In terms of commerce, China is rich with opportunities, though fraught with challenges and risks. As an emerging powerhouse, China’s influence in the global economy. Our job at CUBD is to help you maneuver through this challenging maze.

In this section, we will provide you with datapoints about China that will help you in your research and diligence. Check back often, as this will be updated regularly.

China Factoids:

  • China is the worlds most populous nation with 1.37 billion people
  • China is the worlds second largest economy behind the USA
  • China is 5,000 years old and considered the focal point of our worlds heritage of Language, written text, numerous scientific inventions, modern mathmatics, astronomy , calculator (Abacus), magnetic compass, calendar, and paper money for financial transactions 700 yrs ago began in China
  • In the last 25 yrs, population has grown from 975m to 1.3b
  • 25 yrs ago Deng Xiaoping was the Communist leader
  • Today, Hu Jiantao, Engineer and MBA graduate is the leader
  • 25 yrs ago, USA trade with China was $2.3b annually
  • Today, USA trade with China exceeds $200b annually
  • 25 yrs ago, China did not have a stock exchange
  • Today, Shanghai, Shenzhen exchanges are active and many Chinese companies have gone public on all USA exchanges
  • In 2009 Small Chinese companies trading on US public markets grew substantially, and raised more than $1.6billion. The market value of these companies at the end of 2009 exceeds $25billion
  • China graduates >6,000,000 students each year with 45% Engineer/Computer Science degrees

What is China?

  • It is not a single market, but defined by Province/Regions
  • The East is far more developed than the West
  • Urban population accounts for almost 30% of total population
  • There are major income disparities

What about the Government?

  • Strong influence on Business
  • ‘Socialist Market Economy’
  • Central and Provincial levels to deal with
  • Emergence of Professional Technocrats
  • Ongoing Campaign against Corruption
  • China joined WTO in 2001

Common Business Issues:

  • Selling to the market does not mean all 1.3 billion are customers
  • Sourcing is generally limited to east and south coasts based on Infrastructure, Employment
  • Intense competition for products
  • There may be needs for Government Relations Plan
  • Due Diligence is less stringent in China, but important to find what is real in China
  • Personal Relationships are absolutely critical to success
  • Chinese always want to please, and it is hard for them to say NO. Sometimes YES means NO, or YES is not deliverable
  • Plan for a long term view
  • Communications is challenging, so local representation is necessary
  • Personal touch is important. Social/Business is blurred

Intellectual Property Issues:

  • Contrary to common belief, China has made IP protection a top priority
  • There is a dual track protection system, both ‘Civil’ and the ‘Criminal Law’ which took effect October 1, 1997 has set forth provisions against IP infringement as follows:
  • Counterfeiting Trademarks, Selling goods with Counterfeit Tradmarks, Unauthorized manufacturing of Trademarked goods, Unauthorized passing off of patents, Copyright infringement, Selling unauthorized reproductions for profit, Trade secret infringement. These offenses carry 3 year sentences.
  • There are 50 IP Infringement Centers located throughout China
  • From 2002-2006, 54,321 suits were filed and Chinese courts passed sentences on 52,437 cases
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