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www.exolus.com Starting in 2008, France Houdard of the Exolus Group was one a very small minority of CEO’s, along with Jing Ulrich, Chairman of JP Morgan, to publically take positions on television and in published reports that the Global Financial Crisis was have very little to no impact on China’s economy. This report is an update of previous reports started in 2008, a look a back over the 5 years in assessing the impact of the crisis on China’s economy.
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Will China Save or Spoil the World?
Global Financial Crisis Series …
China’s Real Estate Developers: Stronger or Weaker through Crisis?
France Houdard Exolus International Advisory
June 2013 (Updated from September 2010)
M (86 21) 5100.1833 x 1100
M (1) 917.285.6528 (United States)
2
What does China look like from Space? At Night? 3
Economy: Fastest Growing Large-Scale Economy in History? 4
Wealth: Middle Class now Larger than Populations of most Countries? 5
Migration: Largest Rural-to-City Transformation in History? 6
Urbanization: Emergence of 10+ Cities the Size of Countries? 7
Office Sector 10
Shanghai/Beijing Grade-A Office Supply & Financial Performance 11
Office Demand & Growth Drivers 14
Investor Confidence Continued 18
Hotels & Leisure Sector 19
Hotel Supply – Asia Development Pipeline Comparison 20
Hotel Supply & Financial Performance 21
Hotel Demand & Growth Drivers 26
Retail Sector 29
Shanghai Retail Supply & Financial Performance 30
Retail Demand & Growth Drivers 33
China’s Economic Future…Bust or Boom? 35
Fact Today: Healthy Balance Sheets – Banks, Companies, Households 36
The FUTURE (2020): World Bank Projects China as #1 Economy in World 37
Fact Today: World’s Fastest Growing Major Economy 38
Table of Contents
3
What does China look like from Space? At Night?
Why?
Source: NASA (United States – National Aeronautics and Space Administration
4
0
1
2
3
4
5
6
7
8
9
Source: IMF
Economy: Fastest Growing Large-Scale Economy in History?
China’s Economy: Doubles every 7 Years … Tripled most Recently
3x
2x
2x
China Opens to the World
Applied to join GATT
Eliminated its dual exchange
rate
Accepted full convertibility for current account
transaction
Admitted to WTO
Hosts OLYMPIC
games
China GDP (USD trillion)
US
D (
Re
al M
ark
et R
ate
s)
5
Foreign Direct Investment: Highest in History through Global Financial Crisis
China FDI Inflows Highest in History through Global Financial Crisis
Source: China National Bureau of Statistics
0
20
40
60
80
100
120
140
US
D
Foreign Direct Investment Inflows (1990 – 2012)
Global Financial Crisis
6
Wealth: Middle Class now Larger than Populations of most Countries?
Income Structure for Urban Population
Urb
an
Po
pu
latio
n (
mill
ion
s)
Urban Household Income
(USD – PPP adjusted)
Global > US$ 107,800
Affluent US$ 53,801- 107,800
Upper Middle US$ 21,501 –
US$ 53,900
Lower Middle US$ 13,500 –
US$ 21,500 Poor < US$ 13,500
531
607
684
756
822
239
255
157
106 73
53 170 355
461 525
35
90
99
0
100
200
300
400
500
600
700
800
900
2005 2010F 2015F 2020F 2025F
531
607
684
756
822
Sources: Urbanization Rates and Population Estimates based on United Nations, World Urbanization Prospects 2007; Income Bands based on MGI Consumer Demand 2008.
Upper Middle Class
Lower Middle Class
China’s Middle Class: 400 million (2010) … 500 million (2015)
7
Migration: Largest Rural-to-City Transformation in History?
China’s Urban Population versus Rural Population
1.4 billion
1.3 billion
1.2 billion
1 billion
245 381
531
684
822 822
833
782
705
624
0
200
400
600
800
1,000
1,200
1,400
1,600
1985 1995 2005 2015 2025
57% 49% 40% 31% 23%
1.45 billion
Source: World Urbanization Prospects 2007
Urbanization
Urban Population
(million)
Rural Population
(million)
China’s Urban Population: 600 million (2010) … 700 million (2015)
8
Urbanization: Emergence of 10+ Cities the Size of Countries?
