International Marketing Management of Pakistan - Assignment Example

International Marketing Management I have chosen Pakistan, a country in Asia, as my target marketplace. The total population of Pakistan is 166 million, out of which youngsters are 55 million. Initially for the launch of my product, I shall direct myself towards the capital city which is Islamabad and other main cities that are Karachi and Lahore (Pakistan People, 2006). Youth segment is that section of population that is between childhood and adulthood, but it also depends on the social, economic, cultural factors of a particular country (Cohan et al, 2002). The youth of Pakistan is always willing to try new items that come in the market. They are fond of eating ice cream and ice cream desserts. Launching such an item in this market would be really beneficial for the organization. Consumers in Pakistan are familiar with ice cream products and always wishes to have a new and different flavour (Pakistan, 2006). Product specifications: The product we are going to launch in Pakistan would not be a standard product for the rest of the countries, because it has to be in accordance with the preferences of Pakistanis. Like for example Pizza Hut is operating globally but the pizza you are going to eat in Pakistan compared with pizzas available in other countries' Pizza Hut would be much different as people in Pakistan like spicy food, even the names they have given to the types of pizzas available here are mostly in Urdu language which is the national language of Pakistan. I think that this kind of strategies would be an added advantage for the company. Our ice cream dessert would be available in a packed rectangular box, containing two packets. One will contain the powder form of ice cream dessert which needs to be dissolved in milk, according to the given directions on the box. Another packet will contain the fruit topping, to be served with the dessert. In the preparation of the dessert the temperature of the country needs to be considered. Secondly, the ingredients should be halal i.e. acceptable by the Muslim state. The name we have given to our dessert is 'Summer Delight' because almost for the eight to nine months the weather remains hot in Pakistan. The logo is 'cannot avoid the bite'. How to target the youth segment (Market Targeting): Targeting youth segment of Pakistan would give you an idea of a developing nation where competition and advancements are growing really fast. You might think that as this country is in its development phase, where approximately 30% people are below poverty line, then how would it be possible for the youth population to spend on the desserts The answer is simple. There are thousands of people who can afford and are interested in buying and consuming these items, at a place where there are a few competitors, where youth segment is ready for changes and easily accept and adopt foreign products (Pakistan, 2001). The young generation of Pakistan, aged between 10 - 35 years depending on situations, is a quick decision maker and they are more concerned about the fashion and trend that is going to come in the market. Basically they are ambitious kind of people and always want to be the innovators rather than followers. So if a product fulfils their demands then they are absolutely going to try it. At present for the youth market, the only constant thing is 'change'. Through various communication channels like internet, telephone, newspapers, television programs from all over the world, they are at all times in search of innovative ideas and notions. For a company to target the youth, it has to be adaptable and would be ready and effective for all sorts of integrations, only then it would be possible to catch them and then to retain them (Youth, 2007). Customer's buying behaviour: The buying behaviour of the customer varies significantly depending on the features of the product. For example if a person is interested in buying a car then he will take some time in making the decision because it is complex buying and involves high prices. Our product does not require too much time for decision making process (Market Segmentation, 2006). As we are going to market the product for the first time in Pakistan, there are people who are going to initiate the buying process for our product. People will always be willing to have some variety in such kind of products which they consume on regular basis (Besterfield et al, 2004). Analyzing needs and trends in the macro environment: We need to consider the trend of the Pakistani market, especially for the youth. The forces in the macro environment cannot be controlled and organizations should develop strategies to overcome the problems that are caused by them (Doole & Lowe, 2004). While considering the demographic environment of Pakistan, I'll focus on the areas which are my target markets, their population, the age group I am targeting, the family patterns etc. My targeted regions are Karachi, Lahore and Islamabad, because they are all densely populated cities with high growth rate. If I introduce this dessert all over the country, it would might end up in losses as marketing on a