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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 163

China Business Intelligence No. 163

Samsung Economic Research Institute Beijing Office

June 16, 2010

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I. Economy

The Chinese government has adopted a policy that facilitates private capital inflow into various industries. In May 2010, the Chinese government unveiled" Opinion on Promoting Sound Development of Private Investments (New 36 Articles)" at the State Council of China to attract private investments. The New 36 Articles encourages private investment in the following areas: transportation; processing of hydraulic resources; electricity; oil natural gas; telegraph; land management; development of minerals; public services projects; social welfare housing construction; medical services; education and social education; social welfare; finance; business distribution; logistics; and the defense & science industry.

II. Industry

One of the world' s biggest Contract Research Organization (CRO), Charles River bought Chinese CRO leader, WuXi AppTec. Pharmaceutical companies in advanced countries have outsourced their R&D sector to emerging economies including China and India, to save costs. Faced with the decreasing life cycle of medicine, rising costs, and stricter regulations, they found emerging countries, especially China, to be more attractive to do their business. Equipped with a competitive edge, China is expected to become the biggest CRO market in Asia . The M&A between the American and Chinese CROs is also a testament to the competitiveness of China' s overall medical and medicine industry, benefitting both companies. Indeed, the deal will spark the development of China' s CRO industry.

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