Continental-Size Population … Hyper-Density Expansion
10+ Country-Sized Cities/Corridors E-merging … Populations averaging 60 Million
Urbanization
Cities: 120 cities populations
larger than 1 million people today.
10+ Country-Sized Cities &
Corridors: Emergence of 60+ MM
Populations
Infrastructure
World-Class Super-
Infrastructures, Integrated Hubs:
Historically unprecedented levels of
investment, concentrated in hubs.
Planned - Political - Economy
Full Authority: to Plan Nationally
– and Implement
Confucian -> Socialist ->
Capitalist
Mountains
Steppe
People
9
Context: What do Geography, Demographics, Cultural History tell Us?
Structural Geography
Landmass: 3% larger than the
Landmass of United States
2/3 Country Un-inhabitable: 2/3
of Country Covered by Mountains,
Deserts, thus Un-inhabitable
Continental Demographics
Population: 1.3bn (4.3x Larger
than US Population)
Density: 90% of Population
Concentrated in Eastern Pockets
– away from Mountains/Deserts
Migrants: 200 Million Floating
Population
Cultural Diversity
Cultural Distances: Extreme
Diversity: Cultural, Languages
(298), Economic, Geographic.
Source: The Global Land One-km Base Elevation (globe) Project; ETOPO 2 Worldwide Bathymetry; The Ethnologue, Languages of the World
70% Un-inhabitable … 1.3 bn People … Density … Diversity … Wealth … Migration
Mongolia
Russia Federation
Kazakhstan
India
Myanmar
Thailand
N Korea
S Korea Japan CHINA
10
0
50
100
150
200
250
300
350
400
450
2005 2010 2015 2020 2025
millio
ns s
q.m
Shanghai
Beijing
Wuhan
Guangzhou
Chengdu
Structural Hyper-Density Requires:
1.2 1.2
8.2
16.4
25.9
7.0
8.2
9.5
11.2
-
5
10
15
20
25
30
35
40
2005 2010F 2015F 2020F 2025F
billio
ns s
qm Supply New Additions
Estimated Cumulative China New Construction Estimated Cumulative New Construction (Select Cities)
Source: MGI 2008
40 billion sq m of Additional Supply by 2025
High-Density Infrastructure, Transportation, Linkages
11
Office Sector
Developing the World’s Fastest Growing CBD’s …..
Shanghai 1993
Shanghai 2014
12
Shanghai Grade-A Office Supply
Major Grade-A Office Supply, Absorption, Vacancy
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
0
200
400
600
800
1,000
1,200
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘000 s
qm
Grade-A office supply (LHS) Grade-A office net absorption (LHS) Vacancy Rate
Source: Knight Frank
13
Beijing Grade-A Office Supply
Major Grade-A Office Supply, Absorption, Vacancy
0%
5%
10%
15%
20%
25%
0
200
400
600
800
1,000
1,200
1,400
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘000 s
qm
Grade-A office supply (LHS) Grade-A office net absorption (LHS) Vacancy Rate
Source: Knight Frank
14
Office Financial Performance (Rentals) – Shanghai Vs. Beijing
Steady Growth over Past 8 Years
50
70
90
110
130
150
170
190
210
Shanghai Beijing
Q1 2003 = 100
Source: Knight Frank
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
15
HISTORICAL: Office Demand & Growth Drivers
Global Structural’ Cost Reduction … Revenue Growth
Cost Reduction
RESOURCES
Sales Engineering
R&D
Sourcing
Production
Distribution
Marketing
Shared
Services
IT HR
F&A Procure
DRIVING Shareholder Value
RESEARCH &
DEVELOPMENT
SHARED SERVICE
CENTERS
CONTRACTS,
PARTNERSHIPS
PRODUCTION /
SOURCING
SALES &
MARKETING
Revenue Growth Innovation
16
FUTURE: Office Demand & Growth Drivers
PRODUCTION /
SOURCING
DRIVING Shareholder Value
SALES &
MARKETING
RESEARCH &
DEVELOPMENT
SHARED SERVICE
CENTERS (SSC)
CONTRACTS,
PARTNERSHIPS
RESOURCES
SSC
IT HR
F&A Pro’c
Sales Engineering
R&D
Sourcing
Production
Distribution
Marketing
Cost Reduction
Revenue Growth Innovation
17
Office Demand & Growth Drivers
Cost Reduction
China Wages 5 to 10 times Cheaper than Wages in Western Countries
Margin and Cost Pressures from Customers
Consolidation of Buying Power in Retailing and other Industries
Easier Access for Customers to Alternative Sources of supply around Globe
Revenue Growth
GDP growth a 8%+ per annum for past 10 years
China Fastest Growing Large Economy in World; Stagnant or Low-Growth in Home Markets
Following customers to China; preserving critical customer relationships
Asset Efficiency (Innovation)
China Graduates 600,000 Engineers per Year; US Graduates 50,000 per Year
Access to larger global talent pool, with relevant skills for product localization
R&D - Pressure to introduce new products, faster, better, cheaper
Fundamentals … WEALTH, TALENT, LOW COST, INFRASTRUCTURE, STRONG FINANCIAL SYSTEM
Unprecedented Pressures to Reduce COSTS, Grow REVENUES, Drive INNOVATION?
