Motor Vehicle Parts and Accessories in China: A Strategic Reference, 2006
ICON Group International, July 2007, Pages: 244
How to Strategically Evaluate China
Perhaps the most efficient way of evaluating China is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance to motor vehicle parts and accessories are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries
Demand/Market Potential Driven Firm
Relative Accessibility
Accessibility/Supply Averse Firm
In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).
Latent Demand and Accessibility in China
This report provides a detailed overview of factors driving latent demand and accessibility for motor vehicle parts and accessories in China. Latent demand is largely driven by economic fundamentals specific to motor vehicle parts and accessories. This topic is discussed in Chapter 2 using work carried out in China on behalf of American firms and authored by the United States government (typically commercial attachés or similar persons in local offices of the U.S. Department of State). I have included a number of edits to clarify the information provided. Latent demand only represents half of the picture. Chapter 2 also deals with micro-accessibility for motor vehicle parts and accessories in China. I use the term “micro” since the discussion is focused specifically on motor vehicle parts and accessories.
Chapter 3 is also a stand-alone report that I have authored. It covers proxy pro-forma financial indicators of firms operating in China. I use the word “proxy” because the provided figures only cover a “what if” scenario, based on actual operating results for firms in China. The numbers are only indicative of an average firm whose primary activity is in China. It covers a vertical analysis of the maximum likelihood balance sheet, income statement, and financial ratios of firms operating in China. It does so for a particular Standard Industrial Classification (SIC) code. That code covers “motor vehicles and equipment manufacturing”, as defined in Chapter 3. Again, while “motor vehicles and equipment manufacturing” does not exactly equate to “motor vehicle parts and accessories”, it nevertheless gives an indicator of how China compares to other countries for a proxy adjacent category along various dimensions.
Chapter 4 deals with macro-accessibility and covers factors that go beyond motor vehicle parts and accessories. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in China:
Openness to Trade in China
Openness to Direct Investment in China
Local Marketing and Entry Strategy Alternatives
Local Human Resources
Local Risks
Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are covered in the Chapter 4, which is a general overview of investment and business conditions in China. Chapter 4 is also presented from the perspective of an American firm, though is equally applicable to most firms entering China. This chapter is also authored by local offices of the U.S. government, as is Chapter 2. Likewise, I have included a number of edits to clarify the provided information as it relates to the general strategic framework mentioned earlier.
1 INTRODUCTION & METHODOLOGY 1
1.1 What Does This Report Cover? 1
1.2 How to Strategically Evaluate China 1
1.3 Latent Demand and Accessibility in China 3
2 MOTOR VEHICLE PARTS AND ACCESSORIES IN CHINA 5
2.1 Latent Demand and Accessibility: Background 5
2.2 Latent Demand: Market Composition 5
2.2.1 Market Data 6
2.3 Latent Demand: Leading Segments 7
2.3.1 Automotive Parts 7
2.3.2 Service Facilities 8
2.3.3 Automotive Accessory Products 9
2.4 Key Suppliers 10
2.5 Prospective Buyers 10
2.5.1 Key Players 11
2.6 Accessibility: Market Entry 11
2.6.1 Market Issues and Obstacles 12
2.7 Key Contacts 12
2.7.1 Industry Associations 12
2.7.2 Newspapers and Magazines 13
3 FINANCIAL INDICATORS: MOTOR VEHICLES AND EQUIPMENT MANUFACTURING 14
3.1 Overview 14
3.1.1 Financial Returns and Gaps in China 15
3.1.2 Labor Productivity Gaps in China 18
3.1.3 Limitations and Extensions 18
3.2 Financial Returns in China: Asset Structure Ratios 19
