How Does China Change Your Business? Mat Morrison Ryan Osman Sean Tripi

China Worlds most rapidly changing large economy Increasing presence in our every day lives – Shipping Lanes – Financial Markets – Telecommunications – Globalization

U.S. Reaction Mixed feelings from Americans – Concerns about inequality in trade China sells significantly more to the U.S. than they buy – Concerns over outsourced jobs – Americans consumers continue to welcome inexpensive products from China

Deception in Economy China’s economy is much larger than official numbers show – In 2003 GDP was reported at 1.4 Trillion Dollars – Actual GDP was 6.6 Trillion Dollars Incentive to under report growth – Competition for development funds Measures legal economy and ignores large underground

Economic Growth Extraordinary Growth – In a 30 year run, economy has doubled 3 times – GDP expanded at annual rate of 9.5% – Neither Japan nor South Korea’s post war boom is anything close to China’s economic surge

China Can Be A Bully Dictate wages, put competitors out of work China makes 40% of wooden furniture sold in the U.S. In 2003 China export grew from 360 Million to 1.2 Billion resulting in 35,000 laid off employees or 1 in every 3 in the trade

Global Price Benchmark The term “China Price” is interchangeable with “Lowest Price” China Price assumes that the production of anything can be moved to China for lower prices and sometimes higher quality GM gives suppliers 30 days to find the China Price on their goods or risk contract termination

Piracy is a Problem Very loose enforcement of intellectual property laws Underground market is worth hundreds of billions of dollars to China’s businesses and people By investing in China’s manufacturing infrastructure, we enable them to assemble the most successful illegal manufacturing complex in the world Iphone vs. Phone

Costs of Raw Materials Demand for raw materials increases price – Copper price increased 37% – Oil increased 33% China consumed 7% of the worlds oil in 2003 Trend looks for more consumption and higher prices in the future.

Questions Do you agree with President Obama’s plan to eliminate tax breaks for companies outsourcing to foreign countries? Do you feel that the U.S. dependency on China is a good or bad thing for our economy?