Thursday, December 9, 2010

CCID Consulting: Prospects on Major Industries during China’s 12th Five-Year Plan

During China’s 11th Five-Year Plan (2006-2010), great achievements have been recorded in terms of its scientific development, independent innovation and industrialization strategies. Since 2007, China’s GDP per capita has stayed above 2,480 dollars, signifying that China has virtually entered the middle phase of industrialization. In the face of the recent financial crisis, China managed to offset the global impacts by stimulating its domestic demand, developing hi-tech industries, upgrading traditional industries with advanced technologies, reallocating the state-owned assets, encouraging enterprise restructurings and supporting private enterprises. As a result, the country’s industrial added value recorded in 2009 grew 8.3% from the previous year, with the scale-sized industrial added value up 11% year-on-year.

Based on its understanding of China’s economic development, CCID Consulting believes that government-guided economic openness, regional coordination, industry convergence and technology innovation will still be the focus of the governments’ efforts at all levels as China ushers in its 12th Five-Year Plan (2011-2015).

The 12th Five-Year Plan is endowed with two significant opportunities for growth, One is rooted in the further development of economic globalization and the continuing adjustments on the global industrial structure’s, with an accelerating transfer of manufacturing capacities from the developed countries to the developing countries. In China, the rise of high-growth industries including steelmaking, petrifaction, automobile and equipment manufacturing will help the country take over the transferred capacities and grow into one of the world’s manufacturing bases. The other opportunity is brought by China’s accelerating policy adjustments. As the structural tax reduction and domestic demand stimulation policies continue, the market will be boosted by the upgrade of China’s consumption structure, expanding the space for China’s industrial development and helping China take the initiative in international cooperation.

Meanwhile, China will also face four major challenges during the period, namely China’s heavy dependence on exports vs. uncertainties in the global economic recovery, the sustained economic growth vs. the increasing external pressure, the governmental controls vs. the market laws, as well as the tight resources supplies vs. the lack of an endogenous economic growth pattern.

* The 12th Five-Year Plan for key industries focuses on adjustment and upgrade.

Guidelines for the iron and steel industry: to accelerate the elimination of outdated production capacities, the transfer of industrial capacities to the coastal areas, the consolidation of enterprises as well as the enhancement of the innovation capabilities of low-carbon technologies.

Guidelines for the nonferrous metals industry: to further the structural adjustments, establish a withdrawal mechanism, improve industrial concentration, improve the techniques and promote a cyclic economy.

Guidelines for the equipment manufacturing industry: to significantly enhance the independent innovation capabilities; to optimize the industrial structures and cultivate number of large enterprises brands as well as equipment manufacturing clusters with international influences; to enhance the application of information technology in R&D production control, marketing, corporate management and HR development.

Guidelines for the automobile industry: to stimulate the domestic demand, improve market concentration, cultivate independent brands, promote the commercialization new energy automobiles and support the application of domestically produced key components.

Guidelines for the aviation industry: to reform the investment mechanism, encouraging the absorption of non-state-owned capital and capital from other industries; to reform the research system for effective utilization of the state’s aviation resources, and scientific management of research projects and to promote international cooperation in joint scientific and technology research; to adjust policies and laws to enhance controls on the aviation industry’s economic operation and market performance and ensure the sustained development of the industry.

Guidelines for the aerospace industry: to accelerate the industrialization of the industry, enhancing the R&D capabilities for key equipment, expanding both domestic and international markets and reinforcing resource and business restructurings; to guarantee the key technology developments including the remaining tasks of the manned spaceflight project, the lunar exploration program II and the high-definition Earth observation system; to establish a technology innovation system; to improve the foreign affairs management and services.

Guidelines for electronics and information industry: to encourage endogenous by developing strategically important emerging industries, promoting independent innovation and expanding domestic demand. Investment in the industry will see an increase in the upstream sectors including components, parts and raw materials, with a decline in audio and video devices, computers and telecommunications devices.

Guidelines for the textile industry: to accelerate the elimination of outdated capacities, standardization and structural adjustments; to upgrade equipment and techniques; to increase the revenues of enterprises in the Central and Western regions; to accelerate the R&D and application of new materials.

