Shanghi Business Review Jan 15

JANUARY 2015 Volume 12: Issue 1 www.sbrchina.com ISSN: 1813-310X

A Roll of the Dice The Magical Life of Jack Lam

Chinese Tourism Trends

Air Cargo Survey

China's Insurance Boom

Germany Report

Ronnie Tan, Franklin Covey

Biggi Stefansson, IS Seafood

Directory

AIRFAST AIRFLEX

AIRSAVE

Geodis Wilson’s Airfreight Solutions Moving your business forward. www.geodiswilson.com 2

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

CONTENTS 6

News in Brief A comprehensive summary of China business news for international companies operating in the Middle Kingdom.

26

SHANGHAIBeat

A round-up of some of the significant business events that recently took place in Shanghai.

FEATURE COVER FEATURE

28

Chinese Tourism Trends in 2015

A Roll of the Dice

The pace and scale of change in Chinese outbound travel makes it critical to understand new developments to stay competitive.

In the second part of our ongoing series on the overseas Chinese business community SBR meets with Dr. Jack Lam Yin Lok to discuss his gaming empire as well as Fontana Resort’s involvement in the APEC Philippines Summit 2015.

SBR

JANUARY 2015

Published by: Middle Kingdom Media Ltd.

Vol 12, Issue 1

(Part of Global CAMG Media Group Pty Ltd.)

Hong Kong

Shanghai Business Review

Chairman International Editor Public Relations Director General Manager Executive Publisher Senior Editor News Editors

Website

Production Editor Copy Editor Design

Tommy Jiang David Lake Shirley Gui Fabian Gull Ryan Cai Alun John Mars Mosqueda Jr Paul Taneo Christine Lapaz Jade Obina Marilyn Usaraga Charisse Cartin Ivan Maglasang Karen Kintanar

Sales & Marketing Subscriptions Events Coordinator Finance & Admin

Iren Hao Lyn Salvacion Sophie Wu Zoe Qin Cissy Gao

Cover image: Not Available

For all advertising enquiries, please contact: sales@mk-media.net or +86 21 5403 2211 Letters to the Editor are welcome; please contact us at: editor@sbr.net.cn

© Copyright 2014 Middle Kingdom Media Ltd. All rights reserved.

Shanghai Business Review (ISSN: 1813-310X) is published by Middle Kingdom Media Ltd. No reproduction of any articles or photographs in this publication may be made in whole or in part without the written permission of the copyright holder and/or the publisher. The publisher is not responsible for product claims and representations.

www.sbrchina.com

20th Floor, Central Tower, 28 Queen’s Road, Central, Hong Kong Tel:+852 2159 9457

Shanghai

MKM Communications, Room 809, Hitech Plaza, 488 South Wuning Lu, Shanghai 200042 Tel:+86 21 5403 2211 Contact: Fabian Gull

Beijing

Global CAMG Media Group Room 2002, Building No.2, DongFang Ruijing No.16 JianWaiDaJie Street Chaoyang District, Beijing 100022 China Tel:+(86) 10 8580 1962 Contact: Ms. Wang Su

International Offices Australia

Global CAMG Media Group Pty Ltd.

10 James Street, Waterloo NSW, Australia 2017 Tel: +(61) 2-9286-1888 Contact: Ms. Christina Tong

Indonesia

PT CAMG Indonesia Jl. K.H Hasyim Ashari No 8 Cipondoh Tangerang Banten 15146, Indonesia Tel: +(62) 89998-11111 Contact: Ms. Laiying Cheng

Jordan

Sobhi Omari Street, Building No. 12 Sawifiah District, Amman, Jordan Tel: +(962) 77777-7802 Contact: Mr. Sari Traih

37

Thailand

CAMG (Thailand) Co. Ltd 600/76-78 B-Square Rama 9-Mengjai Soi Ramkhumhaeng 39 (Thepleela 1) Wangthonglang, Bangkok 10310 Tel: +66 2 530 9559 Contact: Mr. Sakon Chiembanchong

Mongolia

CAMG Media Mongolia Co. Ltd. Mongolian National Broadcaster CP Box 365, Khuvisgalyn Zam- 3, Ulaanbaatar-11, Mongolia 210524 Tel: +(976) 9567-9889 Contact: Mr. Si Qin

Nepal

CAMG Nepal (Private) Ltd. Post Box No. 11276, Dhapasi-8 Prayasnagar Kathmandu, Nepal Tel: +(977)-1-4357136 Contact: Mr. Prakash Babu Paudel

New Zealand

Global CAMG New Zealand Limited 194 Marua Road, Mt wellington Auckland, New Zealand 1051 Tel: +(64) 9-525-0101 Contact: Ms. Stella Hu

Philippines

Global CAMG Philippines Inc. Unit 1802, OMM Citra Building ADB Ave, Ortigas Pasig City Manila, Philippines Tel: +(63) 917-887-9663 Contact: Mr. Ray Apita

South Korea

CAMG Korea Co. Ltd. CAMG B/D 48-2 Nonhyeon-Dong Gangnam-Gu Seoul, South Korea 135-814 Tel: +(82) 010-9969-9833 Contact: Mr. Zhang Shuhao

CONTENTS 40

FEATURE

48

INDUSTRY REPORT

Covering the Market

Promising Horizons

The boom of China’s insu-rance industry has primarily benefited domestic providers, though foreign insurers are closely looking at strategies to become bigger players.

The growth in China’s domestic consumption has been a blessing to international air cargo providers, who now have fewer government regulations and a market that allows competition.

ENTREPRENEUR PROFILE

43

Exploring New Shores

Soaring Together

This month, SBR’s Entrepreneurs series looks at Biggi Stefansson, CEO of IS Seafood, who shares his experience of starting a business in China.

VIEW FROM THE TOP

52

COUNTRY FOCUS: GERMANY

C

Germany and China continue their strong and stable economic cooperation, with more Chinese firms looking to bring investment westward.

44

Y

CM

MY

The End of Efficiency

CY

CMY

K

Ronnie Tan is President of Franklin Covey Division at Right Management. He is responsible for all of Franklin Covey’s activities in Singapore, and Greater China.

Franklin Covey is a global leader in effectiveness training, productivity tools and assessment services for organisations and individuals, and has been operating in China for almost 20 years.

PROFESSIONAL OPINION

M

46

58

RegulaTORy update

Key new legal and taxation developments affecting international enterprises operating in Shanghai.

the view offshore

60

FATCA enters into force, new reporting rules in China, among others overseas tax developments.

Countdown to AEC 2015 With the launch of the ASEAN Economic Community in 2015, companies operating in Asia must prepare themselves to harness ASEAN’s new efficiencies.

Directory of service providers A run down of key companies providing business services in Shanghai.

61

NEWS

News in Brief

Daily news updates

A summary of China business news for international companies.

CONTENTS Agribusiness . . . . . . . . . . .

Consulting & Law . . . . . . . .

Finance & Economics . . . . .

Hospitality & Leisure . . . . . .

IT & Telecoms . . . . . . . . . .

Manufacturing & Automotive .

6 7 10 11 14 16

Media, Advertising & Entertainment .

Mining, Energy & the Environment . .

Pharmaceuticals & Healthcare . . . .

Property & Construction . . . . . . . .

Retail & FMCG . . . . . . . . . . . . . .

Transport & Logistics . . . . . . . . . .

Agribusiness Dutch milk firm seeks to revolutionise China's dairy industry Royal FrieslandCampina, the largest dairy firm in Holland, announced that it aims to revolutionise dairy production in China with its so-called grass-toglass method. CEO Cees't Hart

said that Royal FrieslandCampina, which made EUR11.4bn (USD14.25bn) in 2013, seeks USD1.26bn of sales in mainland China, adding that the Chinese market is very important to the firm. The 135-year-old firm merged Royal Friesland Foods and Campina six years ago.

18 18 21 21 22 24

Feihe Dairy and Harvard's medical school put up nutrition-research centre Feihe Dairy of China and the Beth Israel Deaconess Medical Centre at Harvard Medical School launched on 18 November a joint laboratory dedicated to nutrition research. Feihe Dairy is one of the top babyformula producers in China.

Both parties will work together on related fields like paediatrics, neurology, microbiology, and digestion, said Dr. George Blackburn, associate director of the Division of Nutrition at Harvard Medical School.

Starbucks is largest purchaser of China's coffee beans in 2014

Yili and DFAI to put up USD100m Kansas plant Inner Mongolia-based Yili Industrial Group Co and Dairy Farmers of America Inc are set to construct a USD100m milkpowder factory in the US state of Kansas. The milk factory can produce 80,000 metric tonnes of milk powder annually, according to a Yili filing statement on 13 November at the Shanghai Stock Exchange. Under the deal, Yili will put in USD30m into the venture, while DFAI will provide the rest.

6

United States-based Starbucks Corp, the largest coffee chain in the world, acquired almost 14,000 bags of arabica beans from China from January to September this year -- over five times more than it did in the

Stay in-the-know by visiting Shanghai Business Review's website (www.sbrchina.com), where the top business news stories are updated daily.

Register on the website and you can get weekly summary of the news delivered to your inbox every Monday morning.

whole of 2013. According to figures from shipping-intelligence firm PIERS, the amount is just a small part of overall coffee imports by Starbucks worldwide from Q1 to Q3, but the firm's coffee buy is over 50% of all of China’s coffee imports to the United States.

Yanggu's Fengxiang to export poultry products to Mongolia Fengxiang Co Ltd, a big food firm based in China's Yanggu County, Shandong Province, got the official approval from the Mongolian government to export poultry products to the country. Fengxiang is the first ever Chinese firm to sell poultry products to Mongolia.

Mongolian authorities said that they trust Fengxiang's poultry products will be of high quality with safety measures in tow, after they inspected export-oriented poultry firms in Shandong last October.

Agribusiness stories in other sections Xiabuxiabu Catering seeks USD129m in HK IPO SHANGHAI BUSINESS REVIEW

13

JANUARY 2015 www.sbrchina.com

NEWS

Consulting & Law China's central bank ends yuan cap on HK residents The People's Bank of China, the country's central bank, has decided to scrap the Rmb20,000 (USD3,260) daily yuan conversion cap for Hong Kong residents starting 17 November. This means Hong Kong residents will now be able to buy or sell the yuan more freely, in line with the launching of the Shanghai-Hong Kong Stock Connect programme. The Hong Kong Association of Banks applauded the decision, calling it a significant step forward in promoting the internationalisation of the yuan. Hong Kong Monetary Authority Chief Executive Norman Chan said the removal of the limits will allow Hong Kong residents to participate in the Stock Connect and other yuan transactions.

New US-China visa rules to boost tourism and investment The newly-approved visa rules that allow Chinese and American citizens to visit each other's countries repeatedly for ten years will boost tourism and investment for both China and the United States, the Los Angeles Times reported. A US-based banker said the visa changes will give Chinese investors greater confidence to invest across the US. The new visa policy could also mean as many as 7.5 million Chinese visitors in the US by 2021, adding an estimated USD85bn to the US economy, the White House said in a statement.

Negotiations on mainland China-Taiwan tax pact completed Finance officials from mainland China and Taiwan have completed the technical negotiations SHANGHAI BUSINESS REVIEW

over an agreement that would eradicate double taxation in both countries. The officials expressed their hope that the pact will be signed immediately so that Taiwanese investors in China will be protected and will be able to enjoy tax benefits. Liao Tizhong, head of international tax at China's State Administration of Taxation, agreed that Taiwanese investors have paid more tax to the Chinese government than those from the United Kingdom, Germany, Hong Kong or Macau.

7.7%

Year-on-year growth in China’s factory production in October NBS

China to cut charges for small firms Starting next year, the Chinese government will cut 12 charges for small and micro-sized businesses and start-ups to further invigorate the country's economy. A list of charges, including business registration fees, will be removed from 1 January 2015.

Another 42 administrative fees will also be cut, a State Council announcement said. The new rule will save small firms over Rmb40bn (USD6.52bn) in taxes a year.

Beijing relaxes control on ODI The government of China has decided to ease its control on outbound direct investment after local businesses have started to invest more overseas. The country's cabinet, the State Council, released on 18 November a much shorter list of ODI projects that still need government approval. Analysts see this

JANUARY 2015 www.sbrchina.com

as China's way to encourage companies to enter the global market. Gu Dawei, an official of the National Development and Reform Commission, said that about 99% of investment projects on the previous list will now have to register only and don't need to go through tedious government procedures.

