Shaping trends of Greater China Market - Deloitte

Shaping trends of Greater China Market - Deloitte

Shaping trends of Greater China Market Eli Tidhar, head of China-Israel Corridor, Deloitte Deloitte Consulting has one of the most established consu...

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Shaping trends of Greater China Market Eli Tidhar, head of China-Israel Corridor, Deloitte

Deloitte Consulting has one of the most established consulting practices in China Deloitte Offices in Greater China Region

Deloitte China Deloitte in China is a top-tier professional services organization for both multi-national and large local Chinese companies. 

Deloitte serves 80% of companies among Fortune Global 500, nearly 50% of China Top 100 companies and one-third of companies listed on the Stock Exchange of Hong Kong



The first foreign accounting firm to open an office in Shanghai in 1917



Over 13,500 people in 21 Chinese cities



Provides audit, consulting, financial advisory, risk, and tax services

Deloitte Consulting in China In China, Deloitte Consulting were honored with the Top 10 Advisory Consultancy award and CFO‘s Most Trusted Advisory Organization. We are now the largest consulting practice among the Big Four (by size), with our revenue growing by more than 50% per annum in the last 3 years. Staff strength of over 1,200 bi-lingual management consultants located in 6 cities in Greater China, our charter is to assist organizations to achieve their business objectives and goals through the following approaches:

= Deloitte China offices = Deloitte China offices with Consulting operations



Bring the best and most relevant talent through our multi-disciplinary approach



Leverage global networks



Understand challenges of specific industries within China, bring them proven solutions and new thinking

Areas for Cross Border Collaboration CN-IL M&A

Cross Border Audit

• CF/transaction support/M&A services • Sharing deal flow • Targeted approach (investors, potential candidates)

CN

• Building cross border teams to capture specific audit opportunities

1 Deal flow opportunities bridge 2 Cross border audit

IL

3 Consulting bridge 4 innovation bridge

Consulting Bridge • IL companies looking to enter or already active in CN • Services to CN groups active in IL • G2G

Innovation Bridge • GTA Services - Onboarding Israeli innovation

-10.00

-20.00

-30.00

Exports: YoY

-40.00 Imports: YoY

2016-12

2016-09

2016-06

2016-03

2015-12

2015-09

2015-06

2012-12

2012-09

2012-06

2012-03

GDP: YoY

2015-03

2014-12

Total retail sales of consumer goods: YoY

Trade development

60.00

(%)

50.00

40.00

30.00

20.00

10.00

0.00

2016-12

2016-09

2016-06

2016-03

2015-12

2015-09

2015-06

2015-03

2014-12

2014-09

2014-06

2014-03

2013-12

2013-09

2013-06

2013-03

GDP growth set at “6.5%” in 2017

2014-09

2014-06

2014-03

2013-12

2013-09

2013-06

2013-03

2012-12

2012-09

2012-06

2012-03

16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00

(%)

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

China – Slowdown & Resilience Booming consumption

18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00

(%)

The Chinese 13th 5 year plan (FYP) Stabilization of growth & economic adjustment

SOE reform with the genuine mixed ownership experiment

Reduced capacities and inventories

Financial reform with a more flexible RMB exchange rate as the PBOC’s basket is being tested now

Increased innovation and industrial upgrades

Labor reform addressing 150 million migrant workers

Greener economy

China – Industry Segmentation

The Life Science and Health Care Industry

Unbalance between supply and demand drives China healthcare market grow rapidly Demand for healthcare is growing at a breakneck speed, yet supply-side growth is sluggish by comparison. Supply and demand of healthcare service Healthcare Expenditure (trillion in RMB)

Hospital Institutions Beds

Healthcare professionals Doctors

X

2004

2013

0.76

3.17

4.2

840K

970K

1.2

3270K

6180K

1.9

6330K

9790K

1.5

1580K

2290K

1.4

Strong demand for healthcare services with a huge market space Health Expenditure in China

Health Expenditure as Percent GDP (2013)

60000.0 50000.0

2.4 Trillion in RMB

40000.0 30000.0 20000.0 10000.0

2019e

2018e

2017e

2016e

2015e

2014e

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

0.0

• Total health spending is expected to reach 5.6 trillion yuan in 2019, 1.76 times in 2013 • China’s enormous healthcare market continues to expand rapidly, driven by an aging population, economic growth and an expanding basic health insurance

Increasing healthcare spending and significant gaps in patient care experience fuel the demand for private healthcare services Patient experience of China’s healthcare system

Healthcare budget per capita (RMB) HC Budget per Capita in Urban Area HC Budget per Capita in Rural Area

872

Availability

601

43

1995

medical services cannot meet their needs

326

318 110

32% of patients think local

88 2000

168

2005

2010

Accessibility

 Healthcare budget per capita has increased significantly with a CAGR of 15% over last 15years Care Quality

Source: Deloitte China Healthcare service survey, press release, Monitor Deloitte Analysis

45% of patients find waiting time before healthcare service is unfavorable

47% of the patients

believe the hospitals are not patient-oriented

Healthcare reform to promote the following difficulties in public hospitals

Payment Reform

Increased Services

Removal of drug mark-ups

Talent Retention

Availability

Affordability

Quality

Healthcare services will break through the traditional services model



As the development of China, people are growing more aware of their healthcare needs, demanding more preventive care and a greater diversity of services.



Heath care will no longer be limited in "disease to medicine“. It will cover health consultation, prevention, rehabilitation and chronic disease management etc.



Health care model will be innovative, providing a broader development space for m-health, wearable devices and other emerging models.

Policy Reform in Favor of Private Hospital Development The State Council’s 12th Five-Year Plan explicitly proposed that private hospital service volume should comprise 20% of the total by 2015.

Private hospitals are developing rapidly, but volume accounts for only 11%

Number of Private Hospitals in China 14,000

13,153 12,359

12,000

Public and Private Hospitals by Quantity and Service Volume 100% 80%

10,000

60%

8,000 6,000

40%

4,000

20%

2,000 0

0%

Source: Health Statistics Yearbook, Deloitte Analysis

11% 50%

13%

Private capital will boost healthcare sector growth Investors favor hospitals and hospital management Institutions VC/PE Investment Amounts and Transaction Quantities

Active Merger and Acquisition Activities in Healthcare Hospital Acquisitions

Corporation investment in hospitals

The biotech sector has been targeted as key development sector by the government

Healthcare – a trillion dollar market Healthcare is one of the last big industries in China to open up to foreign investment and technology. In addition to rising demand for the best available treatment from newly affluent consumers, China is facing new challenges, as cancer, heart disease, diabetes, and other chronic diseases afflict more of its population.

Demand and policy driving market forward Key market expansion drivers include:

Aging population

Increasing healthcare expenditure

Healthcare reform measures

The Technology, Media and Telecommunication Industry

Technology Sector

Online sales in China

Smart City Projects in China (2014-2015)

www.deloitte.co.il Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in 150 countries and territories, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s more than 244,000 professionals are committed to becoming the standard of excellence.

Brightman Almagor Zohar & Co. (Deloitte Israel) is the member firm of Deloitte Touche Tohmatsu Limited in Israel. Deloitte Israel is one of Israel’s leading professional services firms, providing a wide range of worldclass audit, tax, consulting, financial advisory and trust services. Through 90 partners and directors and approximately 1200 employees the firm serves domestic and international clients, public institutions and promising fast-growth companies whose shares are traded on the Israeli, US and European capital markets. ©2017 Brightman Almagor Zohar & Co. Member of Deloitte Touche Tohmatsu Limited.