Transcript Economic Zone
Springboarding Technology for Commercial Success
Dr. K.B. Chan Chairman and Managing Director Surface Mount Technology Ltd.
November 21, 2005
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Content
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China’s growth & major economic zones
•
Opportunities - Automotive and electronics
•
Partnership with Hong Kong
•
Summary
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Major Economic Zones
CHINA Growth 2005>9% 05/10 > 7.5% Bohai Economic Zone 7+2 Yangtze River Delta (YRD) 6+1 Pan-Pearl River Delta (PPRD) 9+2
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Strength of Economic Zones
Economic Zone 2004 GDP (US$B) Pan-Pearl River Delta (PPRD) Yangtze River Delta (YRD)
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Bohai Economic Zone 735 687 632 % of the Greater China* 34% 32% 29% Annual GDP growth 13% 16% 16% Populat ion million 463 394 350 % of the Greater China* 36% 30% 27% Total 2,054 95% 1,207 93%
1 Includes eastern China, *Includes China, Hong Kong and Macao 4
Source: China Statistics Bureau, Hong Kong Census & Statistics Dept, Macau Statistics and Census Service
Bohai Economic Zone –
7+2
Diversified economy: • Political, culture, R&D center Beijing • Export, manufacturing base Tianjin Major industries/sectors: • Heavy industry, machineries, steel, military Central Government designates as
Third Wave
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Yangtze River Delta –
6+2
• Industry and investment-oriented: Shanghai as the regional leader – banking and finance, industrial manufacturing, tourism • becoming more internationalized Major industries: • • Very diversified Automotive & auto parts , electronics equipment and parts, textile, chemicals, 6
Pan-Pearl River Delta –
9+2
Export -oriented: • external trade of Guangdong accounts for over 30% of China’s total • large numbers of foreign-invested manufacturers in Guangdong, with a high concentration of Hong Kong-invested companies > 60,000 • • Major industries/sectors: consumer goods , light Industries, petrochemical, > 40% are electronic related 7
Opportunities : Automotive Electronics Industry &
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Electronics Production in China
• China is Factory of the World • Advantage – Low cost & huge domestic market • Electronics market – forecast by 2007 300 Billion US$ 20% of world output Growth rate 12%, double of world’s • Largest market – hand set , DVD, TV, • Top 5 – PC, home appliance,
Source: isuppli, 03/2004
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Electronics Output in Major Economic Zones
• Electronic is major industry, highest growth
Economic Zone Pan-Pearl River Delta Electronics Output (2003, US$B) 92 % of the China’s Total 43% Yangtze River Delta 71 33% Bohai Economic Zone Total 43 20% 206 40% of PPRD GDP,Over 80% from Guangdong 96%
Source: China’s Electronic Information Industry Yearbook
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EMS in China to Increase
70 Electronics Manufacturing Services (EMS) Production China 60 50 40 30 20 10 0 2001
Source: iSuppli, June 2003
2002 2003 2004 2005 2006 2007 Mexico (E) Europe US
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Automotive Industry in China
2003 Sales > 100 Billions US$ ; Vehicle Output (Units) Started 1953 > 200 thousand 1971 > 100 thousand 1980 2000 > 3 million > 2 million 2002 2003 > 4 million > 5 million 2004 Vehicle Sales (Million Units) 15 10 13.2
6.3
4.4
5 0 2003 2005 2010
Source: State Information Center – China Economic Information Network
2004 World Ranking
• 4th largest producer • 3rd largest market 12
Automotive Electronics in China
China's Automotive Electronics Market 15 10 5 0 35 30 25 20 2.0
2000 6.6
2003 12.0
2005 30.1
2010
Source: FOURIN China Auto Weekly
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Trend in China’s Automotive Components Industry
• Automotive Output – could exceed 10 M vehicles by 2010 • Automotive Components – over 30% growth • Share of automotive electronic components in a car will increase from 10% to 30% by value • Foreign/ JV auto makers to procure local low-cost and high quality parts and components • Domestic brands increase from 25% to over 50% 14
Partnership with Hong Kong The Advantages
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Position of Hong Kong
• Major economic engine of the Pan-Pearl River Delta, finance and service center • Over 40% of China’s Foreign Direct Investment FDI is from Hong Kong • HK companies operate more than 60,000 factories in Southern China - employing > 10 million workers • 40% of HK Manufacturing GDP is electronics 16 Source: Hong Kong Trade Development Council
Advantages of Hong Kong
• Cosmopolitan city – large number of foreign company • Excellent infra-structure , transportation, telecom • Sound legal and tax system , center for arbitration • Mature equity market • • • Efficient government with no corruption • Easy communication , English, Chinese Risk Management IP Rights protection • Currency management RMB 17
HK - R&D – Technology Developments
• • Administer under ITC – Innovation & Technology Commission – Funding ~ 4 Billion HK$ 8 Universities • Establish 5 R&D centers from 2006 • • • • Auto parts, logistics, textile, nano tech, IT & telecom ASTRI – Apply Science and Technology Institute HK Science & Technology Park – IC design, photonics Cyber Port – Digital entertainment HK Productivity Center 18
Guangdong/HK Technology Co-operation Funding Scheme
• Joint funding efforts between the 2 Government to support R&D projects • 2004> US$ 40 m in 6 areas RFID , Auto-parts, elctronics & IT, energy tech new materials, precision equipments • 2005> US$ 67 m in 6 areas communication, medical & bio tech, new materials green manufacturing, agriculture, 19
HK Companies as Partners
• Understand both International and Chinese cultures, acting as a bridge • Historic link with multinational companies, and foreign countries • Substantial business experience in China, know “
what not to do
” • Fast response • Strong business integrity 20
Summary
• The 3 major economics zones will be China’s economy growth engine > 90% • Pan Pearl River Delta – Super Economic Zone • Bohai Economic Zone is the Third Wave • Electronics and industries automotive will be the leading • Partnership with Hong Kong companies for outsourcing or entering the China market 21
Thank You
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