Doing Business in Asia William Chu International Trade Division North Carolina Dept of Commerce 2010 April

China Beijing Shanghai Guangzhou Shenzhen Hong Kong Macau Taiwan

Canton Fair China s No. 1 fair 15,000 products varieties on display 40% of China s newest product in exhibit 22, million ft 2 floor space 188,170 buyers 55,927 display booths Brought in US$30.5 billion show in years in history of making

Interzum Guangzhou 2010

Global Real GDP (annualized quarterly growth rates) Global Developed Economies U.S. U.K. Euro Area Japan Emerging Economies China India Brazil EMERGING GLOBAL DEVELOPED China & India on Global Recovery Driver Seats Source: International Monetary Fund

CHINA China & ASEAN

How to Enjoy Zero Tariff? Meet one of the following conditions: Products are completely originated in China; The value of the materials coming from other than China and ASEAN countries is less then 60%; or Products are produced by sufficient processing the materials coming from other than China and ASEAN countries.

How Does ASEAN Cope with This Sweeping Change? Not so 10 years ago, the trade balance titled to ASEAN. Today: - – Chinese competition has growing louder – A direct competition with Chinese firms will be deadly – A lower cost of capital – A lower wages in China – A limited accountability to shareholders – Chinese investments are sweeping in ASEAN – ASEAN becomes a popular place for Chinese investments – ASEAN in general accept Chinese quality with low pricing

Opportunities & Challenges In Asia Markets

Emerging Asia Market Economic expansion policy in general. Export trade returning – especially the demand from China market which is helping the region to flourish Rising inflation with low household s debt pushes up consumers spending. Rising exports in Vietnam made them the fastest GDP growth in the 1st half of Indonesia is the largest nation in ASEAN and accounted for 60% consumer spending. The growth will get stronger due to a boom in domestic investments. Malaysia has a strong and stable economy and it is one of the fairly mature market in ASEAN.

Risk Factors in Emerging Market Full recovery is not yet proven. Majorities depend on the export markets aboard which are facing slow recovery and not yet quite normal. Government s economic stimulus can t last forever. Increased the consumers spending to correct global recovery is not an easy task. Increased risk from capital asset bubble.

Huge Market Potential in the Asia Emerging Market

Opportunities in Asia Emerging Market Rising middle-class consumers Cities migration Modernization in retail sector Sell goods directly to retailers or at help of distributors Opportunity in building brands

Market Entry Strategies Don t dump products that do not sell well. Introduce quality products similar in here. Products with good features and reasonable price fetch success. Created branded product to standout from domestic goods. Provide warrantee and after-sales services especially to electronic items.

Challenges and Risk Factors in the Emerging Markets Stability in government and fiscal budget Bureaucracy, corruption and protectionism Infrastructures not sound Retailer sector immature Purchasing power is limited

Developing Chinese Market Major cities in China s coastal region has a faster phase of recovery. Government s stimulus packages to help rural development benefited the purchasing power in the 2nd and 3rd tiers cities. The stock market and housing price surged increased demand for medium- to high-end goods. Market the trendy products to meet the need of affluent class. Consider using several market channels for penetration – franchise store is a popular one.

Chinas Super-Rich Population Hits 825,000

William Chu, Representative State of North Carolina Asia Pacific Office Room 805-6, Tesbury Center, 28 Queen s Road East, Wanchai, Hong Kong Tel Fax Thank You!