Small business to get boost from deposit ratios Chinese Prime Minister Li Keqiang promised to utilise differentiated policies, particularly loan-to-deposit ratios, to aid private lenders in solving the problems of small firms.

Li added that policy variations are necessary and fair because the smaller banks do not have enough resources compared to the big banks. Also, most of the small banks’ clients are small and start-up businesses. Li made his statement in a visit to the Zhejiang Tailong Commercial Bank in the city of Hangzhou in Zhejiang Province on 22 November.

China's SOE execs may be forced to reveal incomes Executives working for the largest state-owned enterprises in China might be compelled to reveal their salaries to the public, according to a report by the Economic Information Daily on 24 November. This is meant to enhance corporate efficiency and transparency, among other reform measures in the country.

The ‘invisible incomes’ of top executives in the central SOEs have been the focus of inquiries from the public, the Chinese business journal reported.

China expands bad-loan purchase trial The rise in sour debts has reportedly prompted the China Banking Regulatory Commission, the country's banking regulator, to allow more regions to set up firms that will buy bad loans

from domestic financial institutions. Bloomberg reported that the latest batch includes Beijing, the municipalities of Tianjin and Chongqing, and the provinces of Fujian and Liaoning.

In July, the banking regulator allowed five places, including Shanghai, to set up companies that will buy bad loans. The expansion of the bad-loan purchase trial came at a time that local banks in China are grappling with nonperforming loans that increased the most in Q3 since 2005.

Shanghai aims to become global insurance centre by 2020 Shanghai's municipal government plans to make itself an international insurance centre by 2020 and will start with creating an advance insurance market. The insurance market that Shanghai plans to create will meet the demand of economic and social development for the metropolis, the official Xinhua news agency reported.

Shanghai's insurance per capita premium is expected to reach Rmb7,300 (USD1,189) by the year 2020 with the insurance penetration rate rising by 6%.

To achieve its goal, Shanghai said it will accelerate system innovation and open up the city's insurance sector.

USD95.9bn

China’s FDI in January-October 2014 MOC

Shanghai further opens legal services market The Shanghai government said Chinese law firms and their overseas counterparts will now be allowed to work on international legal cases in the Pilot Free Trade Zone (FTZ). The move is part of China's plan to 7

NEWS further open the country's legal services market. Before the new measures, representative offices of foreign law firms in China are not allowed to litigate cases or employ Chinese lawyers and could only offer information on China's legal environment.

The measures announced by the Shanghai government allow Chinese law firms to assign lawyers to the representative offices of foreign law firms in China, while foreign law firms can assign foreign lawyers to Chinese law firms.

Indonesia officially joins USD50bn China-led investment bank Indonesia has officially agreed to join the China-led Asian Infrastructure Investment Bank (AIIB) by signing the agreement to become a part of the World Bank rival. Finance Minister Bambang Brodjonegoro said in a statement that Indonesia is ready to work with the other founding members to promote the USD50bn investment bank,

which is set to launch in 2015.

The AIIB now has 22 member countries, which include China, India, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Liu Hongyan, charge d'affaires at the Chinese Embassy in Indonesia, said the AIIB will give Indonesia wider access to financial resources in its infrastructure programme.

149 suspects in economic crimes surrender to authorities At least 149 suspects accused of committing various economic crimes have surrendered to authorities ahead of the imposed deadline by the Chinese government. The suspects have surrendered before 1 December in order to receive lighter punishments, a Chinese media reported. Before their surrender, most of the suspects were forced to live in hiding and were often targeted by local criminals, said Liu Dong of the Ministry of Public Security. Since the Operation "Fox Hunt" was launched

in July, a total of 329 suspected economic criminals have already been arrested.

China to launch USD8bn anti-pollution fund China is set to launch new efforts to combat widespread pollution in the country through a Rmb50bn (USD8.13bn) environmental protection fund. The official China Securities Journal reported that the environmental fund will get investment from the Ministry of Finance and the National Development and Reform Commission. The official guide for the fund is expected to be released this month. The central government has been looking for ways to combat the widespread pollution in most Chinese cities.

Rmb575.47bn

Industrial profits in October NBS

Jaguar recalls 2,877 cars in China

Retail price caps on all drugs to be scrapped Retail price caps on all drugs in China are set to be scrapped as early as the beginning of 2015 in order to allow the actual transaction price of drugs to be set by market competition. According to a report by the official Securities Times, the National Development and Reform Commission has already prepared a draft law for review by the industry. The draft rules propose to cancel government-set prices on drugs.

8

A problem in the brake pipe has triggered the recall of 2,877 Jaguar XJ cars in China, the General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ) said. The recall was filed by Jaguar Land Rover Automotive Trading (Shanghai) Co after it found out that the brake pipe in the affected cars may have been improperly installed. The defect could lead to loss of braking force, the GAQSIQ said. The recall affects Jaguar XJ cars manufactured between 06 February 2012 and 23 July 2014.

China announces USD29.3bn PPP projects A total of 30 projects worth Rmb180bn (USD29.3bn) have been rolled out for possible private investments under the

public-private partnership (PPP) programme, the Chinese Ministry of Finance said. Both local and foreign investors are welcome to take part in the PPP projects that include water and heating supply, sewer system, garbage disposal, medical care, and sports facilities, among others. The announcement came a week after the State Council released an investment and financing guideline that emphasised the importance of PPP in mobilising private capital.

China's stock market posts biggest gain this year Stocks data compiled by the Korea Exchange showed that China’s stock market has been the biggest gainer this year after surpassing the 2,900-point level for the first time since May 2011. Industry data showed that the Shanghai Composite Index has been rallying to become the biggest gainer in Asia. China's stock market is followed by India's benchmark S&P BSE Sensex Index, which rallied 34.42% through Friday this year to become the second-best performer in Asia. The Stock Exchange of Thailand gained 23.03% to become the third-biggest gainer, while the Philippine Stock Composite Index gained 22.76% this year, the Korea Exchange data showed. Japan's Nikkei Index gained 10% so far this year. South Korea's stock index ranked 12th among 14 regional stock indices, declining 1.23% this year through Friday.

China's inflation hits five-year low in November China's National Bureau of Statistics (NBS) has released data that shows consumer-price index (CPI) in November rose 1.4% from a year ago, a fiveyear low. The CPI, a key gauge of inflation, beats the 1.6% gain forecast by economists surveyed

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

NEWS

MONTFORT SHANGHAI ADVERTISING - STRONG PERFORMANCE FOR OUR CLIENTS

Direct Mailings - 3.5 million in 22 languages and 72 countries every year.

Strategic marketing » Creation Branding CI- / CD-Development Documentation / manuals Brochures

DMG MORI Campaign

» Direct marketing AD campaigns Classic advertising

CLIENT: DMG MORI LANGUAGE: German, English, Japanese and Chinese

Employee communication New media Event marketing Logistics Financial communication

Klaus (AT) | Ruggell (LI) | Chicago (US) | Shanghai (CN) Room 1101 | 555 West Nanjing Road | 200041 Shanghai | China SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

Contact : Oliver Lorenz | T +86 (0)21 5213 6600 - 800 B2B@montfortshanghai.com | www.montfortshanghai.com

9

NEWS by the Wall Street Journal. On a monthly basis, November's CPI dipped 0.2% against the previous month, while data remained flat in October. Meanwhile, the country's producer price index, which measures inflation at wholesale level, dropped 2.7% year-on-year in November, the NBS said. The factory-gate prices last month declined for a record 33rd month in a row.

China relaxes regulations on interbank forex trade market The Chinese government has eased rules and procedures to enable financial institutions trade on the interbank foreignexchange market. According to the State Administration of Foreign Exchange, this is an attempt to boost transparency in forex management. Beginning

Finance & Economics Deutsche Bank Asia moves to HK Deutsche Bank's Asian asset and wealth management headquarters has been relocated to Hong Kong from Singapore as the lender aims to capture opportunities in mainland China and the North Asia in general.

Deutsche Asia Pacific Asset & Wealth Management Regional Head Ravi Raju said the decision to move to Hong Kong was based on a raft of market reforms that China is implementing, which allows Chinese investors to invest internatio-

nally. Deutsche Bank, which first entered China in 1872, has an equity stake in Harvest Fund Management, which is one of the largest domestic asset managers in the country.

Shanghai-HK stock link starts operations The historic Shanghai-Hong Kong Stock Connect was launched officially on 17 November. Aimed at linking the stock exchanges of Shanghai and the special administrative region of Hong Kong, the stock connect boosted stocks

1 January 2015, financial agencies in China that are licensed to trade spot forex and financial

Consulting & Law stories in other sections China's fuel prices to be reduced further China may ban smoking in public China to start capping coal consumption Analysts forecast falls in Hong Kong's retail sales up 225.68 points (0.94%) with an opening of 24,313.06. Hong Kong Chief Executive C Y Leung said that the ShanghaiHK stock programme will enhance the competitiveness of both stock markets and raise the status of Hong Kong as a major offshore yuan trading centre.

PBOC predicted to cut rates in 2015 China's central bank, the People's Bank of China, is expected to cut rates by 50 basis points next year, Deutsche Bank predicted. The PBOC is forecast to join the Reserve Bank of India and the Bank of Korea in cutting rates next year while other Asian central banks, such as those of Indonesia, the Philippines and Malaysia, are expected to raise rates due to tighter monetary conditions next year.

Deutsche Bank added that 2015 will be a challenging year for Asian central bankers as they try to support economic growth and guard against potential risks.

Renminbi accounts 11.2% of total payments value between China and rest of the world

IMAX building dozens of theatres in China IMAX Corp CEO Rich Gelfond said his company is set to build dozens of theatres in China even though it already opened 40 theatres in the country this year. Gelfond said IMAX, the pioneer of large-screen cinema, still has a backlog of 250 theatres in China. The company also plans to expand further in Brazil, Russia and the Middle East.

10

derivatives can take part in the interbank market sans administrative approval.

The official currency of China, the renminbi or yuan, was utilised in the total payments value between China and other countries in October at the rate of 11.2%. It was just at 6.2% a year and a half ago, according to figures the Belgium-based global-payment services firm SWIFT announced. The latest

18 18 20 22

yuan tracker of SWIFT shows that 15 other nations use the yuan for more than 10% of their payments value with mainland China and the autonomous administrative region of Hong Kong.

China's insurance firms go on buying spree for overseas property Insurers based in China have spent a significant amount of money on overseas real estate in the recent months. In November this year alone, Sunshine Insurance Group spent USD400m on Sydney, Australia's 557-room Sheraton Hotel. A month before that, Hilton Worldwide Holdings Inc revealed that it was to sell New York's iconic Waldorf Astoria Hotel for USD1.95bn to Anbang Insurance Group Co. The acquisitions have followed official mores to ease foreignexchange controls and administrative procedures.

China is world's biggest emerging market destination for international bank loans Mainland China is now the biggest emerging market destination for global bank loans, accounting for over 25% of cross-border claims, according to the Bank for International Settlements' quarterly report released on 7 December. The country's cross-border claims rose from USD65bn in Q2 of this year to USD1.1tr, and up almost 50% by the end of June.

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

NEWS

Hospitality & Leisure China's outbound travellers may avail of UnionPay discounts UnionPay International of China announced on 19 November that it would offer discounts to holders of UnionPay cards who are travelling to specific tourist destinations. From November to 28 February, UnionPay cardholders can avail themselves of discounts up to a maximum of 15% should they use their UnionPay cards to pay for shopping, dining, hotels, and entertainment, among others, in 20 tourist cities including Paris, Rome, and Sydney.

Chinese tourists spend record USD772m in New Zealand From January to September this year, Chinese visitors spent a record USD772m in New Zealand, an average of USD3,307 per visitor, according to New Zealand's Ministry of Business, Innovation and Employment (MBIE). The amount also represents a growth of 33% year-onyear, the MBIE added. China is now New Zealand's second biggest inbound tourism market, next only to Australia.

Australia eyes bigger share of China's growing tourist market Australia is implementing new measures to further lure Chinese tourists to come to the country, Australian Minister for Trade and Investment Andrew Robb said. The new measures are aimed at ensuring that Australia is able to capture a bigger share of the rapidly increasing Chinese tourist market. Robb said the release of a revised code for inbound tour operators will help his country to become an attractive and popular destination for the group-tour market from ChiSHANGHAI BUSINESS REVIEW

na. Tourism Research Australia said inbound arrivals from China could more than double to 1.49 million by 2022 to 2023. In 2013-2014, Australia cornered 761,400 Chinese tourists.

