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International Business Convention (IBC) China Market Focus: Outdo Your Rivals: Branding & Competing in the China Market (24/01/2008)

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 China’s Hot New Markets

Quote from Barry Friedman: “I have been speaking to a lot of companies around the country and letting them know where the markets of the future are going to be in China

They are going to what are known as emerging urban centers, also known as secondary cities. It is hard to call these “secondary cities” because they have eight to ten million people in them. These cities outside the major centers and are located away from the coast in the interior, very large urban cities that are now having the buying power and industrial development that we have seen throughout the other parts of the country, this is where Americans should be looking at and if they want to be in business with China in five years this is where they should be looking.”

 See the video here source www.export.gov

CHINA’S domestic consumption has replaced investment to become the biggest driver of economic growth for the first time in seven years. Last year, domestic consumption contributed 4.4 percentage points to the 11.4-percent increase in the nation’s gross domestic product, compared with 4.3 percentage points of investment and 2.7 percentage points of net exports, said China Securities Journal yesterday, citing unidentified official with the National Bureau of Statistics. Data released earlier showed the nation’s retail spending rose 16.8 percent to 8.92 trillion yuan (US$1.24 trillion) in 2007, up 3.1 percentage points from a year earlier. Fixed asset investment expanded 24.8 percent to 13.72 trillion yuan, 0.9 percentage point higher compared with a year ago, while the trade surplus grew 47.7 percent to US$262.2 billion, 26.3 percentage points slower in pace. “The rise of domestic consumption is the result of many years of efforts to support spending while curbing investment, with a goal to reduce dependence on external factors,” said Ba shusong, a researcher with the State Council Development Research Center. Since the Asian financial crisis in 1997, China has earmarked a strategy to reduce reliance on investment and exports and turn to consumption through tax cuts, minimum wage rises and improved education, welfare and health care. But investment had still remained a leading driver of economic development despite various efforts in the past decade. In 2006, investment contributed 4.6 percentage points to GDP growth, 0.3 percentage point higher than consumption. Zhang Xinfa, an analyst with China Galaxy Securities Co, estimated consumption will contribute more to the economic growth in the future. However, some analysts suggested that higher consumption growth does not mean a weakened investment sector. “In five years at the minimum, investment and exports will still be major contributors to China’s economic growth, at least of parallel importance to consumption,” said Li Maoyu, an analyst with Changjiang Securities Co. Last year, disposable income for city dwellers jumped 17.2 percent to 13,786 yuan and earnings for rural households rose 15.4 percent to 4,140 yuan, according to official data.

Source: Domestic consumption drives GDP for 1st time

via Shanghai Daily: Business by Wang Yanlin on 1/31/08

New Zealanders rank products imported from China below other imports but have noticed that Chinese imports are fast improving, according to a Massey University consumer survey.

Marketing researchers in the University’s College of Business surveyed Aucklanders on their attitudes towards imports from Australia, China, German, Japan and the United States. Japanese goods got the top rating for product performance.

The research team, led by senior marketing lecturer Dr Gurvinder Shergill (pictured), set out to investigate consumer attitudes towards products and marketing practices of different countries in order to shed more light on how consumers perceive imported products – depending on their country of origin. The study found the three common factors on which consumers evaluate imported products were quality, design and whether they were improving.

Dr Shergill says there has been little research on New Zealanders’ attitudes to imported products. The researchers also wanted to compare the attitudes of consumers towards the way products from the five countries were marketed.

Source: Massey news - Press releases Chinese imports rank low but consumer perceptions improving

The economy is in for a bumpy ride this year, economists say, as fears mount about the global impact of a US recession.

The belief that the United States is heading for recession, or may even be in one already, has led to carnage on world sharemarkets since the new year and a dramatic interest-rate cut of three-quarters of a percentage point by the US Federal Reserve.

Because of the time such moves take to work, economists see it more as a bid to reassure the markets and shorten and reduce the severity of a US recession than to stave one off altogether.

How great the impact of a US slowdown on New Zealand is will depend on how long it lasts and how much validity there turns out to be in the idea of “decoupling”.

Decoupling is the theory that the Asian economies, which have generated most of the world’s growth in recent years, have enough momentum of their own to shrug off at least a short drop in their exports to the US.

If they do, the impact on commodity prices, whose current strength underpins the growth prospects for New Zealand and Australia, our largest export market, should be modest.

Bank of New Zealand chief economist Tony Alexander expects the economy to grow at a weak rate of below 2 per cent this year.

“There will definitely be an impact but there is some insulation,” he said, citing the dairying boom, infrastructure spending, job security and wage growth, the prospect of tax cuts and businesses investing.

Any fall in local fixed-term mortgage rates would be limited, Mr Alexander said, when US interest rates began to rise again later in the year as concerns about inflation came to the fore again.

ANZ National Bank chief economist Cameron Bagrie said the world economy was less reliant on the American consumer than it had been 10 years ago.