Revenue Growth
Asset Efficiency
DRIVING Shareholder Value
Cost Reduction
18
Office Demand & Growth Drivers
China FDI Inflows Highest in History through Global Financial Crisis
Source: China National Bureau of Statistics
0
20
40
60
80
100
120
140
US
D
Foreign Direct Investment Inflows (1990 – 2012)
Global Financial Crisis
19
… Investor Confidence Continued …
Investor Confidence in China #1 in World
Source: World Investment Prospects 2012 - 2014
Top 14 Most Attractive Destinations for Future Investment
(2012 – 2014)
Pe
rce
nt o
f R
esp
on
ses
0%
10%
20%
30%
40%
50%
60%
70%
China UnitedStates
Germany UnitedKingdom
France Japan India Spain Canada UnitedArab
Emirates
Brazil
20
Hotels & Leisure Sector
Developing the World’s Largest, Lowest, Highest …..
Lowest Altitude Hotel Highest Altitude Hotels Largest Golf Complex
21
Hotel Supply – Asia Development Pipeline Comparison
Over ½ of All Asia Hotel Developments are in China
Source: Lodging Econometrics
China Construction Pipeline Q2 2012
Project Stage Projects Rooms
Under Construction 1,202 306,473
Start Next 12 Months 133 36,641
Early Planning 167 63,366
Total Pipeline 1,502 406,480
Asia Pacific Construction Pipeline Q2 2012
Region Projects Rooms
China 1,502 406,480
India 379 66,867
SE Asia & Other Countries 436 88,349
Total Pipeline 2,317 561,696
22
Hotel Supply – Global Comparison
Incl. 84 five-star hotels / over 35,000 rooms*
Incl. 68 five-star hotels / over 25,500 rooms*
Total Hotel Rooms in Selected Major Cities 2010
0 20 40 60 80 100 120 140 160
Las Vegas
Beijing
Tokyo
London
Paris
New York City
Shanghai
Hong Kong
Dubai
Singapore
Seoul
Sydney
(000' Rooms)
Beijing/Shanghai now 2 of the Largest Urban Hotel Markets in World
Source: Data collected from various sources (Some data variance may exists between key sources)
23
Hotel Supply Growth
Shanghai
-
5
10
15
20
25
30
35
40
Th
ou
san
ds R
oo
ms CAAG 11.1% CAAG 13.5%
-
5
10
15
20
25
30
35
40
45
Th
ou
san
ds R
oom
s CAAG 6.1%
Olympics
Beijing
CAAG 10.6%
WORLD EXPO
Overall China Growing at Over 1,000 Hotels per Year
5-Star Hotel Supply (Rooms, 2000 – 2012)
Source: China National Tourism Association (CNTA)
24
Hotel Financial Performance
Hotel Average Room Rates - Selected Major Cities
(YTD Sep 2010, USD)
0 50 100 150 200 250 300
Paris
New York
London
Hong Kong
Beijing
Shanghai*
Buenos Aires
Berlin
Los Angeles
Hotel Occupancy - Selected Major Cities
(YTD Sep 2010)
0% 20% 40% 60% 80% 100%
New York
London
Hong Kong
Paris
Los Angeles
Buenos Aires
Berlin
Beijing
Shanghai*
Average Room Rates (ARR) Comparison
Source: STR Global
25
Hotel Financial Performance
Performance of Top Hotels in Shanghai
(YE Nov 2010)
Notes: Occ - Average Annual Room Occupancy; ARR - Average Room Rate in USD; RevPAR - Average Room Revenue Per Available Room in USD;