large scale requires heavy investment, so it is better to stick to these areas first (Kotler, 2003). In the economic environment of Pakistan, the important features to consider are spending patterns of customers, current prices and income levels. The economy of Pakistan is the industrializing economy like India and Egypt, where the affluent people and the growing middle class people demand variety of goods and services. My segmented areas for the dessert consist of greater number of people from medium and high income levels because these centres are the most cultured and developed areas. On the other hand, while considering the natural environmental factors of Pakistan, we do not have to bother for the raw material, labour and other costs associated with the production of the dessert because our product will be prepared in Bulgaria (Kaynak, 1999). Technology plays a key role in the economic growth of a country, but at the same time it has some drawbacks too. For our product, we need to keep one thing in mind that we have to be creative. This will be done so that with the changing environment, consumers will not switch to other products and will go for something different from the same creation. As our product is a food product we don't have to look for the safety of the public because it will not contain anything that is harmful or would have problems related to regulations of the country. Here we have to consider the fact that as there are too many international organizations preparing food stuff for Pakistan and are working successfully, in the same way we will market our product and in the manufacturing process, we are going to include that items which are not prohibited in an Islamic state. For example in the manufacturing of cream powder, pig's fat cannot be used. Everyone has some cultural values and beliefs that rarely change. Like most Americans belief in working, getting married, giving to charity and being honest (Kotler, 2003). So we cannot try to change the core values as they are the innate principles but we can alter the individual secondary values which vary accordingly. The micro environmental factors influencing our product: Factors that directly influence the company come under the micro environment. Customers: They are the most important participants in the marketing process, because the fundamental thing for any marketer is the customer satisfaction for which they try and struggle exceptionally hard. As our consumers are youngsters who are fun - loving, innovative and outdoor oriented, we have to keep each and every thing according to their preferences. Competitors: Today in such a competitive environment, it is really essential to know your competitors well. In Pakistan, for ice cream and ice cream products, there are giant companies like Igloo and Walls. They sell ready made ice creams and ice cream cakes. Moreover, there is an Italian company, Gellato Affair, famous for their ice creams and youngsters are fond of it. In addition, there are small companies which are selling powdered form of ice creams and ice cream cakes, but as such they didn't catch the public attention. Suppliers and other stake holders: As the company is producing the ice cream dessert in Bulgaria, so Pakistani supply chain will not be required. Rather the organization has to take care of the distribution network for the product's marketing and distribution. In addition to it, media is also vital in advertising and marketing of the product. But to sustain in the market we really have to be careful in the sense that any kind of negative or unfavourable circumstances would be shown and delivered to the general public through media - television, newspapers etc and will have a negative impact on our dessert (Peattie, 1995). SWOT analysis of Ice Cream Company: Swot analysis is the evaluation of company's strengths, weaknesses, opportunities and threats. It is essential for our company to keep record of any development that will take place through some kind of channels inside the organization, which will monitor these integrations. As youth segment of Pakistan is fond of eating ice cream products so this will be an advantage for our company. Moreover, the climatic conditions of the country are also suitable for the imported dessert. At this initial stage we cannot exactly identify all are strengths and weaknesses. As soon as we'll enter the market, we'll have a broader idea of these internal capabilities. Once our product is launched, it would be possible for us to know the performance levels of variables like product quality for which the company is doing its best, pricing effectiveness, promotion effectiveness and others (Undertaking Swot Analysis, 1995). Opportunities and threats come under the external environment of the organization. One think which is important here is that the opportunity for any company if not availed becomes a threat for that company in the later stages, because it turns into an opportunity for someone else. The threats that might affect the product initially depend on the conditions of the market. For instance, some other company enters the market with the same kind of product, then our company