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An overview of Chinese

Prepared by: WallyDate : 03/02/08

Charmer Business Consulting

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China has 56 ethnic groups, including Han and 55 minorities.

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Battik

Wood mask

SculptureShadow stone carving

Minorities own rich artistic culture.

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Minorities culture also offers business opportunity. (an example of room decoration)

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Bright side: Some examples of Chinese active abroad

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Bright side: Achievements gained by Chinese.

Tianqiao Chen, one of the richest Chinese at 32, is credited with creating China's online game industry.

Liwei Yang, the first Chinese blasted into space.

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Bright side: Prosperous metropolitan life

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Summary

We are proud of our enriched multinational culture.

Like any other country, China is not perfect.

China is entering into the international stage with a dynamic power.

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Beijing and Shanghai at a Glance

-What you may not know yet

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The Origins

Beijing （北京）Date: 770 BC to 476 BCName: （蓟， ji ）

Shanghai （上海）Date: Around the 5th centuryName: （沪，扈， hu ）

What happened in West at that time?The first recorded Olympic game – 776 BCFall of Western Roman Empire – 5th century

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Food – Beijing

Beijing Duck

Beijing Noodle (with meat sauce) Beijing Noodle (with meat sauce)

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Food - Shanghai

Shanghai Crab

Shanghai WontonShanghai Wonton

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Housing - Beijing

Beijing Courtyard

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Housing - Shanghai

Shanghai Shikumen

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Bars - Beijing

Hou Hai

San Li Tun

Chao YangChao Yang

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Bars - Shanghai

Xin Tian Di

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What are happening

Beijing 2008 Olympic Games

Shanghai 2010 World Expo

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Q&A

Fish Antelope

Flame

Panda Swallow

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China’s Economy

An emerging power

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A Mixed View

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Quickening Pace

0.00%

5.00%

10.00%

15.00%

20.00%

2000 2002 2004 2006

Percentage Change in GDP

China

U.S.

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Facts

China’s GDP increased from $1.1 trillion to $1. 82 trillion from 2000 to 2006China's foreign-exchange reserves jumped more than $200 billion in 2006 to reach $1066.3 billion China has about $1 trillion in personal savings and a saving rate of close to 50%. China has 10 billionaires, up from 3 last year. The 40-richest people are worth a collective $26 billion, up from $18 billion last year.

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Regional Development

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Economic Powerhouse Regions

Three Delta Regions

Bohai Sea Economical Circle

Yangtze River Delta

Pearl River Delta

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Northeast and Northwest China

• Northeast China Revitalization

• West China Development 12 provinces

participation

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Business Opportunities in China

-Vertical Industries

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Purchasing power is growing

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Common Infrastructure Investment Demand

Highlights Key Int’l Players Roles Market ($Billion)

Energy Crude Oil, Coal, LNG, Electricity

Exxon, Shell, BP Exploitation,Gas Stations, Chemicals, Investor

150

Telecom GSM/CDMA, 3G, Cell Phone, Internet

Motorola, Nokia, Cisco, Ericsson, Qualcomm, Siemens

Equipment Provider, Local ManufacturerInvestor

80

Transportation Airlines, Railway, Super Highway, Automobile

Boeing, Airbus, GM, Chrysler, Toyota, Honda, Volkswagen, Siemens

Manufacturer, Investor

100

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Investing in China is profitable

Workforce: local and returnees

Environment:• WTO and government policies• Stable business environment

Result:

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Foreign VCs: 70% fundingmore early stateMain sector: IT with semi-conductor (400M)Main regions

Venture Capital in ChinaVenture Capital in China

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Huge Market:

Niche / Emulating

high growth / best management

Clear exit route

Market leaders - IPO, followers - acquired

24 VC-backed IPO in 2004, 4.3 billions

Ctrip.com; Baidu; Shanda; Linktone

VC: Invest and Exit

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Financial Market in China

Banking

system

Foreign investment

New opportunities: Electronic / data / credit system

Financial IT: 3.3 billion

Securities market, QFII

- Goldman, Citi, JPM, CSFB, UBS, ML

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Practical Tips

Understand the market

Visit China

Know and sell the demands

Localize your products

Conduct due diligence and research

Find a strong and experienced partner

Manage realistic expectations

Have a long-term strategy

Have an “exit” plan

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Negotiating with Chinese Company

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Decision Making Procedure

A typical Chinese company can have very different organizing structure, positions and titles from a western company

Not always the one with higher title holds real power

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Pace of Decision making

Western companies: deadline-driven; rapid decision

Chinese companies: the pace can be fast and slow simultaneously

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When “Yes” Means “No”

Chinese people and western people have different ways to express opinion

Negative replies are considered impolite. “No big problem” usually means “there are still problems”

American Way Chinese Way

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The Role of Guanxi

Guanxi=“Network” in Chinese way

Guanxi can help you to get more opportunity to present your company and your products.

Guanxi=“Network” in Chinese way

Guanxi can help you to get more opportunity to present your company and your products.

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Business courtesy

Greeting:

- Handshaking (formal)

- Nod and smile (informal)

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Business Courtesy

Addressing - Family name + Given name - Only family members or close friends use first names - A married Chinese woman usually retains her maiden name

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Business Courtesy

Business card: two hands

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Summary

China has different culture background and different economic system

Do in Rome as Rome does

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China and U.S. mutually beneficial partners

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Two countries behind numbers

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Two countries behind numbers (continued)

• China has $1 trillion in personal saving and a saving rate close to 50%. The US has about $158 billion and saving rate of 2%

• Shanghai has 4,000 skyscrapers-double the number in NYC. Still 17% of the entire Chinese live on $1 a day.

• China has 100 million internet users (second to U.S.’s 135 million) and 300 million cell phone subscribers.

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China as the word’s workshop

2/3 of all photocopiers, microwaves, DVD players and shoes½ of all digital cameras2/5 of all personal computers1/5 of all clothing

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Apex Company was founded in 1997 when a DVD player sold for around $1000.I bought my Apex® DVD player at Wal-Mart in Wisconsin in 2001 for $50.You bet they made every unit in China.DVD becomes household product because of such players.

Myth: =+

Support: China to Wal-Mart: $18 billion/year. $60 per person in U.S.

A True Example:

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The Google guy in China

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The 100 million dollar man

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Happily ever after for in China

11/12/1987, first ever western fast food restaurant was opened in mainland China. In 2002, KFC opened the first-ever drive-thru restaurant in China. In 2004, operating profits for the China Division were more than $200 million and up over 20 percent.

Store numbers2000

Store number2005 5 year growth

U.S. 5,364 5,525 1%

China 400 1400 350%

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Summary

China is now the third-largest trading partner for the United States (after Canada and Mexico). A Rising China provides challenges and endless opportunities for China and U.S., economically and politically.The best is yet to come.

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Welcome to China