BRUSSELS (Reuters) – As the Beijing Olympic Games highlight China’s emergence as a world power, the European union is struggling to take a coherent approach to the Asian giant.

Depending on whom you talk to in Brussels, China is a trade headache, an economic opportunity, a serial human rights violator, a resource-guzzling menace to the planet, a strategic partner or a geopolitical threat. or all of the above.

Typically for the EU, no one is in charge of relations with the world’s most populous nation and fourth biggest economy.

“The EU views China still largely through the trade prism,” said an EU official involved in foreign policy. “We call them a strategic partner, but we mostly talk to them about bras and shoes and the exchange rate of the renminbi (currency).”

When the 27-nation bloc’s trade deficit with Beijing hit a record 160 billion euros ($247.4 billion) last year, southern member states that make textiles, footwear and furniture pleaded with Brussels for protection against cheap imports.

How to respond to the rise of the Asian export powerhouse has pitted pro-free trade countries such as the Nordic states and Britain against those such as Italy and France who say China breaks trade rules in ways that cost European jobs.

EU Trade Commissioner Peter Mandelson has done his best to resist protectionist pressure, arguing that China’s export boom has not reduced European prosperity — far from it.

Mandelson, the unofficial relationship manager with Beijing and a frequent visitor to China, is a vocal member of the “economic opportunity” school of thought. 

BRUSSELS (Reuters) – As the Beijing Olympic Games highlight China’s emergence as a world power, the European union is struggling to take a coherent approach to the Asian giant.

Depending on whom you talk to in Brussels, China is a trade headache, an economic opportunity, a serial human rights violator, a resource-guzzling menace to the planet, a strategic partner or a geopolitical threat. or all of the above.

Typically for the EU, no one is in charge of relations with the world’s most populous nation and fourth biggest economy.

“The EU views China still largely through the trade prism,” said an EU official involved in foreign policy. “We call them a strategic partner, but we mostly talk to them about bras and shoes and the exchange rate of the renminbi (currency).”

When the 27-nation bloc’s trade deficit with Beijing hit a record 160 billion euros ($247.4 billion) last year, southern member states that make textiles, footwear and furniture pleaded with Brussels for protection against cheap imports.

How to respond to the rise of the Asian export powerhouse has pitted pro-free trade countries such as the Nordic states and Britain against those such as Italy and France who say China breaks trade rules in ways that cost European jobs.

EU Trade Commissioner Peter Mandelson has done his best to resist protectionist pressure, arguing that China’s export boom has not reduced European prosperity — far from it.

Mandelson, the unofficial relationship manager with Beijing and a frequent visitor to China, is a vocal member of the “economic opportunity” school of thought. 

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Bi was quoted by Monday’s China Securities Journal as saying the huge trade surplus is a direct result of the fiscal and tax policies.

China should improve its policies concerning tax rebates for exports and processing trade, Bi said at an international symposium on the reform of China’s public fiscal policy held in Beijing at the weekend.

According to figures from the General Administration of Customs, China had a record trade surplus of 101.8 billion dollars in 2005, the twelfth consecutive year in which China posted a trade surplus.

The huge trade surplus has led to increased trade disputes between China and its main trade partners and vociferous calls for the appreciation of the Chinese yuan.

A new surplus high in 2006 will bring even greater challenges to the exchange rate of the yuan, the report said.

At the same time, this great trade surplus feature a great time in Chinese economy history, it boasts the great power of china. Because of the great growth of Chinese foreign trade, the china’s economy enjoys a rapid development accordingly, compared to last year. This very fact shows the wise measures of the Chinese government (especially foreign trade) and its flexible control of the Chinese economy.

China economy to grow 10% in 2006

China’s economy will grow by 10.3 percent in the first half of 2006, then slow marginally for a full-year expansion of 10 percent, the central bank said in a new report.

At the same time, inflation will climb slowly, registering 1.3 percent in the first six months of the year and 1.7 percent for the 12 months, according to the report, from the People’s Bank of China’s research bureau.

The forecasts, released over the weekend and published in the Beijing Morning Post on Monday, come despite a stream of government measures aimed at slowing the economy, following growth of 10.3 percent in the first quarter.

China’s economy has showed few signs of responding to the cooling measures, such as an interest rate hike in April and policies targeted at curbing investment in the property sector.

China is the world’s fastest growing major economy, with expansion fueled mainly by investment and exports. It grew 9.9 percent in 2005.

Foreign trade has contributed a lot in the great development of the domestic economy.

-International Trade Policy

Without going deeper, China offers an example of the collapse of the Cold War era trade preferences —a rigid and straightforward export control policy. If there are any growls today, it is that the trade policy is tilted in favor of China and that the playing field is uneven. Politicians and trade representatives from both Republicans and Democrats besides Congress are the policy makers, and since US signed the International trade relations agreement with China, it has taken care of most of the complaints. In addition to signing the normal international trade agreement US has helped China move towards personal empowerment rather than concentrate on economic agendas alone through adapting a long-run policy to normalize international trade relations. Plainly speaking, an international trade is and must be driven by market trends and demands, rather than iron frames and policies must only be made to facilitate benefits of consumers and safeguard it.