really has to be responsive for such kind of actions (Hall et al, 1990). PESTEL framework: The Pestel framework helps in identifying the key influences on the industry in six major types: Political, economic, social, technological, environmental and legal. The legal and political framework of Pakistan discloses some trade restrictions and tariffs depending on the product. The government might impose a specific tariff which will be fixed amount or it might impose ad valorem tariff which will be the percentage per unit of the dessert. Any kind of tax rate will affect the consumption and production patterns of the country (Marrewijk, 2003). Whether the organization is domestic or international it has to face the challenges that come up. Let us consider if the value of rupee (Pakistani currency) goes down, then the equivalent dollar amount will increase. So operating in the global market one has to consider these factors too. In the social dimensions, we need to consider the demographic changes that always have an impact on the product marketing and the consumers buying behaviour. Besides that, one has to keep into account the population growth factor because in developing countries if growth rate heightens then it would create problems associated with the fulfilment of needs and wants that would then become impossible to solve (Usunier, 1996). "Within society decisions about people's lifestyles, spending, consumption, investment, employment and political activities are all influenced by a range of cultural values and beliefs which are shared generally and among specific groups" (Peattie, 1995). With the passage of time and from previous bad experiences, people's faith and trust on the companies have gone down drastically. Today it would take more time to build relationships with the customers and off course because of rapid integrations and advancements in every field, it is hard for any organization to do so. If we, from the beginning maintain a trustworthy relationship then in the long run the consequences will be really profitable. For every country technology is linked with the protection and safety of the nation as a whole. The safeguard of the people in our case won't be an issue, so we are particularly hassle free on that part. In connection to this, the environmental concern is important for us because we have to consider a few important things. First of all, we need to consider whether our packaging material can be recycled or not. Secondly, we need to keep questioning ourselves that is the material used for packaging is harmful or not because at times the gases that evolved reacts with the gases in the air and becomes dangerous to inhale. These measures need to be taken in order to be on the safe side (Organizing and Integrating Marketing and Purchasing in Business Markets, 2007). From France to Bulgaria: From the last four to five years, the investments in Bulgaria have increased rapidly because of too much expensive property in France and Italy. As the property is comparatively cheap in Bulgaria so it would be cost effective for the company because whether they'll rent out or buy the property for the manufacturing plant, it won't be that costly. In addition to it as Bulgaria is economically healthy with strong GDP growth, so in the near future it would be an added advantage for the French Company to invest here (Bulgaria, 2000). Bulgaria accounts for 4% growth since 2000 and is attracting foreign direct investments on a large scale, so why not our company. When we have feasibility, infrastructure and even when we are welcomed by that country, so it would be a positive feature for us as well as for them because with more and more foreign investments they'll growth rate will increase rapidly and at this point when Bulgaria is in its development stage it would be easy and economically possible for us to settle there. Furthermore, this planning will also help in getting the Bulgarian market for our product as well. Today property in the Eastern Europe is getting expensive day by day because of the high increase in the demand1 (Bulgaria Investment Property, 2006). Our ice cream company shifted the manufacturing unit in Bulgaria, as they have cheap and well educated labour (Bulgaria 2002 Investment Climate Statement, 2002).Talking about the criticisms that will arise because of overseas investment, I'm going to put some important points here. Basically, as the France and Bulgaria are both European countries so no issues regarding currency. A lot of countries are in the process of purchasing, building and investing in Bulgaria. The Bulgarian government has also emphasized on establishment of large scale units for foreigners and are offering different concessions on that, so it is quite simple that like other countries France has also opted Bulgaria for its ice cream manufacturing plant (France, 2006). Globalization of companies: When we talk about globalization we mean connections and extensions of production, communication and technologies around the world. Globalization has started after World War II, according to Smith "The speed of communication and exchange, the complexity and size of the networks