• Migration of traditional industries –machinery, tools, consumer products, pharmaceuticals, food, retail industry- into strategic zones of the China market
• Contract manufacturing -processing- migration into “processing zones”

• IT, High Tech R&D centers migration into “high-tech zones”. Patent filings skyrocketing

• Supply chain transfer –design and innovation-. Before, company by company, and now entire supply chains invest together (auto, IT, telecom). Also co-production assembly for export worldwide.

• Logistics transfer –third party logistics- . Management of stocks at FOB price and other factors.

• Domestic service industry increasing capacity and quality –value chain-. This includes investment banking- mutual funds- finance – media – consultancy –technology and systems – human resources

• Large growth. Small companies with exponential growth (Wen Wen cookies)

• Two-tier JVs –business in and out of China- production and distribution

• Reverse JVs –investment out-flow- (Yanjing/Taisun, etc)

• Regional competitors become global cooperators (Haier/Sampo)

• Private equity and funds clubs create financial pipelines from or through  Greater China to the World.

• State Owned Enterprises changing approach towards private investment patterns. Global approach for China focused growth.

• Increased human capital management –managerial and technical support entering the center of the projects-

• Chinese companies becoming more competitive locally. Massive domestic consumption –industrial and household-

• Chinese companies becoming more competitive globally. However, more and more being Global requires being Local. Relevance of the Chinese local market.

• Chinese companies are forming strategic alliances that are and will change the balance in many industries, and these alliances will take place across industries and markets.

• Regional integration (ASEAN) –value chain integration-. Export and manufacturing prowess will take larger market share from neighbors in their home and export markets.

• China is integrating with the World, in a broad and large scale, across industries and markets.

Beyond Manufacturing

• R&D expenditure has an average growth rate of 20%, R&D-to-GDP ratio grew from 0.8% to 1.23% (From 1998 to 2004).

• The 11th 5-Year Program aims at raising R&D-to-GDP ratio to 2% by 2010 (Japan 3.1%, USA 2.7%, South Korea 3.0%, OECD average 2.2%).

• Average 30% annual increase of domestic invention patent application (i.e. grew from 13,726 to 65,786, an AGR of 29.8% (1998-2004)