KTG w/ John Doggett 4.13.10- "Global Trade Outlook"

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We are in the eye of a hurricane in global trade, unlike anything anyone has seen in recent history. Andy Grove calls this time a strategic inflection point, “a time in the life of a business [or country] when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end,” (Grove, Only the Paranoid Survive). Our rules of thumb and assumptions are no longer valid, and countries we hadn’t considered to be competitors in the past are emerging ahead of the US. Listen and learn as Professor Doggett examines recent global trends and zeroes in on the future global economy as impacted by recent Chinese economic growth.

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  • 06/07/10
  • Currencies tend to rise as higher productivity leads economies to converge on Purchasing Power Parity (PPP) exchange rates. PPP exchange rates are especially useful when official exchange rates are artificially manipulated by governments. For example, if the value of the Mexican peso falls by half compared to the U.S. dollar , the Mexican Gross Domestic Product measured in dollars will also halve. However, this exchange rate results from international trade and financial markets. It does not necessarily mean that Mexicans are poorer by a half; if incomes and prices measured in pesos stay the same, they will be no worse off assuming that imported goods are not essential to the quality of life of individuals Purchasing power parity ( PPP ) is a theory of long-term equilibrium exchange rates based on relative price levels of two countries. looks at the prices of a Big Mac burger in McDonald's restaurants in different countries. If a Big Mac costs US$ 4 in the United States and GBP £3 in the United Kingdom, the PPP exchange rate would be £3 for $4.
  • China is expected to pass Japan and have the second largest GDP in 2010 China is expected to surpass the US GDP in 2027 Side note, India is projected to pass the US in 2050
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  • 06/07/10
  • http://www.ft.com, search for “top 20 financial institutions” and log in
  • Annual percentage growth rate of GDP at market prices based on constant local currency. Aggregates are based on constant 2000 U.S. dollars. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Source: World Bank national accounts data, and OECD National Accounts data files.
  • Exports of goods and services represent the value of all goods and other market services provided to the rest of the world. They include the value of merchandise, freight, insurance, transport, travel, royalties, license fees, and other services, such as communication, construction, financial, information, business, personal, and government services. They exclude labor and property income (formerly called factor services) as well as transfer payments. Source: World Bank national accounts data, and OECD National Accounts data files.
  • Imports of goods and services represent the value of all goods and other market services received from the rest of the world. They include the value of merchandise, freight, insurance, transport, travel, royalties, license fees, and other services, such as communication, construction, financial, information, business, personal, and government services. They exclude labor and property income (formerly called factor services) as well as transfer payments. Source: World Bank national accounts data, and OECD National Accounts data files.
  • China's exports last month grew 24.3% from a year earlier China's trade surplus in the first quarter totaled $14.49 billion, but shrinking 76.7% from the same time a year earlier
  • China's imports last month grew rose 66% from a year earlier China's trade surplus in the first quarter totaled $14.49 billion, but shrinking 76.7% from the same time a year earlier China ran its first monthly trade deficit in six years in March Looks to be short lived
  • Blue – what the US exported (to China?) Red – what we imported from China So yellow = the trade deficit
  • China now accounts for close to 40% of manufacturing exports from developing countries Multinational enterprises (MNEs) account for almost 60% of merchandise exports and imports.
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  • KTG w/ John Doggett 4.13.10- "Global Trade Outlook"

    1. 1. McCombs Knowledge To Go April 13, 2010
    2. 2. Global Trade Outlook by Professor John Doggett
    3. 3. We Are In The Eye of a S.I.P.