involved, and the sheer volume of trade, interaction and risk give what we now label as 'globalization' a peculiar force" (Smith, 2005). From 1980s two main factors accelerated the spread of globalization; one is the advancements in technology that has lowered down the costs associated with communication, transportation etc and the other is liberalization of trade and capital markets, because now the governments are no longer protecting their economies from foreign competition. Today there are a lot of companies who have made their brands global and are working successfully worldwide e.g. Pepsi, Nokia, Sony, Coca Cola etc (Doole & Lowe, 2004). Still for a global product, risks are also involved because then you have to face competitions from all sides, policies of local governments and off course the cultural aspect of that specific country. Unlike China which has drastically boosted its economic growth through globalization 2(Peixin, 2003), developing countries are not that fast to heighten their economies. First of all there is a fear factor attached to the local recent established industries that if the foreign products come in the market then with the risen competition, they won't be able to stay in the markets for long (Warren, 2004). Moreover, governments of such developing countries introduce quotas and make the imports more expensive in order to safeguard their domestic companies and products. In this way they often remain less efficient with little competition which is not a positive sign for the country (Klein, 2006). Trading between countries helps in obtaining low cost products and services. Nowadays we see Pizza Hut, Burger King, and Mc Donald's everywhere in the world. They are more appreciated than the local restaurants. Less developed nations like Pakistan are unable to compete in the international markets (Marrewijk, 2003). Considering the global perspective and applying it to Pakistan and our product, this phenomena of globalization have given the domestic companies a chance to improve their product quality and services if they want to stay in the market, otherwise they would not be able to resist the rising competition and effective and efficient work systems that are integrating day by day. Bibliography Besterfield, Dale H. , Besterfield, C, Besterfield, Glen H. & Besterfield, M. 2004 Total Quality Management Pearson Education Pte. Ltd., India. Berman, B & Evans, Joel R. 2001, Retail Management, Prentice Hall, New Jersey. Bulgaria.com,2000, Job Market, 6th February 2007) http://www.bulgaria.com/ Cohan, L., Cunningham, Vermehren, A. 2004, Youth as a Key to Development in Latin America and the Caribbean, 5th February 2007. http://www.ybiz.com/GDLN/March%202004/NEWSpectrum%20%20Youth%20in%20LAC%20-%20LC&WC&AV%20w%20notes.htm CEEBICnet 2002, Bulgaria 2002 Investment Climate Statement, 5th February 2007 http://www.mac.doc.gov/ceebic/cables/2001/Dec/Bclimate.htm Doole, Isobel &Lowe, Robin., 2004, International Marketing Strategy, Thomson Learning EMEA, UK. Doole, Isobel &Lowe, Robin., 2004, Strategic Marketing Decisions in Global Market, Thomson Learning EMEA, UK. France, 2006, Employment Trends, 5th February 2007, http://www.goinglobal.com/countries/france/france_employment.asp Hall, E. T. and M. R. Hall, 1990, Understanding cultural differences, Yarmouth, Me., Intercultural Press. Industrial Marketing and Purchasing Group, 2007, Organizing and Integrating Marketing and Purchasing in Business Markets, 4th February 2007, http://www.impgroup.org/ Kaynak, Erdener 1999 Cross National and Cross Cultural Issues in Food Marketing 5th February 2007 www.google.com Khan, M. Ibrahim, 2003, Globalization and Challenges for Pakistan 4th February 2007 http://www.globalenvision.org/library/8/467/ Klein, Karen E. 2006 Going Global Part 1, 5th February 2007 http://www.businessweek.com/smallbiz/content/aug2006/sb20060814_446868.htmcampaign_id=rss_null Kotler, P. 1996, Principles of marketing. London, Prentice Hall. Kotler, Philip 2003, Marketing Management Education, Inc., United States of America. Lynch, Richard, 2004, Analysing the Environment, Pearson Education, U.S. Market Segmentation, 2006, Need for Market Segmentation, 5th February 2007 http://www.netmba.com/marketing/market/segmentation/ Marrewijk, Charles Van. 2003 International Trade and the World Economy, Oxford University Press Inc., Newyork, United States. Pakistan, 2001, Database and Development Indicators, 4th February 2007 http://www.adb.org/statistics/poverty/PAK.asp Pakistan, 2006, Energy Information Administration, 5th February 2007 http://www.eia.doe.gov/emeu/cabs/Pakistan/Background.html Peixin, Ambassador Zha. 2003, China and Globalization, 9th February 2007 http://www.chinese-embassy.org.uk/eng/dsjh/t27161.htm Population, 2006 Pakistan People 5th February 2007 http://www.theodora.com/wfbcurrent/pakistan/pakistan_people.html Peattie, Ken 1995 Environmental Marketing Management Pitman Publishing, Great Britain. Smith, M.K. 2005 'Globalization' the encyclopedia of informal education, 4th February 2007, www.infed.org/biblio/globalization.htm. Teacher Net 1995. Undertaking Swot Analysis,. 