Dairy Farm Report
- About Esquel Lecture
On June 11, 2011, Mr. John Chen gave us a speech about the pros and cons of vertical integration in Esquel. His topic was divided by three parts. The first part was perspective on China’s
Economy. The second part was the pros and cons of vertical integration. The last part was winning as the industry consolidation.
The first part was started at Chinese momentous event from 2008 to present. He mentioned the passed Olympic Games, Shanghai Expo and Asian games were held very successfully and he believed that coming University Games in Shenzhen will also grant great success in following months. These big events represent China growing power and economic status in the world.
Then he gave us some detailed perspective on China’s economy. Right now, China’s economy is
moderating after a sharp rebound. He listed some real GDP growth data from 2008 Q1 to 2010 Q4. The data are as below:
Q1 Q2 Q3 Q4
2008 11.3% 10.7% 9.8% 6.6%
2009 6.5% 8.1% 9.5% 12.1%
2010 11.9% 11.1% 9.6% 9.8%
What are the growth drivers for China GDP? He also listed some data and drivers factor. Private consumption, government expenditure, net export and investment are the driver factor. Investment are the key driver and contributed the main growth which we didn’t expect it. Following he listed
some data about 4 drivers factors contributed China GDP from 2000 to 2010. China GDP Growth
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
8.4% 8.3% 9.1% 10% 10.1% 10.4% 11.1% 11.9% 9% 9.1% 10.3%
Gov. Expenditure , Net Export , Investment and Net Export are key factors for China GDP growth. . And Investment contributed the biggest growth for China GDP growth among all the factors. Then private consumption came to the second contribution, government expenditure was the third contribution. Net export contributed the smallest growth..
Why the Net Export are the smallest factor for contribution. Because 2008 and 2009 , due to the Economy Crisis , Net export was hurt and influenced by it and all the consumption was focused in Chinese domestic market. Although it contributed little growth, the import and export growth rebound after the economic crisis. Import growth was from 20% to 40% and export growth was from 25% to 45%.
Since the investment has contributed the huge growth to China GDP growth, what are the main capital resource? Bank loan. Massive bank lending moderated in 2010, what will happen in the second half of 2011? Following chart gave us a clear understanding.
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So the inflation risk became a major policy concern. As the RMB appreciation a lot, food price flow in China too. Then he listed some data for illustration.
In the fast part, John listed the perspective of China and it let us think more about current opportunities and difficulties. It widened out vision in China’s economy and more understanding the
impact of these factors and influence.
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