    4. 4. S.I.P.’s Are Scary
    5. 5. Birth of the BRICs <ul><li>In 2001, as the Internet Bubble was collapsing and the stock market was imploding, Goldman Sachs predicted that four countries would dominate global economic activity in the 21 st Century. </li></ul><ul><li>B razil </li></ul><ul><li>R ussia </li></ul><ul><li>I ndia </li></ul><ul><li>C hina </li></ul>
    6. 6. The Axis of the Future
    7. 7. Are These Guys Crazy? <ul><li>6,100% Annual Inflation (1994) </li></ul><ul><li>Shock Therapy and the Oligarchs (1990s) </li></ul><ul><li>Two Weeks of Foreign Reserves (1991) </li></ul><ul><li>The Cultural Revolution (1966-1976) </li></ul>
    8. 8. Largest Countries By Population <ul><li>C hina 1,338,612,968 (slightly smaller than the US) </li></ul><ul><li>I ndia 1,156,897,766 (slightly more than one-third the size of the US) </li></ul><ul><li>United States 307,212,123 (6.25% of the earth’s land mass = 424,378,888) </li></ul><ul><li>Indonesia 240,271,522 (slightly less than three times the size of Texas) </li></ul><ul><li>B razil 198,739,269 (slightly smaller than the US) </li></ul><ul><li>Pakistan 174,578,558 ( slightly less than twice the size of California ) </li></ul><ul><li>Bangladesh 156,050,883 (slightly smaller than Iowa) </li></ul><ul><li>Nigeria 149,229,090 ( slightly more than twice the size of California ) </li></ul><ul><li>R ussia 140,041,247 ( approximately 1.8 times the size of the US ) </li></ul><ul><li>Japan 127,078,679 ( slightly smaller than California) </li></ul><ul><li>Mexico 111,211,789 (slightly less than three times the size of Texas) </li></ul><ul><li>Philippines 97,976,603 (slightly larger than Arizona) </li></ul><ul><li>Vietnam 88,576,758 (slightly larger than New Mexico) </li></ul>CIA World Factbook - April, 2010
    9. 9. National GDP in 2009 (purchasing power parity) <ul><li>Country GDP 2009 Growth % </li></ul><ul><li>United States $ 14,260,000,000,000 - 2.4% </li></ul><ul><li>C hina $ 8,789,000,000,000 8.7% </li></ul><ul><li>Japan $ 4,137,000,000,000 - 5.3% </li></ul><ul><li>I ndia $ 3,560,000,000,000 6.5% </li></ul><ul><li>Germany $ 2,811,000,000,000 - 5.00% </li></ul><ul><li>United Kingdom $ 2,149,000,000,000 - 4.3% </li></ul><ul><li>R ussia $ 2,116,000,000,000 - 7.9% </li></ul><ul><li>France $ 2,110,000,000,000 - 2.2% </li></ul><ul><li>B razil $ 2,025,000,000,000 0.2% </li></ul><ul><li>Italy $ 1,760,000,000,000 - 4.8% </li></ul><ul><li>Mexico $ 1,482,000,000,000 - 7.1% </li></ul><ul><li>Spain $ 1,368,000,000,000 - 3.6% </li></ul><ul><li>S outh Korea $ 1,356,000,000,000 0.2% </li></ul><ul><li>Canada $ 1,285,000,000,000 - 2.5% </li></ul>CIA World Factbook – April, 2010
    10. 10. Elephants Emerging from the Mist <ul><li>Total World Population = 6,790,062,216 </li></ul><ul><li>BRIC Population = 2,834,291,250 ( 41.7% ) </li></ul><ul><li>Total World Land Area = 174,814,000 sq. km. (- oceans) </li></ul><ul><li>BRIC Land Area = 38,471,715 ( 22%) </li></ul><ul><li>Total World Gross Domestic Product = $58.07 Trillion (Official Exchange Rate) </li></ul><ul><li>Total World Gross Domestic Product = $70.29 Trillion (Purchasing Power Parity) (p.p.p.) </li></ul><ul><li>BRIC Gross Domestic Product (p.p.p.) = $ 16.49 Trillion ( 23.5%) </li></ul>Source: CIA World Factbook – April 2010
