Gordian Knots

Influx Insights’ on why a China strategy is necessary:

China has secured its spot in the global marketplace, and the world is taking notice. Everyone is talking about China, but we thought it was worth uncovering why – the answer is scale. What’s particularly
astonishing is China’s potential is not even close to being tapped yet, with low penetration rates indicating that China’s dominance will only continue to grow. Here are some statistics that help to explain why
China is on everyone’s radar these days.

Economy
- Population of over 1.3 billion. The United States is about 295.7 million.
- Population growth rate is .58%. The United States is .92%.
- Population expected to hit 1.46 billion by the 2030s.
- The world’s fastest growing large economy.
- GDP of about $7.3 trillion. The United States is approximately $11.8 trillion.
- GDP per capita of $5,600. United States is $40,100.
- Estimated GDP growth rate of 9.1% verses 4.4% for the United States.
- Japan’s largest trading partner, a spot previously held by the United States.
- US imports from China were $179.2 billion in 2004.
- China imports from the US were $31.5 billion ($45.9 billion if Hong Kong is included).
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Many Chinese firms are looking to make acquisitions of US firms in
order to build global brands. Qingdao Haier in China recently placed a bid on the US based Maytag Corporation.

Resources
- Approximately 40% of the world oil demand growth over the past 4 years.
- Highest production and consumption of coal.
- Largest producer of steel and cement.
- Second largest consumer of energy.
- Third largest producer of energy.

Technology & Communication
- Largest cellular phone market, with 353.7 million users. The US has 180.5 million.
- 26% penetration rate for cell phones, compared to 50% in the United States.
- 5.5 million new subscribers a month.
- Expected to be over 500 million cellular phone users by 2007.
- 7 million cellular phone users less than 10 years ago. The United States had 44 million.
- Almost 100 million Internet users, the United States has approximately 200 million.
- Internet users increased 18% from 2003 – 2004, and is currently increasing at 800,000 a week.
- Estimated that 4 million people maintain blogs, approximately half the number in the US.
- Largest mobile networks in the world, but is only at a 15% penetration rate.

Transportation
- 75% increase in automobile sales during 2003. 15% increase in 2004. The US had a 1% increase in 2004.
- 16 cars and light passenger trucks per 1,000 people. 700 per 1,000 people in the United States and 598 per 1,000 people in Japan.
- Automobile market expected to grow to 51 cars and trucks per 1,000 people by 2014.
- More than 5 million new cars sold in 2004. 16.9 million new cars sold in the United States.
- Car sales expected to increase by 10-15% this year, while remaining steady in the US.
- 2% of consumers own a private car, but 5% say they will buy one within the next two years.
- Worlds third-largest vehicle market, behind the United States and Japan.

Advertising
- Current advertising market

is approximately $9 billion, and is expected to grow to $12 billion by
2006 and $18 billion by 2011, which would make it the third largest
advertising market.
- Internet advertising grew approximately 58% between 2003 and 2004, reaching $230 million by the end of 2004. Expected to double by 2006.td>

Tom Evslin writes:: “It is almost impossible to sell something which customers can?t use unless they change the way they do business. That?s a hard lesson for an innovator to swallow because the best use of innovative products is to change the way business is done. The more you tell your prospect that your product is revolutionary, the more nervous he?ll get. Besides, it may not matter to him that what?s inside your product is revolutionary; he doesn?t want to buy a revolution. He wants something that?ll make his business work better.”