-International Trade- Internet based product selection

The present system for international trade with a computer and internet requires you to possess an internet connected computer. Importers will visit vendors’ websites; browse specifications for chosen products. Once done, the products of required specifications can be selected and an order form can be generated for just the selected products of the already selected specification. Before you complete the international trade order, the order can be checked and/or corrected for details of product name, quantity, rate and total price. The order can be cancelled if it is unsatisfactory for any reason. Similarly, confirming it requires importers’ information like name, company’s name contact and shipping addresses, insurance, payment details etc.

With the increasing ratio of communication and exchange of technologies between China and other countries, it has now become easy for companies to get access to new technologies. With the changing liberalization policies in the whole world including China, a good number of companies are garnering benefits from international trade and investments. From expansion point of view many multinational companies in China are increasing their level of work so that they can gain maximum share of international trade and investments. These corporations are also busy in increasing the goodwill of their brand name and are continuously striving to make their presence felt in international trade. On account of increasing competitiveness in international market, multinational corporations are paying sufficient heed to provide qualit

Trade exchange between different cultures and countries has long yielded rich rewards for those who recognize the potential.

After all, as far back as the 1st century BC, merchants and caravans followed the Silk Road – the overland trade route from northern China to the Western World – and brought precious silks, tea and other resources from China to the rest of the world. Not only did linking different countries and cultures prove profitable, but new and greater products and ideas flowed between the countries.

The Silk Road of the 21st century is technology driven. This trade exchange, built on fiber-optic cable, sprang from the Telecommunications Act of 1996. Now, it is the R&D departments of companies from the United States and other countries that benefit from the resources and opportunity found in China.

Today’s China, the fastest growing country in the world, offers the:

• Biggest engineering talent pool

• Biggest emerging market

• World’s number one manufacturing industry

Strengthening ties, country-to-country, people-to-people, has shown time and time again that remarkable achievements, that otherwise would have been impossible, can come to fruition.

Long Circle urges you to explore the opportunities that exist in China today, especially if your business focus is embedded systems technologies for software and hardware.

With our global reach, we could see the importance of China, and we have grown significantly in the past five years in this critical market. Today, we have $5 billion in revenues and 12,000 employees.

GE 2005 Annual Report/

Letter to Stakeholders

Biggest Engineering Resource Pool

The last few years have convinced Fortune 100 companies and start-ups alike that China, home of the fastest growing economy in the world, is key to achieving their strategic plans, as well as the business objectives of their R&D departments. GE, Microsoft, Motorola, Intel, Nokia, Oracle, and SAP are just a few of the multinational companies with R&D operations in China, and for some important business drivers:

o Lower costs

o Lower wages

o Expanded productivity

o Reduced time-to-market

o Strengthened R&D embedded technology engineering resources

Wages are lower offshore, there’s no question about it, but the experience the workforce has must be in product research and development, not IT. With China’s deep pool of engineering talent, especially R&D embedded technology engineers, companies can expand and strengthen their R&D resources.

For example, the Microsoft Research (MSR) Asia lab has engineers working on a wide range of advanced technologies – from spoken-language technologies such as automatic speech recognition to face detection and tracking, face modeling and recognition, cartoon generation, image and video retrieval for MSN, and Xbox camera-based game interfaces. According to Forbes, Microsoft’s investment in all China-related R&D activities is approximately $100 million US dollars annually. In addition, with currently more than 800 employees in China, Microsoft is predicted to grow that number substantially over the next three to five years.

Biggest engineering talent pool; most engineering graduates each year

Engineering Graduates China India United States

Source: Duke University*352,000 112,000 137,000

Source: Unknown ** 600,000 350,000 70,000

*Source: A study released in December, 2005 by Duke University (and also widely quoted in the media, including The Christian Science Monitor) citing the number of engineering graduates in each country yearly.

* Note: Statistics widely quoted, from Fortune Magazine to Senator Ted Kennedy’s speeches. However according to the Wall Street Journal online, these figures are misleading and no one can track down a concrete and reliable original source.

Biggest Emerging Market

How could any organization that wants to be successful in the global arena ignore China today?

China is the world’s most populous country – 1,313,973,713 (2006 est.) – and organizations like the Finnish mobile telecommunications giant Nokia expect China to be a key growth driver for their global operations. Nokia provides equipment, solutions and services for network operators and corporations’ mobile phones and network equipment.

According to Infoworld’s online Web site:

“China has 400 million mobile users and its 3G (third generation) networks are not yet switched on, providing a future avenue for further growth. “ According to a study done by Norson (Hong Kong) Information Technology , “. . . after three years of 3G availability, more than 84 million Chinese will use 3G services.”

Consequently, construction is underway on Nokia’s new and expanded China headquarters, scheduled to open in 2007, that will host over 1500 of Nokia’s R&D, sales and marketing operations, pre-production, logistics, sourcing and manufacturing operations.

During China’s President Hu Jintao’s recent visit to the United States, he attended a dinner at the home of Microsoft’s Bill Gates and called for broadening the relationship between the United States and China.

“Today, many cargo ships are very busy crossing the Pacific Ocean, laden with the rich fruit of our strong trade ties and friendship between our two peoples,” Hu said. “I am sure that with the further deepening of China’s reform and opening up, we are going to see an even broader prospect for the economic cooperation and trade between China and Washington State and China and the United States as a whole.” Source: Reuters

According to the US-China Business Council:

• China’s economy grew 10.2 % in the first quarter of 2006.