    11. 11. Today, The BRICs Have Arrived <ul><li>BRICs Economies collectively are now 23.5 % of global GDP , which is $2.2 trillion larger than America’s GDP. </li></ul><ul><li>China is the second largest economy in the world. Today! </li></ul><ul><li>India is the fourth largest economy in the world. Today! </li></ul><ul><li>The Trade Implications are Obvious </li></ul>CIA World FactBook, Goldman Sachs and Professor Doggett Analysis
    12. 12. China is On the Move <ul><li>Goldman Sachs says that China can become the largest economy in the world by 2035 by growing by 5% a year. </li></ul><ul><li>What does the world look like when China’s economy is 9x bigger than it is today? </li></ul><ul><li>What opportunities does this represent for American entrepreneurs? </li></ul>
    13. 13. India is Rising <ul><li>Goldman Sachs says that India can challenge the US for #2 by 2040 by growing by 6% a year. </li></ul><ul><li>What does the world look like when the Indian economy is 12x bigger than it is today? </li></ul><ul><li>What opportunities does this represent for American entrepreneurs? </li></ul>
    14. 14. Here Comes The BRIC Middle Class <ul><li>Goldman Sachs predicts that the BRIC Middle Class could grow 4x in the next decade </li></ul><ul><li>Never before have we seen the addition of 750 million new members of the middle class in one decade. </li></ul><ul><li>Goldman says that the BRIC Middle Class could grow from 250 million in 2005 to 3.5 billion by 2050* </li></ul>Jim O'Neill, Managing Director & Head of Global Economic Research, Goldman Sachs, 5/06
    15. 15. Future GDP (PPP) Estimates Source IMF (Oct 2009)
    16. 16. GDP Predictions
    17. 17. A Swarm of Inflection Points Dr. P. Konana, McCombs Business School, University of Texas at Austin 1964-70 1989-94 2000-2005
    18. 18. How Far The BRICs Have Come <ul><li>In 2006 the G7 (US, Japan, Germany, France, Britain, Italy & Canada) held $1,253,900,000,000 in FOREX </li></ul><ul><li>By the end of 2007 China’s FOREX reserves had passed $1,500,000,000,000 </li></ul><ul><li>China spent $65 billion for the Olympics. 5x the cost of the Athens Olympics. </li></ul><ul><li>China’s China Investment Corporation is a $300 billion State VC Fund </li></ul><ul><li>Today, China has $2,400,000,000,000 in FOREX reserves. </li></ul>Professor P. Konana, McCombs School of Business, University of Texas at Austin & Goldman Sachs
    19. 19. Go Where the Market Is <ul><li>756 million Mobile Phone Users in China (January, 2010) </li></ul><ul><ul><li>Only 56.3% of China’s population </li></ul></ul><ul><ul><li>550 million Mobile Phone Users in India </li></ul></ul><ul><ul><li>19,000,000 Indians signed up for cell phone service in January, 2010 . . . for the first time ever </li></ul></ul><ul><ul><li>612,903 new subscribers every day of the month </li></ul></ul><ul><li>All of Motorola’s mobile phone ads are developed and designed in Beijing </li></ul><ul><ul><li>They outsource to the US and Europe for “localization” </li></ul></ul>
    20. 23. Exports in 2009 (Trillion US $) <ul><li>C hina $1.194 </li></ul><ul><li>Germany $1.121 </li></ul><ul><li>U.S.A. $0.995 </li></ul><ul><li>Japan $0.516 </li></ul><ul><li>France $0.457 </li></ul><ul><li>Netherlands $0.398 </li></ul><ul><li>Italy $0.369 </li></ul><ul><li>South Korea $0.355 </li></ul><ul><li>United Kingdom $0.351 </li></ul><ul><li>H ong Kong $0.317 </li></ul>