3.2.1 Overview 19
3.2.2 Assets - Definitions of Terms 19
3.2.3 Asset Structure: Outlook 22
3.2.4 Large Variances: Assets 23
3.2.5 Key Percentiles and Rankings 26
3.3 Financial Returns in China: Liability Structure Ratios 41
3.3.1 Overview 41
3.3.2 Liabilities and Equity - Definitions of Terms 41
3.3.3 Liability Structure: Outlook 43
3.3.4 Large Variances: Liabilities 44
3.3.5 Key Percentiles and Rankings 47
3.4 Financial Returns in China: Income Structure Ratios 60
3.4.1 Overview 60
3.4.2 Income Statements - Definitions of Terms 60
3.4.3 Income Structure: Outlook 63
3.4.4 Large Variances: Income 64
3.4.5 Key Percentiles and Rankings 67
3.5 Financial Returns in China: Profitability Ratios 82
3.5.1 Overview 82
3.5.2 Ratios - Definitions of Terms 82
3.5.3 Ratio Structure: Outlook 84
3.5.4 Large Variances: Ratios 85
3.5.5 Key Percentiles and Rankings 88
3.6 Productivity in China: Asset-Labor Ratios 103
3.6.1 Overview 103
3.6.2 Asset to Labor: Outlook 104
3.6.3 Asset to Labor: International Gaps 105
3.6.4 Key Percentiles and Rankings 108
3.7 Productivity in China: Liability-Labor Ratios 123
3.7.1 Overview 123
3.7.2 Liability to Labor: Outlook 124
3.7.3 Liability and Equity to Labor: International Gaps 125
3.7.4 Key Percentiles and Rankings 128
3.8 Productivity in China: Income-Labor Ratios 141
3.8.1 Overview 141
3.8.2 Income to Labor: Outlook 142
3.8.3 Income to Labor: Gaps 143
3.8.4 Key Percentiles and Rankings 146
4 MACRO-ACCESSIBILITY IN CHINA 161
4.1 Executive Summary 161
4.1.1 Government Intervention Risks 161
4.1.2 Infrastructure Investment 162
4.2 Political Risks 162
4.3 Marketing Strategies 163
4.3.1 Distribution Channel Options 163
4.3.2 Establishing a Presence in China 165
4.3.3 Selling Strategies 166
4.3.4 Advertising and Trade Promotion 167
4.3.5 Pricing Issues 168
4.3.6 Selling to the Government 169
4.3.7 Intellectual Property Risks 169
4.3.8 Local Professional Services 174
4.3.9 Performing Due Diligence 175
4.4 Import and Export Regulation Risks 175
4.4.1 Import Tariffs and Customs Regulations 176
4.4.2 Trade Barrier Risks 177
4.4.3 Import Documentation Requirements 180
4.4.4 Controls on Exports 181
4.4.5 Export Controls 182
4.4.6 Inspection Standards 183
4.4.7 Labeling Issues 185
4.4.8 Additional Trade Issues 185
4.4.9 Restrictions on Imports 186
4.4.10 Customs Contact Information 187
4.5 Investment Climate 187
4.5.1 Openness to Foreign Investment 187
4.5.2 Laws Affecting Foreign Enterprise Establishment 190
4.5.3 Other Laws Relating to Investment 192
4.5.4 Conversion and Transfer Policies 194
4.5.5 Expropriation and Compensation 194
4.5.6 Dispute Settlement 194
4.5.7 Performance Requirements and Incentives 196
4.5.8 Right to Private Ownership and Establishment 197
4.5.9 Transparency of the Regulatory System 198
4.5.10 Capital Market Risks 199
4.5.11 Political Violence 200
4.5.12 Corruption 200
4.5.13 Bilateral Investment Agreements 201
4.5.14 OPIC and Other Investment Insurance 201
4.5.15 Labor 201
4.5.16 Free Trade Zone Options 203
4.6 Trade and Project Financing 203
4.6.1 Banking System 203
4.6.2 Foreign Exchange Control Risks 205
4.6.3 Financing Exports 206
4.6.4 Terms of Payment 208
4.6.5 Insurance 209
4.6.6 Financing Projects 209
4.6.7 Commercial Bank Contacts 209
4.7 Travel Risks 214
4.7.1 Planning and Logistics 215
4.7.2 Temporary Entry of Materials and Personal Belongings 216
4.7.3 Country Data 217
4.7.4 Major U.S. Investors in China 218
4.8 Key Contacts 219
4.8.1 State Commissions 219
4.8.2 Chinese Ministries 219
4.8.3 Associations and Corporations 228
4.8.4 American Chamber of Commerce 230
4.8.5 U.S. Embassy Contacts 231
4.8.6 Contacts in Washington D.C. 233
4.8.7 U.S.-Based Multipliers 234
5 DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS 235
5.1 Disclaimers & Safe Harbor 235
5.2 Icon Group International, Inc. User Agreement Provisions 236
Customers who bought this item also bought
All rights reserved. © Copyright 2013 Research and Markets WWW5
Terms and Conditions Privacy Policy Publishers Employment Opportunities Site Map Link to us Webmaster Affiliate Network
