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Go China! - Dr. graham jackson

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Go China! - Dr. graham jackson

  1. 1. CHINA TODAY -Problems, Challenges and Opportunities Dr. Graham Jackson Head, International MBA Program, University of Haifa gjackson@univ.haifa.ac.il March 2013 1
  2. 2. “When China awakes, the world will tremble” Napoleon Bonaparte , 1800 (?)“When China awakes, they’ll all want Gucci” Graham Jackson 2000 2 Haifa University, Dr. Graham Jackson
  3. 3. A SHORT HISTORY OF CHINA• The First Emperor of China, QínShǐHuángdì created a system that made him and his dynastic successors extremely rich and almost everyone else extremely poor• The Founder and Chairman of the Communist Party of China, Máo Zédōng created a system that made everyone equally poor• The leader of China’s economic reform, Dèng Xiǎopíng created a system that today enables everyone to be un-equally richer than ever before. 3 Haifa University, Dr. Graham Jackson
  4. 4. “TO GET RICH IS GLORIOUS” Deng XiaoPing (1993) 4 Haifa University, Dr. Graham Jackson
  5. 5. CHINA’S ECONOMY IN THE GLOBAL CONTEXT 5 Dr. Graham Jackson Haifa University, Dr. Graham Jackson
  6. 6. HOW BIG IS CHINA’S ECONOMY? Source: Wikipedia / International Monetary Fund (Oct. 2011)Rank Country GDP Population GDP per (2010) Capita US $ millions US $ trillions1 USA 14,526 310 46,8602 CHINA 5,878 1341 4.3823 JAPAN 5,458 128 42,7834 GERMANY 3,286 82 40,274 6 Haifa University, Dr. Graham Jackson
  7. 7. CHINA – THE FACTORY OF THE WORLD 7 Haifa University, Dr. Graham Jackson
  8. 8. WHEN WILL CHINA OVERTAKE THE USA? 8 Haifa University, Dr. Graham Jackson
  9. 9. WHERE’S THE MONEY? Source: http://baidu.com/p/1398073413 (2010)Rank City Population GDP per Disposable (millions) Capita Income per Capita (RMB) (RMB)1 Hong Kong 7.0 315788 1598252 Dongguan 8.2 57606 395133 Shenzen 10.3 111045 365004 Shanghai 23.0 83390 362306 Guangzhou 12.7 96868 343007 Hangzhou 9.1 80000 3406511 Suzhou 10.4 102398 330708 Beijing 19.6 81583 32900 9 Haifa University, Dr. Graham Jackson
  10. 10. CHINA’S INEQUALITY GAP (GINI), 2012China = 0.47 (gradually rising over the last ten years )USA = 0.47 (rising slowly)Israel = O.39 (2009) 251 $ billionaires 2.7 million $ millionaires ~12% = 160 million rich people ~24% = 340 million middle classes ~64% = 900 million poor people~ 250 million live in cities with > 750,000 population~ 250 million live in smaller cities and towns~ 850 million live in poverty in the countrysideSources: World Bank and Huron Rich List, 2011 10 Haifa University, Dr. Graham Jackson
  11. 11. CHINA’S STRENGTHS“The Chinese socialist system’sadvantages enable us to take decisionsefficiently, organize effectively andconcentrate resources to accomplishlarge undertakings.”Prime Minister Wen Jiabao, March 2010 11 Haifa University, Dr. Graham Jackson
  12. 12. CHINA’S WEAKNESSES Endemic Corruption by CPC officials Regional Inequality (The Urban-Rural gap) Pollution of the Environment (Air, water, soil) Strong growth depends on massive imports of commodities and raw materials Underdeveloped health services Underdeveloped social security system Recently increasing inflation (in real terms) Housing bubble Aging population 12 Haifa University, Dr. Graham Jackson
  13. 13. Chinese Premier Wen Jiabao talks with a petitioner during the first ever visit of a government leader to China’s top complaints department, “The State Bureau for Letters and Calls” People’s Daily, 25 January 2011 13 Haifa University, Dr. Graham Jackson
  14. 14. Over 180,000 “Mass Incidents” per yearStreet riots by small-business owners and workers against increasing local taxes in Zhejiang Province, 27.10.2011 14 Haifa University, Dr. Graham Jackson
  15. 15. Air Pollution in Beijing , February 2013 15 Haifa University, Dr. Graham Jackson
  16. 16. WHAT ARE THEY DOING ABOUT IT? - China’s 12th Five-Year Plan, Published 5 March 2011-The new national leadership from March 2013 onwards: ???????? 16 Haifa University, Dr. Graham Jackson
  17. 17. CHINA’S 12TH FYP 2011-2015: PRINCIPLES• GDP Annual Growth Rate target of only 7%• Raise average household income by an annual average of about 7% and close the income gap by increasing minimum wages by 13% annually (end of the era of “Cheap Labor”)• Promote domestic consumption over infrastructure investments and exports• Hold inflation down to about 4% per year• Increase social security nets• Promote measures to conserve energy 17 Haifa University, Dr. Graham Jackson
  18. 18. CHINA’S 12TH FYP 2011-2015: WHAT IT MEANS FOR BUSINESShttps://www.mckinseyquarterly.com/article_print.aspx?L2=7&L3=10&ar=2832 Higher wages and better conditions for workers Higher levels of domestic consumption Development of a better health care infrastructure More emphasis on strategic high-tech industries More (controlled?) urbanization Growth of Services B2B and B2C business opportunities Higher level of uncertainty 18 Haifa University, Dr. Graham Jackson
  19. 19. NEW STRATEGIC INDUSTRIESBENEFITING FROM R&D AND OTHER SUBSIDIES• Biotechnology• Alternative energy / CleanTech• High-end equipment manufacturing• Energy conservation (e.g. LED lighting)• Environmental protection (e.g. better water treatment)• Electric vehicles• New materials• Next-generation IT 19 Haifa University, Dr. Graham Jackson
  20. 20. A SELECTION OF PROBLEMS FOR WESTERN COMPANIES IN CHINA• Guanxi relationships allow Chinese businessmen to get preferential treatment and advance information of new government rules and regulations• Easier for Chinese businesses to understand local needs and adapt their product specifications, range, quality, designs, performance, taste, etcetera• Stealing foreign IP, including theft of company designs copying and cyber-espionage - all protected by local Chinese courts helped by “commissions” 20 Haifa University, Dr. Graham Jackson
  21. 21. HOW TO SUCCEED IN CHINA According to Kai-Fu Lee, leader ofMicrosoft Research Asia (MSRA), 1998-2005• Understand Chinese culture and norms• Develop mutual respect• Create trustworthy relationships• Make a long-term commitment: contribute first in order to benefit later• Hire leaders and senior managers with Guanxi• Nurture local managers and talented workers• Be flexible and open to local needs and practices• Find ways to support the local economy• Align your strategy with the Government’s goals• Be humble 21 Haifa University, Dr. Graham Jackson
  22. 22. Thank you for your attention ! Dr. Graham Jackson Head, International MBA Program, University of Haifa gjackson@univ.haifa.ac.il 22 Haifa University, Dr. Graham Jackson

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