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Country Analysis China

Gaurav Bagwe Yashasvi Sanghavi Apurva Kulkarni

Flow of Presentation
History Society Education and Languages National Anthem and Flag Geography Economic Policies and Reforms Business Etiquettes and Customs Growth and Development of Pharma Clusters

China
The Peoples Republic of China Origin: First emperor Qin and Qin dynasty Meaning: Middle country Population: 1.3 billion 2nd largest economy in the world 23 provinces (incl. Taiwan), 5 autonomous regions, 4 municipalities and 2 special administrative regions

Chinese History
Three Eras: 1.Ancient China (2100 BC - 256 BC) 2.Imperial China ( 255 BC 1911 AD) 3.Modern China (1912 AD - Present)

Chinese History
Before 221 BC: state rivalry and battle for control China united by Qin - 221 BC Han Dynasty - 206 to 220 AD Chinese majority Tang Dynasty - 618 to 907 Silk route Yuan Dynasty - 1271 to 1368 First foreign dynasty (Mongol) Ming Dynasty - 1368 to 1644 The Great Wall Qing Dynasty - 1644 to 1911 Second foreign dynasty (Manchu)

First Emperor Qin

Chinese History
1912 to 1949 : Republic of China Years Internal struggle for Power 1st Oct 1949 : National Day Peoples Republic of China 1978 : Reforms, Democracy Movement Rapid Economic growth 2001: China joins WTO 2003: Hu Jintao becomes President 2008: Olympic Games held in Beijing

Mao Zedong

Deng Xiaoping

Chinese Society

Family Pinnacle of Society; Consider family bonds sacred Patriarchal Elaborate wedding celebration culture Recent One child Policy

Chinese Society
"At the end of the day, the Chinese are very pragmatic. If you have something they want, they'll do business with you no matter whether you can hold chopsticks or not. - Stephen Perry President of the 48 Group Club, (an independent business network promoting business relations between China and the UK.)

Age structure and Gender Distribution of the population

0-14 years: 24.3% (male 163,821,081; female 148,855,387) 15-64 years: 68.4% (male 452,354,428; female 426,055,713) 65 years and over: 7.3% (male 43,834,528; female 49,382,568)

Culture and Believes


Yin and Yang Interconnectedness and interdependence of seemingly contrary forces in the nature

Chinese Dragon Symbol of Wisdom, Power and Luck Chinese as descendents of Dragon Nine different types

Religions

30 42

Folk religions and Taoism Buddhism Christianity Ethnic Minority Islam

18
2

Atheist

Education System in China


The Compulsory Education Law Nine years of formal education Basic Education Higher Education Adult Education

Languages
292

living languages and 1 extinct language

Standard Chinese Putonghua official national language spoken Cantonese- Hong Kong and Macau

Tibetan Tibet Autonomous Region Mongolian Inner Mongoli

National Anthem
March of the Volunteers Tian Han (Poet and Playwright) Music composition by Nie Er Musical march First performed as part of a 1934 Shanghai play Official Status in 1982

National Anthem
Chinese Pinyin English

Qli! Byun zu nl de rnmen! Arise! All those who don't want to be slaves! B wmen de xiru, zhchng wmen Let our flesh and blood forge our new Great Wa xn de chngchng! As the Chinese people have arrived at their mos Zhnghu mnz do lio zu wixin de perilous time. shhu. Every person is forced to expel his very last cry. Mi ge rn bi pzhe fch zuhu de Arise! Arise! Arise! hushng. Our million hearts beating as one, Qli! Qli! Qli! Brave the enemy's fire, March on! Wmen wnzhngyxn, Brave the enemy's fire, March on! Mozhe drn de pohu, qinjn! March on! March on! On! Mozhe drn de pohu, qinjn! Qinjn! Qinjn! Jn!

Flag

5 Stars red flag Red: Communist Revolution Five stars and their relationship: the unity of the Chinese people under the leadership of the Communist Party of China The larger star: Communist Party of China, four smaller stars: the four social classes 1. working class, 2. the peasantry, 3. The urban petit bourgeoisie 4. the national bourgeoisie

Geography of China
3RD LARGEST COUNTRY- 9.6 million sq.

China- Topography
China is divided into 5 physical macro regions1. Eastern China-(Northeast plain, north plain, and Southern hills) 2. Xinqiang-Mongolia 3. Tibetan-highlands
LAND FORMS CHINA MOUNTAINS PLATEAUS BASINS AREA( million) sq. km) 9.6 3.2 2.5 1.8 PERCENTAGE OF TOTAL AREA 100 33 26 19

PLAINS
HILLS

1.15
0.95

12
10

land is high in the west and descends to the east coast

Eleven of the 17 tallest mountain peaks are located on China's western borders.

