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"Red" marketing for a Fidelity China fund

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THE CHINESE
                                                   CONSUMER
FIL Investment Management (Singapore) Limited.
      1 Raffles Place, #14-00 One Raffles Place
                                                  REVOLUTION
                  Singapore 048616.                 Facts & Trivia
      Tel: (65) 6511 2200 Fax: (65) 6536 1960
"Red" marketing for a Fidelity China fund
Contents
1. UNITE AND CONSUME ...................... 1
2. RISE OF THE WORKING CLASS ........ 5
3. NETIZEN UPRISING ............................ 9
4. FROM MARX TO LUXE ....................... 13
5. THE GREAT MARCH
   TO URBANISATION .............................17
6. FIDELITY FUNDS –
   CHINA CONSUMER FUND .................. 21
UNITE
AND
CONSUME
          Times have changed; it is no longer a case
          of China produces and the world consumes.
          The Chinese government has implemented a
          series of policies to further stimulate domestic
          consumption, ensuring that consumer spending
          grows by leaps and bounds.




                                                             2
Did you know?                                                                              Tap into China’s
    China will overtake United States to                                                       consumption power!
    become the world’s largest economy by                                                      The consumption boom is expected to
    2017. And by 2020, it will account for more                                                continue for the next 5 to 10 years as
    than 20% of world GDP in Purchasing Power                                                  government policies shift towards
    Parity terms, up from the current 13%.                                                     addressing income inequality and
                                                                                               promoting wage growth.
    Source: Euromonitor International, “Top 10 largest economies in
            2020”, July 2010
                                                                                               China Retail Sales – Consumer Goods
    Largest economies by GDP in PPP terms
                                                                                           1,600

                               2010                                                        1,400




                                                                            CNY, billion
                                                                                           1,200
       US$14.8 trillion                        US$9.7 trillion
                                                                                           1,000

                                                                                            800
                               2020
                                                                                            600

                                                                                            400
                                                                                                         05         06         07         08         09         10
       US$22.6 trillion                        US$28.1 trillion                                    Nov        Nov        Nov        Nov        Nov        Nov
    Source: Euromonitor International from IMF, International Financial
            Statistics and World Economic Outlook/UN/national statistics,                      Source: National Bureau of Statistics, China, 30 November 2010
            July 2010
3                                                                                                                                                                    4
RISE
OF THE
WORKING   The per capita disposable income of urban
          residents was 19,109 yuan (US$2,911) in
CLASS     2010, up 82% from 2005*.  The Ministry of
          Human Resources and Social Security also
          reported that 30 Chinese provinces had
          raised the minimum wage in 2010 by an
          average of 23%^ from the year before.

          *Source: chinadaily.com.cn, March 2011
          ^Source: People’s Daily, 26 January 2011




                                                      6

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"Red" marketing for a Fidelity China fund