PAR - Per Available Room
Among Highest in World on a Total Revenue Basis
Distribution of Revenues YE November 2010
(Top 10 Shanghai Hotels)
Rooms: USD155
54%
Other: USD24,
8%
F&B: USD108,
38%
Shanghai Occ ARR RevPAR
Total
Revenue
PAR
Top 3 Hotels 58% 336$ 195$ 394$
Top 5 Hotels 56% 329$ 184$ 362$
Top 10 Hotels 58% 269$ 156$ 263$
No.: Top 10 Hotels (by RevPAR, YE Nov 2008) Rooms
1 Grand Hyatt 555
2 Shangri-la Pudong 950
3 JW Marriott 342
4 Four Seasons Hotel 439
5 Westin Shanghai 570
6 Marriott Hongqiao 313
7 Jing An Hilton Shangai 720
8 Le Royal Meridien Shanghai 761
9 The St. Regis Shanghai 328
10 Okura Garden 492
Performance of Top
Hotels in Shanghai
26
912
736
605564 540 531 526 522
460 458
400 392 392 379 353 334 328 307 305 285
67%69%
71%
55%
69%
54%
66%
70%68%
74%72%
58%
65%
53%51%
58%
68%
54%52%
63%
-
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
Sha
ngha
i
Beijin
g
Qingd
ao
She
nzen
San
ya
Gua
ngzh
ou
Han
gzho
u
Che
ngdu
Dal
ian
Jina
n
Nan
jing
Xiam
ien
Xian
Tian
jin
Suz
ho
Don
ggua
n
Cho
ngqi
ng
Zhen
gzho
u
Wuh
an
Uru
mqi
RM
B
0%
10%
20%
30%
40%
50%
60%
70%
80%
RevPAR
ARR
Occ
Hotel Financial Performance – Major Cities 2010 (5-Star Hotels)
, Source: China Tourist Hotel Association / STR Global
China 5-Star Hotels Performance (Major Cities across China, 2010)
Strong Performance Across Major Cities
Average
RevPAR in
US *RMB
450)
27
Demand Segments: 5-Star Hotels in China,
Beijing, Shanghai
CORPORATE
RELATED
DEMAND:
63-64%
FOREIGN
DEMAND:
35-53%
31.0%
20.0%
13.0%
15.0%
15.0%
7.0%
26.3%
24.2%
12.8%
20.8%
10.9%
5.1%
15.6%
33.5%
13.9%
19.5%
9.2%
8.3%
0.0% 10.0% 20.0% 30.0% 40.0%
Domestic Business Traveler &
Government
Foreign Business Traveler
MICE
Foreign Leisure
Domestic Leisure
Other
China Beijing Shanghai
Hotel Demand & Growth Drivers
Sustained Corporate Business Activity and Strong Consumer Incomes to Underpin Growth
Source: China Hotel Industry Study 2010
28
World’s Leading Foreign-Inbound Destination
Source: World Tourism Organization (UNWTO)
International Overnight Tourist Arrivals Top 10 Countries 2009
81.9
59.2
56.0
54.7
43.7
30.7
24.4
23.1
22.2
21.4
84.8
0 20 40 60 80 100
France
Spain
United States
Mainland China
Italy
United Kingdom
Germany
Ukraine
Turkey
Mexico
China incl
. HK & Macao
Millions Arrivals
100M
by 2015
China's Inbound Tourism 2000-2015F
0
20
40
60
80
100
120
2000 2001 2002 2003 2004 2005 2006 2007 2008 2015F
Inb
ou
nd
Ove
rnig
ht
Vis
ito
rs (
mil
lio
ns
)
Overnight Visitors Increase
6.9% * 9.5% *
Hotel Demand & Growth Drivers – In-Bound Tourism to China
29
Inbound,
USD41.6
million,
24.5%
Domestic,
USD128.3
million,
75.5%
China's Domestic Tourism 2000-2015F
(billion person times)
Tourism Recipients by Source Market
(2010)
Exploding Domestic Chinese Travel