MOUNTAIN MT EVEREST K2 LHOTSE MAKALU CHO OYU GHYUCHUNG KANG GASHURBRUM 1 BROAD PEAK GASHERBRUM 2 GASHURBRUM 3 GASHURBRUM 4 SHISHAPANGMA

HEIGHT( meters) 8848 8611 8516 8485 8188 7952 8080 8051 8035 7946 7932 8013

Rivers
50000 rivers, totaling 420000 kms. 4 major rivers- 1)Yangtze-6300 kms , 2) Huang he (Yellow river)- 5464 kms , 3) Heilongjiang (Black dragon)-3101 kms , 4) Zhujiang (Pearl)-2214 kms

Major Cities
Energy and Minerals Worlds largest producer of Antimony, Natural graphite, Tungsten, Zink. Chinas hydropower potential is largest in the world. Demographic geography The demographic occupation follows the topography and availability of arable lands.

Land use 14.86% (about 1.4 million km) of Chinas total land area is arable. About 1.3% (some 116,580 km) is planted to permanent crops and the rest planted to temporary crops

Energy and Minerals Worlds largest producer of Antimony, Natural graphite, Tungsten, Zink. Chinas hydropower potential is largest in the world. Land use 14.86% (about 1.4 million km) of Chinas total land area is arable. About 1.3% (some 116,580 km) is planted to permanent crops and the rest planted to temporary crops

Demographic geography The demographic occupation follows the topography and availability of arable lands.

Climate The climate of China is extremely diverse; Tropical in the south to subarctic in the north.

Environment Air pollution (sulphur dioxide particulates) from reliance on coal is a major issue. The eastern part of China often experiences smoke and dense fog in the atmosphere as a result of industrial pollution. China is a party to the 1. Antarctic-Environmental Protocol. 2. The United Nations Convention to Combat Desertification. 3. The Hazardous Wastes. 4. Agreements on Marine Dumping. 5. Ozone Layer Protection. 6. China has signed, but not ratified the Kyoto Protocol. 7. Nuclear Test Ban treaty.

Boarder disputes
Western sector-41,000 km Pamir Mountains area- With Afghanistan, Pakistan, the Soviet Union. Northeast- With Soviet Union China signed an agreement with Russia on the delimitation of their entire 4,300-kilometerlong border, which had long been in dispute. Other border disputes-Taiwan, Aksai Chin, the Trans-Karakoram Tract, and South Tibet.

India- China border dispute

Economic Reform
Started in December 1978 by reformists within the Communist Party of China (CPC) led by Deng Xiaoping. Economic reforms introducing capitalist market principles began in 1978 and were carried out in two stages.
1st phase
Decollectivization of agriculture

2nd phase
Privatization of SOEs

Open door policy Permission for entrepreneurs to start up businesses.

Lifting price controls

protectionist policies, and regulations

It doesnt matter whether its is a white cat or a black cat, it is a good cat as long as it catches mice

Four Modernizations: Industry, Agriculture, Science and technology, and National defence

Economic Reforms
Economy prior to reform1949-1978- Mao era- Great leap forward (1958-1961) - Cultural Revolution (1966-1976)

Economic reform1978-1984 Decollectivizing agriculture Household-responsibility system Open door policy- SEZs

Economic Reforms
1984-1993 Privatization of SOEs Tiananmen Square protests of 1989 Shanghai Stock Exchange reopened after 40 years. Private sector surpassed the state sector in share of GDP for the first time in the mid-1990s. 1993-2005 Large scale privatization Tariff reduction. WTO

Economic Reforms
2005- PRESENT Reversal of some of Deng Xiaoping's reforms in 2005. Adoption of more egalitarian and populist policies. Increased subsidies and control over the health care sector. Halted privatization and adopted a loose monetary policy.

Economy

Currency- Renminbi (people's currency)-Yuan ()- (CNY) Subdivided into 10 jiao or 100 fen The renminbi is issued by the People's Bank of China, the monetary authority of the PRC.

