MERCER CHINA 2014 ANNUAL HR CONFERENCE WINNING THE FUTURE THROUGH - - PowerPoint PPT Presentation

MERCER CHINA 2014 ANNUAL HR CONFERENCE

WINNING THE FUTURE THROUGH TODAY’S INNOVATION

September 23, 2014 China - Shanghai

Economic Overview Global , AP and China

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World GDP and Inflation

GDP goes up and Inflation goes down from 2013 to 2015

Source: IMF World Economic Outlook (April, 2014)

• 2.0

0.0 2.0 4.0 6.0 8.0 10.0

2008 2009 2010 2011 2012 2013 2014 2015 Emerging market and developing economies Inflation

9.2 5.4 5.9 7.3 6.0 5.8 5.5 5.2

Emerging market and developing economies GDP

5.9 3.1 7.5 6.3 5.1 4.7 4.9 5.3

World Inflation

6.0 2.5 3.6 4.9 3.9 3.6 3.5 3.4

World GDP

2.7

• 0.4

5.2 3.9 3.2 3.0 3.6 3.9

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Shift in Global Business Landscape Driving corporate growth in Asia Pacific

Source: APAC Exec Brief, August, 2014, IMA Asia

Asia Pacific still leading the pack To cash in where the growth is today, and for the foreseeable future, Increasing focus on Asia Pacific 4.3% GDP growth 1.1% GDP growth 2.0% GDP growth

Asia Pacific vs. Developed markets

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Regional GDP, Inflation & Salary Increase

0% 1% 2% 3% 4% 5% 6% 7% 8%

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22 September 2014

Source: IMA Asia Brief Aug 2014 Salary Increase: Mercer Global Compensation Planning Report 2014 July *Mercer TRS Surveys 2014

AU CN HK ID IN JP KR MY NZ PH SG TH TW VN GDP 3.0% 7.4% 2.5% 5.0% 4.9% 0.4% 3.6% 6.2% 3.3% 6.2% 3.2% 1.1% 3.8% 5.0% Inflation 2.6% 2.5% 3.8% 5.7% 7.3% 2.7% 1.5% 3.5% 2.0% 4.6% 2.1% 2.3% 1.7% 4.9% Salary Increase 3.5% 7.5%* 4.5% 10.0% 11.0% 2.1% 5.0% 5.6% 3.0% 7.0% 4.5% 5.9% 3.8% 10.7%

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• 1
• 0.8
• 0.6
• 0.4
• 0.2

0.2 0.4 0.6 0.8 1 North America Europe and Central Asia Asia and Pacific Latin America and the Caribbean Middle East and North Africa S ub-S aharan Africa

• 1. The overall index is unweighted average of the four pillar scores
• 2. Scores are weighted by population; population data from United Nations Department of Economic and Social Affairs, World

Population Prospects, rev. 2012.

Source: The Human Capital Report, World Economic Forum, 2013 The report is published in collaboration with Mercer

Human Capital Index – by Region

Health and Wellness Education Workforce and Employment Enabling Environment

Human Capital Index

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Human Capital Index - China Rank #43

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Country Rank Score Switzerland 1 1.455 Finland 2 1.406 Singapore 3 1.232 Netherlands 4 1.161 Sweden 5 1.111 Japan 15 0.948 United States 16 0.920 Malaysia 22 0.644 China 43 0.186 Thailand 44 0.158 Russian Federation 51 0.010 Indonesia 53 0.001 Brazil 57

• 0.054

Mexico 58

• 0.057

Vietnam 70

• 0.202

India 78

• 0.270

Source: The Human Capital Report, World Economic Forum, 2013

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6.0% 4.0% 2.0% 0.0% 2.0% 4.0% 6.0%

0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95-99 100+

Asia

Population Demographics - Gender

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2010 2030

Source: UN Population Statistics 2012

Male Female

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Population Demographics – Median Age

