Transcript China.ppt
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?