China okays USD114bn new projects in October The National Development and Reform Commission (NDRC), China's top economic planner, has approved a total of nearly Rmb700bn (USD114.3bn) worth of investment projects in October. The investments include 16 railway projects and five airport projects. A state media report said the new investment projects will help ease the problem of incomplete infrastructure in the western regions of the country.

Evergrande to pay USD122.5m for controlling stake in New Media Group Guangzho-based property developer Evergrande Real Estate Group announced plans to pay HKD950m (USD122.5m) for a 74.99% stake in New Media Group, a Hong Kong-based magazine publisher. In a stock exchange announcement, Evergrande said it has already signed a deal to buy 647.95 million shares of the company that publishes Chinese-language magazines, including the Oriental Sunday and Weekend Weekly.

It will be Evergrande's first foray into publishing.

HK and Singapore top China investment destinations in Asia Hong Kong and Singapore are the most-preferred outbound destinations in Asia for mainland Chinese investors, said a report released by Cushman & Wakefield. From January 2008

JANUARY 2015 www.sbrchina.com

China Eastern partners with Qantas China Eastern Airlines and Australian carrier Qantas Group have signed a deal that aims to provide better travel services for passengers between Australia and China. Under the terms of the deal, the two airlines will carry out cooperation on marketing and airport services. Qantas said the partnership with a major Chinese carrier based in Shanghai will further enhance the options for the increasing number of Qantas customers travelling to Shanghai. China is the second-largest source of tourists for Australia.

to June 2014, China invested USD3.84bn into Hong Kong's real estate market. Singapore came in at second place with USD3.23bn of Chinese investment in the city-state's real estate industry. Chinese investors are drawn to strata-titled offices in Singapore. Globally, the United States was the top destination for Chinese real estate dollars, with 124 deals worth USD9.72bn from 2008 to June this year. The United Kingdom followed with USD5.8bn.

Australia appoints Bank of China as official yuan clearing bank The Australian Stock Exchange has appointed the Bank of China, the fourth-biggest lender in the country, as the official yuan clearing bank in Australia, following the signing of a landmark free trade deal between China and Australia. The expanded cooperation between

the ASX and the Bank of China will further promote SinoAustralian trade and economic links and facilitates cross-border RMB investment and financing by business, said Bank of China Chairman Tian Guoli.

China overtakes Japan as world's second-largest stock market For the first time in three years, China has overtaken Japan to take on the title as the world's second-largest stock market. Bloomberg reported that China's market capitalisation soared to USD4.48tr on 26 November, growing 33% this year.

Japan's, meanwhile, slipped to USD4.46tr after dropping 3.2% since the end of December 2013. It was in March 2011, after an earthquake hit Japan, when China briefly surpassed Japan to become the secondbiggest market behind US. The country's market value growth 11

NEWS

12

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

NEWS was helped by the resumption of IPOs in January after more than a year of being frozen.

Alibaba and Tencent buy Ping An Insurance stake Alibaba's Jack Ma and Tencent's Pony Ma Huateng became the biggest investors in Ping An Insurance's private placement offering. Ping An, the secondlargest insurer in mainland China, raised about USD4.7bn from selling 594 million shares in a private placement. The investment from Alibaba and Tencent further enables Ping An to capture a huge share in China's growing online insurance industry. Online insurance sales in China reached Rmb62.2bn (USD10.11bn) in the first quarter of this year.

Consortium plans to rebid for USD3.75bn Mexico rail project A consortium that includes China Railway Construction Corp (CRCC) and CSR Corp is reportedly planning to bid again for Mexico's USD3.75bn highspeed rail project. The consortium was awarded the contract but the Mexican government revoked the awarding on accusations that the bidding was fixed because the consortium's bid was uncontested. Mexico announced that it will re-run the tender and a source said CRCC was definitely going to bid again.

70% Rise of angel investments from January-November Zero2IPO Group

ICBC launches London office branch The Industrial and Commercial Bank of China opened its London branch -- the first branch of a Chinese bank from the SHANGHAI BUSINESS REVIEW

mainland to get an approval to do business in the United Kingdom since the People's Republic of China was founded in 1949.

The British regulatory authorities gave ICBC a license to open a branch in September this year.

The ICBC London Branch will concentrate in developing wholesale business, while ICBC (London) Plc, which is the bank's local unit, will basically engage in traditional commercial banking like retail and SME enterprises, said ICBC Chairman Jiang Jianqing.

CGN Power makes USD3bn in HK IPO CGN Power Co, mainland China’s biggest nuclear power plant operator, was able to raise USD3.16bn in its initial public offering in the special autonomous administrative region of Hong Kong. It is the biggest IPO in Hong Kong since China Everbright Bank’s USD3.2bn IPO in December 2013. CGN priced its offering highly due to a strong demand from investors. The firm sold 8.8 billion shares for HKD2.78 (USD0.36) each – or the top end of the indicative price range of HKD2.43-HKD2.78 (USD0.31-USD0.36).

Shanghai stocks hit three-year high The Shanghai Composite Index went up 3.11% to 2,763.55 points, its highest close since July 2011, on turnover of Rmb397.2bn (USD64.5bn).

Shanghai's stocks rose the highest in a 15-month period on 2 December, sending the benchmark index to a three-year peak.

Trading volumes were 65% more than the 30-day average, according to figures released by Bloomberg News.

China's investment into Malaysia hits USD1.46bn in seven months China's investments into Malaysia have reached USD1.46bn

JANUARY 2015 www.sbrchina.com

Wanda seeks to put up more than 150 hotels all over the world Dalian Wanda Group of China revealed a plan to construct more than 150 premium hotels across the globe before 2018 ends. Its target foreign markets include the United States, Europe, and Australia. Before this year is over, Wanda will have 71 luxury hotels in China alone. Wanda Hotels & Resorts Co Ltd, founded in 2012, is a subsidiary of Dalian Wanda Group Corp Ltd.

from January to July this year, a significant rise in the past five years, Deputy Prime Minister Tan Sri Muhyiddin Yassin said.

The approved investments in the first seven months of the year had already surpassed the USD1bn full-year investment figure of 2013. Muhyiddin further invited Chinese investors into Malaysia, which he described to have a businessfriendly environment. Muhyiddin was in Beijing to speak at the Malaysia-China captains of industry roundtable meeting.

pected to expand Guahao's user base as the health platform seeks to upgrade its WeChat payment service. WeChat is a mobile text and voice messaging communication service developed

by Tencent in China. Set up in 2010, Guahao was created as a solution to problems in making appointments and seeing test results. The site has a 3,000-personnel team that helps patients who are not used to the Internet to make appointments with doctors. It launched a mobile phone application in 2013.

Tencent invests USD120m in healthcare platform Guahao

Xiabuxiabu Catering seeks USD129m in Hong Kong IPO

Chinese Internet giant Tencent has invested USD120m into Guahao, a Chinese online medical health platform that helps users make doctor appointments and get medical services.

The Tencent investment is ex-

China-based Xiabuxiabu Catering Management Co, a hotpot restaurant chain, hopes to come up with some HKD1bn (USD129m) in its Hong Kong initial public offering, with its offer of 227.1 million shares 13

NEWS leaders Apple’s iPad models and Google’s Android system. Microsoft is currently offering free Windows systems for use in tablet computers that have screens smaller than those in nine-inch models. Worldwide sales for tablets are seen to rise by 45% year-on-year to 333.2 million units next year, exceeding even that of personal computers.

China encourages foreign investments in elderlycare services The Chinese government is urging foreign investors to put money into the nation’s elderly-care services. The Ministry of Civil Affairs and the Ministry of Commerce on 2 December posted a circular on the former's website saying that overseas investors can put up care institutes independently or in tandem with a Chinese company. Foreign investors need only to submit application requirements to provincial-level commercial affairs agencies, it added. for HKD4.4-HKD5 (USD0.57USD0.65) each. Xiabuxiabu revealed that it is offering global underwriters an over-allotment option of 34 million more shares that, when exercised, will enhance its IPO proceeds and market capitalisation.

Microsoft boosts computer-tablet investment in China Microsoft Corp of the United States has increased its investment in China's booming tablet-computer market, hoping to catch up with industry

IT & Telecoms Alipay to go public Alipay, Alibaba's payments subsidiary, will soon go public to allow more people to become part of its success, said Alibaba Group Holding Ltd Executive Chairman Jack Ma. Ma said the goal of the listing will not be for more money but to allow more people to share in and be part of Alibaba's financial services arm.

However, he did not mention the timeline for Alipay’s listing or specify whether Alipay itself will list or its parent Zhejiang Ant Small and Micro Financial 14

Services Group will be the one to do the listing.

Alibaba-Paypal collaboration not impossible China’s Alibaba Group Holding Ltd is open to working with eBay Inc's Paypal to expand its payment options, Bloomberg reported. Joseph Tsai, Alibaba's vice chairman, told the financial news agency that Alibaba and Paypal have some complementary footprints - the Chinese firm being the largest online

China's Haitong Securities acquires Banco Espirito Santo de Investimento for USD466m Chinese financial services company Haitong Securities is reportedly paying EUR379m (USD466m) to acquire Banco Espirito Santo de Investimento, the investment banking business of Novo Banco. The deal, confirmed by Novo Banco in a news release, allows Haitong to expand into Europe and other areas where Banco Espirito

Santo de Investimento operates.

The acquisition still requires regulatory approval from the Bank of Portugal and the European Commission.

Didi Taxi gets USD700m investment Didi Taxi, China's popular cabhailing app similar to Uber, has attracted an investment worth more than USD700m. The Russian investment firm DST Global and Singapore's state-linked investment giant Temasek were involved in the latest funding round for Didi, the Wall Street Journal reported. Didi, which is backed by Internet conglomerate Tencent Holdings, claims to have more than 100 million registered users and 1 million registered taxi drivers operating in more than 300 Chinese cities.

The firm called it the single biggest investment round in China's mobile internet sector.

Hospitality & Leisure stories in other sections China's central bank ends yuan cap on HK residents Alibaba's bank fees highest at USD291m

payment company in China and Paypal having a very good international position.

Youku Tudou and Xiaomi to work together Youku Tudou, the biggest Internet video provider in China, and Xiaomi, the country's top domestic-smartphone firm as of September this year, have agreed to cooperate and work together in media and entertainment content. This will cover devices like digital television, smartphone and tablet that will better serve hundreds of millions of Chinese consumers. The two companies will invest in the production and distribution of online movies and video content as

7 15

well as develop multi-screen online video services. Xiaomi will acquire Youku Tudou stocks in the open market.

Four Chinese firms in top ten list of world's most valuable Internet companies Four companies from China are among the top ten of the global giants in the Internet industry.

According to a report that New York-based financial information-provider S&P Capital IQ released, Alibaba Inc, with USD165bn in assets, is the most valuable Chinese Internet firm based on market capitalisation as of 15 September. The top ten global giants are, in order,

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

NEWS Google, Facebook, Alibaba, Amazon.com, Tencent, Baidu, eBay, The Priceline Group, Yahoo and JD.com.

China plans Mars mission around 2020 State media reported that Chinese scientists plan to launch a rover towards Mars around the year 2020. The government has not officially announced any plans for a Mars mission yet, but China Daily reported that officials from the China National Space Administration are pushing for the inclusion of such plan in the government agenda.

A space expert from the China Academy of Space Technology told the state-owned news site that the planned Mars mission will include three steps - orbiting, landing and roaming.

Russian social network VKontakte to enter China Russian social networking website VKontakte is set to open a marketing branch in Beijing, as Facebook continues to be banned in China. Vkontakte said it aims to bring Chinese advertisers on its platform instead of attracting individual users. VK, which is based in St. Petersburg, has about 250 million accounts and 4 billion daily page views. The Russian social networking site is the second notable Russian firm to announce major investment plans in China this month.

7%

Estimated annual growth rate of the ICT market in 2013-2020 International Data Corp

Alibaba's bank fees highest at USD291m Chinese e-commerce giant Alibaba turned out to be the biggest source of fees for banks working on capital-market deals, the SHANGHAI BUSINESS REVIEW

Wall Street Journal reported.