Source: China National Tourism Administration (CNTA)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2015F
Do
mesti
c T
ou
rists
(b
illio
n p
ers
on
-tim
es)
Visitor Trips Increase
11.9% * 7.4% *
* Compound Average Annual Growth
Hotel Demand & Growth Drivers – Local Chinese Tourism
30
Retail Sector
Developing the World’s Largest …
Leading Retail Formats World’s Largest Flagship World’s Largest Flagship
The Place Barbie
Louis Vuitton
Nokia
31
Shanghai Retail Supply: Shopping Center
Major Shopping Center New Supply, Absorption, Vacancy
0.0%
4.0%
8.0%
12.0%
16.0%
20.0%
0
100
200
300
400
500
600
2004 2005 2006 2007 2008 2009 2010 2011 2012
‘000 s
qm
New supply Net Absorption Vacancy Rate
Source: Colliers International Shanghai (CIS) Research
32
0
10
20
30
40
50
60
2006 2007 2008 2009 2010 2012
Rents of Overall Market Rents of Prime Area Rents of Inner Ring Area Rents of Decentralized Area
Shanghai Retail Financial Performance (Rentals)
Shopping center Ground Floor Rental Trend
RMB per sq. m per day
Source: Colliers International Shanghai (CIS) Research
33
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Retail Financial Performance
Sustained Retail Sales Growth … Huge Shift in Discretionary Spend
Personal Expenditure
12.9% Growth (2012)
3.0
Retail Sales Growth
US
D T
rilli
ons
54
12
7
9
11
4 2
1
0
10
20
30
40
50
60
70
80
90
100%
1990
29
9
11
6
15
5
9
16
2010
Consumer Goods
Health Care
Housing
Clothing
Education
Transport &
Communications
Food
Home Appliances
Source: China National Bureau of Statistics
34 Sources: Urbanization Rates and Population Estimates based on United Nations, World Urbanization Prospects; Income Bands based on MGI Consumer Demand.
300 MM Middle Class Today … 500 MM in 6 Years
Middle Class as % of Urban Population
Urb
an
iza
tio
n P
op
ula
tion (
mill
ion
s)
Urban Household Income
(USD – PPP adjusted)
Global > US$ 107,800
Affluent US$ 53,801- 107,800
Upper Middle US$ 21,501 –
US$ 53,900
Lower Middle US$ 13,500 –
US$ 21,500 Poor < US$ 13,500
531
607
684
756
822
239
255
157
106 73
53 170 355
461 525
35
90
99
0
100
200
300
400
500
600
700
800
900
2005 2010F 2015F 2020F 2025F
531
607
684
756
822
Upper Middle Class
Lower Middle Class
Retail Demand & Growth Drivers
35
Total Urban Household Income
(PPP - Adjusted Income)
Per Capita Annual Income
(USD, PPP-Adjusted)
Heilongjiang
Jilin
Liaoning
Hebei
Beijing
Tianjin
Inner Mongolia
Shandong
Jiangsu
Shanghai
Zhejiang
Fujian
Guangdong Guangxi
Hainan
Hunan Jiangxi
Anhui Hubei
Henan
Guizhou
Yunnan
Sichuan Chongqing
Gansu
Ningxia
Shaanxi
Shanxi
Qinghai
Xinjiang
Tibet
0–17,500
17,500–20,000
20,000–25,000
25,000–30,000
30,000–40,000
>40,000
Retail Demand & Growth Drivers
Source: China National Bureau of Statistics 20010
Wealth Patterns Emerging … Highest in Coastal Regions
36
China’s Economic Future …
Bust or Boom?
