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E-commerce in China: Gain entrance into a completely different world

Posted by Administrator
Administrator
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on Tuesday, 18 June 2013
in Business in China

Every minute 48,000 e-commerce transactions are made online in China

In a keynote speech at the 16th Credit Suisse Asian Investment Conference Jack Ma, founder of Alibaba, highlighted the differences between the ecommerce industry in China and in the USA. According to Mr Ma, “in the U.S., e-commerce is just online shopping. In China, e-commerce is a lifestyle.” This important distinction in the consumer perspective of e-commerce in both countries is critical to understanding the market. In the U.S. e-commerce is an additional market for companies, next to their offline main business. However, in China, where the infrastructure is not as developed as in the Western world, for some consumers e-commerce is the only way to fulfil their desires.

China’s 12th Five-Year Plan - Part 3

Posted by Tyler Kretzschmar
Tyler Kretzschmar
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on Monday, 13 May 2013
in Business in China

This is Part 3 of a 3-part series on the 12th Five-Year Plan.

Part 1 simplifies and summarises the plan, and Parts 2 & 3 will discuss the importance of the Plan for those interested in the Chinese market.

Click here for image source.

What does the Five-Year Plan mean for SMEs looking to enter the China market?

One thing that SMEs must be aware of is the rising cost of doing business in China. One of the implications of higher quality of life in China is increased wages, meaning increased production costs in the manufacturing sector. Some estimates show that the cost of labour has increased by 20 percent annually since 2008. And despite any delays in carbon tax, environmental awareness is sure to come at least partially at the expense of companies as well. These changes correspond to the shift toward high-tech manufacturing, as companies in low-end sectors will likely find it difficult to profit as they have in the past.

China’s 12th Five-Year Plan - Part 2

Posted by Tyler Kretzschmar
Tyler Kretzschmar
Tyler Kretzschmar has not set their biography yet
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on Tuesday, 07 May 2013
in Business in China

This is Part 2 of a 3-part series on the 12th Five-Year Plan.

Part 1 simplifies and summarises the plan, and Parts 2 & 3 will discuss the importance of the Plan for those interested in the Chinese market.

How has the 12th Five-Year Plan developed since its implementation?

The Five-Year Plan is not set in stone. As a drafted document to oversee social and economic development over the course of five years for the most populous country in the world, a certain level of coordination with local governments through supplementary and supporting legislation, as well as flexibility with the Plan are paramount to its success. As such, some aspects of the Plan drafted in 2011 are today, in 2013, slightly different after re-evaluation.

China’s 12th Five-Year Plan – Part 1

Posted by Tyler Kretzschmar
Tyler Kretzschmar
Tyler Kretzschmar has not set their biography yet
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on Saturday, 27 April 2013
in Business in China

This is Part 1 of a 3-part series on the 12th Five-Year Plan.

Part 1 will simplify and summarise the plan, and Parts 2 & 3 will discuss the importance of the Plan for those interested in the Chinese market.

This is an abridged version; for more information on the background and specifics of the 12th Five-Year Plan click here: chinas-12th-five-year-plan-part-1.pdf


Background & Overview

A term synonymous with China’s continuous development strategies, the 12th and current Five-Year Plan breaks from tradition and acts as a milestone in Chinese policy-making;  a shift in the path that China has been on for more than three decades. First approved on March 14, 2011, the partly philosophical and partly strategic programme encompasses a mix of goals, benchmarks and principles for the Chinese top and local government bodies to follow regarding the social and economic future of the country, between 2011 and 2015.

The Philosophy behind the Plan

China may have escaped some of the more drastic consequences of the global financial crisis that affected markets around the world in 2008, however given the globalised nature of the world’s markets, a Chinese economy that is based heavily on exports would undoubtedly suffer if foreign countries stopped importing goods. Economic stability is one of the key goals for Chinese policy-makers, something that cannot be achieved when GDP relies so heavily on demand outside of one’s own borders. In 2011, the US, Europe and Japan accounted for 48 percent of China’s exports, highlighting the need for a GDP base that is less reliant on countries whose economies are struggling.  

Capitalising on China’s growing middle class – estimated to reach 700 million by 2020 – constitutes using a different model than one of growth solely focused on exports and investments. Thus, looking at private domestic consumption as a new primary market feature is imperative in building a stable and well-rounded Chinese economy.

What are the key economic aspects of the 12th Five-Year Plan?

Compared to previous Plans, the 12th envisions more broad based developments in the economy as opposed to simply attaining specific levels of growth. Looking at the future of the country, the Plan’s overarching themes seek to promote sustainable growth and development for a well rounded economy and an improvement in the overall quality of life for Chinese citizens.

Entering the Chinese market: more challenges, more rewards

Posted by Tyler Kretzschmar
Tyler Kretzschmar
Tyler Kretzschmar has not set their biography yet
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on Monday, 22 April 2013
in Business in China

The global financial crisis and the fast growing Chinese consumer market, as well as the abundant wealth available for investment in China today, amplify the growing need to penetrate and operate in the Chinese market. It is no secret that China offers numerous opportunities to expand a business; however what remains a mystery for many small and medium sized enterprises (SMEs) is how to effectively address the challenges of entering and operating in China.

One such challenge is the growing market itself, giving way to an increasing number of competitive local companies. The 12th Five Year Plan that laid the roadmap for China’s social and economic development for 2011-2015 shifted the focus of the Chinese policy makers to the strengthening of China’s dynamic new homegrown companies, referred to in China as Domestic Private Enterprises (DPE), both home and abroad. In 2010, 60 percent of China’s GDP came from DPEs – this is in striking contrast to the 38 percent they contributed in 2005. The fact that GDP is expected to quadruple itself between 2007-2025 also gives perspective into the business threats facing foreign companies in China and in home markets in the next few years.

Furthermore, the 12th Five Year Plan’s goal to increase the overall quality of life for Chinese citizens is creating higher operating costs in some sectors. One example is minimum wage increases (up to 13 percent each year), translating into more costly production in many of the developed manufacturing hubs along the coast. Another is China’s goal of a 40 percent reduction in carbon-dioxide emissions per unit of GDP by 2020, constituting elevated environmental taxes for manufacturers.