Alibaba paid USD291m to Wall Street underwriters this year after its USD25bn IPO in September and after selling USD8bn in bonds. Alibaba tops the list of debt and equity underwriting fees paid by nonfinancial companies according to a study

by Dealogic. The Chinese company eclipsed firms such as Canadian energy company Encana Corp (USD215m), French telecommunications firm Numericable Group SA (USD200m) and Japanese real-estate company Mitsui Fudosan Co (USD135m) to top the rankings of the most lucrative underwriting clients globally this year.

Google seeks to get back into mainland China US-based Google Inc has made it known that it plans to bring a version of its Play mobile-app store to the Chinese mainland. It effectively left the Chinese market in 2010. While Google was away, Android app stores have proliferated in the country, encouraging industry pirates and forcing developers to hire teams to ease relations with the app stores. In Google's home market in the United States, only two app stores rule: Google’s Play Store for Android mobile devices and Apple Inc’s App Store for iPhones and iPads.

Intel announces new USD1.6bn China investment American chip making giant Intel said it will continue to expand its operations in China with a further investment of up to USD1.6bn over the next 15 years. Intel said it will use the new investment to upgrade its Chengdu chip plant, where it previously invested USD600m.

Intel's investment comes at a time that the Chinese government has labelled semiconductors as a strategic sector that it seeks to build up. Intel Execu-

JANUARY 2015 www.sbrchina.com

UnionPay added to Apple's App Store US-based Apple Inc struck a deal with China’s sole local-bank card provider UnionPay, making it easier for consumers in China to purchase applications. Apple’s payment system, Apple Pay, is not yet operating in China. Apple released an official statement on 17 November saying that Chinese consumers can hook up their Apple ID with a UnionPay credit or debit card in buying apps.

tive Vice President and General Manager William Holt said Intel is committed to bringing its newest "Advanced Test Technology" to China.

tory Commission lifted the IPO freeze in December 2013.

China and US lead global tech IPOs

China-based Xiaomi Corp, the third-biggest smartphone manufacturer in the world, has scheduled the launch of its newest smartphone in the US at the Consumer Electronics Show in January next year in Las Vegas, Nevada. It will be Xiaomi's debut in the US market. According to China's Economic Daily News, Xiaomi might launch its Mi5 smartphone with highend specifications but priced much lower than other highend phones like the iPhone and Korea's Samsung.

From 2010 to 2014, a total of 195 Chinese technology firms have launched initial public offerings (IPOs), all USD14m and above, to lead the global technology IPOs, said PricewaterhouseCoopers (PwC). During the said period, PwC said 138 tech IPOs from the United States were registered while 80 were launched in the rest of the world. PwC's global technology leader Raman Chitkara said Chinese and US companies account for the lion's share of listings over the past four years.

US IPOs, he said, are mostly in the software and Internet services business while China is slightly different. PwC also noted a rebound in the number of Chinese IPOs in 2014 after the China Securities Regula-

Xiaomi to introduce new smartphone model in the US next year

Pony Ma sells USD387m worth of shares in Tencent Tencent Holdings Ltd Chairman and CEO Pony Ma has sold a total of 25 million shares in the Chinese internet firm for about USD387m this month.

15

NEWS The sale, according to a Tencent spokeswoman, was related to Ma's personal wealth management. The shares sale was reported in a regulatory filing at the Hong Kong Stock Exchange.

Ma co-founded Tencent in 1998 and helped it become one of the most influential internet firms in the world.

Shanghai tops Alipay's per capita payments The city of Shanghai recorded the most per capita payments using Alipay this year.

Shanghai residents had an average payment of Rmb38,561 (USD6,230) from January to October 2014. Beijing came in second followed by the provinces of Zhejiang and Guangdong. Total payments in Shanghai by way of Alipay comprised 9.3% of the country's overall payment in a decade. Alipay started operating in 2004.

Harbin Aircraft Industry Group Co Ltd of China on 11 November signed a deal with a United

IT & Telecoms stories in other sections Microsoft boosts computer-tablet investment in China

14

Lenovo Group Chairman and CEO Yang Yuanqing said that

Time editors nominate Ma as 'Person of the Year'

18

States-based airline company to deliver 20 Y12 series aircraft.

This is the first time for China to sell civil aircraft to a US company. The planes will be used for sightseeing tours and cargo

deliveries from Las Vegas to the Grand Canyon. The HAIG is a unit of the Aviation Industry Corp of China.

Volkswagen prepares for sales slowdown in China Germany's Volkswagen AG revealed that it expects to see growth slow in mainland China to about 10% this year.

Volkswagen China President Jochem Heizmaann said in Guangzhou ahead of the city’s annual auto show that the company had insufficient capacity and so its growth rate had fallen behind that of other foreign car firms in China. Heizmann added that his firm will deliver an estimated 3.6 million units in China before 2014 is over -- a 10% annual rise but short of 2013’s 16% growth.

tional trains and meet all ERL's operational requirements.

1.99 million

Kia and Hyundai increase sales target to 8 million due to China expectations Kia Motors and Hyundai Motors of South Korea increased their world sales goal for this year to at least 8 million units, expecting record-high vehicle sales in mainland China despite a drop in sales in their European and United-States markets. According to Kia and Hyundai, which jointly rank fifth in global sales, the new sales goal represents about a 6% rise from 2013.

CRC to supply six trains to Malaysia

16

to grow rapidly in the last ten years. Lenovo now has a solid manufacturing platform and it is time to move to our next goal of building a brand name that showcases our hardware capabilities, Yang added. Lenovo acquired the personal-computer unit of IBM Corp this year.

Lenovo believes it can become a global IT giant

Manufacturing & Automotive Harbin Aircraft receives order for 20 Y12 planes from US firm

his company can turn itself into one of the world's biggest information-technology firms if it uses its resources properly. Yang said the wise use of research and development expertise in developed countries and adequate labour resources in the emerging markets have enabled Lenovo

China's CNR Changchun Railway Vehicles Co Ltd (CRC) will supply six sets of four-car trains to Malaysia after sealing a deal with Malaysia's Express Rail Link Sdn Bhd (ERL). CRC will supply trains that will be able to carry a maximum of 540 passengers each on the 57kmlength line from Kuala Lumpur city centre to Kuala Lumpur International Airport. Malaysian Transport Minister Liow Tiong Lai said he is positive that CRC will be able to supply the addi-

Total number of vehicles sold in China in October CAAM

Huawei's MATE-7 smartphone launched in Malaysia China-based Huawei Inc released on the Malaysian market its latest smartphone, the MATE-7, in Kuala Lumpur on 27 November. Huawei’s Marketing Chief Xu Xiao said that the MATE-7 has a distinct fingerprint identification system and is China's very first smartphone that sells for only Rmb3,000 (USD488.18). The MATE-7 has two versions in Malaysia: the standard one with two gigabytes of internal storage and the advanced version with three gigabytes of internal storage.

TPG Capital sells China Grand Auto stake for USD700m TPG Capital is exiting China Grand Automotive Services Co by selling its nearly onethird stake in country's largest auto dealer by sales for nearly

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

NEWS USD700m. In a statement to the Hong Kong Stock Exchange, Haitong International said it is taking 40% of TPG's stake via a partnership with a group of investors that is buying the rest of the stake. TPG Capital invested in China Grand in 2007 and planned to push for a Hong Kong listing. The IPO plan of the firm, however, did not materialise.

Toyota's China sales up, Nissan's fall in November Japanese carmaker Toyota Motor Corp sold about 92,300 vehicles in China last month through its two Chinese joint ventures. The November sales were up 2.9% from a year earlier. Japan's biggest automaker by sales volume sold about 907,400 vehicles in China from January to November this year.

Nissan Motor Co, another Japanese carmaker, however, said its China sales last November went down 11.8% from a year earlier.

Its Chinese joint venture partner sold about 116,200 automobiles in the country.

Demand for iron ore to remain steady in 2015 Demand for iron in China will continue to grow in 2015 due to lower commodity prices and growth in domestic demand, the China Metallurgical Industry Planning and Research Institute said. Iron ore imports are expected to rise by 6.4% to around 1 billion metric tonnes in China next year, up from this year's forecast of 940 million tonnes.

The China Iron and Steel Association, meanwhile, said that while the country's economic growth will decline next year, domestic steel output and demand will increase.

China’s CNR and CSR submit first draft for rail firms' merger China CNR Corp and CSR Corp, two of the country's largest train manufacturers, presented to the State Council the first draft of their plan for a merger that will have CSR giving shares to combine with CNR. The former will purchase all of CNR's shares by way of a

Electric car production up in November Chinese carmakers produced a total of 9,728 new energy vehicles in November, ten times as many as they did in November 2013, the Ministry of Industry and Information Technology reported. The November production brings the total for the first 11 months of the year to more than 56,700 units, or 500% more than last year's. Intense government-led promotion helped in the rise of electric car production. Last month, the Ministry of Finance announced new incentives to encourage the construction of charging facilities for new energy cars in cities. secondary public offering. The latter will then delist from the capital market, according to a report by 21st Century Business Herald on 5 December. The new firm will be called China Railway Vehicle Corp.

Airbus delivers 200th Tianjin-assembled plane to China Eastern

Foreign heavy machinery firms seek to boost localisation in China Foreign manufacturers of heavy equipment in China are depending heavily on enhanced localisation in order to counteract increased competition, sluggish demand, and to further expand their presence in the country, industry sources said.

South Korea's Doosan Infracore, for instance, revealed that it seeks to further localise its China operations in research and development. Last year, Doosan Infracore put in over Rmb80m (USD12.9m) on its R&D centre in Shandong province.

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

France-based Airbus SAS on 3 December delivered the 200th passenger jet assembled in the central city of Tianjin to China Eastern Airlines. Airbus China CEO and President Eric Chen said that the delivery of the 200th Airbus A320 Family plane that was fully assembled in Tianjin is a significant milestone, celebrating it with their partners Aviation Industry Corp of China and the Tianjin Free

Trade Zone. The assembly plant in Tianjin started its operations in 2008.

Jaguar Land Rover undertakes charity health programme in China UK-based carmaker Jaguar Land Rover is sponsoring a charity programme called "Land Rover Never Stop Caring-Journey for Vision Program�, which seeks to provide health services to poor Chinese children. Jaguar calls its programme a product of its spirit of exploration and discovery, which will give professional medical services for free to Chinese children in the remote regions of the country for at least three years. Training for local medical personnel and funding for medical equipment will likewise be provided.

Manufacturing & Automotive stories in other sections Jaguar recalls 2,877 cars in China

8

Xiaomi to introduce newest smartphone model in the US next year

15

17

NEWS

Media, Advertising & Entertainment Details of Shanghai Disney Resort revealed The management of the Shanghai Disney Resort came out with new details on 13 November which include an 800room hotel to be themed after the animated box-office hit Toy Story. Another hotel, the 420room Shanghai Disneyland Hotel, is Art Nouveau-inspired with some Disney imagination thrown in it. Also, the 46,000-sq.-m. lakeside Disneytown will include a dining, shopping and entertainment district.

Prince William set to visit China in 2015 The Duke of Cambridge, Prince William, is expected to visit China early next year after being invited by the Chinese government to visit the country, BBC reported. However, it will be unlikely for Princess Catherine to visit the country because of her pregnancy with their second child. BBC said Prince William's trip to China will become his most significant overseas tour to date.

Tencent-HBO deal to stream shows in China Tencent Holdings, China's largest Internet company, has

signed a deal with Time Warner's HBO network to distribute HBO TV dramas and movies through Tencent's video site.

Under the deal, Tencent’s video site will be the exclusive online platform for HBO shows in China, the companies said in a statement on Tuesday. Tencent President Martin Lau said the partnership will benefit Chinese Internet users because it will enable the Chinese Internet company to distribute the most groundbreaking programming in the world through Tencent's technology platform.

Data released by the China Petroleum and Chemical Industry Federation (CPCIF) showed that the country's petrochemi18

The Chinese government is planning to prohibit smoking in public areas as well as ban advertisements on tobacco products.

China is the biggest tobacco market in the world but is currently facing problems in treating chronic diseases related to cigarette smoking. A ban on all forms of tobacco advertising, promotion and sponsorship is just one of the measures being considered, according to a Xinhua News Agency report on 24 November. The state-owned China National Tobacco Corp, the sole tobacco monopoly in the country, has not commented on the issue yet.