    21. 24. Exports, continued <ul><li>13. R ussia $0.296 </li></ul><ul><li>14. S ingapore $0.269 </li></ul><ul><li>15. Mexico $0.230 </li></ul><ul><li>17. T aiwan $0.204 </li></ul><ul><li>21. I ndia $0.165 </li></ul><ul><li>23. B razil $0.159 </li></ul><ul><li>24. M alaysia $0.156 </li></ul><ul><li>25. T hailand $0.151 </li></ul><ul><li>30. I ndonesia $0.116 </li></ul><ul><li>Greater China $2.270 </li></ul>
    22. 25. Export Partners (2008) <ul><li>China </li></ul><ul><ul><li>USA 17.7% </li></ul></ul><ul><ul><li>Hong Kong 13.3% </li></ul></ul><ul><ul><li>Japan 8.1% </li></ul></ul><ul><ul><li>South Korea 5.2% </li></ul></ul><ul><ul><li>Germany 4.1% </li></ul></ul><ul><li>India </li></ul><ul><ul><li>U.A.E. 12.3% </li></ul></ul><ul><ul><li>USA 11.7% </li></ul></ul><ul><ul><li>China 5.4% </li></ul></ul><ul><ul><li>Singapore 4.5% </li></ul></ul><ul><li>United States </li></ul><ul><ul><li>Canada 20.1% </li></ul></ul><ul><ul><li>Mexico 11.7% </li></ul></ul><ul><ul><li>China 5.5% </li></ul></ul><ul><ul><li>Japan 5.1% </li></ul></ul><ul><ul><li>Germany 4.2% </li></ul></ul><ul><ul><li>United Kingdom 4.1% </li></ul></ul><ul><li>Brazil </li></ul><ul><ul><li>USA 13.7% </li></ul></ul><ul><ul><li>Argentina 8.7% </li></ul></ul><ul><ul><li>China 8.1% </li></ul></ul><ul><ul><li>Netherlands 5.2% </li></ul></ul><ul><ul><li>Germany 4.4% </li></ul></ul>
    23. 26. Imports in 2009 (Trillions US $) <ul><li>USA $1.445 </li></ul><ul><li>Germany $0.931 </li></ul><ul><li>C hina $0.922 </li></ul><ul><li>France $0.532 </li></ul><ul><li>Japan $0.491 </li></ul><ul><li>United Kingdom $0.474 </li></ul><ul><li>Netherlands $0.3589 </li></ul><ul><li>Italy $0.3587 </li></ul><ul><li>H ong Kong $0.345 </li></ul><ul><li>Belgium $0.315 </li></ul>
    24. 27. Imports, continues <ul><li>14. I ndia $0.254 </li></ul><ul><li>15. S ingapore $0.245 </li></ul><ul><li>16. Mexico $0.234 </li></ul><ul><li>17. R ussia $0.197 </li></ul><ul><li>19. T aiwan $0.175 </li></ul><ul><li>25. B razil $0.136 </li></ul><ul><li>26. T hailand $0.132 </li></ul><ul><li>28. M alaysia $0.120 </li></ul><ul><li>31. I ndonesia $0.087 </li></ul><ul><li>Greater China $2.407 </li></ul>
    25. 28. Import Partners (2008) <ul><li>China </li></ul><ul><ul><li>Japan 13.3% </li></ul></ul><ul><ul><li>South Korea 9.9% </li></ul></ul><ul><ul><li>Taiwan 9.2% </li></ul></ul><ul><ul><li>USA 7.2% </li></ul></ul><ul><ul><li>Germany 4.9% </li></ul></ul><ul><li>India </li></ul><ul><ul><li>China 10.8% </li></ul></ul><ul><ul><li>Saudi Arabia 6.9% </li></ul></ul><ul><ul><li>USA 6.7% </li></ul></ul><ul><ul><li>U.A.E. 6.7% </li></ul></ul><ul><ul><li>Iran 4.2% </li></ul></ul><ul><li>United States </li></ul><ul><ul><li>China 16.4% </li></ul></ul><ul><ul><li>Canada 15.7% </li></ul></ul><ul><ul><li>Mexico 10.1% </li></ul></ul><ul><ul><li>Japan 6.6% </li></ul></ul><ul><ul><li>Germany 4.6% </li></ul></ul><ul><li>Brazil </li></ul><ul><ul><li>USA 14.9% </li></ul></ul><ul><ul><li>China 11.6% </li></ul></ul><ul><ul><li>Argentina 7.9% </li></ul></ul><ul><ul><li>Germany 7.0% </li></ul></ul>
    26. 29. LET’S FOCUS ON CHINA <ul><li>Now </li></ul>
    27. 30. Welcome to the New China copyright - John N. Doggett, 2008
    28. 31. Growth at Warp Speed
    29. 32. The People’s Republic of Communist China?