6th February 2007 http://www.teachernet.gov.uk/professionaldevelopment/tipd/guidance/swot/ Usunier, J. 1996, Marketing across cultures, London ; New York, Prentice Hall. Vestaland Limited 2006 Bulgaria Investment Property - Property Market Overview 5th February 2007. http://vestaland.com/Bulgaria_property_information.htm Warren, J. Keegan 2004, Global Marketing, Prentice Hall, Inc., Englewood Cliffs, New Jersey. Wright, Ray 2003, Business-to-Business Marketing: A Step-by-Step Guide Financial Times Press. Youth (Target Marketing) 2007, All Business, 6th February 2007 http://www.allbusiness.com/youth/3174714-2.html Bulgaria Investment Property - Property market overview (Appendix 1) Key points to note on Bulgaria Investment Property: Stable environment: strong GDP growth, healthy economy and currency linked to the euro. Strong capital appreciation to date: Estimated at 25% ( 2004) for specific types of property and location. Attractive rental yields: In 2004 yields were averaging between 7 and 10 per cent per annum. EU entry: Bulgaria is negotiating to enter the EU. This should further boost its economy. (GDP Growth 5.3% in 2004.) Exceptional growth of tourism: and to grow further in the future. (In 2004 there were 4.2m visitors this has been forecast to rise to 12m by 2020) The new Spain: Bulgaria is often likened to Spain in it's development approach. It is focused on large scale tourism. Mortgage Market: Bulgaria has a developing mortgage market with improvements in bank mortgages - interest rates are falling, banks are competing for business. Possible issues of over supply: There could be issues of over supply in specific areas and markets. For example some experts see intense construction works on Bulgaria's coastline as the main threat to the property market. Summary comments, Bulgaria Investment Property: Over the last four to five years Bulgaria has become one of the hot investment spots in Europe. It is seen by some as the "new Spain". Bulgaria is also attracting prospective holiday buyers that are put off by what they see as overpriced property in Spain, France and Italy. According to King Sturge during 2005 property prices have risen at an estimate of 35% per annum and further strong growth is predicted in the medium term. The world Tourism Organisation placed Bulgaria near the top in terms of tourism growth, they described the growth as "remarkable". Bulgaria has many tourist attractions from "blue flag" award beaches to top class ski resorts. Economic development In 1997, macroeconomic stability was reinforced by the imposition of a fixed exchange rate of the Bulgaria currency ( Lev) against the German D-mark and the negotiation of an IMF standby agreement. Low inflation and steady progress on structural reforms improved the business environment; Bulgaria has averaged 4% growth since 2000 and has begun to attract significant amounts of foreign direct investment Macroeconomic stability: Political and economic stability Sustained GDP growth of 4.7-4.9 % per year NATO membership achieved in 2004 EU membership set for 1 January 2007 Very competitive labor cost compared to the rest of Europe Very competitive tax regime - 15% corporate profit tax as of 1 January 2005 Well educated, highly trained English speaking workforce Strategic geographic location Full national treatment of foreign investment Property Market Price trends: The average property prices in the major Bulgarian cities experienced a 10% - 30% growth through 2005, according to the Bulgarian National Statistics Institute. In 2004 some apartment prices registered almost 50% increase. Some agents believe that the real increase may be much greater and is not registered by official statistics because of the incentives of market participants not to report the real transaction price. We can not validate this claim. However, it is fair to say that 2005 has been an exciting year for the Bulgarian property market. It is expected that the transaction volume will top 250,000 for 2005 compared to 196,000 for the entirety of 2004. It is important to notice that not all parts of the country registered significant increase but rather several big cities (biggest seacoast towns, the capital, 3 - 4 large places with dynamic growth and higher employment, as well as several mountain resorts). The most important reasons for this increase are: Stable economic growth for the past 3 years - 4.5% on average GDP growth Improvement in bank mortgages - interest rates are falling, banks are competing for business. Bulgaria's accession to the EU which will help stimulate property prices. Foreign demand - specifically for new build summer apartments and cottages in the mountains. Huge increase of foreign direct investments. Legislative environment - introduction of Law on Special Purpose Investment Vehicles (2003), Law on Mortgage Bonds (2000) facilitated real property development and allowed for bigger scale investments. Overseas Bulgarian's - Many are investing their money in real estates High home ownership - Bulgaria is among the countries with highest home ownership rate. According to official statistics approximately 91% of people own their place of residence. Rental Yields: Rental yields in cities across Eastern Europe