• The government’s new focus on balanced growth and its attempt to shift from an investment- and export-driven economy to a consumption-driven one will mean more policies to promote consumption.

• GDP (purchasing power parity): $8.158 trillion (2005 est.)

• GDP – per capita: purchasing power parity – $6,200 (2005 est.)

• GDP – real growth rate: 9.2% (official data) (2005 est.)

• GDP – composition by sector:

Agriculture: 14.4%

Industry and construction: 53.1%

Services: 32.5% (2005 est.) Source: [www.uschina.org]

World’s #1 Manufacturing Industry

China is “the world’s factory” and produces $60 billion worth of consumer electronic goods a year. The “Made in China” label is found everywhere.

When China became a member of the World Trade Organization (WTO), it agreed to abide by WTO standards and regulations, along with the rest of the WTO countries. And this opened up one of the world’s largest economies to the rest of the world. Forward-thinking organizations did not hesitate to capitalize on the unprecedented opportunity.

For example, GE has long regarded China as an essential piece in the company’s strategic plan. According to Jeff Immelt., “We have been there for 15 – 20 years, so we know how to do business. We have been on the ground. We have 12,000 employees. And I think at the end of the day, China is trending towards being a great global competitor and following the rules. And that is important to us and it’s a way that we can be successful as well.”

Today, companies doing business in China find tax incentives, excellent civic infrastructure, government support, a political environment that encourages foreign business, rapid economic growth, a deep pool of engineering talent and college graduates, and improving legal, banking and financial systems.

China Strategy: Choose the Right Road to China

There are basically three paths an organization’s R&D department can follow to successfully gain entry into China. Take time to consider the best route for your company, especially if your focus is in R&D embedded technology.

? Single, Independent Project

Beginning by outsourcing a single, independent project is an excellent way to start on the path to China. Typically, these projects involve software and hardware development, testing, maintenance, or product enhancement. This transaction type outsourcing is turn-key, straightforward, and has a quick ramp up time. An R&D department can:

o Capture an opportunity within a short time frame.

o Boost bandwidth to meet short-term demand.

o Outsource clearly defined short-term projects.

Companies going this route find cost savings through transaction-type outsourcing and capitalize on short-term cost savings.

? Partner Program

A long term, relationship-based service program is another excellent way to leverage China’s technology resources. A dedicated team within the China outsourcing vendor’s R&D department can be created, trained, hosted, and managed exclusively for your embedded systems R&D technology projects. Clients take advantage of lower wages, while benefiting from a team educated on the Client’s corporate values and culture, providing a true business level alignment. A China R&D department can:

o Offload non-core functions.

o Fill in needed skills.

o Increase engineering efficiency.

o Increase return on R&D.

? Offshore R&D Center

Many companies find they benefit most from a one-of-a-kind incubation center that is an extension of their R&D department back home. Building a R&D facility from the beginning and introducing best practices provides the optimal solution to meet your company’s strategic goals.

Your company takes advantage of China’s low cost workforce, manufacturing capacity, and emerging markets and there are no intermediaries or third party costs.

A China R&D Center can:

• Provide confidence and security to handle sensitive data and intellectual property inhouse offshore.

• Train talent according to your company’s unique standards and values.

• Increase talent retention by providing attractive culture and a sense of belonging.

• Share services with other functions of the company.

• Engage in long term innovation-driven research that does not usually generate immediate profits.

• Access the China labor market directly.

Turn to China

Throughout history, new products, new ideas, and new opportunities have come about by crossing borders. The global exchange of trade, expertise, and capabilities means exciting ideas and innovations which benefit everyone.

China today is a country with unlimited opportunity. However, personal connections and relationships are essential to any successful business in China. Would your company like to expand into China, but is unsure about potential roadblocks such as regulations, recruiting, and setup? The right vendor can smooth your way.

In addition to entry into China, a potential vendor’s technology expertise must not be overlooked. For example, does the potential vendor focus on embedded technology? Do they have experience with manufacturers, original equipment manufacturers (OEMs), original design manufacturers (ODMs), independent software vendors (ISVs), system integrators (SI), and value added service providers (VASPs) who rely on embedded hardware and software technologies?

Intellectual property is a concern everywhere, but especially in a new environment. What are a potential vendor’s procedures for protecting your intellectual property?

Remember, when searching for the best route to leverage China’s vast resources and opportunities, it pays to make certain you have the best vendor as your guide.

A journey of a thousand miles

Begins with a single step.

Lao-tzu (604 BC – 531 BC)

Chinese philosopher

About Long Circle

Long Circle provides outsourced engineering services to companies whose products and services rely on embedded software and hardware technology. Long Circle and the Long Circle China Center of Excellence enables U.S. companies to reduce costs, increase engineering bandwidth, and broaden market reach by providing low-risk, strategic access to China’s engineering talent, manufacturing industry, and emerging markets. To learn more about Long Circle, visit http://www.longcircle.com.