FACTORS POPULATION GDP( NOMINAL) GDP PER CAPITA

CHINA 1.3 billion $8.250 trillion(2nd) $6248 (90th)

INDIA 1.21 billion $1.848 TRILLION(10th) $1514 (139TH)

GDP GROWTH
EXPORTS IMPORTS INFLATION FOREIGN RESERVES FDI POPULATION BELOW POVERTY LINE UNEMPLOYEMENT AVERAGE GROSS SALARY EASE OF DOING BUSINESS

7.4%
$1.904 trillion $1.743 trillion 1.7% (CPI) $3.28 trillion $116 billion 29.8%( less than$2) 4.2% $457 monthly 91st

5.3%
$299.4 billion $461.4 billion 9.9% (CPI) $295.29 billion $47 billion 68.7%( less than $2) 9.4% $1410 yearly 132nd

China today
Considered Communist but acts Capitalist No cult dictatorship like Mao Government structure is still communist and there is only party. GDP has grown at an annual average rate of 10 % for 30 years Largest exporter, second largest importer, second largest trading nation in the world China became worlds second largest economy in 2007

Banking in Mao ERA


In 1949 the

Banking in Post Mao Era

Bank of China (BOC)

People's Bank Of China took over


functions of central bank (regulation and monetary policy) functions of commercial bank (control on all banking business)

Industrial & Commercial


Bank of China (ICBC) China Construction Bank (CCB)

Agricultural Bank of China (ABC)

China today
Considered Communist but acts Capitalist No cult dictatorship like Mao Government structure is still communist and there is only party. GDP has grown at an annual average rate of 10 % for 30 years Largest exporter, second largest importer, second largest trading nation in the world China became worlds second largest economy in 2007

Business Etiquettes and Customs


The initial approach
Chinese business contacts are mostly referrals. Address a person using his or her family name only. Business interactions between men and women are conservative.

Business Etiquettes and Customs


Chinese business relationship inevitably becomes a social relationship after a while.

Seniority is very important to the Chinese


When giving out a name card or receiving one, ensure that you are stretching out with both hands with the card. In China, it is assumed that the first person that enters the room is the head of the group.

Business Etiquettes and Customs

Giving Face or Gei MianZi Do not underestimate the concept of losing face. Complimenting someone on their business acumen in front of their colleagues is an easy way to win points.

Lunch/Dinner in China
There is no business talk in China without at least one trip to a restaurant. Sitting positions in a meeting room or a dining table is accorded accordingly to rank, importance and seniority. Try to master chopsticks before you arrive in China. Frequent toasts are not unusual. Do not toast to a woman. Always bring a gift (fruit or flowers or something from your own country). Take your shoes off at the threshold.

Business Etiquettes and Customs


Dress Code
Conservative suits for men with subtle colors are the norm. Women should avoid high heels and short sleeved blouses. Men and women can wear jeans. However, jeans are not acceptable for business meetings.

Business Etiquettes and Customs


Controversial Issues in China Dont mention that Taiwan is an independent state or a country Always keep in mind Dont praise Shanghai in front of natives of Beijing and similarly vice versa.

Smile Be professional Giving face Make friends Bring a large supply of business cards. Do learn a few words of Chinese

Growth and Development of Pharmaceutical Clusters

Market profile and Structure (2012)*


Total value of the healthcare industry : CNY 1691 Bn ($ 249 Bn)* (Growing at 22 +%)
Total pharmaceutical industry - $ 52 Bn Patented drugs 10%

Healthcare Expenditure 4.6 % GDP (India 4.2 %)


Per capita expenditure - $ 309 (India 132) Govt expenditure on health as % of total govt expenditure 12 % (India 4.3)
*www.who.org

OTC 27% Generic drugs 63%

Pharma Stakeholders
CHINA
Pharma companies Retail pharmacies 5,000 6,000 58,065

INDIA
9,000 3.5 lakhs

Hospitals
Health centres/clinics

30,000
3.3 lakhs

15,000
1.6 lakhs

* www.cia.gov, www.who.org,

Chinese pharmaceutical guide

Health Profile
Birth rate (per 1000) Death rate (per 1000) Under 5 Mortality rate (per 1000) No of Physicians (per 1000) Hospital beds(per 1000) China 12.29 7.01 deaths 19 1.4 4.06 India 20.97 births 7.48 deaths 47.57 0.59 0.9

No of adults with Diabetes


Prevalence of HIV Prevalence of Tuberculosis

43.2 million
0.1 % 3.8 per 1000
* www.cia.gov, www.who.org,

50.8 million
0.3 % 3 per 1000
Chinese pharmaceutical guide

5 tips to carry out business in china


China is a mosaic of markets Business culture and etiquette Taking a market-based approach Build a strong local team

Procedures in China take time, patience and money

Domestic companies in china

CRO OTC
CHINESE PHARMACEUTICAL MARKET

R&D

TCM

TAX

TCM
TCM is a medical system developed in China about 3,000 years ago. It is based on the concept that ones health depends on a constant struggle between various opposing forces (e.g. yin and yang, or hot and cold). Excesses or imbalances in the body cause sickness or disease, with Chinese herbal medicines helping to restore balance and nurse the body back to health. Beyond their implicit meaning, Chinese herbal medicines actually comprise a combination of herbs, minerals and animal products.