Shanghai launches English website

Time editors nominate Ma as 'Person of the Year'

The Shanghai Municipal Financial Service Office on 1 December launched an Englishlanguage website, en.sjr.sh.gov. cn, in order to communicate more effectively with the rest of the world. The site has updated information on financial policies and statistics, the construction of a world-class financial centre, and reforms in Shanghai's pilot free-trade zone. From January to October 2014, turnover in the Shanghai’s financial markets has reached Rmb587tr (USD95.4tr) -- a 10.6% year-onyear rise.

Alibaba Group Holding Ltd Founder and Executive Chairman Jack Ma is among the eight final nominees for US-based Time magazine's "Person of the Year". The other nominees are Russian President Vladimir Putin, Iraqi Kurdish President Masoud Barzani, Apple Chief

Mining, Energy & the Environment Petrochemical revenue set to hit USD2.36tr

China may ban smoking in public

cal industry will record business revenue of Rmb14.5tr (USD2.36tr) this year. This after the CPCIF said business revenue in the first three quarters of the year reached

Executive Officer Tim Cook, NFL Commissioner Roger Goodell, American pop singer Taylor Swift, the Ebola caregivers, and the protesters in Ferguson, Missouri. Time describes Ma as a former English teacher who founded the China-based electronic commerce firm which made USD25bn in its initial public offering this year.

Media, Advertising & Entertainment stories in other sections IMAX building dozens of theatres in China Youku Tudou and Xiaomi to work together

Rmb10tr (USD1.62tr), an increase of 7.7% year-on-year.

Li, however, said that the petrochemical industry is still facing overcapacity problems and lack of innovation which result in weak profitability.

China's fuel prices to be reduced further Mainland China's retail fuel prices will be further lowered for the ninth straight time on 29 No-

10 14

vember since the month of July this year, as the government reacts to the falling global prices of crude, industry sources said.

Retail gasoline prices will be lowered to Rmb190 (USD30) per metric tonne, while diesel prices will be at Rmb210 (USD34.18) per tonne, according to the Shandong-based Longzhong Information Technology Co. The National Development and Reform Com-

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

NEWS

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

19

NEWS mission is set to announce the fuel-price cuts on 28 November.

37% decline in China's gold demand affects world market China’s demand for gold slid 37% in Q3 of this year, dragging global demand, which fell 2% year-on-year to 929.3 tonnes.

The World Gold Council revealed that the price for gold now stands at 39% below the record level in August 2011. With this, money managers expect that the US Federal Reserve will increase short-term interest rates in 2015.

Shanghai Electric Power shows interest in E.ON's Italian assets Shanghai Electric Power is in an early stage of communication with Germany's top utility firm E.ON over the possible purchase of E.ON's assets in Italy. A Shanghai Electric official confirmed that the company was in preliminary contact with E.ON but declined to com-

ment further. E.ON's Italian assets include gas-fired power plants, renewable assets, a hydro generation plant and an LNG terminal. E.ON has already sold its businesses in both Spain and Portugal to an Australian investment bank.

France's Total to promote cleaner fuel use in China France-based fuel firm Total SA seeks to help promote a cleaner and more efficient use of gaspowered vehicles in mainland China. Total Senior Vice President Thierry Pflimlin said that sustainable mobility equates with energy efficiency and that Total's mission is to provide energy that will enable consumers achieve this goal. China is the world's biggest consumer of fuel and the largest market for gas-powered vehicles.

Solar-powered plane to touch down in China next year The Solar Impulse Second, the biggest solar-powered aircraft

China set to become world's biggest oil consumer in 2030s China is seen overtaking the United States as the biggest consumer of oil in the early part of the 2030s, according to a report released on 12 November by the International Energy Agency.

International demand for oil will rise 16% to 104 million barrels daily in 2040. In 2013, demand is only at 90 million barrels each day, according to data found in the IEA's latest World Energy Outlook report. in the world, is set to make two separate stopovers in mainland China in the course of its 2015 round-the-world flight. The second-generation model can stay in the air without fuel for five straight days. It will make stopovers in the city of Nanjing in Jiangsu Province and in the town of Chongqing. The specific dates for the two stopovers in China will be decided based on weather conditions.

CNOOC inks oil exploration deal with Kuwaiti firm

China to start capping coal consumption China will impose a cap on annual coal consumption of 4.2 billion metric tonnes by 2020 in an effort to cut carbon emissions, the State Council said in a statement. The Council also said that China plans to limit coal-bed methane output of 30 billion cubic metres by 2020. The headline figure was revealed within the State Council's energy development strategy plan (2014-2020).

The plan details moves to cut coal dependence from 67% to 62% and raise consumption of non-fossil fuels to more than 15%.

20

The China National Offshore Oil Co Ltd announced that its parent company, CNOOC, signed on 10 December a production sharing contract with Kuwait-based KUFPEC to work on three blocks in the South China Sea. Explora-

tion expenses will be shared by CNOOC (20%) and KUFPEC (80%), with CNOOC acting as the operator of the three blocks.

CGN to buy wind farms in the UK State-owned China General Nuclear Corp (CGN) is reportedly buying three onshore wind farms in the United Kingdom from French utility firm EDF. Reuters reported that CGN will pay more than GBP100m (USD157.4m) for an 80% stake in the three wind farms. EDF will buy the electricity generated from the farms and will retain the 20% remaining stake.

The three wind farms have the capacity to generate more than 70 MW of electricity. CGN generates 55% of China's nuclear energy output through its 11 plants.

Mining, Energy & the Environment stories in other sections China to launch USD8bn anti-pollution fund CGN Power makes USD3bn in HK IPO SHANGHAI BUSINESS REVIEW

8 13

JANUARY 2015 www.sbrchina.com

NEWS

Pharmaceuticals & Healthcare China eyes modern commercial health insurance by 2020 China is looking to establish a modern commercial health insurance industry by 2020. It will be part of the government's efforts to boost the country's insurance sector. The State Council released guidelines that aim to propel the insurance industry. The guidelines stated that commercial insurance provides social security to Chinese individuals and households.

Top pharma firms enjoy USD16bn annual sales in China McKinsey & Co estimates that the top 15 pharmaceutical multinationals have annual sales of about Rmb100bn (USD16bn)

in China. Foreign pharma companies, however, have expressed their concern as the Chinese government intensified its scrutiny of sales practices.

Chinese authorities have place sales practices in the country's pharma industry under greater scrutiny last year following the investigation into GlaxoSmithKline, which was then fined USD465m for bribery.

More Chinese seek medical treatment abroad A growing number of Chinese patients, around 70% of them suffering from cancer, are travelling overseas, especially into the United States, to seek medical treatment with the hope of raising their odds of survival, a Chinese media reported. Chi-

Source: Wikipedia/Wing

Watsons eyes 3,000 stores in China by early 2017 A.S. Watson Group, Asia's largest health and beauty retailer, aims to have 3,000 Watsons stores in China by early 2017, seeking to expand in lower-tier cities in the mainland. Watsons, which recently opened its 2,000th store in China, in Tianjin municipality, is expanding in the nation faster than its competitors, said COO Christian Nothhaft. Watsons has more than 4,000 stores and more than 1,000 pharmacies in 12 Asian and European markets. nese patients also seek overseas treatment for newer drugs that usually hit the Chinese market much later, experts said. Massachusetts General Hospital, a

medical facility affiliated with Harvard Medical School, said the number of Chinese patients it served jumped from 40 in 2012 to 100 in 2013.

Property & Construction China's home prices fall may lure REITs

Beijing's housing market up a bit in H1

Real estate investment trusts (REITs) could start launching in China as the country's home prices start fall, said China REITs Alliance Secretary General Wang Gang.

Wang said the launch of REITs, which are popular in developed economies, has been deterred in China due to the country's high property prices. However, as the once red-hot property market has shown signs of cooling since early this year, Wang said it may be a good time to consider the new investment tool.

Property developer China Vanke Co said that even if Beijing’s housing market is showing signs of improvement in the first half of 2014, bigger gains should not be expected even with the lowering of interest rates. Senior Vice-President Mao Daqing of China Vanke Co said that the market hit its lowest in June this year but things are improving. Home resales are up and China's four biggest banks are willing to give better mortgage terms for those looking to buy homes, Mao added.

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

China's real estate industry not collapsing Real estate tycoon Wang Jianlin, chairman of property developer Wanda Group, said China's real estate industry is expanding in proportion to the country's GDP growth and is not set to collapse. Wang, who attended the Asia-Pacific Economic Cooperation (APEC) CEO Summit, said the real estate industry will be backed by urbanisation, significant home demand and the traditional Chinese preference for home ownership. He also stressed that the industry's golden age has ended, with developers facing slowing growth. However, he described the next decade as a stable period for China's real estate industry, with no serious problems in sight.

21

NEWS Bank of China to buy Manhattan tower for USD600m The Bank of China has reportedly agreed to pay nearly USD600m for 7 Bryant Park, a glassy 28-story Manhattan office tower located near the 1,200-foot-tall Bank of America Tower. Dow Jones quoted sources as saying that the Bank of China will buy the property from a venture led by Houston developer Hines and JP Morgan Chase & Co's asset management arm. JP Morgan and Hines broke ground for the tower in 2013. The Bank of China currently has its New York headquarters in Madison Avenue. It remains unclear if the bank will occupy the entire Manhattan tower when it buys the property upon its completion next year.

Housing sales unlikely to rebound in 2015 A report released by Fitch Ratings showed that China’s

housing sales are not likely to rebound significantly next year.

Fitch expects nationwide home sales to fluctuate by between a 5% decline and a 5% rise in 2015, from this year's prediction of a 10% fall. The report said smaller and weaker developers will be forced out of the industry due to consolidation and restructuring which will continue in the next 12 months.

Source: Westin Shanghai

China's new-home prices fall for seventh straight month For the seventh straight month, the country's new-home prices fell in November, the China Real Estate Index System said. In November, average new-home prices fell 0.38% from October's decline of 0.4% and September's 0.9%. Seventy-six of the 100 cities surveyed showed a decline in home prices in November, up from 73 in October. The monthof-month fall of home prices began in May this year, the first decline since June 2012.

Shanghai, Beijing in top ten list of favoured countries for real estate activity A joint report issued by PwC and the Urban Land Institute has ranked Shanghai and Beijing in the sixth and tenth spots, respectively, in the list of favoured countries for real estate activity for next year. The Emerging Trends in Real Estate Asia Pacific 2015 report ranked Asian countries in terms of property investment and development prospects for next year. Tokyo ranked first while Hong Kong dropped to the 21st spot due to an impending interest rate increase, the property cooling measures implemented by the Hong Kong government last year, and the continuous slowdown of mainland China's economy.

Retail & FMCG Walmart China donates USD1.63m to project for Chinese women Walmart China donated Rmb10m (USD1.63m) to the China Women's Development Foundation to help its Revolving Fund for Mothers' New Ventures project. It is the fifth donation that Walmart China has given to the project which started in 2010 to help women in China's poorer regions. Walmart China had already given Rmb7.6m (USD1.24m) to the project before its latest donation.

Analysts forecast falls in Hong Kong's retail sales Pro-democracy protests in Hong Kong are expected to have resulted in a drop in October retail sales with three analysts pre22

dicted falls of 0.3%, 0.5% and 4.4% from a year earlier. The official retails sales figure was set to be announced by Hong Kong today but one analyst, Lily Lo of DBS Bank, said the retail sales data should be most serious in the first two weeks of October due to the pro-democracy protests. Lo predicts a fall of 0.3%. An analyst from Citi, however, predicted a 1.2% increase, Reuters reported. Most Hong Kong-listed retailers said the civil unrest has had an effect on the city's retail market. Hong Kong's retail sales increased 4.8% in September.

Decathlon targets 500 stores in China Decathlon, the world's leading sports supplies retailer, said it

Wal-Mart lays off 30 senior execs in China In an effort to streamline and simplify its business, US retail giant Wal-Mart Stores Inc said it has laid off around 30 senior executives in its China unit. Wal-Mart’s China Spokesman Ray Bracy said that the layoff is consistent with actions taken over by Wal-Mart in the last several months. Wal-Mart earlier announced that it will shut down 25 nonperforming stores in China this year. plans to increase its number of stores in China to 500 within five years. The retailer, which already has 100 stores in China,

said it expects to add about 60 new outlets in the country in 2015 and continue the expansion until it reaches its goal of

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

NEWS 500 stores. Decathlon also plans to further expand into third- and fourth-tier cities and into China's western region. Decathlon entered China in 2009.