  China was included in a group of seven key WTO members who attempted to reach a compromise on the talks seeking a breakthrough in the WTO’s Doha round, reflecting China’s growing importance in the world economy.
  The “tragic failure” of global trade talks is a serious setback to the troubled world economy, Chinese Commerce Minister Chen Deming said.
  “In the face of a world economic downturn, serious inflation and imminent financial risks, the failure will have a major impact on the fragile multilateral trading system,” Chen told fellow ministers at the trade talks.
  Chen expressed his regret that the talks had broken down over differences between two countries — a reference to the United States and India — over a proposal to help poor farmers cope with import surges, despite flexibility by China on a range of trade areas, according to a statement.
  China had shown willingness to compromise on a proposal restricting developing countries’ ability to shield entire industrial sectors from lower tariff cuts. It had indicated its willingess to liberalise some services sectors, he said.
  China was ready to intensify its bilateral links with other World Trade Organisation (WTO) members, especially developing countries, he said.
  China was included in a group of seven key WTO members who attempted to reach a compromise on the talks seeking a breakthrough in the WTO’s Doha round, reflecting China’s growing importance in the world economy.

From:http://www.chinatopsupplier.com/
Tag:China,WTO,trade talks,compromise on a proposal restricting

  China was included in a group of seven key WTO members who attempted to reach a compromise on the talks seeking a breakthrough in the WTO’s Doha round, reflecting China’s growing importance in the world economy.
  The “tragic failure” of global trade talks is a serious setback to the troubled world economy, Chinese Commerce Minister Chen Deming said.
  “In the face of a world economic downturn, serious inflation and imminent financial risks, the failure will have a major impact on the fragile multilateral trading system,” Chen told fellow ministers at the trade talks.
  Chen expressed his regret that the talks had broken down over differences between two countries — a reference to the United States and India — over a proposal to help poor farmers cope with import surges, despite flexibility by China on a range of trade areas, according to a statement.
  China had shown willingness to compromise on a proposal restricting developing countries’ ability to shield entire industrial sectors from lower tariff cuts. It had indicated its willingess to liberalise some services sectors, he said.
  China was ready to intensify its bilateral links with other World Trade Organisation (WTO) members, especially developing countries, he said.
  China was included in a group of seven key WTO members who attempted to reach a compromise on the talks seeking a breakthrough in the WTO’s Doha round, reflecting China’s growing importance in the world economy.

From the beginning of implementation of economic reforms in China the country has experienced cycles of rushes in economic activity and inflation that were chased by phases of retrenchment. In the 1980’s two cycles were finished by hard landings. It could be easily seen in 1986-90 cycle. It started with loosening the monetary and fiscal policies that resulted troubles for SOEs. In 1988 inflation was as high as 19 percent which actually caused the government to respond with reconsidering policies. They managed to take inflation into control but the administrative measures had bad consequences for allocation of resources. Another cycle of 1991-97 started with a rise in government spendings and loosing up bank’s credit policies. In 1992 China faced the investment boom which was quite similar to the one it is facing right now. The investment boom resulted GDP to grow by 14 percent. Demand forces resulted an increase of inflation. Government’s response was a “16-point” plan to cool the economy that they adopted in 1993. The key points of the plan were aimed to rise the interest rates, make the process of giving the loans to commercial banks by the central bank more strict and complicated, and also limit investment approvals. The tightening was reversed by the end of 1993. This was a base for a highest rate of inflation that occurred in China in 1994. It was as high as 24 percent. The government actually achieved the stabilization of economy in 1996, and the inflation was even less than 10 percent. While a soft landing was achieved, the rapid pace of credit growth in 1992–96 contributed to the weakness of the financial sector today. Most of the non-performing loans in the banking system date from this period.

The speed of economic movement in China greatly increased in 2003, regardless the SARS outbreak. The growth of GDP was at a mark of 10 percent for 2003 and it continued to grow with the same pace in 2004. This was mainly caused by great level of investment. CPI inflation was as high as 4.4 percent in May. Overinvestment in some sectors of the economy caused a great threat of a problem. Responding to that, Chinese government made monetary and administrative policies a bit stricter to prevent the potential overheating of the economy. Money and credit rates have decreased but they still remain about 18 percent per year as of midst 2004. Real GDP growth also owes to an increase in export. Fixed capital formation has increased by 20 percent in real terms (the fastest rate since 1993) achieving 44 percent of GDP. Due to SARS epidemic that was in the second quarter of 2003, consumption growth has decreased comparing to 2002. However, the influence of SARS was only for a short period o time and a country has fully recovered from it later in the year. Export growth was 35 percent in 2003 comparing to 22 percent in 2002. This mainly happened due to China’s acquired of big market shares in major industrialized countries. As well as exports, imports showed a great percentage of growth as the demand grew especially for raw materials. CPI inflation increased to 4.4 percent in May 2004 that resulted increases in prices for groceries. If not take to account the increase in food prices, inflation had a slight positive effect on the economy just as this rate of inflation should have. The increase of food prices was also caused by the decrease of the cultivation area and summer draught that took place a year before.

China’s integration into the world’s economy will create harsh difficulties for a great number of countries. During the last 20 years, China’s trade expanded at double the rate of world trade. Today China is one of the world’s top trading nations, and has 4% of total world trade, comparing to 1% in 1980. Nevertheless, China’s exports and trade surpluses are achieving politically sensitive levels, and more stress on export-led increase may not be sustainable. China itself is still a quite closed market, for imports of goods and even more closed for imports of services. Letting the imports to China’s markets, particularly as a member of WTO, can offer more reasonable development and simplify the international stresses arising from China’s transformation.

