Why should SMEs Focus
in China
Market?
Since
China
opened its economic door in Y1980 by the late Chinese leader Deng Xiaoping, no
one would have expected then of the humongous stride in its achievement in just
30 years’ time. Just after China
celebrates its first 30-years benchmark of new economic policy, we have seen a
great leap in its world status ever since it was admitted into World Trade
Organization in Y2001.
What
is left behind for our wild guess is how much more China can achieve when it is
stepping into the threshold of next 30-years from Y2010. As late Deng said, the
first 3 decades were only meant to consolidate infrastructure and hardware
foundation. The second phase of another 3 decades will be the genuine
development of economic growth after the first stage was done properly.
Looking
at the current global economy, China
has fast risen to become the second largest economy in Y2010 bypassing Germany and Japan . As China has 23
provinces with many aggregate cities within them, it is tongue-wagging to read
that less than 1/3 are classified as first-tier cities now but already
submerged in the rapid inflation and fast-growing expansion. Indeed, it may
take another 3 – 5 decades to fully develop only just ½ to 2/3 of the aggregate
cities nationwide.
While
U.S. is still reputed as the
world’s largest economy but suffering in economic fatigue, China has been
struggling with stoking growth that many Chinese mainlanders are finding hard
to cope with quick rising prices. Besides being the country that holds the
largest foreign currency reserves valued at USD2.6 trillion, below are many
reasons why SMEs should streamline their attention to develop businesses in China :
1)
In Y2009, China
sold 13.6 million vehicles as reported by Association of Automobile
Manufacturers, passing the sales record of U.S. auto-sales for the first time
that recorded at 10.4 million.
2)
On 13 August 2010, Agricultural Bank of China has the
biggest initial public offering in the world’s record at USD22.1 billion.
3)
According to Internet Network Information Centre
in China , there was an
estimated 420 million online users in Y2010 that is already larger than the
whole population of U.S.
economy.
4)
China
overtook Germany as the
world’s 2nd largest exporters in Y2009, chalking USD1.2 trillion
worth of overseas shipment compared to USD1.1 trillion worth of exports in Germany .
5)
In Y2009, China
became the largest energy consumer in the world with 2252 million metric tons
of oil usage compared to 2170 million metric tons consumed by U.S. population
in previous year. Just as it was ranked
as the world’s top energy user, china has also become the top carbon emission
nation. According to Netherlands Environmental Assessment
Agency , China
emitted 14 percent more greenhouse gases in Y2007 than the U.S.
industries.
6)
Today, China manufactures the largest
production of solar cells in the world with more than 1/3 of total production
comes from Mainland. Just as the green solar energy expands fast enough
throughout the world as a low cost and highly effective energy source, the
global demands rose 51 percent in Y2010 while 95 percent of solar panels made
in China
are sold overseas.
7)
The U.S. and the westerners are
well-known to be good beer drinkers. This fact has no more been valid till
Y2002 when the Chinese took over the beer mugs due to escalation of more rapid
growth in economies. In Y2008, Kirin Institute conducted a global research and
reported that China ’s
drinkers have literally drained away ¼ of the world’s beer into the stomach.
Where else can it be?
8)
According to World’s Health Organization, China has
always been the largest producer and consumer of tobacco. To many Chinese,
smoking is more like a tradition of manhood that has been passed down since
last century when great politicians appeared in media exposure with cigarette
held in their hands. Till date, China
is one of the few countries among the modernized nations that does not restrict
smoking in public areas like restaurants, offices, air-conditioned
environments. Being well-known for its superb low prices in tobacco production,
China
has 320 million smokers that equates to 1/3 of all smoking community on the
planets!
9)
China
is the world’s biggest rare earth producer, a mineral that is essential in
making mobile equipment, batteries in hybrid cars, catalysts in cutting exhaust
emission in automobiles and wind turbines. The biggest importers of rare earth
are U.S. and Japan for
high-industrialized usage. According to China ’s Chamber of Commerce of
Metals, Minerals & Chemicals Importer & Exporters, the mainland miners
have been providing 95 percent of global shipment out of 17 rare earth
metals.
Sound
fantastic? Perhaps, we will have more compiled data in this new decade that put
many facts on China
to be the truly world’s number 1 economy. As the world’s emerging markets are
rising rapidly, basic resources like water, food supply, energies will become
great necessities in addition to being scare on earth.
For
SMEs, it is best to identify a new market for expansion with the most essential
factor backed up by large consumer spending. In China , there are just too many
business roles to be considered covering from the extensive internet community
in addition to the population of 1.3 billion people walking on the streets
everyday.
Businesses
involving in energies and commodity –related fields are the utmost industries
while consumer services are separate enlarging sectors that have been growing
massively with rising retail spending in China .
Realty and manufacturing industries are in current boom-time with more upside
potentials when one can manage risk cautiously in the different tides of
Chinese economy.
In
our opinion, it is good to stay observant in China ’s
progress. Moving into the future, many more new-era technologies will be
developed in this country to meet the increasing consumer demands as well as
managing the shortages in resources output!
DAR Wong is the Principal Consultant of
APSRI with 22 years of investment and trading experiences in financial markets.
The expressions are solely his own. He can be reached at dar@pwforex.com
Date:
9 Jan 2011
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