have received a boost, with Sofia, Bulgaria, where property prices average 25,000, seeing yields of between seven and ten per cent per annum, and Prague, Czech Republic, where the average property costs 39,000, seeing yields increase to between five and seven per cent per annum. "Ten years ago no one would consider investing in Eastern Europe, but now property in the Eastern Bloc is selling faster than ever," comments Nick Clark, managing director of Homebuyer Events. "Holidays in countries that have recently joined the European Union are becoming increasingly popular so investors with a long term perspective will secure solid rental yields." Globalization and China (Appendix 2) Globalization is the objective trend of economic development in the world today, featured by free flow and optimized allocation of capital, technology, information and service in the global context. It is the inevitable result of the development of productive forces and advances of science and technology, especially the revolution of information technology since the 1980s and 1990s. As a result, economic interdependence and interaction between countries are becoming ever stronger. In this massive tide of economic globalisation, no country can develop and prosper in isolation. China has learnt from her long history that isolation leads to backwardness. Development, progress and prosperity could only be achieved through opening to and integrating with the outside world, through stepping up exchanges and cooperation with other countries and through absorbing all fine results of human civilization. Therefore, we should embrace and seize the opportunities presented by globalization and adopt reforms to keep up with the steps of the changing world. Challenges brought by Globalization Due to the lack of a just and equitable international economic order, the influence of globalization on countries at different stages of development is entirely different. The "dividends" derived from globalization are not fairly distributed. The developed countries have apparent advantages in capital, technology, human resources and administrative expertise and in setting the "rules of the game". They are usually the most active propellers and the biggest beneficiaries of globalization. The developing countries on the other hand are on the whole in an unfavourable position. Developing countries can obtain some foreign investment, advanced technologies and management expertise, but at the same time they are the most vulnerable to the negative impacts of globalization and lack the ability to effectively fend off and reduce the risks and pitfalls that come along with globalization. In the 1990s, especially in recent years, the gap between the North and the South has further widened. The economic sovereignty and economic security of the developing countries are confronted with enormous pressure and stern challenges. Some least-developed countries are even on the brink of being marginalized by globalization. Therefore, in participation of globalization, developing countries should always be on alert and try by all means to exploit the advantages and avoid all kinds of risk and harm. China's Experience For China, globalization is often seen as a double-edged sword that brings opportunities and challenges, advantages and disadvantages. How to turn disadvantages into advantages in the tidal wave of globalization depends on formulating the correct policies and strategies. If the policies are correct, challenges can be turned into opportunities. China has learnt many lessons and accumulated rich experiences in dealing with globalisation from its practice of reform and opening-up. In my personal opinion, they can be summarized as follows: 1. To find a road of development that suits the national conditions. In the past 20-odd years, China has maintained an annual growth rate of over 9.3% on average. China is now the 6th largest economy and the 5th largest trading nation in the world. More than 200 million people have been lifted out of poverty. The average life expectancy reached 71.8 years in 2002, close to that of a medium-level developed country. The above accomplishments were achieved against the backdrop of a volatile international situation. The reason why China can achieve so much in such a short span of time and in a constantly changing international environment is because China has found its own road of development, suitable to its national conditions, namely building socialism with Chinese characteristics. In one word, building socialism with Chinese characteristics is to base what we do on the realities of China. While sticking to the basic system of socialism, reforms should be carried out to solve the problems of incompatibility between the productive forces and the relations of production, and between economic base and the superstructure, so as to achieve self-perfection of socialism. Every country is different from the other. While it is important to learn from other countries in the world, no country should simply copy other countries' model. 