The importance of China in external trade, especially in the region’s production chain saved its growing trend. China’s exports and imports achieved 60 percent of GDP in 2003 and these amounts made country fourth largest exporter in the world. The increasing importance of China in the world’s production of manufactured goods and rising domestic demand caused other sectors of China’s economy to grow, and also resulted the raise in prices for a lot of goods. China’s imports that are mainly from Asia also got bigger and China’s trade deficit with the region enlarged but the trade with the U.S. and Europe balances it back. The general trade surplus was $45 billion which is about 3 percent of GDP. China’s international position continues to grow stronger. The current account surplus increased by a half percentage point in 2003 to three and a half percent of GDP. Official reserves grew by $162 billion in 2003. External debt increased to $200 billion in 2003 but it is very modest to exports and GDP. By the end of May 2004 China had a trade deficit of $9 billion as compared to $2 billion of surplus that it had for at the same time of the previous year.

The drive for investment by recent local governments that started by the end of 2002 was stimulated by extensive excess liquidity in China’s banking system. People’s Bank of China was worried about fast credit growth that was easy to see even in the beginning of 2003 but its policies were delayed by SARS epidemic. Significant increase in capital inflows made it more difficult for PBC to implement the monetary policies. However, they managed to do that, in July 2003 PBC increased the reserve requirement by one percent and also announced a planned increase of ½ percent in April 2004. By doing this they tried to reduce the credit growth to banks. To deter the increase of overinvestment in branches of economy that have already faced it, the government made stricter lending standards. To finish up PBC raised short-term relending by 0.6 and rediscount rates by 0.3 percent in March 2004.

If China continues to develop as it is doing right now then by the midst of this century it will have developed actually three transitions. First and at the same time the one of greatest importance is the transition from a planned to a market economy. Second is from agrarian to an industrialized country. Last, but certainly not least, from a centralized to a participatory government.

Only a half century ago, it was very difficult to predict great China’s development that it is facing today. Simply like nobody thought that Japan could reach the level that the country is on right now, nobody even could forecast the pace of China’s development. According to forecasts of some prominent economic scholars, by the midst of this century China’s economy will grow to about $20 trillion and would be about 4/5 of the United States economy. The income per capita in China can grow to about US$12,000 which is equal to the Korean’s before the Asian financial crisis. GDP of only Hong Kong, Macao, and Guangdong would be equal to France’s GDP. Chinese currency the renminbi will become a one of the major world’s currencies along with euro, U.S. dollar and yen. If they keep up with the pace of development, Shanghai could be world’s financial center. With the renminbi becoming fully convertible in the world, Shanghai could rise to the level of London and New York City.

New technology and knowledge will gradually develop to a high level as the country expands it integration. In couple of generations Chinese scholars and scientists could be a fresh source of brilliant ideas and innovations. China sets up a good base for its future generations, giving a good opportunity for a great number of students to go study abroad and get mostly western ideas and worldviews.

China of course has some difficulties that can result very unpleasant consequences not only for the country but for investors as well. Some possible outcomes are probable failure of the banking system, enormous level of unemployment that can be resulted by the reforms of government enterprises, considerable hardships with the level of the environment. To continue the growth rates China needs creative but at the same time practical leaders. Another great change that might effect China’s future development is changes in values of its citizens. As most of Chinese nowadays adopting the lifestyles of Europeans, Americans, and Japanese China will have a totally different society in thirty years or so. People will desire of better level of life, similar to the level of Japanese and Europeans.

Conclusion

A lot of hopes are put into China’s development due to the determination and pragmatism of Chinese leaders. The governing of the country has been positively changing or almost twenty years. China also has a great potential in its younger generation, it is an advantage for those young people to go study abroad and then implement all their knowledge it their home country that still has so many areas that need development. In the best position are those that are in their 20s and 30s. They will be running the country in twenty years when China will be a great industrialized power. It will not be the center of the world, as many like to forecast for China, it will simply be one of the advanced countries.

China now faces one of the most destructive problems that all the developing countries have which is corruption. It is dangerous because it slows down the country’s development and is very difficult to be deterred.

Despite all the difficulties that China faces on its crossroads of the development, it has great pragmatic leaders are capable of taking the country up to the new level. China has a great potential to construct modern economy by the 50’s of this century. It will surely become one of the most important countries in the world. It is obvious even now that China will become the largest trading country in the world. Due to its partners China has a great opportunity to become one of the financial leaders of the world. If China stays on the same track of its development and keeps up with its speed it will surely become a very modern and greatly confident country.

The answer is technology, industry, petroleum, and iron. Technology is always either for sale, or it can be gathered through espionage. China can buy the same level of technology from intermediaries or allied governments. Industry can be built with economic growth. Currently China is the number one growing economy in the world. It nearly controlled our petroleum supply domestically and failed, so China decided to buy petroleum from Saudi Arabia through German intermediaries. Now our gas prices are going through the roof and stock analysts are saying its some kind of market fluke created by a belief that oil prices will continue to soar.

Iron, the main export that I would like to discuss, is five times its original price four years ago when China started buying up the world’s supply of raw iron. Right now, they are using this iron to create cranes and other machinery to export to the US and other nations, but most of the iron is being stockpiled in China for future use. What future use? We can only speculate. Why would China stockpile their ever-increasing supply of iron and still buy more, regardless of the price (literally)? What big plans do they have for such an immense stockpile of iron? Aren’t bullets, guns, factories, and tanks made out of iron? Absolutely, here is a piece of an article on the Chinese economy.