Source: UN World Population Prospects 2012 5 10 15 20 25 30 35 40 45 50 55

India ASEAN USA Australia China South Korea Japan Median Age of the Total Population (Years) 1990 2010 2030

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China’s Changing Demographics

Group by 10 from 20 - 59

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Unit: thousand The forecast of the future population adopts medium fertility rate assumption. Source: World Population Prospects: The 2012 Revision, United Nations

50,000 100,000 150,000 200,000 250,000

1990 1995 2000 2005 2010 2015 2020 2025 2030

20-29 30-39 40-49 50-59

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China on Track for Moderate Growth

GDP, CPI, salary increase and turnover rate

10.4 11.6 13 9.6 9.1 10.4 9.3 7.8 7.7 7.4

• 2

2 4 6 8 10 12 14 16 18 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014(E) 2015(F) GDP CPI(Inflation Rate) Salary Increase Staff Voluntary Turnover

2014 1st half year

10

Source : National Bureau of Statistics of China IMA Asia (Aug 2014) 2004-2014 Mercer Total Remuneration Survey

6.7 12.2 13.5 14.6 11.3 15.7 16.3 13.6 13.6 13.4 7.2 8.6 8.2 8.7 6.9 8.5 9.6 9.4 8.2 7.9 7.5 7.7 1.8 4.8 1.5 5.9

• 0.7

3.3 5.4 2.6 2.8 2.5 2.6

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China on Track for Moderate Growth

GDP per capital

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• 1. Source: IMF World Economic Outlook (April, 2014).
• 2. GDP is expressed in current U.S. dollars per person. Data are derived by first converting GDP in national

currency to U.S. dollars and then dividing it by total population.

• 3. For the ranking, there are 186 countries and regions with the data of GDP Per Capital.

China’s Ranking of GDP per capital

Year Ranking 2011 91 2012 88 2013 84 2014(F) 82 2015(F) 81

5,434 6,078 6,747 7,333 7,961

2011 2012 2013 2014(F) 2015(F)

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China GDP Growth Rate Forecast

12 Source: China Forecast Book, IMA Asia， 2014 Q3

3 6 9 12 15 2010 2011 2012 2013 2014 2015 2016 Manufacturing Construction Services GDP

CHINA: GDP Growth by Component, %

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China’s Total Debt vs. GDP Raised rapidly since 2008 economic risk increased

13 Source: Financial Times reported on July 22, 2014, citing estimates from Standard Chartered.

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• 10

10 20 30 40 Growth Percentage(Year-on-year)

China FDI Growth

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

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China Foreign Direct Investment (FDI)

Source : Ministry of Commerce of the People’s Republic of China Source: World Investment Report 2014 United Nations Conference on Trade and Development

2011 2012 2013 2014

100 124

2013 FDI Flow

FDI Outflow FDI Inflow

USD, Billion

2014

Outflow > Inflow

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50.2 54.1 45 46 47 48 49 50 51 52 53 54 55 PMI Manufacturing PMI Service Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

China PMI : Manufacturing and Services

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Source: HSBC September, 2014

2013 2014 Service

Highest since Mar 2013 Down Again after 3-month up

Manufacturing

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Global Innovation Index rankings

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Innovation – A Path to Transformation

China has improved its innovation from 2013 to 2014

Country/Economy Score(0-100) 2014 Rank 2013 Rank

Switzerland 64.78 1 1 United Kingdom 62.37 2 3 Sweden 62.29 3 2 United States of America 60.09 6 5 Hong Kong (China) 56.82 10 7 Japan 52.41 21 22

China 46.57 29 35

Russian Federation 39.14 49 62 Brazil 36.29 61 64 India 33.70 76 66

Source: The Global Innovation Index 2014 Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO)

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Summary

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• China still has strong-to-moderate GDP growth rate in next 3 years.
• Economic risk is raising due to stimulation.
• China may become a FDI net outflow country in 2014.
• China is on the way improving its Human capital index and

innovation ranking in the world, while the aging population will be a issue，China has to seek way to offset its negative impact.