2. To adopt opening-up policy. China's opening to the outside world is comprehensive. It opens not only to developed countries, but also to developing countries, not only in economic field, but also in all areas of social development. At the same time, it is not a blind opening, but a self-conscious one, not a disorganized opening but a systematic one. China's opening proceeds and deepens in a gradual and step by step fashion. It started from the 4 special economic zones, to coastal cities, then to capital cities of inland provinces and now it has reached an unprecedented stage of all-round opening demonstrated by China's accession to the World Trade Organization. During its opening-up, China paid special attention to give full play to its comparative advantages to actively conduct international cooperation and competition. For instance, China has fully exploited its advantages of low cost of labour to attract foreign investment and technology to push economic development and better efficiency and quality of economic growth. These measures have brought the Chinese economy increasingly integrated with the world economy. 3. To promote regional cooperation for better risk-resistance ability. Due to weakness in economic strength, it's difficult for developing countries to resist the risk brought about by globalization on their own. Therefore, they should, through strengthening regional economic cooperation, rely on group strength to stand risks. Today, regional and sub-regional cooperation is becoming increasingly active. They complement and correlate with the trend of globalization. China has signed the Framework Agreement with ASEAN on Comprehensive Economic Cooperation with the aim of establishing China-ASEAN Free Trade Zone in 2010. The Shanghai Cooperation Organization is also forging closer economic links alongside with cooperation in security issues. Strengthening cross-Taiwan straits economic links conforms to the pattern of economic development, serves the overall interests of the Chinese nation and complies with the trend of globalization. To set obstacle to this trend is unwise and is bound to fail. More than 3 million people travelled across the Taiwan Straits, with the two-way trade reaching 44.6 billion US dollars in 2002, an increase of 38% over the previous year. More than 60,000 Taiwan enterprises have invested in the mainland. By the end of 2002, the accumulated cross-straits trade was 267.9 billion US dollars, among which Taiwan enjoys a trade surplus of 182.6 billion US dollars. Now Taiwan is mainland's 4th largest trading partner. The mainland is Taiwan's largest export destination and the biggest source of trade surplus. With regard to Hong Kong, more than 50% of foreign investment China has attracted so far comes through Hong Kong. The above figures have clearly attested to a growing economic interdependence between the mainland, Hong Kong and Taiwan. We strongly hope that the Taiwan authorities can have a clear understanding of the situation and does not move against the tide of history. 4. To be vigilant against various risks, especially financial risks. The Asian financial crisis in 1997 has clearly been a microcosm of the challenges and dangers involved in economic globalization. When the crisis swept Asian countries, China adopted a responsible approach. China not only persisted not to devalue its own currency, but also contributed more than US$ 4 billion through bilateral and multi-lateral channels to help the affected countries. This has helped to stabilize the financial situation in Asia as well as the world. Many lessons could be drawn from this crisis. Developing countries have to pay special attention to the restructuring and strengthening of their financial system. Developing countries should keep the destiny of their economy in their own hands and should not lose the grip to others. 5. To push for the establishment of a new international economic order that is just and rational. A globalized economy calls for globalized regulations and co operations. All countries, big or small, poor or rich, strong or weak, should have the right of equal participation in international economic affairs, and the formulation and revision of "rule of the game" should not be determined by only a small number of countries or groups of countries. To establish a fair and rational international economic order is the only way to ensure that the benefits of globalization are shared more widely and equitably. The new order should uphold the principle of equality and mutual benefit and common development. It should be conducive to narrow the gap between the North and South so as to make it possible for the trend of economic globalization to evolve in the direction favourable to the common prosperity of mankind. The United Nations Report on Human Development shows that the trend of globalization has made "the poor poorer and the rich richer". If such a situation were to continue, not only the economic development of the developing countries would be in jeopardy, the economies of the developed countries would also face difficulties in achieving a steady and sustainable growth. In the process of globalization, the developed countries should assume more responsibilities in such fields as restraining the speculative factors