* The 12th Five-Year Plan for strategically important emerging industries focuses on cultivation and upgrade.

New materials industry. China’s new materials debuted during the 10th Five-Year Plan, and it has established a complete industry system by far. Currently China is a leading producer of various basic raw materials and industrial products in the world, however its reliance on imports of high-performance materials, key components and important equipment is still heavy. The guidelines for the new materials industry are to reach a new stage of development through a number of key projects and to establish a world-class new materials and intelligent green manufacturing system, with focus on key materials for aerospace engineering, microelectronic and supporting materials, optoelectronic materials, new display materials, new energy materials, high-performance composite materials, special functional materials, intelligent materials, nano-materials, superconductor and other new materials.

Advanced manufacturing industry. Equipment manufacturing is key to the development of the advanced manufacturing industry. During the 12th Five-Year Plan, China will focus on high-end CNC machine tools and fundamental manufacturing equipment, very-large-scale integrated circuit devices and other key equipment for strategic development, energy saving and new energy vehicles, high-speed rail transportation devices, regional and trunk-line aircrafts, high-tech ships and other advanced vehicle manufacturing, as well as digitalization and environmental upgrades of the traditional industries.

Energy-saving and environmental-protection industry. The industry features a great market potential, a strong impetus for other industries, and a strong capability of employment creation, which makes it a good choice to boost consumption, investment and exports. During the 12th Five-Year Plan, China will further increase its investment in the industry, accelerate its development by means of economic approaches and policy adjustments, as well as encourage the consumption of the energy-saving and environmental protection products.

New energy industry. Despite its fast development during the 11th Five-Year Plan, the new energy industry is still at an initial stage with problems such as the incomplete industry system, capacity surpluses and shortages, and the lack of industry standards. Hence, in future the country will have to ensure the healthy development of both the market and the industry. The PV sector will focus on the stand-alone power plant and building integrated grid application and the R&D on high-purity polysilicon production technologies, energy saving technologies, byproducts recycling technologies, next-generation thin-film solar cell technologies, integrated polysilicon equipment, key equipment for solar cell manufacturing, solar battery backing plate binder technologies, etc. The wind power sector has primarily decided to build large-scale bases and to supply the national grids. The biomass sector will focus on green power plan and non-food biomass transportation fuel application plans.

Biomedical industry. China’s biomedical industry is facing outstanding problems such as lack of a national development strategy, generally small enterprise scales, low R&D commercialization rate, poor financing, small state investment in R&D, and poor protection of intellectual property. During the 12th Five-Year Plan, China’s biomedical industry will focus on strengthening the intellectual property protection and enhancing the market access system; making achievements in, key biomedical technologies concerning people's livelihood and the country’s economic development, including functional genomics and genes related to important traits, proteins and the importance of protein structures and functions, metabolism group and systems biology research, stem cells and therapeutic cloning, tissue engineering and regenerative medicine, genetic engineering drugs, vaccines and gene therapy, nano-biotechnology and nano-drugs; supporting innovative drugs and high-end medical equipment; expanding the international market for R&D outsourcing services; cultivating leading experts and elite teams.

About CCID Consulting Co., Ltd.

CCID Consulting Co., Ltd. (hereinafter known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market (GEM) of the Stock Exchange of Hong Kong (HKSE: 08235) and the first consulting firm which gets ISO 9001 international and national quality management system standard certification, is directly affiliated to China Center for Information Industry Development (hereinafter known as CCID Group).

Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen, Wuhan and Chengdu with over 300 professional consultants after many years of development. The company’s business scope has covered over 200 large and medium-sized cities in China. With its powerful industrial resources, information technology and data channels, CCID Consulting provides customers with public policy establishment, industry competitiveness upgrade, development strategy and planning, marketing strategy and research, HR management, IT programming and management services. The company's customers range from industrial users in electronics, telecommunications, energy, finance and automobile to government departments at all levels and diversified industrial parks. CCID Consulting commits itself to becoming China's No.1 advisor for enterprise management, No.1 consultancy for government decision and No.1 brand for informationization consulting.

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