“In recent years China’s booming economy, fueled by large inflows of foreign direct investment (FDI) and rapid export growth, has emerged as a significant force in the global economy. This year, China surpassed the United States as the world’s largest recipient of FDI, and its bilateral trade surplus with the United States reached $117 billion in the 12 months up through August 2003. Both inward investment and export growth create strong demand for China’s currency, the Yuan. All things being equal, such demand pressures should cause the Yuan to appreciate relative to the U.S. dollar and cause China’s external position to return to balance.”3

Since China is the number one growing economy on the planet, they also have the number one growing currency relative to the US and other nations. Everyday China is become more industrialized. They used to be a purely state controlled economy, but they are starting to develop into more of a free economy in some areas. Overall, they are not shutting down as many businesses that do not pay the government officials regular bribes, which is definitely a move in the right direction.

The US wants to encourage free trade with China because of their enormous population. This means that US companies would have access to a huge new market of consumers. It also means improving the quality of life in China. It is also widely known that many native Chinese women perform acts of prostitution or marry solely to support their family. It is also common in China to see people walking barefoot because they cannot afford sandals, or seeing people including children who are starving. China also has more than 300 organized crime syndicates with a history that goes back to the Shaolin Monks. China is a desperate nation, so desperate that they engage in foreign currency scams to inflate the value of the Renminbi (pronounced Yuan). In 2000, the exchange rate was 8.3 Yuan per U.S. dollar. Today, the exchange rate is 7.6 Yuan per US dollar. Here is the second piece of the article above.

“But all things are not equal: China pegs the Yuan to the dollar at a fixed rate and strictly regulates imports and the allocation of foreign exchange. In order to maintain the Yuan’s fixed value, China must create a residual supply of Yuan to counter growing demand for its currency; China achieves this by buying dollars in foreign exchange markets. Between December 2000 and July 2003, China more than doubled its foreign reserve holdings from $168 billion (16% of its GDP) to $361 billion (31% of its GDP).”4

“How should the United States respond? On nine occasions between 1988 and 1992, the U.S. Treasury found that similar external surpluses accompanied by much smaller accumulation of foreign reserves constituted evidence that countries—including China—were manipulating their currency’s value for competitive trade advantage. When such a finding is made, U.S. law requires the Treasury Secretary to undertake negotiations to end such manipulation. Current evidence indicates that China is engaged in just such a manipulation of the Yuan for competitive gain.”5

Today, foreign “investment, combined with China’s swelling export earnings, have pushed the country’s foreign exchange reserves beyond $600 billion”.6

One thing that I learned from experience is that desperate people and people that try to steal from others generally cannot be trusted. This is why, among all the other evidence I provided above, I do not think we should let the Chinese government do whatever they want. They should not have a majority of the world’s iron, petroleum or our country’s economic and physical security in the palm of their hands. What good are tanks and supply trucks that do not have gas? This may seem silly today, because we are not at war with China.

In support of this opinion, many nations like Japan learned long ago that warfare in the physical sense is foolish and destructive, because it diminishes the productive capacity of the nation unless they can build new factories just as fast as their enemies can blow them up.

Today, the real modern warfare is economics. If China shuts down U.S. companies that depend on buying iron at a certain price in order to earn a profit after U.S. labor costs, then they take our market share and our productive capacity depends on whether China will sell us what we need. Prices are good today because Chinese labor costs are low, but it will not stay that way according to economic theory. Eventually the FDI, which exceeds our nation, will create even more jobs and economic prosperity in China. The end-result will increase wages, and hopefully it will improve working conditions.

However, if China does not sell to us anymore and they do the same bullying routine in other international markets, then we could be at a serious economic and military disadvantage. Should we trust China and believe that they want to change for the better? Here is an article that may shed some light on that question.

“China wants to suspend human rights talks with the United States. The news came after Washington said yesterday that it will condemn Beijing’s serious violations with a resolution at the UN Human Rights Commission currently underway in Geneva. The Chinese foreign minister called the action taken by the Americans a ‘serous meddling in China’s internal affairs.’ China’s Vice Foreign7 Minister said the ‘clash intentionally provoked by the United States has now seriously damaged any basis for dialog and discussion on human rights issues between both countries. China must immediately suspend talks and discussion.’ Yesterday, US State Department spokesperson, Richard Boucher, expressed the American government’s disappointment with Beijing’s inadequacies in improving human rights conditions in the country, after commitments it undertook in 2002 and 2003. Boucher also stressed Washington’s concern about ‘backward steps’ being taken by China, as reported in the American government’s world human rights report released last Feb. Last year the United States asked for a resolution, stating that Beijing had made limited, though significant progress in the sphere of human rights. The resolution was presented each year after the brutal repression of the student protestors in Tiananmen Square in June 1989. This year various human rights organizations, like Human Rights Watch, asked that the United States to put back a motion to blacklist Beijing. Even American trade union representatives requested that their government condemn China for the way it trades its labor force. Meanwhile Amnesty International called for a moratorium on the death penalty on China, reporting that the Chinese legal system does not guarantee fair trials and often punishes innocent persons. Yesterday the AI published a report titled ‘Executed according to law?’ ‘The report was released following statements made by a member of Chinese Parliament who said that every year there are at least 10,000 people sentenced to death in China 5 times more than all cases of capital punishment registered worldwide’.”8

The Chinese people are very much like our own with the exception that they communicate more through context and women are not valued very highly in their society. They also have four different cooking styles based on the four different regions. They speak different languages in each region, and they have a wide array of different traditions based on the former cultures that lived there before. China does not tolerate freedom of speech and they frequently kill anyone who is suspected on saying negative things about the current government. There is no defense or
fair trial, and basic human rights are not valued by their government. Their economy is state controlled, but they are slowly changing into a free enterprise economy.