in international capital flow, alleviating the debt burden of poor countries, opening the markets and furthering technology transfer to help the economic development of developing countries. In return, they will enjoy more markets and investment opportunities to ensure long-term prosperity. It is indeed a win-win situation which is best testified by the case of China. China's Contribution to World Economy China's participation in Globalization is by no means a one-way street. When the world economic growth remains weak, China's economy is one of the few bright spots. As World Bank Report on Global Development Finance 2003 published in early April, pointed out that China's fast growth "helped to drive the recovery in East Asia. Together with policy stimulus in other countries, China's performance lifted the region to growth of 6.7 % in 2002, up from 5.5% in 2001. Average regional growth of more than 6% is expected for the next two years, with China increasingly becoming the engine of the regional economy." China has also provided the world with the largest rising market. When more than 1.25 billion people become well-off, the demand on everything will be enormous. Just to give you an example, in the coming 10 years alone, China will import US$ 2 trillion of goods from the outside world. A recent article in the Economist highlighted the benefits brought by China's growth: "Millions of consumers in other countries are gaining from the low prices and high quality of Chinese goods. A billion Chinese are escaping the dire poverty of the past. Business across the globe will profit from supplying a vast new market. These are wonders to be celebrated, not threats to be agonized over." Blueprint for Future Development The first 10 to 20 years of this century present China with an important strategic window of opportunity for development. It goes without saying that we are also facing many challenges. For instance, with the accession to the WTO, China is faced with growing pressure from international competition. China's enterprises have to cope with fiercer competition not only at international market, but at home market as well. Nevertheless, opening the country to the outside world is China's basic and long-term state policy. China is committed to opening still wider to the outside world in an all-directional and multi-tiered way, with an even more active approach. Last November, the 16th CPC National Congress set the objective of building a well-off society in an all-round way to the benefit of 1.3 billion people. In the economic field, the objective is to quadruple its gross domestic product (GDP) of 2000 by the year 2020. That means China's GDP would reach about 4.32 trillion US dollars by the year 2020. Other objectives include: further improve the socialist democracy and the legal system; enhance the ethical standards and educational and cultural qualities of the people; promote sustainable development etc. The aim is to achieve comprehensive economic, political and cultural development of socialism with Chinese characteristics. China's new Premier, during his first press conference after the First Session of the 10th National People's Congress last month, summarized the immediate tasks ahead in the following 4 points: 1. Strive to achieve one objective: to maintain a steady and rapid economic growth and continuously improve people's living standards. To this end, continuity and consistency of policy will be ensured. China continues to expand domestic demand and adopt a proactive fiscal policy and a prudent monetary policy; 2. Grasp two crucial links: to continue to advance the strategic restructuring of China's economy and continue to open up to the outside world. 3. Solve three major economic issues in the economy: unemployment and social security system, increase fiscal revenue and cut public expenditure, rectify and regulate market economic order; 4. Advance reform in four major areas: rural reform, state-owned enterprise reform, financial reform and governmental institution reform. Reform of the state-owned enterprises continues to be taken as the central task. China is committed to establish a modern corporate system while deepening reform in state assets management. In financial reform, the financial regulatory system will be improved and at the same time reform of the state-owned financial institutions will be accelerated so as to establish a modern financial corporate system in the real sense. The tasks are enormous. There will be all kinds of difficulties ahead, some foreseen and some unexpected. But we are determined and remain confident that pressure can be turned into motive force. Through reform and opening up over the past 20 years, China has accumulated valuable experiences as well as sound material strength. China today is in a better position to face severe challenges. With the concerted efforts of the Chinese people, the strategic goal of building a well-off society in an all-round way will be achieved. By learning swimming through practice, China will master the art of riding the tide of globalization and in the process we will surely achieve the rejuvenation of the Chinese nation. Read More