 Kwan 2012 40
  40. 40. Innovation in China Kwan 2012 41
  41. 41. Current Issues Kwan 2012 42
  42. 42. Current Issues Kwan 2012 43
  43. 43. ? Greater China 2012 – 2013? How can Service Science HelpChina develop its Service Industry? Kwan 2012 44
  44. 44. Conclusion•US cannot become complacent – real/potential trade barriers• Learn from (non-protectionist) best practices in other countries• Sustainability of Competitive Advantage requires Innovation Much more details Available in this new book J. Bradford Jensen (2011)

×