I think that trading with China is mutually beneficial as long as they are not buying up significant amounts of raw materials that affect our national security. After the “911 attacks on New York and the Pentagon”, security measures at the ports are very strict in the US.9 The Port of Tacoma and the Port of Seattle have cameras, tall fences, and security personal strategically placed. They also conduct more customs inspections than before, and canines are commonly used to find people and contraband. The US also has a satellite system that detects nuclear radiation, infrared (heat signatures), records and filters every electronic conversation in the US, and video records the activities of the world’s ports. They also pay very close attention to refrigerated and abnormally heavy containers for biological weapons and shielded nuclear material.

China does not perform any significant security measures other than custom inspections accompanied by armed guards. Custom inspectors frequently accept bribes to expedite export and import processing, which creates a huge delay for companies who did not pay bribes or paid less. Dogs are also used for detecting contraband, but they use german sheppards instead of beagles. German sheppards are know to be effective in chasing down people and enforcing security. However, beagles have two hundred times the ability to smell contraband. This means that their port security is seriously lacking unless they physically inspect every crate, which they do not normally do whenever a bribe is taken to expedite the customs process.

Recently, the Port of Tacoma purchased three cranes from China to unload containers off the ships. They purchased scrap iron from suppliers in Washington State, melted the iron down, manufactured the cranes, and sold them back to us for less than domestic companies could make them.
Inventories of iron are currently state managed and exceed “70% of iron imports internationally”.10 US laws regarding customs are identified as governing security measures domestically. Otherwise, maritime laws apply to shipments.

The political ramifications of cutting off certain resources to China will make them an enemy. In order for the US to be effective at cutting off the massive purchasing campaign of iron by China, it will need allies who are all the current trading partners to do the same thing. However, this would also make them enemies of China, and suppliers are becoming very wealthy by selling their raw materials for a higher price to China. This means that international trading partners must have a significant reason to cut China off or limit them other than the US’s economic prosperity.

Culturally we also have to consider that the Chinese want a better life, and they want independence. It is unlikely that the US will be able to push the Chinese government into giving their people human rights without completely replacing their government or waiting a significant number of years for their human rights policies to catch up with the rest of the civilized countries in the world.

Geographically, China has taken over Hong Kong, which is the largest shipping location of Chinese imports and exports. The decision of the Chinese government to take over Hong Kong assures their ability to distribute goods internationally without major changes in worldwide distribution. Economically, we must understand that China has a lot to offer in terms of cheap labor and outsourcing, but it may come with a steep cost in the near future.

Letters of credit are guaranteed by international banks in Malaysia and China based on current deposits. This insures payment on receipt of goods for both imports and exports. The global marketing process for government contracts is the same as it is in the US. Foreign bidders are required to send a proposal to the government authority issuing the contract. Whether they choose to buy or not from a foreign source is a balance between price driven economics and supporting local companies.

China has no restrictions on the treatment of their employees, the ages of workers, the hours they work, the healthcare of employees or their working conditions. US employers must abide by laws concerning the treatment of minors, paying overtime, paying wages, paying health and unemployment benefits, discrimination, etc.

Foreign investment in China is carefully controlled in specific sectors and industries. Foreign investment in the US is allowed as long as it does not negatively impact our national security. This is why the US government stopped China from purchasing a controlling position in the U.S.’s primary oil supplier. However, it is almost a guarantee that they will try again.

If you choose to do business in China, please carefully consider the implications of your actions. Making a great profit is very important, but it can never come at the expense of our lives, the lives of our children or the world’s stability and security. I think the world has a great opportunity everyday to change for the greater good, maybe our enemies will decide that building a better world for everyone is better than petty arguments over land, money and religion.

Bibliography
Flannery, Russell. At Your Service, China! New York, NY: Forbes, 2007

Goodman, Peter S. China Ends Fixed-Rate Currency. Washington DC: Washington Post, 2005

Hersh, Adam S. China’s currency manipulation and U.S. trade. Washington, DC: Economic
Policy Institute, 2003
http://www.epinet.org/content.cfm/webfeatures_snapshots_archive_10302003se

Hill, Charles W.L. Global Business Today 5th Edition. New York, NY: McGraw-Hill Irwin,
2008

R., M. Beijing suspends human rights talks with United States. Geneva: Asia News, 2004
http://www.asianews.it/view4print.php?l=en&art=524

It is not that easy to get an entry in the international trade market of China, especially for global health products. The legal and government system in China is very complicated and it involves a good amount of paperwork, which sometimes baffles the investors. The work council and labour unions in China outsourcing are very influential and the laws are very strong regarding the security of the international trade. The real fun of China outsourcing business regarding global health products is that we meet a lot of great people along the way. Everyone we meet has a wealth of experience that is invaluable in terms of China outsourcing in international trade of global health products. Phenomenal growth of global health products has a lot to do with the relationships with customers, vendors, and strategic alliances in the international trade market. Creative ideas are tossed around when we interact with clients, vendors and China outsourcing professionals. Involvement is the key word in any business. Obligation is not the same as a social connection that stresses the importance of relationships. Aspiring to profit from a China outsourcing business is not always the same as succeeding in international trade business.