Best Buy sells home appliance unit and exits China US retailer Best Buy is officially pulling out of China with the sale of its home appliance unit in the country. Best Buy said it sold the business to domestic real estate firm Zhejiang Jiayuan Group in order to focus on its North American operations. The world’s largest consumer electronics chain did not disclose the financial terms of the sale of the 184-store network. The deal is expected to be completed in Q1 of 2015, depending on regulatory approval.

Best Buy's business in China was lukewarm due to strong performances of competitors, including Suning and Gome.

Wal-Mart China to lay off 250 workers US-based Wal-Mart Stores Inc announced that 250 workers of its China division will be terminated in line with the firm's plan to restructure its business, cut costs and boost sales amid an economic slump. Wal-Mart will close down its Dalian regional office and consolidate its management structure. The 250 labourers that will be affected by the retrenchment include mid- and lower-level personnel, accounting for 0.2% of such employees in China.

Chinese economists call for a boost in public spending Economists in China are calling for more proactive fiscal policies to counteract the country's lingering financial slowdown. Director Gao Peiyong of the National Academy of Economic Strategy said that a bigger budget deficit could hapSHANGHAI BUSINESS REVIEW

pen soon. Assuming of a 7% growth in the gross domestic product next year, the deficit would be between Rmb1.35tr (USD220bn) and Rmb1.9tr.

China's yearly Central Economic Work Conference will begin on 9 December and is expected to set the tone for next year’s macroeconomic policy.

Source: imgkid.com

China's outbound travellers may avail of UnionPay discounts UnionPay International of China announced on 19 November that it would offer discounts to holders of UnionPay cards who are travelling to specific tourist destinations. From November to 28 February, UnionPay cardholders can avail themselves of discounts up to a maximum of 15% if they use their UnionPay cards to pay for shopping, dining, hotels, and entertainment, among others, in 20 tourist cities including Paris, Rome, and Sydney.

Galeries Lafayette names new China CEO Galeries Lafayette, a French luxury department store that opened its first Chinese store in Beijing in 2013, has named Paul Burke as its new China market CEO. Burke is tasked to manage Galeries Lafayette's store in China and look after the company's expansion in the vast Chinese market. The company said it plans to add new stores in the country. The Beijing Galeries Lafayette department store is the second biggest store of the company, next only to its flagship store in Paris.

CITS to open first nonairport DFS in Cambodia The China International Travel Service Group is set to launch the first-ever non-airport dutyfree shop in Cambodia in December. The DFS, located in the city of Siem Reap, will start operating before the year is over,

JANUARY 2015 www.sbrchina.com

Starbucks is 2014's largest purchaser of China's coffee beans United States-based Starbucks Corp, the largest coffee chain in the world, acquired almost 14,000 bags of arabica beans from China from January to September this year -- over five times more than it did in the whole of 2013. According to figures from shipping-intelligence firm PIERS, the amount is just a small part of overall coffee imports by Starbucks worldwide from Q1 to Q3, but the firm's coffee buy is over 50% of all of China’s coffee imports to the US. CITS said. The shop will cover an area of 4,500 sq. m., offering watches, tobacco, perfume, and wine, among other goods.

US firm Heinz to boost Chinese investment on infant products H J Heinz Co of the United States is set to increase its investment and market more products in mainland China. Heinz CEO Bernardo Hees said that his firm will expand its presence in China by putting in more money in production and introduce more products in the next several years as China's need for safe and high-quality baby products keeps growing. Heinz currently has seven factories in mainland China and the number will rise in the near future as the market expands rapidly.

China to have the world's largest domestic air traffic in ten years Airbus SAS said China will have the world's largest domes-

tic air traffic within a decade and the country's new aircraft market will hit USD820bn during the period. In order to meet the demand, China will have to produce 5,363 new passenger planes and freighters from 2014 to 2033. By 2023, Airbus said the number of people flying in China will exceed that in the United States.

PlayStation set to enter Chinese market Following the introduction of Microsoft's Xbox on the Chinese mainland, Japan-based Sony Corp said it will unveil its PlayStation in China in January to tap into the country’s huge game market. Sony will start selling its game console through a cooperation agreement with Shanghai-based media giant Oriental Pearl Group. The entry of PlayStation in the mainland is expected to further create a huge video game market in the country, which banned foreign game consoles for 13 years.

23

NEWS

Transport & Logistics Alipay’s collaboration with foreign public transport firms to aid Chinese travellers China's Alipay on 1 December revealed that it is cooperating with foreign public transport service companies to let tourists from China pay using the country's official currency, the yuan or renminbi, for transport cards while abroad. Chinese card users will then be allowed to pay for public-transport cards by way of Alipay’s smartphone application. They will show the electric vouchers at designated counters once they get to their destination airports to get their cards.

China's November non-manufacturing PMI slightly up The services sector of mainland China slightly recovered in November, with the purchasing managers' index for the nonmanufacturing industry going up 53.9. It was at 53.8 a month earlier, according to a report that the China Federation of Logistics and Purchasing and the National Bureau of Statistics released together on 3 December.

A 50-plus reading shows expansion and a below-50 reading indicates contraction.

Mexico and China discuss cancelled USD3.75bn train contract Officials from Mexico and China met on 24 November to discuss the cancelled USD3.75bn high-speed rail contract that was awarded to a consortium led by China Railway Construction. Mexico's Communications and Transportation Minister

24

Gerardo Ruiz Esparza is in China to discuss the cancelled contract and his country's plans to build a USD10bn state-owned and privately operated mobile network. The USD3.75bn contract was revoked by Mexican opposition lawmakers who claimed that the bidding was fixed.

More than 300 deals inked at Zhuhai air show The prefecture-level city of Zhuhai in the south of Guangdong Province hosted the Airshow China 2014. The show closed on 16 November with the United Arab Emirates' Knights aerobatics team performing aerial manoeuvres. Over 300 contracts worth a record USD23.4bn were signed, organisers said.

Zhuhai will again host the next air show on 1-6 November 2016.

EHi Car Services of China debuts on NYSE EHi Car Services Ltd, the top car-rental and services provider in China, had its shares listed on the New York Stock Exchange on 18 November.

EHi's initial public offering of 10 million American depositary shares each represents two Class-A common shares selling for USD12 per ADS. The price is lower than the expected price of USD12-14 under the ticker symbol “EHIC”.

NDRC approves construction of new Beijing airport The National Development and Reform Commission, the country's economic planner, said it has given its approval on the

DHL to invest USD141m in China US-based DHL Supply Chain, the biggest contract logisticsservice provider in the world, will put in another EUR113m (USD141m) into mainland China to boost its business after a double-digit growth in the country. This brings DHL's total investment in China to EUR218 including last year's investment. DHL Supply Chain Asia Pacific CEO Oscar de Bok said that in six years' time, DHL will have six more logistics hubs in Guangzhou, Hangzhou, Shenyang, Shenzhen, Wuhan, and the Shanghai Free-Trade Zone. construction of a new airport in Beijing. The new airport, which will involve about USD13.11bn of investment, will be built in southern Beijing's Daxing District. The commission said the new airport, when operational in 2025, will be able to handle 72 million passengers, 2 million tonnes of cargoes and mail, and 620,000 planes. The new airport, it added, will meet the capital's rising demand for air transportation.

Baidu to invest USD600m in Uber The popular but controversial US taxi-hailing app Uber is

getting China's leading search engine's attention. According to state media reports, Baidu, which is considered as the Chinese equivalent of Google, is investing up to USD600m into Uber. While Baidu has not confirmed the report yet, it has sent out invitation to an Uber press conference in Beijing, where it will announce the signing of an important cross-border investment. The news came after Didi Taxi, China's popular cabhailing app similar to Uber, has attracted an investment worth more than USD700m from a group of investors.

Transport & Logistics stories in other sections China Eastern partners with Qantas Solar-powered plane to touch down in China next year

SHANGHAI BUSINESS REVIEW

11 20

JANUARY 2015 www.sbrchina.com

NEWS CO-PUBLISHED FEATURE

Integrating Innovation Customer innovation is the key focus for Menlo Worldwide Logistics. As global supply chains become ever more complex, more and more businesses are looking to third party logistics firms for help. Yet, if these logistics companies do not offer innovation, there is little point in bringing them on board - a company can manage its own basic supply chain. However, if, like Menlo, a logistics company provides real innovation based on a customer’s needs, then the difference they make can be staggering.

Automotive High-Tech E-Commerce Retail & Consumer Chemical Government Heavy Manufacturing Oil & Gas Health Care Wine & Spirits

SJZ

CHINA

TY

XN

LZ

YC Xi’an

JN

Zhengzhou

Wuhan

Chengdu

SHANGHAI BUSINESS REVIEW

XZ NJ

HF

Shanghai HZ

CQ CS

NC

GY

Headquarter Operating Facility

KM

Guangzhou

SZ

Hong Kong

Satellite Hub

dollars of freight a year, while their retail and consumer team support the world’s top brands. Through this detailed knowledge of a sector’s dynamics Menlo’s world-class staff are able to truly understand their customer’s business, and provide real innovation.

An additional factor that allows Menlo to innovate is the range of different services that they provide. Often companies can struggle to integrate the different aspects of their supply chain, as they employ different logistics firms to manage different aspects.

However, because Menlo offer warehousing and distribution services, transport management, and supply chain engineering, they can run the entirety of a supply chain, allowing integration and therefore innovation across their customers’ full supply chain.

A global reach

Menlo has a presence all across the world

KOREA JAPAN

TS

Beijing

Sectors of Strength

Menlo’s areas of expertise

Shenyang

Hohhot

BT

PZH

To innovate successfully, a logistics company must have in depth and focused knowledge of the specific industry in which they are operating. Menlo have specialized teams for different industries, allowing them to make a genuine difference to their clients. Their automotive team transport over one billion

CC

BYNL

Urumqi

A logistics company also needs a global network. With companies large and small manufacturing and selling all around the world, they need their 3PL to travel with them. There is little point in having highly innovative supply chains in Peru, if the goods also need to be sold in Poland and China.

This is why Menlo, which operates across all five continents can offer truly innovative solutions for their clients needs.

However, while Menlo may operate around the world, this does not dilute their specialist knowledge of the Middle Kingdom. They entered China in 1983, and with over 181,000 square metres of operating facilities in cities from Kunming to Shenyang, and transporting nearly 100 000 shipments a month Menlo

JANUARY 2015 www.sbrchina.com

FZ XM Taiwan

WAREHOUSE 181,000+ square meters of primary operating facilities in: • Beijing • Shanghai • Guangzhou • Xi’an • Shenyang • Chengdu • Wuhan • Zhengzhou • Hong Kong • Tai Wan TRANSPORTATION • 90,000 shipments monthly • Utilizing over 1,500 trucks daily • Handled over 1 million Tons yearly EMPLOYEES • 800

can provide a detailed knowledge of China alongside their industrial expertise.

Contented Customers Menlo’s success in customer innovation is demonstrated by the wide range of clients they have, and in particular by the awards these clients have given Menlo. Cisco have recognised Menlo as being ‘experts in forward logistics’, Mary Kay have given Menlo its best service provider award and excellent operation award, Johnson & Johnson have bestowed on Menlo North Asia their best inland transportation award and Diebold have awarded Menlo its silver certification in acknowledgement of the fact that Menlo achieved over USD 50 million year-over-year net cost reduction by taking up the leadership role of Lead Logistics Provider to meet Diebold’s evolving requirements. Nor is it just customers who recognise Menlo’s innovation, and the China Federation of Logistics and Purchasing have awarded Menlo its China Logistics Innovation Award.

It is not surprising that Menlo have been able to win such prizes, with their global reach, their China knowledge and their industry expertise, they are well placed to provide truly innovative solutions for their customers.

25

AROUND TOWN

ShanghaiBeat A round-up of some of the significant business events that recently took place in Shanghai. >> On 19 November, New World Shanghai Hotel held

a fund raising gala dinner named “Songs for Joy� in aid of Hands On Shanghai. The dinner included jazz and vocal performances from JZ School of Music and Western International

Family Group and Emery Brautigan, General Manager of United Family Healthcare - Shanghai Market Hospitals and Clinics. A range of presentations and activities occurred, including the announcement of plans for expansion of United Family services in Shanghai.