37
Fact Today: Healthy Balance Sheets – Banks, Companies, Households
Insulation of Financial System … USD2 trillion Foreign Reserves … Low Inflation
China’s Financial System Healthy, Benefits from Insulation, Abundant Liquidity
China banks cleaned up in 1990s: Non-performing loans in 1997 averaged 40 – 50%; only 6% in 2007.
China’s financial system relatively insulated; imposed capital controls; modest exposure to sub-prime assets.
Forex Reserves Quadrupled in only 4 Years (‘03 – ‘07): US$ 2 trillion
The Central Bank has accumulated over USD2 trillion in foreign reserves.
The accumulation of large external surpluses means financial system enjoys abundant liquidity.
Clean Balance Sheets for Corporates and Households
State Owned Enterprise net profits as share of GDP has grown from (-1%) in 1997 to (+4.3%) in 2007.
Record corporate profit growth over past 5 years (industrial profits rose 38% per annum); liability ratios declined.
Urban incomes have nearly doubled in past 10 years.
CPI Inflation Low, has Fallen to 4%
Food price increases fading out, raw commodity prices continue to drop, as well as price of oil.
Source: Deutsche Bank; Standard Chartered; UBS; IMF; Other
38 Source: The World Bank
The FUTURE (2020): World Bank Projects China as #1 Economy in World
2009 GDP*
6,4 trillions
de $ 3,6 trillions
de $
$4.1 tr $3.8 tr $9.1 tr $14.2 tr
US China
India
$14.1 tr
Japan Japan
EU-27
France
UK
Germany
2020 GDP*
$30.0 tr $13.4 tr $28.8 tr $6.8 tr $29.6 tr
US
India
China
Japan
EU-27
France
UK
Germany
GDP* PPP-adjusted
GDP* PPP-adjusted
39
Fact Today: World’s Fastest Growing Major Economy
GDP Growth (% per year)
Source: The World Bank
Growth 2 to 5-times Faster than Major Western Economies for Past 20 Yrs
-6
-4
-2
0
2
4
6
8
10
12
14
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
China India US Japan
40
Fact Today: Stimulus Plan Well Structured, Strong Ability to Implement
Monetary Stimulus $586 billion $700 billion
GDP (PPP) $7.8 trillion $14.3 trillion
GDP $4.2 trillion $14.3 trillion
Stimulus/GDP 14% 5.10%
National Debt/GDP 20% 76%
Trade Surplus (Deficit)/GDP 10% -4%
Past Stimulus/GDP 47% (‘90’s) 3% (’81-’91)
China Stimulus Distribution Economic Stimulus - Comparative
Source: National Development and Reform Commission
China Stimulus Roughly Same Size as US … USD586 billion … Authority to Deploy
China has USD2 trillion in Foreign Reserves
4%
25%
9%
5%
9%38%
10%
Housing Rural Developm ent
Infrastructure Healthcare, Education
Environm ent Innovation & Industrial Restructuring
Disaster Reconstruction
4%
25%
9%
5%
9%38%
10%
Housing Rural Developm ent
Infrastructure Healthcare, Education
Environm ent Innovation & Industrial Restructuring
Disaster Reconstruction
4%
10%
38%9%
5%
9%
25%
Hous ing Infras tructure
R ural Development Healthcare, education
E nvironment Innovation & Indus trial R es tructuring
Dis as ter R econs truction
41
Contributions to GDP (percent of GDP PPP)
Fact Today: Focus on Consumption as % of GDP
Shifting to Service/Consumption Economy … Major Growth Potential
Source: IMF, DESTATIS CIA World Fact book
$7.8 tr $2.8 tr $14.3 tr
10%
37%
39%
6%
56%
19%
18%
-4%
71%
19%
14% Government
Consumption
Investment
Private
Consumption
Net Trade
GDP (PPP)
China Germany United States
14%
42
Fact Today: Exports Dependency Less than Neighbors
Reports on China’s Exports & Impact on Economy -- Often Significantly Overstate Dependence on Exports
Degree of China’s Export-Dependency and in Driving GDP Less than that Often Reported
The degree to which a slow-down in trade might impact GDP seems to result in frequent overstatements of
China’s export dependency.
China’s dependency on exports is much less than its neighbors, Singapore and Korea, and roughly equal to that
of Japan.