China should incorporate total quality management techniques in its outsourcing of global health products to assure its international trade customers that Chinese outsourcing global health products are of the highest quality. In addition, Chinese Government should implement stringent oversight mechanisms on its global health products to maintain its economic growth and consumer confidence in Chinese global health products.” Buyer beware,” is applicable on both China outsourcing and international trade scale. And in an international trade food market, the phrase, “we are what we eat,” takes on a whole new meaning. To develop and execute a successful business plan for outsourcing Chinese global health products, it requires a good understanding of the profits and losses associated with it. The international trade for China outsourcing market is a network which works competently using their connections in the market for the sale of global health products.

China global health products’ directory or database is undoubtedly the best place to begin our search for China outsourcing procedures in international trade. A good China outsourcing Directory will invariably place us in a position to approach supplies of our choice based on facts and figures. Using a China supplier’s data base, we’ll immediately have the driving position with respect to China global health products suppliers and be able to bypass middlemen and wholesalers and thus the associated costs, as per latest procedure adopted in China outsourcing and international trade. There are online and offline databases for China outsourcing professionals, global health products suppliers and most of these are pioneers in international trade. While choosing a general database may present us with countless options, China outsourcing specific directories can be assumed to be more authentic both in their choice of credible global health products suppliers. International trade specialists, China global health products suppliers directory, recommends China outsourcing as No.1 in the international trade market.

If you are interested with us, please visit the website tootoo.com (http://www.tootoo.com/?source=articles)

HORECA sales of beverages (i.e. the food services sector) in China remain an important source of revenue – this is especially true for beer; around 95 per cent of glass bottle sales of beer are for on-premise consumption. However, in the face of decreasing average earnings per hectolitre of beer in China over the past few years, breweries are looking to the home consumption market to improve revenue growth. This is the same for other beverage makers.

The growing home consumption market has been identified as a key target to improve sales volumes, but it remains a challenge. Changes in demographics, consumption behaviour, purchase patterns, and the rise of organised retailers (supermarkets, convenience stores etc.) over the years have necessitated the increasing use of new primary packs and price point strategies to drive the home consumption volumes. These new primary packs have to incorporate solutions to address: Product shelf life (vital for carbonated beverages); ease of handling; distribution; and environmental concerns.

As competition increases, marketing and brand managers have to continually identify new ways of staying ahead of the competition and defend their products’ market share. This in turn has further increased the impetus on using the primary packs as an effective tool for brand differentiation on the shelf.

When considering the most effective home consumption primary pack for the Chinese market, physical factors such as the size, spread, and homogeneity of the consumer population, quality of roads and other distribution infrastructure, nature of retail trade need to be looked at. Looking at the development of markets in Europe, countries that have large populations and hence require high-capacity filling lines as well as transportation of goods over long distances due to a greater spread of target population have all developed into strong cans markets. The advent of modern retailing and consumer choice has helped to turn many Eastern European countries into can markets too.

Following the European experience cans have a clear case for developing as the preferred primary pack for Chinese beverage makers. The same experience was made by the cola majors, Coca Cola and Pepsi, who began shipping their beverages across long distances from the US to the Middle East market in the 70s and 80s.

However, a successful cans strategy needs to focus beyond addressing and conquering these physical business attributes. Even if there are clearly identified advantages of cans being the preferred packaging for home consumption, to achieve growth in sales any strategy needs to build in a clear market approach targeted towards influencing consumer behaviour in favour of cans.

When a foreign investor decides to launch a business venture in China they will need to decide whether to launch the business in the form of an actual capital investment or whether to look for local distributors or suppliers. The latter approach does not require sizable investment but you should ensure that your contractual arrangements are binding and enforceable.

The business registration process is prone to bureaucracy and over regulation. Using an authorized agent or legal representative can assist with the process. Even when using an agent for registration, you should bear in mind that certain locations in China and special economic zones are geared to attract different types of industries and offer tax incentives or financial inducements.

Foreign investors without a comprehensive understanding of the China market may wish to test the market strength first to see whether it is worthwhile to establish a full operation in China and invest a large sum of capital.

The investment required is dependent upon the scope of business, volume of sale and company size, and is judged on a case-by-case basis. Chinese authorities will consider what would be a reasonable capital injection for each specific project in question, and where the intended investment is in the field of manufacturing will look closely at whether there are environmental impacts or waste disposal requirements.

Those with more experience and understanding of the China market who intend to conduct a full range of business activities need to establish a legal entity. In that case, the form of the entity chosen is quite crucial. Aspects that have to be considered are the sector of business and amount of money invested; if a Chinese partner is desirable or even mandatory for the business; and other general commercial and strategic considerations. Foreign investment is classified into encouraged, restricted or prohibited categories, so it is important to determine which category your industry falls within.

In Summery, A clear understanding of the investment and business options available will be crucial to successfully establishing a business and operating in China. With China’s gradual compliance with its WTO membership obligations, the business registration process should also continue to become more streamlined and transparent.