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Transcript of Microeconomics Presentation
Augustina Tan (Group Leader)
Ow Woan Ting
Yeo Jin Xiu
Jun Jie Post-trip Presentation on
Bei Jing & Tian Jin GDP per capita : US$60,500 (rank 6 in the world)
Unemployment rate : 2% (rank 188)
Inflation rate : 5.2% (rank 88) GDP per capita : US$8,500 (rank 121 in the world)
Unemployment rate : 6.5% (rank 130)
Inflation rate : 5.5% (rank 82) China Business & Financial Environment Singapore to transform from investment driven dynamo into a global power house - steadier & more stable trajectory Emphasize on "Higher quality growth" in faces of pollution, intensive energy use & resource depletion "Inclusive growth" to solve the issure of increasing wealth disparity Foreign Direct Investment (FDI) 5 year plan What? Key Themes Aims Develop China’s western regions
Improves lives of the chinese citizens Protect the environment and improve energy efficiency Continue transitioning to an economy driven by domestic consumption instead of exports -Sustainable growth
-Moving up the value chain
-Reducing disparities -Scientific development
-Environmental protection -Energy efficiency
-Domestic consumption Ever since joining the World Trade Organization (WTO) in 2001, the PRC has further opened its markets to foreign investors. Tariffs on agreed products have been minimized, and under the WTO, market access to the various regulated industries has been phased in gradually. The Chinese government progressively encourages foreign investments, particularly in those priority industries. (cc) image by nuonsolarteam on Flickr A more open market will attract know-how, technology, services and materials. FDI breakdown in China, 2005 vs 2010 International Trade
Company Management China Huiyuan Juice Group Limited
中国汇源果汁集团有限公司 Uses different types of packaging for different drinks to save cost
More durable, suitable for products sold to hotel as it is sealed with a cap
For household juice as the carton is hard and printing is attractive to consumers
For packet juice that requires straw (Sealed with aluminium foil) Packaging Product differentiation (non price competition):
- Number 1 fruit juice brand in China by meeting the needs of a large population in China as well as overseas e.g. 100% fruit juice & 20% fruit juice
- Contribution back to society by果
-Many category of juices e.g. 乐乐园 (Happyland) for children
-Flavour diversification e.g. 奇异王果 (V-plus) for the unique kiwi juice produced by Huiyuan Market Structure : Oligopoly Management Style Packaging The removal of germs for 15 sec at a high temperature of 108 degree Celsius. Removal of germs High pressure compression To reduce oxidation of the juices and loss of vitamins Removal of air The concentrated juices used are not only from China itself, but also from Brazil, Israel, Iran and Chile. The ingredients Storage for 7 days before it’s ready for sale Capping of bottles Packaging from America which has the most advanced sterilization systems to ensure the quality of the product Homogenizer is used to reduce the size of the molecules via high pressure compression for a better taste. Currency Risk
Foreign currency transactions
- Exposed to foreign exchange risks due to fluctuating foreign exchange rates.
