China’s Industries

1. China’s Industries Preliminaries: industry characteristics The new industries Adjusting: the established industries How far has China come? Current Trends

4. The New Industries • Some well known patterns • Excess entry (Klepper et al) • Shake-out/escalation (Klepper, Sutton, etc.)

5. 200 80 60 40 20 100 80 60 40 20 200 80 60 40 20 100 80 60 40 20 Fridges W/Machines

6. 100 90 80 70 60 50 40 30 20 10 Color TVs 78 9 80 1 2 3 4 5 6 7 8 9 90 1 2 3 4 5 6 7 8 9 00 1 2 3

7. The Established Industries • Cement • Steel • Clothing • Machine Tools • Beer

8. Cement • High Transport Costs Segment Market • Regulatory Regime Strengthens This • A Quiet Life … The BBMG Company • A Turnaround at Sunnsy

9. Clothing and Textiles • Key to Turnaround is Not Privatisation but Permission to Export Directly (Lanyan) • Hangsu in Silk: Capability Building and Direct Exporting • Ever Glory: Fast Growing Private Firm

10. Steel • Slow but Steady Technical Progress • Key Role Played by Equipment Suppliers (Jiangsu link with Fuchs) • Joint Ventures: Jiangsu with Posco (Korea) • Still ‘High Volume Moderate Quality’… with a Large Fringe of Small Producers

11. Machine Tools • Slow but Adequate Adjustment Towards CNC Machines • Transition Cushioned by Profits from Conventional Machines • Joint Ventures Established over Past Few Years are Building Capability in Advanced CNC Machines (Dalian Company with Index of Germany etc.)

12. Beer • First Moves towards Classic Pattern become Evident • Interaction of Scale Economies and Advertising • Foreign Stakeholders Move In

13. How Far Has China Come? • Two Methods – 1. Benchmarking in Autocomponents 2. Trade Statistics by Product Line

16. Current Trends • Seeking a Foothold: Air Conditioners for Saudi Arabia • The Nineties see a Move in FDI Away from Low wage Seeking Towards the Pull of the Large Domestic Market. Illustration from DVD Market etc • Chinese Firms seek Low Labour Cost Locations … Ever Glory … • Making Fridges in Italy … A Reverse Process