china and its neighbors 2005
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29111311 Haidir Afesina29111328 Hendra Winata
29111329 Mita Listyatri29111338 Andek Prabowo29111344 Aprian Eka Rahadi29111384 Chairunnisa Mirhelina29111387 Franciscus Xaverius Kresna Paska29111393 Agung Indri Pramantyo
CHINA and
Its Neighbors in
2005
MM5005 Business Economics
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Economy
Analysis
Milestone
Challenge
AnalysisRecomme
ndation
Facts
Outline
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Facts#
In 2003, China became
an Asian economic powerhouse
with GDP of US$1.4 trillion
andthe 2nd largest recipient of FDI worldwide
make them the leading among developing economies
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Y= C + G + I + (X-M)
Economic
Growth
Domestic
Consumption
Investment
Government
Spending
Export - Import
GDP Formula
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Facts#
In 2003, China became
the world`s 7th largest economy
using market exchange rates
butthe world 2nd largest economy
using purchasing power purity rates
Per capita income in 2003 was US$1,100 (market
exchange rates) butUS$ 4,995 (ppp)
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Challenge
ECONOMIC GROWTH
GDP DOMESTIC CONSUMPTIONGOVERNMENT SPENDINGINVESTMENTNETT EXPORT (EXPORT IMPORT)
11,963 RMB BILLION = US$ 1.4 TRILLION
Worlds 7thLargest Economy
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Challenge
hundreds ofmillion
people liftedout of
poverty
U.S.$ 1.100
Its NEIGHBORS
COUNTRYHINA
FORCE MOVE
CONTINUE PRE-EXISTING PATH
vs
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Porter`s Diamond Analysis
Firm
Strategy
Rivalry
DemandCondition
Related
SupportingIndustries
Factor
Condition
Chance
Government
Growth population
Highest
Saving Rates in 2003
Low technology
Become Globe`s factory
(low & light manufactured)
Communist Politics
Policy: cut tariffs, WTO
Benefits for investor
Growing
economy
attracts
FDI
Domestic
Company
Expand
overseas
Invest on
technology
Skills and
knowledge
Supporting
Infrastructure
(supplier andraw material)
Emerging economyEconomy in transition
Private sector economy
Environmental problem issue
The RMB is stable
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Facts#
China became an export oriented country
especially on textiles, machinery and electronic products
by making substantial cuts in import barriersthat attracts international trade
And make them the world`s 4th leading exporter
And3rdleading importer in 2003
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People
High
population
Low
skilledNeed jobs Low wages
Attract investor
(save labor cost)
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RMB (Yuan)
Chose not to devaluate, even they can
set it higher
Trusted as international trade currency
Use USD in trading
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Neighbors Analysis
Region
ASEAN
FDI as Growth
engine for the region
High Labor
but cheap wages
Easy andcheap raw material
FDI will be shifted to China
The Shanghai Five
Cooperation on
security, military
and economic
Resources and intermediate
goods
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Facts#
China avoided the worst of Asian economic crisis in
1997-1999 due to
its closed capital account,large foreign reserve position,
the austerity programed introduced in 1993
andmassive public expenditures
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Macro Economy Social Culture
Chinese people areeverywhere around the world
High GDP
Mostly people
in the rurals
Government
is rich
People are poor
Need money and
jobs
Entreprenuer &
family business
Expand
Work harder to live Hard worker to be rich
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Macro Economy Market
Growth in 2003Auto sales : 500.000 (1997) 2 millionsMobile telephone : 13.8 million (1997) 269 millionHome mortgages : US$2 billion US$142 billion
High DomesticConsumption
Industrial Marketincrease
High
Domestic Demand
High Growth
POTENTIAL MARKET
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Internal
Support
Political
Influence
Global
Support
Strong
GovernmentSupport
Economic
Condition
Growth
Macro Economy - Political Legal
Communist party(political power)
Economiccontrol
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Macro Economy - Technology
Fast Adopt & Customize
Innovation R&D
MyPad vs iPad
Source: Intelligent report, 2005
Compettitve flexibility
Internationalization of R&D
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Recommendations
Innovation in technology
Invest in Knowledge and Education
(build highly education system and competitive)
Try to develop other industry to attract other FDI
Eg. Tourism
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