  • 1. THE CHINESE CONSUMER FIL Investment Management (Singapore) Limited. 1 Raffles Place, #14-00 One Raffles Place REVOLUTION Singapore 048616. Facts & Trivia Tel: (65) 6511 2200 Fax: (65) 6536 1960
  • 3. Contents 1. UNITE AND CONSUME ...................... 1 2. RISE OF THE WORKING CLASS ........ 5 3. NETIZEN UPRISING ............................ 9 4. FROM MARX TO LUXE ....................... 13 5. THE GREAT MARCH TO URBANISATION .............................17 6. FIDELITY FUNDS – CHINA CONSUMER FUND .................. 21
  • 4. UNITE AND CONSUME Times have changed; it is no longer a case of China produces and the world consumes. The Chinese government has implemented a series of policies to further stimulate domestic consumption, ensuring that consumer spending grows by leaps and bounds. 2
  • 5. Did you know? Tap into China’s China will overtake United States to consumption power! become the world’s largest economy by The consumption boom is expected to 2017. And by 2020, it will account for more continue for the next 5 to 10 years as than 20% of world GDP in Purchasing Power government policies shift towards Parity terms, up from the current 13%. addressing income inequality and promoting wage growth. Source: Euromonitor International, “Top 10 largest economies in 2020”, July 2010 China Retail Sales – Consumer Goods Largest economies by GDP in PPP terms 1,600 2010 1,400 CNY, billion 1,200 US$14.8 trillion US$9.7 trillion 1,000 800 2020 600 400 05 06 07 08 09 10 US$22.6 trillion US$28.1 trillion Nov Nov Nov Nov Nov Nov Source: Euromonitor International from IMF, International Financial Statistics and World Economic Outlook/UN/national statistics, Source: National Bureau of Statistics, China, 30 November 2010 July 2010 3 4
  • 6. RISE OF THE WORKING The per capita disposable income of urban residents was 19,109 yuan (US$2,911) in CLASS 2010, up 82% from 2005*.  The Ministry of Human Resources and Social Security also reported that 30 Chinese provinces had raised the minimum wage in 2010 by an average of 23%^ from the year before. *Source: chinadaily.com.cn, March 2011 ^Source: People’s Daily, 26 January 2011 6
  • 7. Did you know? Get ready for the new age China’s middle class is already larger than of consumption! the entire population of the United States Increase in wages has boosted sales of and is expected to reach 800 million* in mid-priced consumer discretionary goods 15 years. like sportswear.  Home-grown companies have sprung up to tap into this market and *Source: Helen Wang, Forbes columnist, “The Chinese Dream” are expected to continue growing given the anticipated income rise. Per capita disposable income of urban residents US$2,911 Size of China’s sportswear market $ 82.1% 2008 US$9.8 billion 2013 US$20 billion 2002 US$3.3 billion Source: KGI, 21 July 2010; Citigroup, 29 November 2010 2005 2010 year Source: chinadaily.com.cn, March 2011 7 8
  • 8. NETIZEN UPRISING China has the world’s largest internet market.  The current 457 million internet users are expected to grow to more than 700 million by 2013 – however, that would still only represent a little more than 50% of China’s population. Source: China Internet Network Information Center, 2010 10
  • 9. Did you know? Plug into China’s The Chinese use the internet more for fastest-growing companies! entertainment – playing online games, In 2009, the internet penetration rate in China messaging, downloading music and movies, was 29%*. Given the low penetration rate and shopping – than for work. People in the 60 and the Chinese’s obsession with the largest cities in China spend around 70% of internet, the telecommunications sector their leisure time on the Internet. The PC has presents tremendous growth opportunities. replaced the TV set as an entertainment hub. *Source: CSLA Asia-Pacific Markets, January 2011 Source: McKinsey Quarterly March 2010, “China’s internet obsession” Internet penetration rate % of leisure time spent 80% 7 77.3 60% 70% 40% 31.8 20% 0% 9 0 1 2 3 4 5 6 7 8 9 0 199 200 200 200 200 200 200 200 200 200 200 201 C China Korea U US U UK J Japan HK Source: CNNIC, ITU, MII, NSD, OECD and FIL, November 2010 11 12
  • 10. FROM MARX TO LUXE Sale of luxury goods in China will hit US$27 billion by 2015. This will represent 20% of the total global luxury sales, with China eclipsing Japan as the world’s number one consumer of luxury goods. Source: McKinsey Insights China, 2011 Luxury Consumer Report, March 2011 14
