Doing business in China

1,300,000,000

o123million of interest users

o1 out of every 3 cigarettes is consumed in China <= /div>

oCrime rate is nearly one-thirtieth (1/30) that of the UK= 3;

oExport 259 million pieces of swimwear a year?

o71 million more mobile phone users than landline users? = ;

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Exacts from World Bank’s China Quarterly Updates

Doing business in China

oDoing Business in 2007: China ranks <= /span>among Top Reformers on E= ast of Doing Business Index—China has picked up the pace of its reforms and is among the world’s top 10 reformers on the ease of doing business, according to a new report by the International Finance Corporation and the World Bank.

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According to the “Global CEO survey 2006<= /span>” = conducted = by one of the Big-4s

o55% of the global CEOs plan to venture into China in th= e next three years oForming alliances with local partners= is the most popular stra= tegy to enter into new markets, especially in China o54% of them plan to set up office in = China

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introduction

oChinese authorities start encouraging foreign investments since 1979

oGradual improvement in China investment environmen= t

oWTO (10 Nov 2001) opens up a multitude opportunit= ies.

oOther major events include: =

nOlympic 2008 (budget of US$34b)

nExpo 2010 (1st developing nation to win bid in= 150 years)=

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Macroeconomic overview

oGDP (2005) at RMB 18.2 trillion (US$2.27 trillion)

oGDP per capita (2005) a= t RMB 13985 trillion (US$1747)

o FDI (2005) at USD 60.3 Billion = 3;

oKey sectors for investment

nConsumer goods and manufacturing

nPower & utilities&#= 13;

nAutomotive <= /span>

nFinancial services =

nInfrastructure & se= rvice industries

n =

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Extract from a earlier survey

oAnalysis of survey respondents

n89% respondents already= doing business or investing in China

nRemaining are planning = to within next few years

oSetting up business _ why?

nRapid economic growth. Promising economic prospects & potential market penetration&#= 13;

nMostly respondents are = WFOE, RO,E-JV

nAbout half invest via a foreign holding or corporate vehicle

n60% met financial budgets

nOnly 26%are currently profitable; remaining expect profitable within 5 years

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oActual challenges

o Top 5 challenges for invest= ing in China= in descending orders:

nLegal & political environment

nForex controls (including repatriation of capital and earnings)= 3;

nKnowledge of local business environment

nManagement quality & attitudes

nTax regulations

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oPlanning for entry and exit

n92% intend to expand th= eir investments within the next 3years =

nForeign companies prefe= r to expand by widening scope of business of existing operations

nOnly 18% think it would= be easy to exit their investments

n3 main concerns when ex= iting in descending orders:

oTo mitigate losses =

oTo maximize value on exit

oTo maintain their reput= ation

nMost of them do not hav= e an exit strategy

nPrefer to exit by dispo= sing to their local partner or to a third party

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oOutlook in china (trend of foreign investment= s)

n95% believe that foreign investment will increase in next 3years

n3 most important areas of improvements for attracting= more foreign investments in descending orders: =

oLegal and regulatory framework

oRelaxation on forex controls

oHigher level of transparency and accountabilit= y

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