Doing Business in AsiaWilliam Chu

International Trade Division North Carolina Dept of Commerce

2010 April

China

Beijing

Shanghai

Guangzhou Shenzhen

Hong Kong

Macau Taiwan

Canton Fair

• China’s No. 1 fair• 15,000 products varieties on display• 40% of China’s newest product in exhibit• 22,320 exhibitors @ 12 million ft2 floor space• 188,170 buyers• 55,927 display booths • Brought in US$30.5 billion businesses @ show in

2009• 53 years in history of making

Interzum Guangzhou 2010

Global Real GDP (annualized quarterly growth rates) Global

Developed Economies

U.S.

U.K.

Euro Area

Japan

Emerging Economies

China

India

Brazil

EMERGING GLOBAL

DEVELOPED

China & India on Global Recovery Driver Seats

Source: International Monetary Fund

CHINA China &

ASEAN

How to Enjoy Zero Tariff?

Meet one of the following conditions:• Products are completely

originated in China;• The value of the materials

coming from other than China and ASEAN countries is less then 60%; or

• Products are produced by sufficient processing the materials coming from other than China and ASEAN countries.

How Does ASEAN Cope with This Sweeping Change?

• Not so 10 years ago, the trade balance titled to ASEAN.

• Today: -– Chinese competition has growing louder– A direct competition with Chinese firms will be deadly– A lower cost of capital– A lower wages in China– A limited accountability to shareholders– Chinese investments are sweeping in ASEAN– ASEAN becomes a popular place for Chinese

investments– ASEAN in general accept Chinese quality with low

pricing

Opportunities & Challenges

In Asia Markets

Emerging Asia Market

• Economic expansion policy in general.• Export trade returning – especially the demand from

China market which is helping the region to flourish• Rising inflation with low household’s debt pushes up

consumers’ spending.• Rising exports in Vietnam made them the fastest GDP

growth in the 1st half of 2010.• Indonesia is the largest nation in ASEAN and

accounted for 60% consumer spending. The growth will get stronger due to a boom in domestic investments.

• Malaysia has a strong and stable economy and it is one of the fairly mature market in ASEAN.

Risk Factors in Emerging Market

• Full recovery is not yet proven.• Majorities depend on the export

markets aboard which are facing slow recovery and not yet quite normal.

• Government’s economic stimulus can’t last forever.

• Increased the consumers’ spending to correct global recovery is not an easy task.

• Increased risk from capital asset bubble.

Huge Market Potential in the Asia Emerging Market

Opportunities in Asia Emerging Market

• Rising middle-class consumers• Cities migration• Modernization in retail sector• Sell goods directly to retailers or at

help of distributors• Opportunity in building brands

Market Entry Strategies

• Don’t dump products that do not sell well.• Introduce quality products similar in here.• Products with good features and

reasonable price fetch success.• Created branded product to standout from

domestic goods.• Provide warrantee and after-sales services

especially to electronic items.

Challenges and Risk Factors in the Emerging Markets

• Stability in government and fiscal budget

• Bureaucracy, corruption and protectionism

• Infrastructures not sound• Retailer sector immature • Purchasing power is limited

Developing Chinese Market

• Major cities in China’s coastal region has a faster phase of recovery.

• Government’s stimulus packages to help rural development benefited the purchasing power in the 2nd and 3rd tiers cities.

• The stock market and housing price surged increased demand for medium- to high-end goods.

• Market the trendy products to meet the need of affluent class.

• Consider using several market channels for penetration – franchise store is a popular one.

China’s Super-Rich Population Hits 825,000

William Chu, Representative

State of North Carolina Asia Pacific Office

Room 805-6, Tesbury Center, 28 Queen’s Road East, Wanchai, Hong Kong

Tel： 852-28650555‧Fax： 852-25270819Email：wichu@netvigator.com

Thank You!