  • 11. Did you know? Arise and embrace China’s Whereas the market for luxury goods in new wealth! other countries is typically dominated by Chinese shoppers prefer high-end luxury women, in China the men fill the tills with goods and this has been the key driver of nearly equal abandon. They buy both for the Hong Kong retail market. Their total themselves and for others, since gifts spending rose from HK$15.5 billion in 2002 lubricate business in China. to HK$48.8 billion in 2009. Source: The Economist, February 2011 Source: Company information; Credit Suisse, 11 November 2010 Shopping spending by Chinese visitors HK$m 60,000 50,000 40,000 30,000 20,000 10,000 0 2002 2003 2004 2005 2006 2007 2008 2009 15 16
  • 12. THE GREAT MARCH TO URBANISATION China is on an accelerated urbanisation drive. By 2015, China’s urban population is expected to exceed 700 million, marking the first time China’s urban residents exceed its rural neighbours*. *Source: China’s National Population and Family Planning Commission, July 2010 18
  • 13. Did you know? Ride on the wave of Cities have been the major drivers of China’s China’s growth! GDP growth over the past two decades. The home appliance sector will grow with the By 2025, the proportion of China’s GDP increased pace of urbanisation in China. The generated by cities will rise from 75% today growth in the sector will benefit manufacturers to 95%. and retailers of such appliances. Source: McKinsey & Co. report, “Preparing for China’s urban billion”, March 2009 Home appliance penetration rates in urban and rural areas (units per 100 household) China’s GDP as generated by cities 140 120 By 2025 100 % 80 95% 60 100 Now 40 75% 20 80 0 Air conditioner Refrigerator Washing mashine 60 40 20 Urban households Rural households 0 Source: CEIC, JP Morgan, 16 July 2010 19 20
  • 14. Fidelity Funds – Investment Objective China Consumer Fund The fund aims to achieve Fidelity Funds – China Consumer long-term capital growth through Fund offers investors the investing primarily in equity securities of companies having opportunity to benefit from their head office or exercising a the Chinese consumption predominant part of their mega-trend. This equity fund uses activities in China or Hong Kong. Fidelity’s dedicated China-based These companies are involved in research team, as well as its the development, manufacture or global resources, to invest in sales of goods or services to companies that will benefit from consumers in China. the coming golden age of Chinese consumption growth. 21 22
  • 15. Fund Details Disclaimer Benchmark MSCI China Index NR This document is prepared by Fidelity USD - 23 February 2011 International. All views expressed cannot be Fund Launch Date SGD - 1 August 2011 construed as an offer or recommendation. FIL Investment Management (Singapore) Share Class Class A - USD Limited [“FIMSL”] (Co. Reg. No.: Class A - SGD 199006300E) is a responsible entity for the Minimum fund(s) offered in Singapore. Prospectus for Investment Amount USD 1,000* the fund(s) is available from FIMSL or its Subsequent distributors upon request. Potential Investment Amount USD 500* investors should read the prospectus before Investment Mode Cash deciding whether to invest in the fund(s). Reference to specific securities or fund(s) is Applicable Up to 5.25 % initial sales charge. included for illustration only, and should not Charge / Fee 1.5% annual management fee. be construed as a recommendation to buy Risk and Very high risk (equity). May suit or sell the same. This document is for Investor Profile a growth investment strategy information only and does not have regard and most likely to be to the specific investment objectives, appropriate for investors who financial situation and particular needs of are investing for long-term any specific person who may receive it. capital growth who are willing Potential investors should seek advice from to accept very high risk. Such a financial adviser before deciding to invest a fund should form a small part of one’s overall portfolio. in the fund(s). If that potential investor chooses not to seek advice from a fund(s) in *or the equivalent of the amount shown above in any major freely question is suitable for him. convertible currency. 23 24
  • 16. Past performance of the manager and the fund(s), and any forecasts on the economy, stock or bond market, or economic trends of the markets that are targeted by the fund(s), are not indicative of the future performance. Prices can go up and down. The value of the shares of the fund(s) and the income accruing to the shares, if any, may fall or rise. Investors investing in fund(s) denominated in a non-local currency should be aware of the risk of exchange rate fluctuation that may cause a loss of principal when foreign currency is converted back to the investors’ home currency. Exchange controls may be applicable from time to time to certain foreign currencies. Fidelity / Fidelity International means FIL Limited, which is established in Bermuda, and its subsidiary companies. Fidelity, Fidelity International, and the Pyramid Logo are trademarks of FIL Limited. SG11/267 25