    30. 33. Shenzhen in 1979 www.lenbracken.com/images/china31
    31. 34. 30,000 people lived here in 1983 Source: http://en.wikipedia.org/wiki/Image:57440.jpg
    32. 35. China’s Exploding Middle Class
    33. 36. Chinese Banks and The World
    34. 37. GDP Growth Rate
    35. 38. Exports as percent of GDP
    36. 39. Imports as percent of GDP
    37. 40. GDP vs. Exports (% of GDP) Source: World Bank World Development Indicators
    38. 41. GDP vs. Imports (% of GDP) Source: World Bank World Development Indicators
    39. 42. US Trade (Im) Balance with China http://www.census.gov/foreign-trade/balance/c5700.html
    40. 43. Who Owns Our Debt? (Billion US$) <ul><li>May 2008 </li></ul><ul><ul><li>C hina = $506.8 </li></ul></ul><ul><ul><li>Japan= $575.3 </li></ul></ul><ul><ul><li>Caribbean Banking Centers = $104.5 </li></ul></ul><ul><ul><li>Oil Exporters = $164.2 </li></ul></ul><ul><ul><li>UK = $271.2 </li></ul></ul><ul><ul><li>B razil = $151.4 </li></ul></ul><ul><ul><li>R ussia = $63.7 </li></ul></ul><ul><ul><li>Luxembourg = $75.2 </li></ul></ul><ul><ul><li>H ong Kong = $61.4 </li></ul></ul><ul><ul><li>T aiwan = $38.9 </li></ul></ul><ul><li>January 2010 </li></ul><ul><ul><li>C hina = $889.0 </li></ul></ul><ul><ul><li>Japan = $765.4 </li></ul></ul><ul><ul><li>Oil Exporters = $218.4 </li></ul></ul><ul><ul><li>UK = $206.0 </li></ul></ul><ul><ul><li>B razil = $169.1 </li></ul></ul><ul><ul><li>H ong Kong = $146.6 </li></ul></ul><ul><ul><li>Caribbean Banking Centers = $143.5 </li></ul></ul><ul><ul><li>R ussia = $124.2 </li></ul></ul><ul><ul><li>T aiwan = $119.6 </li></ul></ul><ul><ul><li>Switzerland = $84.4 </li></ul></ul><ul><li>http://www.treas.gov/tic/mfh.txt </li></ul>
    41. 44. Who is Our Banker? <ul><li>In May, 2008, we owed China, Inc. $607.1 billion. </li></ul><ul><li>By January, 2010, this number had grown to $1.16 trillion </li></ul><ul><li>We borrowed an additional $552.9 billion in 1 ½ years. </li></ul><ul><ul><li>This is a 91.07% increase in their “line of credit” to US </li></ul></ul>
    42. 45. What Are They Buying Now? <ul><li>Majority Share of GM China & GM India </li></ul><ul><li>Hummer from GM (Not anymore) </li></ul><ul><li>Volvo from Ford </li></ul><ul><li>15% of the Cleveland Cavaliers </li></ul><ul><li>20% of Fisher & Pavkel (New Zealand) </li></ul><ul><li>Oz Minerals (Australia) for $1.4 billion </li></ul><ul><li>Addax Petroleum (Swiss oil company) for $7 billion </li></ul><ul><ul><li>Access to Kurdish & Nigerian oil fields </li></ul></ul><ul><li>9.9% of Morgan Stanley & Citibank </li></ul>
    43. 46. China’s Top Trade Partners ( 2009 US $ Billions ) Source: PRC General Administration of Customs, China's Customs Statistics Rank Country Volume % change over 2008 1 United States 298.3 -10.6 2 Japan 228.9 -14.2 3 Hong Kong 174.9 -14.1 4 South Korea 156.2 -16.0 5 Taiwan 106.2 -17.8 6 Germany 105.7 -8.1 7 Australia 60.1 0.7 8 Malaysia 52.0 -3.0 9 Singapore 47.9 -8.8 10 India 43.4 -16.3