Unpredictable fluctuations in prices for raw materials
- Seasonal or disaster such as drought
Lean Production : Produce only when there’s sales
Reduced the need for storage
Suppliers may be unable or unwilling to supply on a tighter schedule or in smaller amounts, thus affecting the manufacturing process and cause frequent changes of suppliers Risk Create “Fruit banks” for rural peasants globally by
Building plots for them to farm
Introduce them to the best quality of fruits to farm
Changing or upgrade the local saplings
Provide free trainings to them
Buying their crops in accordance to uniform price
This “Fruit banks” work like these peasants fixed deposit account, receiving interest (income) whenever their crops are sold to Huiyuan. 2. A variety of 237 drinks sold worldwide & 154 products in Beijing By catering different juice to different cities/country for example:
Kiwi Juice : Nan Jing
Peach Juice : Fu Jian & Guang Dong
Cranberry : A specific Beijing restaurant
By packaging different designs & brands for consumers overseas
In America, the bottles are cartoon-designed for children
Ocean Spray : Singapore
By using different cities’/countries’ fruits to make full use of the fruits
Xinjiang grapes - sweet but not juicy
processed as raisins
Processed as juice Recommendations While encouraging foreign investment on one hand, the government is cautious in controlling and monitoring the pace of opening up. Industry restriction is gradually narrowing down. China’s Catalogue Guiding Foreign Investments - Prohibited
(e.g. media) - Restricted (e.g. heavy energy users) -Encouraged
(e.g. energy Saving projects) 1. (A farming project) 1. Project Financing
A project finance company (PFC) established by a consortium of financial institutions led by Temasek Holdings to plug gaps in financing for larger, long-tenure cross-border projects. The Government will guarantee the debt instruments issued by the PFC. At steady state, the PFC is expected to provide about $400 million of financing every year, in turn catalysing about $2-$3 billion of projects annually. 2. Trade Financing and Political Risk Insurance
The current suite of trade financing schemes under IE Singapore will be expanded to support Singapore companies in cross-border trade, including helping companies with the cost of political risk insurance. 3. Double Tax Deduction for Internationalisation
Double tax deduction may be given automatically, instead of on an approval basis, on qualifying expenses incurred on key overseas expansion activities. This will apply for up to $100,000 of expenses incurred for each YA, from 1 Apr 2012. Government Policies in Promoting International Trade Government Policies in Promoting International Trade Improve the recreation facilities in the staff lounge namely, gyms, swimming pools, siesta rooms, etc. In a research in the US, workers who take afternoon naps are deem to be more efficient. Hence, Hui Yuan Fruit Drinks Company may consider allowing their staffs to take short naps during lunch time to increase their staff efficiency. Employees to learn to speak foreign languages
Increase partnership/collaboration opportunities with foreign companies with the increase ability to communicate well
Employment of qualified multilingual employees (to promote foreign generated revenues)
Increase international trade of China in the long run
Especially important for Huiyuan since it is importing & exporting to different countries such as Spain, Mongolia, Niger, Czech & Papua New Guinea A documentary credit is a written conditional undertaking by a bank (issuing bank) given at the request of an importer (applicant), to effect payment to an exporter (beneficiary), provided the exporter presents documents as stipulated by the importer and complies with all other terms and conditions stipulated in the credit.
Hui Yuan no longer depend on the creditworthiness of the importer/ buyer, but now a more reliable party, the issuing bank.
Documentary credit is a more reliable payment method for the exporter in the settlement of international debts.
Governed by the International Chamber of Commerce's Uniform Customs and Practices for Documentary Credits (UCP 600).
Hui Yuan can be more assured that payment can be received from the issuing bank as long as it presents documents as stipulated and complies to all T&C in the L/C.
If the L/C is irrevocable, it cannot be cancelled or amended without agreement of issuing bank, confirming bank and beneficiary.
A confirmed L/C gives Hui Yuan an additional degree of security as confirming bank will pay it if issuing bank fails to do so. Management of Hui Yuan Drinks Company Reducing Communication barrier Methods of Payment - Letter of Credit (cc) photo by medhead on Flickr Thank you Citations
China Huiyuan Juice Group Limited. (2008). Rural Services - Social Responsibility. huiyuan.com.cn. Retrieved September 24, 2012 from http://www.huiyuan.com.cn/duty_duty
IndexMundi. (2012, January 1). GDP - per capita (PPP) - Country Comparison. indexmundi.com. Retrieved September 24, 2012 from http://www.indexmundi.com/g/r.aspx?v=67
IndexMundi. (2012, January 1). Inflation rate (consumer prices) - Country Comparison. indexmundi.com. Retrieved September 24, 2012 from
IndexMundi. (2012, January 1). Unemployment rate - Country Comparison. indexmundi.com. Retrieved September 24, 2012 from http://www.indexmundi.com/g/r.aspx?t=0&v=74&l=en
Micol, C. (2008, May 30). Huiyuan – Kiwi – V-Plus. [Video file]. Video posted to
Ministry of Finance Singapore. (2011, February 20). Key Budget Initiatives. app.mof.gov.sg. Retrieved September 24, 2012 from http://www.mof.gov.sg/budget_2012/key_initiatives/business1.html#s10