But economies had become more interdependent because of intricate interconnections of markets, making it impossible to quarantine the kind of problems the US banking system was grappling with as a result of lax lending practices in the “subprime” mortgage market.

With the banks looking sideways at each other, wondering what losses had yet to be disclosed, credit while still available had become more expensive, he said.

“For an economy such as New Zealand, which is very reliant on offshore capital, this is probably the worst possible scenario. We are still managing to tap overseas capital markets but it is far more difficult and is costing more,” Mr Bagrie said.

“That is a cost borrowers will have to face, whether it is for housing or in the corporate world.”

He is dubious about the decoupling theory.

“If it’s just a US problem, the overall prognosis for New Zealand is reasonably good. But growth is fading in Japan and Europe looks sluggish. They are very big shoes for the rest of Asia and emerging markets to fill.”

New Zealand Institute of Economic Research chief executive Brent Layton is more optimistic.

He does not believe the US slowdown will amount to a recession. “I don’t think Asia will slow a lot, hence the impact on Australia will not be so great, helping New Zealand.”

Sharemarkets’ volatility reflected uncertainty, Dr Layton said. They were not always a reliable barometer of the economic outlook.

“It is only a very small proportion of the total value of equities that gets traded on any day,” he said.

“You can have large movements which affect the value of the market but only a small proportion of players are participating.”

In overnight trading, London’s FTSE 100 had fallen 0.8 per cent.

After three weeks of falls, the New Zealand sharemarket closed higher yesterday - though only just.

Source: New Zealand Herald via: Asia markets key for NZ

SHANGHAI pledged to increase gross domestic product to more than two trillion yuan (US$276.3 billion) in the next five years, the city mayor said today. Per capita GDP is expected to surpass 100,000 yuan by 2012, Mayor Han Zheng said at the annual plenary meeting of the Shanghai People’s Congress this morning. The service industry, which will be the heart of the city’s economy by then, is expected to account for more than 80 percent of GDP in urban areas, Han said. The added value of the service industry aims to exceed 1.1 trillion yuan by 2012, Han said. The city will also continue providing financial support for innovation and scientific research to boost economic development, Han added. Research expenditures will increase to three percent of the city’s total GDP, Han said.

Source: City’s GDP to surpass 2 trillion yuan in 5 years

via Shanghai Daily: Metro by Lydia Chen on 1/24/08

THE Silk Street Market in Beijing, which has long offered copies of international designer and branded goods, has unveiled its own brand - with a warning that anyone who tries to copy it will be held liable. The first items to bear the Silkstreet name, include ties, shirts and scarves, as well as household items such as tablecloths. They are marked “quality guaranteed” with a label that tells buyers that “the goods are certified by the Silk Street Market. If any quality problems are found, the market will bear the responsibility of compensation.” Wang Zili, general manager of the market, told the Beijing Evening News: “Silkstreet products are sold exclusively in the market. Anyone using the brand outside will be held liable.” Nearly 100 stalls connected with 39 market shops will be entitled to sell the goods initially. T-shirts, jeans, knitted goods, jewelry, luggage and other items will be added to the product line, Wang said. Those now authorized to sell Silkstreet products had to have a good business record, said Wang, with “no record of selling fake or shoddy products within six months and no [customer] complaints.” Most of the Silkstreet items come from the factories of famous Chinese manufacturers. For instance, shirts come from the century-old silk company Ruifuxiang, according to the newspaper. The Silk Street (Xiushui) market in eastern Beijing’s Chaoyang District has long been popular with overseas tourists, who have been flocking there to buy counterfeit luxury clothes and accessories since 1985.

Source: Hands off our brand, says silk market

via Shanghai Daily: National by on 1/25/08

New Zealand is close to a free-trade agreement with China and Trade Minister Phil Goff is confident a deal will be signed in April after final details are worked through.

Source: Goff confident of China trade deal

via: NZ Herald

Big news for all NZ exporters.

Formal talks for a free trade deal between New Zealand and China have been completed and all the contentious issues resolved, New Zealand Trade Minister Phil Goff said Monday.“I believe that we will become the first developed country in the world to sign a free trade agreement with China, which within 20 years could well be the world’s largest economic power,” Goff told Radio New Zealand.

There was still a lot of work to be done to finalise the drafting of the 1,000-page trade agreement, he said.

The New Zealand government has previously said it hopes to complete the deal by April.

Fifteen rounds of talks have been held between the two countries on the trade deal, with the last being held in December.

Prime Minister Helen Clark previously identified New Zealand’s dairy exports as a sticking point in the talks.

Trade between the two countries is worth about NZ$6.2 billion (US$4.7 billion) annually.

Source: New Zealand says FTA talks with China completed
Posted: 21 January 2008 0832 hrs

The consumer goods retail sales in China have surged 17 percent to stood at 8.9 trillion yuan (about 1.2 trillion U.S. dollars) in 2007, said the Commerce Ministry at a work conference on Saturday.

Source: China’s retail sales of consumer goods reach 8.9 mln yuan in 2007

via China Business on 1/20/08