    44. 47. China’s #1 Trading Partners <ul><ul><li>Australia 15.4% </li></ul></ul><ul><ul><li>Bangladesh 15.8% </li></ul></ul><ul><ul><li>Benin 36.1% </li></ul></ul><ul><ul><li>Burma 31.3% </li></ul></ul><ul><ul><li>Equatorial </li></ul></ul><ul><ul><li>Guinea 18.2% </li></ul></ul><ul><ul><li>Ethiopia 16.3% </li></ul></ul><ul><ul><li>Gambia 21.6% </li></ul></ul><ul><ul><li>Ghana 16.0% </li></ul></ul><ul><ul><li>Guinea 15.4% </li></ul></ul><ul><ul><li>Hong Kong 46.6% </li></ul></ul><ul><ul><li>Japan 18.8% </li></ul></ul><ul><ul><li>North Korea 57.0% </li></ul></ul><ul><ul><li>South Korea 17.7% </li></ul></ul><ul><ul><li>Lesotho 26.3% </li></ul></ul><ul><ul><li>Macau 31.1% </li></ul></ul><ul><ul><li>Madagascar 20.1% </li></ul></ul><ul><ul><li>Malaysia 13.9% </li></ul></ul><ul><ul><li>Nigeria 16.1% </li></ul></ul><ul><ul><li>Pakistan 14.3% </li></ul></ul><ul><ul><li>Paraguay 30.0% </li></ul></ul><ul><ul><li>Sierra Leone 10.2% </li></ul></ul><ul><ul><li>Sudan 20.3% </li></ul></ul><ul><ul><li>Tanzania 13.7% </li></ul></ul><ul><ul><li>Togo 35.3% </li></ul></ul><ul><ul><li>U.A.E. 12.9% </li></ul></ul><ul><ul><li>USA 16.4% </li></ul></ul><ul><ul><li>Vietnam 22.4% </li></ul></ul>
    45. 48. China’s #2 Trading Partners <ul><ul><li>Angola 15.2% </li></ul></ul><ul><ul><li>Argentina 12.4% </li></ul></ul><ul><ul><li>Armenia 8.6% </li></ul></ul><ul><ul><li>B razil 11.1% </li></ul></ul><ul><ul><li>C anada 9.8% </li></ul></ul><ul><ul><li>C hile 11.9% </li></ul></ul><ul><ul><li>C olumbia 11.5% </li></ul></ul><ul><ul><li>Comoros 12.5% </li></ul></ul><ul><ul><li>Democratic </li></ul></ul><ul><ul><li>Rep of Congo 18.7% </li></ul></ul><ul><ul><li>Cuba 11.8% </li></ul></ul><ul><ul><li>E gypt 9.9% </li></ul></ul><ul><ul><li>Germany 8.2% </li></ul></ul><ul><ul><li>Indonesia 11.8% </li></ul></ul><ul><ul><li>Iran 12.6% </li></ul></ul><ul><ul><li>Jordan 10.4% </li></ul></ul><ul><ul><li>Kazakhstan 25.0% </li></ul></ul><ul><ul><li>Kyrgyzstan 17.9% </li></ul></ul><ul><ul><li>Laos 10.4% </li></ul></ul><ul><ul><li>Libya 9.3% </li></ul></ul><ul><ul><li>Mauritania 8.9% </li></ul></ul><ul><ul><li>Mexico 13.5% </li></ul></ul><ul><ul><li>Mongolia 27.8% </li></ul></ul><ul><ul><li>Netherlands 10.1% </li></ul></ul><ul><ul><li>New Zealand 13.2% </li></ul></ul><ul><ul><li>Niger 11.0% </li></ul></ul>
    46. 49. China’s #2 Trading Partners, cont. <ul><ul><li>P eru 10.5% </li></ul></ul><ul><ul><li>S audi Arabia 10.4% </li></ul></ul><ul><ul><li>South Africa 11.0% </li></ul></ul><ul><ul><li>Sri Lanka 12.4% </li></ul></ul><ul><ul><li>Syria 8.7% </li></ul></ul><ul><ul><li>Taiwan 14.0% </li></ul></ul><ul><ul><li>Tajikistan 11.9% </li></ul></ul><ul><ul><li>Thailand 12.7% </li></ul></ul><ul><ul><li>Turkmenistan 16.7% </li></ul></ul><ul><ul><li>Uzbekistan 15.3% </li></ul></ul><ul><ul><li>Yemen 11.8% </li></ul></ul><ul><ul><li>Zimbabwe 4.2% </li></ul></ul>
    47. 50. Income per Capita in 2050 (2006 US$) <ul><li>The “Rich Club” </li></ul><ul><li>United States $92,000 </li></ul><ul><li>Korea $90,000 </li></ul><ul><li>United Kingdom $80,000 </li></ul><ul><li>Russia $78,000 </li></ul><ul><li>Canada $75,000 </li></ul><ul><li>France $74,000 </li></ul><ul><li>Germany $68,000 </li></ul><ul><li>Japan $67,000 </li></ul><ul><li>Upper Middle Income Group </li></ul><ul><li>Mexico $62,000 </li></ul><ul><li>Italy $58,000 </li></ul><ul><li>Brazil $50,000 </li></ul><ul><li>China $48,000 </li></ul><ul><li>Turkey $45,000 </li></ul>Goldman Sachs BRIC Book (2007) - page 155
    48. 51. Income per Capita in 2050 (2006 US$) <ul><li>Lower Middle Income Group </li></ul><ul><li>Vietnam $35,000 </li></ul><ul><li>Iran $32,000 </li></ul><ul><li>Indonesia $20,000 </li></ul><ul><li>India $18,000 </li></ul><ul><li>Egypt $17,000 </li></ul><ul><li>Philippines $16,000 </li></ul><ul><li>Low Income Group </li></ul><ul><li>Nigeria $10,000 </li></ul><ul><li>Pakistan $5,000 </li></ul><ul><li>Bangladesh $4,000 </li></ul>Goldman Sachs BRIC Book (2007) - Page 155
