China at a Glance China Map US China

China at a Glance

China Map

US / China

China Population

Economic Indicators

Comparative GDP Growth ( 3. 9% of global GDP / 15% of global growth )

Economic Growth -- 2002 Policies driving growth: Expansion of “socialist market economy” ü Rapid Emergence of private sector ü Ø 1. 32 million private companies Ø 300% increase in # of employees over 5 years Continued Overhaul of SOE’s ü Emphasis on export trading ü Clean-up of capital markets ü

Economic Growth -- 2002 Market sectors driving growth Manufacturing – 35% of GDP ü Exports – 26% of GDP ü Infrastructure expansion 10% – 15% of GDP ü Foreign investment – $52 billion ü Capital Markets ü v. Domestic consumption

Government Initiatives and Projects * Ø SOE overhaul and privatization Ø Financial services ü Banking overhaul ü Insurance services ü Asset management ü Investment services Ø Agricultural modernization

Government Initiatives and Projects * -- continued Ø Home ownership – 30% growth Ø Technology development Ø Developing Western provinces Ø Infrastructure projects (water / waste / roads / power / airports / Yangtze project) Ø Environmental clean up – 1% of GDP Ø 2008 Olympics Ø 2010 World Expo

New Milestones -- 2002 v 8% GDP growth – largest globally v #1 in foreign investment - $52 billion v 24% increase in domestic investment v #1 in cell phone users – 200 million v #2 in Internet users – 59 million v #4 in auto sales – 3. 2 million v Foreign investment in stock markets v 2010 World Expo

Change in Leadership Hu Jintao New Chairman of Central Committee – CCP n President – March, 2003 n Maoist leanings and ideals n Rejuvenation of Party n Continuation of private sector expansion n “Spreading the growth” to inner Provinces n Social security and health care benefits n

Major Exports – 2002 * Apparel, clothing & footwear Machinery, parts & transportation equip. Textiles & yarn Chemical industrial products Furniture, housewares, toys, handicrafts Food stuffs Electrical equipment & parts

Major Imports – 2002 * Electrical equipment & parts Machinery & parts Transportation equip. Crude oil and fuels Plastics and plastic articles

China’s Leading Markets

China’s Leading Suppliers

China’s Trade with the World 1996 1997 1998 1999 2000 2001 Exports 151 182 183 194 249 266 Imports 138 142 140 165 225 243 Total 289 325 324 360 474 509 2002 550

China’s Trade with the US

Florida Trading Partners: GDP Growth

Recent Foreign Corporate Expansions in China * Walmart Kfc / Pizza Hut Heinz / P&G Mac. Donalds Office 1 Superstore Home Depot Honda / Mitsubishi / VW / GM Intel Microsoft Computer Associates Du. Pont Rockwell Toshiba Embraer Aviation World Trade Group

China’s Big 3 Trading Centers

Rogers Towers Bailey Jones & Gay Map

China’s Work Force Allocation (percentage of work force)

China’s Labor Supply Labor cost 1999 2000 2001 2002 0. 44 0. 50 7. 0 6. 0 ? ? 8. 0 ? ? USD / hour Recorded 5. 50 Unemployment * * Does not include 150 mil. Underemployed in rural areas

Manufacturing Wages: China vs. Latin America

Labor Over-Supply* At current GDP growth rate: 8 million new jobs / yr Current annual rate of new workers: 12 million / yr.

Major WTO – Related Changes in 2002 Tariffs Quotas and other non-tariff barriers Anti-dumping / overproduction Enhanced IP protection and enforcement Transparency rules and systems Accelerated Clean up of banking and securities markets “Opening up service industries

Services Opening up with WTO Sales and distribution 3 rd party Logistics Telecom Banking and finance Insurance Construction and development Project consulting Engineering Architecture Environmental Legal services Education / training Travel services Employment agencies Franchising

Chinese Legal Changes - 2002 Over 200 new or changed laws n n n Joint ventures and wholly-owned subsidiaries Patent, trademark and copyright laws Foreign investment Import / export, distribution, franchising Stock markets Thousands of implementing regulations Training of attorneys and judges

Taxes in China Ø 33 % tax on profits BUT SEZ’s = 15 % Open Coastal cities = 25% Inland areas = tax preferences 3 -5 yr. Forgiveness for FIE Ø 17 % VAT BUT Special treatment for exported items

Ongoing Logistics Issues in China International transport Inland transport Aggregation and warehousing Cold-chain storage Supply-chain management IT solutions Customs issues

Miscellaneous Issues Who am I really dealing with ? Referrals to “Friends” Who is in charge ? Public corruption Language translation / documentation “Contract” = a living document

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