The overstatements of China’s export dependency might be rooted in a focus on China’s gross exports
(approximately 40% of GDP); which is actually not used in calculating the export-portion of GDP.
The export-portion of GDP is actually calculated based on the sum of value-add exports (only approximately 18%
of GDP)
Implications of Slow-Down in Exports
Slow down in trade does result in a decrease in GDP relative to previous years.
In last four years a very steep jump in China’s trade position added a bonus of as much as 3% on top of China’s
GDP growth, resulting in the extremely high GDP growth figures of 10 to 12%
In absence of that steep jump in China’s trade position, the 3% bonus on previous GDP growth would disappear.
Estimates on job losses from the economic slowdown in trade sector could result in a loss of anywhere between
5 and 10 MM people – mostly migrant workers from the rural countryside – and thus has little impact on internal
urban economy.
Urbanization impact. Moderate impacted on urbanization due to return of migrant workers from the trade sector
and related construction sector.
Source: Deutsche Bank; Standard Chartered; UBS; IMF; other
43
SUMMARY: What are Developers looking for through Global Crisis?
Economic Robustness, Growth … Strong Institutions … Strong Stimulus … Strong Fundamentals
Economic Size and Growth Potential
Strong Institutional, Banking, Financial Stability, Access to Capital
Stimulus – Impact on Construction, Infrastructure, Urban/Rural Development
Strong Underlying Fundamentals and Drivers across Classes
Office – Corporate Investment/Expansion – Production, Distribution, R&D
Hotel – Corporate, MICE, Leisure (foreign/domestic)
Retail – Urban/Rural Income Growth, Expenditures
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For a Comparative Perspective with the other BRIC Countries Please Refer to the Following Research Reports
Found on Slideshare @
http://www.slideshare.net/Exolus/china-2010-2020-v58slideshare
http://www.slideshare.net/Exolus/india-2020-what-india-will-look-like-in-the-future
http://www.slideshare.net/Exolus/brazil-2020-what-will-brazil-look-like-in-the-future
http://www.slideshare.net/Exolus/russia-2020-what-will-russia-look-like-in-the-future
Download Reports @
www.exolus.com/en/knowledge/research.html
India 2020 Brazil 2020 Russia 2020 China 2020
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Global Expansion Strategy & Cross-Border Investment Execution
(Greenfield, M&A, Joint Ventures, Outsourcing)
About Exolus: Exolus is a hybrid management consulting and transaction advisory firm. We work with
management teams in the development of their global expansion strategies, across the range of investment
formats: Greenfield, M&A, Joint Ventures and Outsourcing. As well, we deploy against global strategies by
providing program management across all phases of cross-border investment projects, from candidate searches
and evaluation, through investment structuring and negotiations.
The founders of Exolus have spent the past two decades in the global service space and have direct experience
operating in nearly all of the major investment destinations in the world (40+ countries). The team has served
clients of all sizes, both public and private, on projects that ranged in investment size from USD10 million to greater
than USD1 billion. We have served clients across all of the following industry segments: Life Sciences,
Manufacturing, Automotive, Technology, Retail, Consumer Business, Real Estate, Public Sector.
Follow Exolus at: www.exolus.com
Need Further Information: [email protected]
Want Copies of our Reports: www.exolus.com/en/knowledge/research.html
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Disclaimer
In writing we benefit from standing on the shoulders of others and, in the process, we strive to make our own
contributions to the market of ideas. As well, we are always tremendously grateful for the many, often selfless,
contributions that are availed in the process.
The opinions represented herein were prepared for information purposes only, at the time of publication. The
information represented herein is believed to be reliable, at the time of publication, and was obtained by various
public sources also believed to be reliable. The opinions were considered to be accurate at the point of creation,
and further, any views, forecasts, or estimates contained herein may be subject to change at anytime without notice.
The opinions expressed or implied herein may not be the opinions of the author, also Exolus, or any associated
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reader shall make an independent assessment of opinion’s stated herein that shall not be considered a substitute for
obtaining advise from the readers’ advisors.
The author shall not accept responsibility, express or implied, with regards to the accuracy and completeness of the
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