    49. 52. Energy per Capita Rising with Incomes Dr. P. Konana, McCombs Business School, University of Texas at Austin Source: Roopa Purushothaman, Goldman Sachs, BRICs Report 2003 Japan UK South Korea
    50. 53. Unprecedented Energy Growth <ul><li>China became the World’s Largest Emitter of energy-related CO 2 in 2008. </li></ul><ul><li>China will become the World’s Largest Consumer of Energy in 2010. </li></ul><ul><li>From 2007 and 2030, China will install more new electricity generating capacity than exists in the United States in 2007 </li></ul><ul><li>World Energy needs in 2030 will be 55% higher than in 2006 </li></ul><ul><li>China and India will = 45% of this new demand </li></ul>World Energy Outlook - 2007
    51. 54. China’s Exploding Energy Demand <ul><li>China’s Primary Energy demand will more than double from 1,742 million toe in 2005 to 3,819 million toe in 2030 ( 3.2% annual growth rate) </li></ul><ul><li>In 2005, the United States used 1/3 more energy than China </li></ul><ul><li>By 2010, China will use more energy than the United States </li></ul><ul><li>China’s primary energy demand will grow by 5.1% until 2015 </li></ul>World Energy Outlook - 2007
    52. 55. Who is Worried About IP? <ul><li>Thermal Power Research Institute is China’s world-leading laboratory on cleaner coal, has just licensed its latest design to Future Fuels in the US. </li></ul><ul><ul><li>Future Fuels will pay about $100 million to import from China a 130-foot-high maze of equipment that turns coal into a gas before burning it. This method reduces toxic pollution and makes it easier to capture and sequester gases like carbon dioxide under ground. </li></ul></ul><ul><ul><ul><li>Future Fuels will ship the equipment to Pennsylvania and have Chinese engineers teach American workers how to assemble and operate it. </li></ul></ul></ul>
    53. 56. China Drawing High-Tech Research <ul><li>Mark Pinto, Chief Technology Officer of Applied Materials moved to Beijing in January </li></ul><ul><li>Applied Materials is building its newest and largest research labs in China </li></ul><ul><li>Applied held its annual shareholder’s meeting in Xi’an, China. </li></ul><ul><ul><li>Applied’s global headquarters are in Santa Clara, California </li></ul></ul>
    54. 57. Applied’s New Xi’an R&D Plant
    55. 58. This Will Be China’s Century
    56. 59. The Ball is In Your Court <ul><li>You Control the Future </li></ul><ul><li>You Will Be The Captains of The Future </li></ul><ul><li>Your Children Will Either Cheer or Jeer </li></ul><ul><li>It’s Show Time! </li></ul>
    57. 60. Please Give Back to McCombs! <ul><li>This webinar has been brought to you by the </li></ul><ul><li>McCombs MBA Alumni Advisory Board, coordinated by </li></ul><ul><li>alumni for the benefit of the Alumni Network. </li></ul><ul><li>Please get involved with the Alumni Network! </li></ul><ul><li>All alumni benefit when we work together to build the quality </li></ul><ul><li>and value of the Alumni Network and the McCombs brand. </li></ul><ul><li>Time: Get involved in your local club </li></ul><ul><li>Talent: Mentor another alumni or speak at a future webinar </li></ul><ul><li>Treasure: Make a donation to McCombs </li></ul><ul><li>www.mccombs.utexas.edu/alumni </li></ul><ul><li>Suggested fund: MBA Alumni Excellence Fund </li></ul><ul><li>Please use response code KTG </li></ul><ul><li>Send your feedback -- [email_address] </li></ul>

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