The title of “the possibility of the land” is one of China’s. Economists expect it officially the second biggest national economy this year and continue to grow record rates. Many of its industries are well developed and established. What new industries should investors their money in three years?

Global Intelligence Alliance identifies six upcoming industries.

1. International travel

A number of 100 million mainland Chinese citizens to travel abroad for 2010 and beyond desire to attract millions more in the coming years. Chinese tourists are also the largest purchaser, to go to a third of its production overseas retailers.

2. Luxury items

Chinese consumers now spend over US$4 billion on luxury goods a year, buying up fine jewelry, expensive watches, luxury sedans and other luxury goods. It is the third-largest consumer of luxury goods, next only to Japan and the United States. As its economy continues along its current rate of growth, we can expect to see sales of luxury goods easily exceeding US$10 billion in the next three to five years.

3. Environmentally friendly projects

China is big on energy consumption and big on its positive development. Investment in new energy sources is expected to reach US$400 billion, with particular interest in wind energy, solar power and co-generation. The Chinese Government already provides subsidies to encourage the consumption of energy saving and environmental friendly products such as LED lighting and small vehicles. China is also encouraging independent innovation into new energy materials such as nano materials, eco-materials and structural materials.

4. Electric vehicles

The Chinese Government has set an ambitious target of having 5 percent of its passenger car sales being represented by electric vehicles by 2011. It is keen on the introduction of foreign high technology and research on Li-ion batteries.

5. Advanced life science and bio-breeding

Biotechnology is a buzzword in China and advanced diagnostic, measuring and testing equipments are hot items.

6. Information technology

There are areas in China where telecommunications networks have yet to be fully developed. While the Chinese Government will focus on developing local service providers, there is ample room for the development of 3G and wireless internet, integrated circuits, new display devices, IT infrastructure, software, etc.

 

Where in China to start looking

Overall, it is useful to look at the areas local governments have slated for further development by geography.

Eastern China

With an average GDP per capita of about US$5,000, Eastern China is the most developed and prosperous region. It can be explained by the fact that all three of its main economic zones, Bohai Rim (around Beijing), the Yangtze River delta and the Pearl River Delta, are located in this region. Together, they generate about 55 percent of the country’s gross domestic product (GDP). Eastern China takes up 10 percent of the country land mass and is home to 30 percent of its total population. The emerging industries here are automotive, electronics, petrochemicals and biotechnology.

Northeast China

Seen as extension of the Bohai Rim, the North China’s heavy industrial center. Average GDP per capita here is that about half of the East China, approximately U.S. $ 2800th Government, “the revitalization of North East Region Policy” was launched in 2003, China has developed a 10-15 year target area in the center of production. Emerging industries here are among those included in mining and processing of natural resources, the production of new energy vehicles, and biomedical products and software.

Central China

Central China has developed more slowly than other regions and the government was “Rise of China Center project in 2006 to promote better development. Average per capita GDP is slightly less than $ 2,000. Wuhan is the most important city of central China operates its own economic and transportation center. The newly built high-speed rail has reduced travel time between Wuhan and Guangzhou in 12 hours to three hours. here is the emerging industries of textiles and ro ivatööstuse machinery and renewable energy.

Western China

Comprising 70 percent of the country’s size and home to 27 percent of China’s total population, Western China is the least developed region of all, with an average GDP per capita of US$1,800. The good news is that it has been attracting a lot of private equity investment, particularly after the Government launched a “Go West” policy in 1999. Western China offers rich land resources and the local government has been offering preferential policies to attract foreign investments. The emerging industries here are infrastructure, chemicals and metals.

 

Warnings for new investors

There are fierce competitive pressures in China. Many Chinese companies are “policy-driven”. They often rush into markets that are encouraged by the Government, often creating oversupply. Chinese competitors, particularly those from the state-owned sectors, often have special relations with the Government and will enjoy a relatively low cost of capital. Thus, they can enter markets quickly and can expect to receive strong support from the Government.

Regarding information transparency, things are improving in China but there is still a long way to go. Published data continues to be typically unreliable and becomes obsolete very quickly.

China’s legal and regulatory system is also fast changing. It is often complex, opaque and inconsistently enforced. For instance, some central Government rules are not enforced or not enforced properly in the provinces. On the other hand, there are instances where rules may be suddenly enforced. Investors should be careful with promises from local officials, and it is essential to call upon well-informed legal advice before entering into an agreement.

Chinese culture values ‘guan xi’ (relationships) in business. Those with successful ventures have strong local presence and relationships, as well as domestic management who have been in China for long periods.

Foreign investors are well advised to work with advisors who are intimately familiar with local dynamics and challenges, and how to circumvent those in order to reap the rich rewards available in the market place.


Article Source:China Sourcing Blog

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