【正文】 84% 28% 16% ? The actual investment in real estate reached RMB billion, up % ? 32 million square meters of land was used for real estate development, up % ? Market price slightly increased by % ? Top cities such as Shanghai, Beijing, Guangzhou, Shenzhen are leading the growth, . the private consumption in Beijing was almost tripled to million square meters pared with the period of the last year Private buyer Institutional buyer [Million sqm] High end real estate is on track of steady growth during the past 5 years Growth of sales of villas and high end apartments* Composition of high end real estate market (1999) *: The high end real estate market is defined by the selling price per sqm, in 1999, the criteria is above 4500 RMB per sqm 57%9%14%20%Guangdong Others Shanghai Beijing [Million sqm] 2 . 4 8 2 . 5 0 2 . 5 43 . 4 54 . 3 61995 1996 1997 1998 1999+15%. [Million sqm] 42% Total: Chinese government is endeavoring to drive sustainable economic growth Openup ? Continuously adopt the direction market oriented economy development, the market will open further ? Prepare for WTO entry to gain more foreign investment and sell more abroad Western region development ? To narrow the gap of economic development between coastal area and western region ? To create extra domestic market demand by government direction setting Sustainable economic growth Market reform Domestic market demand driven ? Keep the growth of government’s investment in infrastructure ? Prioritize the market development of real estate by issuing out stimulating policies, such as housing privatization policy, tax cut of housing consumption ? Create consumption market demand by increasing the pay of government staff 50%, lowering down deposit interest etc. ? Keep SOE reform at the top agenda of economic development, to achieve a longterm solution for a viable SOE business, some shortterm pains may be caused such as a large amount of workers laidoff Probably China will join WTO early in 2023, which will make a tremendous impact in the Chinese macro economic environment Boost economic development Impact to Geberit’s business in China Intensify market petition ? More favorable investment environment ? Easier to import Geberit European produced products to Chinese market Impact to macro economic environment ? Overall, WTO will make a dramatic impact on China’s economic development by opening the door to foreign business and making Chinese products more accessible to the global market ? WTO entry will boost one new tide of foreign investment in Chinese market ? WTO entry will also bring consumer spending growth ? WTO entry means more international players will e to Chinese market by exporting their products with the lower tariff or by direct investment in the market ? The tariff for sanitary product, now around 40% will be reduced to 10% in the ing 5 years, a great favor for American or European sanitary products imported to China ? WTO entry will strengthen key petitors’ determination for Chinese market like Caroma, Grohe Dal. They will move into the market quickly WTO entry implication Western region development will create a considerable market demand, however, Geberit should not be overlyoptimistic Implication to Geberit Government’s direction ? Chinese government will invest 100 billion USD in infrastructure construction across the western region in the ing 10 years, invest 24 billion USD in ecological environment protection and enhancement ? 70% of the loans from international financial anization and preferential loans to Chinese government will be poured into western region ? Government issued extra incentives and preferential treatment to attract more foreign investment in the western region ? The western industry structure will be optimized to be more efficient and environmental friendly ? To improve farmer’s ine ? The massive infrastructure upgrade and construction will create certain market demand for Geberit’s products. . around 20 airports in western region will be built or upgraded in the next 5 years, a potential market for Pluvia and public products ? The household ine and the general economic development in western region will still lag far behind the eastern coastal area in China, It will take quite a long time for the west to catch up, Geberit should not be overlyoptimistic to target at the vast but poor western market Source: China Infobank, RBP analysis China’s western region, a vast land with rich natural resources, lags far behind national economic development Overview (1999) Geography Indicator Ine per capita Land area Population GDP GDP per capita Western region 406 USD SKM mn 285 mn USD bn USD As % of national 60% 57% 24% 15% 62% ? Account for no more than 4% of total contracted and utilized foreign investment ? Rich natural resources such as water, gas, coal, and ore The western region consists of 10 provinces: Shichuang, Chongqing, Guizhou, Tibet, Yunnan Shangxi, Gangshu, Qinghai, Ningxia, Xingjiang Backup Source: China Statistics Yearbook 2023, RBP analysis Chinese urban residents ine and consumption per capita has dramatically increased in the past 15 years Annual per capita disposable ine of urban residents (1999) Annual per capita consumption of urban residents (1999) 5 8 5 4 . 04 2 8 3 . 01 5 1 0 . 27 3 9 . 11985 1990 1995 1999+16%. +22%. +6%. 6750487416868021985 1990 1995 1999+16%. +22%. +6%. [RMB] [RMB] Source: China Statistics Yearbook 2023, RBP analysis A consumer group with strong purchasing power has emerged in the Chinese consumer market, they are demanding and bra