>> On 26 November, SBR Events held a half day seminar at the

Westin Bund Centre entitled Lean Supply Chain Management. Different industry experts, including speakers from PwC,

School, and a silent auction of a range of items provided by corporate sponsors in aid of the charity. Hands On Shanghai is a charity providing flexible volunteer opportunities in Shanghai, and serving local charities.

>>

On 23 November Shanghai United Family Hospital and Clinics celebrated ten years of providing world-class care to the people of eastern China in a grand ceremony with over 150 people

CHEP, the International Business School Suzhou and Panalpina explored some of the key elements of supply chain management in China, offering practical guidance to attendees with the aid of real life examples.

>>

On 11 December SBR Events held their annual half day HR seminar entitled HR Management and Trends in 2015.

Angel Lam, associate director, Robert Walters Shanghai shared

held at the Jing An Shangri-La Hotel. The event was co-hosted by Roberta Lipson, Founder and Chair of United Family Healthcare, Dr. David Rutstein, Senior VP of Medical Affairs of the United

26

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

AROUND TOWN Robert Walters’ latest research into the reasons why people leave their jobs and what employers can learn from this. Joanne Danehl from Crown World Mobility offered a global perspective on relocation of staff comparing the different regulatory environments around the world. Lia Zuo, global HR business partner, at Bayer Material Science, shared practical experiences of restructuring HR services.

Peter Alatsas from SanZhi hotel group offered a wide ranging presentation on the subject of leadership, and Nick Chen, managing partner, Pamir Law Group scared delegates by explaining why the anti-corruption campaign impacted them. After the event, one attendee said “It was great for me to attend this high-effective and high outcome event.”

>> On 10 December Cornerstone CCC held a breakfast

roundtable for professionals and senior executives. At the event Laurent Estachy, professor of global finance at KEDGE business

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

school gave a presentation entitled US-China Financial Battles in Global Capital Markets. The talk explored the breakdown of the so-called ‘Chimercia’ system, and looked at recent economic policies pursued by both the USA and the PRC from the perspective of their geopolitical relationship.

>>

On 12 December the InterContinental Lijiang held a press conference at their sister hotel InterContental Ruijin Shanghai to share the news that Crowne Plaza Lijiang has been upgraded and will now be known as the InterContinental Lijiang

Ancient Town Resort, to serve the evolving needs of their clients. At the event Andy Zeng, Director of Sales and Marketing and Lydia Liu, Director of Marketing and Communications, spoke about the new facilities and how they would be of use to their clients.

27

COVER FEATURE

A Roll of the Dice The Magical Life of Dr. Jack Lam In the second part of our ongoing series on the overseas Chinese business community SBR meets with Dr. Jack Lam Yin Lok to discuss his gaming empire as well as Fontana Resort’s involvement

By David Lake in the APEC Philippines Summit 2015.

28

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

COVER FEATURE

I

n a region where rags to riches stories populate the biographies of the wealthiest men in Asia, the epic of Dr. Jack Lam Yin Lok is certainly one of the more interesting. The rise of the Godfather of Gaming, as “Global Gaming Magazine” refers to the Jimei Group Chairman, was nothing less than meteoric in an industry known for its rough-and-tumble nature and billion-dollar casino gambles. It is on this glittering stage, with its flashing neon lights and mega-high rollers, that Lam made his name through a mix of ritzy developments, listed companies and travel services coupled with a driving desire to play a role in Asia’s economic development.

Lam was relaxed and talkative over a simple breakfast of congee and dim sum with the publisher of SBR, hosted at his Fontana Hot Spring Leisure Parks and Casino Resort in Clark Freeport Zone in the Philippines. Once the former Asian bastion of US military, Clark is now a high-end, manicured, tree-lined residential, resort and golfing community. During the conversation, Lam pulled out a slick granite-grey property brochure with a mock up of his dream project, a 108-story International Port Complex in Hengqing, an island off Zhuhai not more than a stone’s throw from the gambling Mecca of Macau.

Hengqing is the latest battlefield for the South China tycoons, and Lam is making a statement with this landmark development. Since 2009 when the China State Council designated Hengqing as a Special Economic Zone similar to the Pudong New Area, and leased parts of the small island to Macau, tens of billions of dollars of investment have flowed into projects. “Our tower will be taller than anything in Hong Kong,” Lam notes proudly, pointing to the helicopter pad on the roof of 640,000 sq. m. building, resting nearly 470 m. above the ground. “It will be the centrepiece of one of China’s fastest growing new development zones.”

However, it is the pending role that Fontana will play in the November 2015 APEC (Asia Pacific Economic Cooperation) Summit and in the associated ministerial meetings that excites Lam most.

Driving through the vast Fontana estate in his golf cart, Lam passes hundreds of bungalows and three-story mansions, along with waterparks and hot springs. Lam heads straight for his new conference hall. “We are working day and night to prepare this building for the APEC January ministerial meetings,” he says, pointing to a building in progress that looks like a mini-palace, all sweeping porticos and columns, ready to receive world leaders.

It will be Lam’s party and his greatest moment in the spotlight to date. The stellar guest list will include the likes of Xi Jinping,

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

29

COVER FEATURE

Jack Lam's unique capacity for building relationships with clients has set him in good stead, from ordinary guests to stars from the world of show business such as Nat Chen, pictured with Jack Lam at the opening of the Jimei Casino in Macau

Barrack Obama and a slew of leaders from around the Pacific Rim region. For the 53-year old man who has everything, the halls of power are an attractive next step and there are few political stages bigger in this part of the world than an APEC Summit. “Playing even a small part in such grand world affairs makes one humble,” adds Lam, who already has close connections with many of the Asian leaders coming to the Fontana grand ballroom.

Spin of the Wheel Born in the bustling provincial capital of Guangdong, Lam moved from the city of Guangzhou to Hong Kong in 1979 to work with his factory-owner uncle as a bookkeeper. With a salary of just HKD1000 (USD128) a month, Lam could do little but watch his elder uncle play the tables on frequent trips to Macau. However, sitting in the glitzy casinos watching his uncle test lady luck, Lam knew one thing, this was the industry for him. It was here that he felt at home and it was here where his fortune would be made.

30

Lam nuzzled into the gambling world as a teenage sub-agent in 1981, working to bring junkets of high rollers through Hong Kong to Macau. It soon became clear that Lam had a natural manner with the richest gamblers in the region. He well understood their motivations and catered to their every whim, allowing him to reach the top of the ultimate service industry. With this unique talent for forming relationships, Lam built a billion-dollar empire that spans many of the capitals of Southeast Asia. Along the road to success, Lam partnered with the likes of Stanley Ho, Stephen Adelson and Jimmy Wynn, all legendary kingpins in the world of gambling and instrumental in Macau’s rise.

In the Macau junket sector, which still accounts for much of the turnover of the Jimei Group gaming portfolio, Lam ranks among the top five operators by rolling chip turnover. As a measure of his prominence in the industry, Lam is one of the few junketeers to run a gaming property in his own right, having taken over Casino Oriental at the then Mandarin Oriental in 2009 with the blessing of Stanley Ho’s Sociedade de Jogos de Macau (SJM). Located under

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

COVER FEATURE

the roof of the renamed Grand Lapa, the refurbished Jimei Casino operates as a “satellite” of SJM in exchange for a revenue share.

Today, Lam manages his growing casino empire from his Jimei Group offices in COSCO Tower in Central Hong Kong. In recent years, he has reduced some of his overall exposure to Macau by diversifying his business. Lam now sits atop of a conglomerate that boasts a portfolio of investments in casino properties, financial services, travel, casino cruises, as well as the flagship Fontana Resort, a junket room in one of Seven Luck’s popular foreigners-only casinos in Seoul and the recent addition of a VIP operation at Manila’s new Solaire Resort & Casino.

Analysts state the Philippines remains Lam’s most adventuress investment. Fontana, a sprawling holiday getaway assembled across 300 hectares, is certainly the most imaginative Lam project completed to date. From his Fontana throne, Lam has operated gaming packages to the Philippines from Hong Kong, Taiwan and South Korea for years. Along the way he has cultivated relationships with politicians and government officials that brought him VIP rooms in Pasay City and Cebu casinos and an interest in the Fort Llocandia Resort and Hotel on the South China Sea. The ten year old Fontana complex, located about 80 kilometres from the nation’s capital, has rapidly grown to become the Jimei flagship with its collection of family-style holiday villas and time shares, hotel, water park, golf, fitness facilities, spa, restaurants, convention space and boutique casino. It is a leisure city within a city, catering both to locals and to a Chinese and Korean clientele that Jimei has come to know intimately over the years.

step into the Hong Kong capital market was a critical milestone for Lam and Jimei Group. As for the Hong Kong investors – they have appreciated the gains so far.

After it was announced that Lam, combined with two British Virgin Islands (BVI) entities, Creative Cosmo Ltd. and New Elect International Ltd., to buy 325 million new shares in Sinogreen, a firm trading in silicon rubber keypads, for HKD113.8 million (USD14.7 million), shares in the company rose by nearly 80 per cent over a three day period. The purchase price of HKD0.35 (USD0.05) per share, 94.3 per cent discount to a closing price of

Market Manuevers With intense competition in the Asian gaming sector and the challenge of China’s new anti-corruption practices policy, many of the movers and shakers in this world of roulette wheels and baccarat tables have shifted their attention to building war chests in an effort to establish capital strength. Central to this strategy is the ability to tap stock markets, and Hong Kong is the bastion of power for the South China players with many of the world’s leading gaming and entertainment stocks on its board.

Lam made his first step into the public market arena in September 2014 with Sinogreen Energy International Group Limited (stock code: 1159.HK). To compete with his gaming peers, Lam entered the high-stakes backdoor listings game on the HKE, the most expensive listings markets in the world, where Mainboard backdoor shell companies can go for as high as USD50 million. This important

Macau learned all the tricks of the trade from Las Vegas on the road to surpassing America's biggest gaming market by dollar volume SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

31

COVER FEATURE

HKD6.15 per new share (taking into account capital adjustments) amounted to nearly two-thirds of Sinogreen’s enlarged share capital.

Yet, life in the listed world is not always easy, especially these days when regulators are vigilant on all fronts and the complexity of being a public company carries many responsibilies.

Lam found out just how complex life could be when he and his partner were required under the Hong Kong Takeovers Code to make an unconditional mandatory cash offer to acquire all the outstanding shares of Sinogreen. This posed a problem, if the bid succeeded, Sinogreen would be forced to delist.

Lam had no choice but to proceed with the takeover bid. However, in a neat financial maneuver he managed to avoid a delisting.

Reach Luck, Lam’s BVI investment entity at the time, made an offer of a less than generous HKD0.35 (USD0.05) in cash for each share.

The bid was so low that the firm appointed to advise independent shareholders, Veda Capital Ltd., warned against the offer, saying it was at too deep a discount to the share closing price.

Veda also noted the potential of a rise in prospects for Sinogreen with Dr. Jack Lam at the helm as Executive Chairman.

Not surprisingly, the public filing on the closure of the Sinogreen mandatory cash offer stated that the offer had only received valid acceptances from shareholders representing 0.005 per cent of Sinogreen issued capital.

The filing document added: “…25.15 per cent of the total issued shares as at the date of this joint announcement remain in the hands of the public, and the company is in compliance with the public float requirement” of the Hong Kong Stock Exchange.

Since then, the Sinogreen market capitalization has risen to over HKD2.2 billion (USD 280 million) and the share price peaked early

<< On his route to

success Lam has partnered with legendary kingpins like Stanley Ho and Jimmy Wynn >> In the wild world of Macau's casinos, the Venetian is one of the largest casinos in the work and one of the more striking resorts for Asian players

32

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

COVER FEATURE

this year at over HKD15 (USD 1.93) on the back of the Jimei Group casino and gaming story. And the time of this writing, the share price had pulled back from the peak, hovering around the HKD13 (USD1.68) level.

Yet, never one to receive a perceived snub lightly, in October 2014, Hong Kong’s Securities and Futures Commission started legal proceedings against a former Sinogreen chairman, alleging he made an illicit USD1 million profit on disposal of a business unit at the expense of public shareholders. In a later filing it was noted that the person concerned had resigned in March 2009. So after a few bumps on the road, Sinogreen is back on the trading board and maintaining a stable stock price.