OTC
Chinas OTC market, valued at US$7.45 billion in 2011, Accounts for 22% of the overall pharmaceutical market Competition is expected to increase as more and more global players try to break into the OTC market. Persistent and aggressive advertising as well as brand building may be two strategies that firms might use to distinguish their products.

Challenges for the OTC market Need for more product quality Packaging design improvements Increased access to better distribution channels

Leading Chinese CROs are able to offer contract research services at costs significantly lower than that of Westernbased CROs. At the same time, Chinese CROs have shown an increasing ability to meet Western standards in drug quality and safety.

CRO

Factors that have contributed in making it an attractive destination for outsourcing are 1. Cost and time saving 2. Talent pool 3. Patient pool 4. Animal resources 5. Chinas Rapid economic dev elopment

R&D
CRO fuelled by a strong and steadily growing economy, China has emerged as an increasingly attractive R&D outsourcing destination for foreign pharmaceutical companies trying to reduce their products time and cost to market

China currently offers a number of key advantages for conducting domestic pharmaceutical research:
1. Lower cost 2. Talent pool 3. Patient Pool 4. Pharmaceutical and biotech clusters 5. Government support

TAX
High/New Technology Enterprise (HNTE) incentive CIT super-deduction Income tax exemption for the transfer of technology

Disease acceleration in china

1/3 rd of the worlds smokers are chinese

Lifestyle related diseases which are accelerating are Obesity ,Diabetes , cardiovascular ,Chronic respiratory diseases

China will have 38 million diabetic patients by 2025, almost double the projections fromt hat of the US

840,000 known HIV/AIDS victims are between 20 and 39 years of age .

CHINESE CLUSTERS
Chinese silicon valley
The Beijing Zhongguancun Science Park (1988) - Beijing (249 hectares). It houses - 6 biological research institutes as well as R&D centers
for Novo Nordisk and Genzyme.

Stated strategy of: 1. Attracting investment from within the top 500 pharmaceutical companies 2. Attracting Chinese biotech companies to undertake R&D 3. Establishing a SME business centres 4. Establishing an incubator to support new company growth.

Beijing Zhongguancun Science Park

Guangzhou Development District


Formed in 2002 - merger of four state level development zones in Guangzhous east.
It is the most successful of overall 54 state-level development zones in China. It ranks first in terms of gross zonal product, added value and tax revenues.

More than 2700 foreign invested companies from 60 countries are located in the district.

3. Shenzhen HTDZ 2. Zhangjiang HiTech Park (established in 1992)

4. Chengdu HTDZ

1. Xian Hi-Tech Development Zone (established in 1991)

Hi Tech development zones (53)

5. Wuhan HTDZ.

Regional Life Sciences clusters


Yangtze River Delta cluster (includes Shanghai, Suzhou, Wuxi: pharmaceutical R&D, bioengineering; medical devices, biomedicine and medicine)
Beijing cluster (includes Tiajin: focussed on biopharmaceutical, medical devices) Pearl River Delta (South) cluster - (includes Shenzhen, Guangdong and Hong Kong: focussed on medical devices & low cost manufacturing) Central cluster (includes Chengdu, Chongqinq and Xian: traditional chinese medicine (TCM), medical devices, biomedicine

IN The FUTURE

Key drivers for growth in China


Quality

Modernization of traditional Chinese medicines

Innovation

Focus on Biotechnology

Affordability

Future Potential

Every big Company focusing in this region

Changing the way Drugs are invented tested and even regulated

Leaders In the Pharmaceutical World

References
http://www.economist.com/topics/chinese-economy http://www.economist.com/news/finance-and-economics factsanddetails.com edition.cnn.com afe.easia.columbia.edu www.nytimes.com www.collectiveresponsibility.org www.cleanergreenerchina.com www.inchina.cc www.doingbusiness.org www.tradingeconomics.com

XIE XIE