【正文】 Impacts ? The stateowned trading panies currently still own the advantage of getting quota from the government free of charge or at lower cost ? Having relied on the quota protection for a long time of period, most of the stateowned trading panies haven’t established enough petitiveness for a free market petition ? The deregulation is the absolute trend and stateowned panies will gradually lose their advantages in quota acquisition ? After China’s accession to the WTO, the abolishment of quota will push the stateowned trading panies into a very unfavorable situation %%%Free quota Cheaper quota Market price quota Profit contribution from subsidized quota: US$ 20m Example Lines 32 presentationCEMSx Apparel export is still the most important business of OIE in terms of sales and profit contribution Source： OIE, Roland Berger Strategy Consultants 1) Including Holding, Minhang, Baihe, Gaonan, apparel business of Rongheng, Pudong 2) Jiada + Jingmao 3)Including Holding, Rongheng Sales structure by business 20xx [US$ m] Operating profit structure by business 20xx [US$ m] Apparel1) export Logistics2) forwarding Pharmaceutical export Textile3) export Others Total % % % % % Apparel1) export Logistics2) forwarding Pharmaceutical export Textile3) export Others Total % Example Lines 33 presentationCEMSx Taking into account the uping market liberalization, OIE will lose rapidly its petitive advantage based on governmental protection Assessment of petitiveness Business Market share development Profitability / cost position Governmental protection Business models Match of core petence and success factors Overall assessment Apparel export Phar. Export Textile export Logistics forwarding (sea) Logistics forwarding (air) High Medium Low Source: Roland Berger Strategy Consultants Lines 34 presentationCEMSx The apparel business will need to improve its profitability considerably to offset the loss of the quota business Adjustment of reported profit of apparel business based on “Economic profit” [US$ m] 1 2114 1 64 1 1Reported profit FY20xx Elimination of nonsustainable profits Currency gains Profits protected by quota “ Sustainable” profit Cost of equity “ Sustainable” Economic profit II Value of apparel business is declining! Source： OIE, Roland Berger Strategy Consultants I Requirement to improve profitability Lines 35 presentationCEMSx There are two strategic options for OIE in the apparel business: “Service oriented manufacturer” or “Fullservice regional agent” Strategic options in apparel business “ Fullservice regional agent” “ Serviceoriented manufacturer” Customer focus ? Foreign retailers (esp. vertical chains) ? Chinese retailers (private label) ? Big retailers with own buying offices ? Lowmedium advanced agents ? Regional coverage of supplier countries for production in Asia ? National coverage (. Several production plants in different labor cost areas of China) Supplier country coverage ? All apparel product categories and qualities ? Focus on one / few product categories and / or qualities Product categories Services / petences ? Supply chain partner with core petences in fabric sourcing (worldwide), factory sourcing1) and quality control ? Additional innovative services in – Design (own collection) – Product development (flexible and quick prototyping through own production capacity) – Fabric research amp。 Partners。 quality petition ? Decrease of profit margins ? Increase in bankruptcies ? 1% additional growth . ? 34% until 20xx ? High loss of labor/jobs in some industries (. agriculture, automotive), but new jobs created in other industries(. apparel) ? Increase of skilled labor ? Ruralurban discrepancy in wealth and ine (+% . / % .) ? % additional GDP/cap . 60% of population 6000 USD ine by 20xx ? % additional export growth . ? % additional import growth . ? 50bn annually Lines 7 presentationCEMSx The macroeconomic impact of China?s accession to the WTO will be especially strong in apparel, automobiles and electronics Some categories as example Without accession With accession Without accession With accession Without accession With accession Foodgrains Other agriculture Beverages/tobacco Extractive industries Textiles Wearing apparel Petrochemicals Metals Automobiles Electronics Utilities Trade/transport Total Table 10. Output, Exports and Imports as a Share of the World Economy Output Exports Imports 1995 20xx 1995 20xx 1995 20xx Source:, World Bank analysis 20xx Lines 8 presentationCEMSx With some dramatic consequences for employment (1) Source: World Bank and Dev. Res. Ctr. of the State Council Employment of skilled labor growth: 1995~20xx Foodgrains Meat amp。 tobacco Textiles Apparel Wood amp。Lines 1 presentationCEMSx Strategic Impact of China?s entry into the WTO On Chinese and Foreign Companies Presentation for CEMS Universities in St. Gallen, Stockholm, Bergen, Milano November, 20xx Lines 2 presentationCEMSx Content Page A. The macroeconomic impact of China?s WTO entry 3 B. Automotive 11 C. Apparel amp。 paper Petrochemicals Metals Automobiles Other manu. Total manu. Total 2 7 . 42 3 . 5 51 2 9 . 0 32 0 . 22 1 . 5 9765