WNew In just over three decades, Jack Lam has built a business empire that can be estimated to be worth in the billions of US dollars. Yet, we should not expect him to rest on his laurels any time soon. Still in his early 50s, Lam has plenty of time and desire to increase his presence in the business world of Asia, and make forays into farther flung domains like Australia.

The coming year will be one of many challenges for Lam nonetheless. A successful hosting of the APEC festivities is an important step for Fontana on the path towards recognition as a major resort. Meanwhile the ongoing development of the Hengqing mega-tower will be watched closely as the competition for Macau dominance shifts to a new playing field of massive new development projects. Meanwhile, anti-corruption policies will continue to have a negative effect on cash flow at gaming palaces around the region, though this is considered to be just a temporary phenomenon.

Parking his golf cart in front of the famous Fontana hot springs, Lam is non-plussed with the challenges ahead. “Look, this life has never been easy, everyone knows that,” he laughs. “Why should it be any easier now then when I was a bookkeeper making a small salary and dreaming of big things. Still, the region continues to grow and the prosperity of China looks set to continue, so we must look ahead to new horizons.”

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

From bookkeeper to the Asian Godfather of Gaming, Dr. Jack Lam has built a billion-dollar business empire in just three decades with savvy business practices

33

COVER FEATURE

Fontana at the Apex APEC 2015 is coming to the Philippines and one of the earliest ministerial summits is to take place at Jack Lam’s Fontana Resort

By Alun John

I

n preparation for the Asia Pacific Economic Cooperation tial had been completely squandered,” stated Philippines President (APEC) Leaders’ Summit in November 2015, the Philip- Benigno Aquino frankly at the launch of the APEC 2015 logo and pines will be a hotbed of activity on the APEC social scene for theme on 1 December 2014. “Thankfully, the Filipino persevered.

Today, I am proud to say we have months to come. At the moment, turned the corner. We have won the senior ministers will make back the recognition, the respect their way to the Philippines for and the confidence of the global high-level meetings between 26 community.”

January and 10 February. Some This is a most important feather 1,800 APEC member senior minin the Philippines cap. The leadisters will descend on Jack Lam’s ers of a significant part of that Fontana resort to enjoy the ameglobal community will be present nities of the largest tourist estate in the Philippines and the couninside Clark Freeport. try will want to show off its acAfter the successes of the 2014 complishments. As Aquino aptly APEC Summit in Beijing, the notes: “This gathering’s signifiAPEC jamboree moves on to the sunny climes of the Philip- Senior officials from the APEC nations met in Manila last December cance is magnified when one considers that in a world where many pines for 2015. The agenda for to lay groundwork for the year's events economies are reeling from unthis important annual session is: “Pursuing Inclusive Growth”. Certainly growth is something they certainty, Asia-Pacific economies have, for the large part, sustained know about in the Philippines. When the island nation last hosted a relatively solid growth.” the APEC Leaders’ Summit in 1996, observers called the country “Asia’s next economic tiger”. Nearly two decades and three presi- Setting the Agenda dents later, APEC is returning to the Philippines at a time when the economy is one of Asia’s fastest growing.

More growth is always welcome, no matter how well your econ“In the span between the last time we hosted APEC and now, there omy is doing. However, the aim of this Summit is to discuss how were moments when many of us wondered if our country’s poten- best to make individual citizens part of this expansion, hence the 34

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

COVER FEATURE

theme of “Building Inclusive Economies, Building A Better World”.

Four key areas are identified: enhancing regional integration, mainstreaming small and medium enterprises in global and regional markets, investing in human capital development, and building sustainable and resilient economies.

The first of these will be most vital for the future of the region and is a theme that has been on going for some time now. Philippine Socio-economic Planning Secretary Arsenio Balisacan has warned that the slow regional recovery from the global financial crisis could threaten success: “While many economies may look inward to promote economic growth, we need to remain resolute in our efforts towards greater economic integration. This provides a more robust channel to growth and development.”

Balisacan stressed that at the APEC Summit the Philippines aims to support other economies in exploring initiatives to enhance supply chains and identify best practices to expand connectivity through services. The aim is a 25 per cent reduction in the cost of doing business. If this can be achieved, the effects on all businesses, but especially those in the SME (small and medium-sized enterprises) sector would be staggering.

The days of intra-Asian operations being restricted to MNCs are long gone. Even smaller SMEs are now expanding operating across the region, and their importance is well appreciated in the Philippines. “We seek to underscore the significance of SMEs in our economy and their integration in global supply chains,” Trade Secretary Gregory Domingo remarked at APEC 2015 launch ceremony.

When the APEC talks begin in earnest, discussion will centre on promoting SME modernization, standards, commercial innovation, global production chain integration and value-added trade.

China, now back among the hoi polloi after hosting the 2014 APEC Summit in Beijing, will certainly not take a back seat in these talks. The topics under discussion are of much relevance to the Middle Kingdom. As PRC companies expand across the region, a 25 per cent reduction in the cost of doing business is helpful. What’s more, as the playing field is no longer limited to the largest businesses, attempts to make regional markets available to SMEs will be beneficial for Chinese companies. Many such enterprises are looking abroad already, and any further boost to prospects will see the numbers of SMEs overseas grow even faster.

Fontana Spotlight As the largest and most advanced leisure park in Pampanga Province, just 80 kilometres from the nation’s capital, it is hardly surprising that Fontana was chosen to host the Clark meeting. It is not only the facilities and security at Clark that brought APEC to Fontana. Given that the theme of the APEC 2015 is “pursuing inclusive growth”, the resort is a most appropriate place to hold the Summit as Fontana is a good example of the integrated Pacific Rim economy that the Summit hopes to progress towards.

Aside from being a thriving development and business, Fontana considers itself to be “one with the community”, creating and involving itself in events to demonstrate its unwavering support to the Filipino communities. As such, recent activities have included opening up the resorts facilities to children with special needs for swimming competitions and supporting a number of charities throughout the region.

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

Fontana has invested millions of dollars into the resort's grounds and conference facilities in preparation for the grand entrance of world leaders and their entourage

Fontana is certainly a significant part of Jack Lam’s business empire, but it is still only a part of activities that sprawl across Asia Pacific. If the Summit is successful in attempts to enhance regional integration then companies like Jimei Group will be amongst the first to benefit. And, to make sure all goes as planned at the Summit, Fontana has instituted nine expansion projects, including a makeover of its convention centre costing USD4.5 million, adding up to 1,000 new jobs for Pampanga locals in the process.

35

FEATURE

36

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

FEATURE

10 Chinese Tourism Trends to Watch in 2015 The pace and scale of change in Chinese outbound travel makes it critical to observe and understand emerging developments in order to stay competitive.

By Gary Bowerman

D

o you remember where you were on Thursday 9 January 2014? How about Monday 6 October, or Monday 10 November? While personal recollections may be vague, those three dates were key landmarks for Chinese tourism, which was one of 2014’s biggest economic talking points. Hype and hyperbole are intrinsic to the tourism industry, but Xu Jing, AsiaPacific director of the UN World Tourism Organization, was stating reality when he said that China is now “dictating the international tourism map”.

National tourism boards, hotel groups, airlines, tour operators and associated businesses such as retailers, luxury brands and real estate developers are mining their creative capacities for ways to attract greater numbers of Chinese travellers. Finance ministries, too, are highly enthusiastic about the potential investment flows and related jobs to be created from China’s high-spending holidaymakers.

Put simply, China is having a transformative impact on the way the global travel industry operates, finances and markets itself, but it’s important to remember that mass Chinese tourism is a new, albeit fastgrowing phenomenon. In 2004, 20.9 million outbound border crossings were made, and China only broke the 50 million mark for the first time in 2010. So, with that in mind, let’s put those three seminal 2014 dates into context.

9 January. Xinhua announced that 97 million outbound border crossings were SHANGHAI BUSINESS REVIEW

Macau, along with Hong Kong and Taiwan, accounts for over two thirds of outbound border crossings from China

made from China in 2013. That figure, later amended to 98.2 million, was significant, because if the previous year’s growth rate of 18 per cent were continued, China would exceed 100 million outbound crossings in 2014. Indeed, the Germany-based China Outbound Tourism Research Institute says the 100 million figure was achieved for the first time in a 12-month period between April 2013 and March 2014.

6 October. China’s Anbang Insurance agreed to pay USD1.95bn to Hilton Worldwide for the legendary Waldorf Astoria hotel in New York. Built by a member of the

JANUARY 2015 www.sbrchina.com

Astor family, the founders of luxury hospitality in the US, it is the highest amount paid by a Chinese buyer for a US property. The deal is subject to a US government review, but the intention is clear: Chinese companies are willing to pay top dollar to acquire the world’s premium tourism assets.

10 November. The US and China agreed to increase short-term tourist and business visas issued to each other’s citizens to ten years and student and exchange visas to five years.

The official US announcement codified the deal: “As a result of this arrangement, the United States hopes to welcome a growing 37

FEATURE share of eligible Chinese travellers, inject billions into the US economy and create enough demand to support hundreds of thousands of additional US jobs”. The impact will be significant for the world’s largest air market, the US, and the fastest growing air market, China.

Taken together, these events have created a platform for the continued upward growth of Chinese tourism, which is an increasingly integrated phenomenon comprising five main components: 1) An increasing overlap between domestic and outbound travel. This is important because the huge investment in Chinese domestic tourism – ranging from high-speed railways and new aircraft fleets to the Changbaishan ski resort and Shanghai Disney Resort – is broadening the range and quality of travel experiences in China, as well as raising the expectations of outbound travellers.

2) The shifting engagement strategies of tourism boards, tour operators, hoteliers, airlines and retail outlets. Attracting Chinese travellers is not just a global goal of the tourism industry -- it has become the primary objective, and “The future of Chinese tourism” is now almost a required discussion topic at every travel industry seminar around the world.

3) The influence on legislative agendas.

In addition to the US-China visa agreement, several other countries, including the UK, have amended their visa policies for Chinese travellers, while South Korea is issuing more licences for duty-free shopping outlets because of high demand from Chinese visitors.

4) Outbound investment from China.

In 2013, the world barely noticed when Dalian Wanda purchased UK-based luxury yacht-maker Sunseeker. In 2014, Chinese companies making tourism-related acquisitions overseas and investing in different domestic projects with global aspirations made regular headlines.

5) The Internet imperative. The great modern facilitator of travel is used to a high degree in China to research, book and carefully prepare for overseas trips. It’s no surprise that China’s cash-rich Internet giants are all investing heavily in the travel sector.

So, as we look ahead, an inevitable question is being asked: “What will be the Chinese travel trends in 2015?” Here are 10 38

The USD1.95bn acquisition of the Waldorf Astoria by China’s Anbang Insurance Group set a record for the largest acquisition of a US real estate asset by a Chinese buyer

thoughts, not including the four most obvious: increased shopping spend, more online travel booking, expansion of outbound air routes from secondary cities, and a surge in travel to the US. 1) Visa-free access goes global. Although China ranks low (tied for 83rd with Jordan and Comorros) on the Henley & Partners 2014 Visa Restrictions Index -- a global ranking of countries according to the travel freedom of their citizens -- the total of 45 countries to which Chinese travellers can visit visa-free will rise in the next year.

<< Chinese

companies are willing to pay top dollar to acquire the world’s premium tourism assets >> 2) Golden Weeks go orbital. Destinations and brands worldwide are finally getting to grips with planning and budgeting their promotions for Chinese travellers during Spring Festival and the October National Holiday. Both weeks are firmly

established on the global travel calendar.

It’s worth remembering, however, that the growth of independent travel, diversification of flight options and seasonal-specific niches -- such as cruising and winter sports -- mean Chinese outbound travel is now year-round.

3) More purchases of overseas tourism assets. This past year was the one in which purchases made by Chinese brands hit the headlines, particularly in the tourism sphere.

Marquee purchases included Jin Jiang Hotels acquiring Louvre Hotels, HNA raising its stake in Spain’s NH Hoteles, and Ctrip buying a cruise ship from Royal Caribbean.

Meanwhile, Fosun stepped up its bid for control of Club Med, and Dalian Wanda launched an IPO in Hong Kong to fund its targeted global portfolio of 150 hotels. This is just the beginning.

4) More strategic agreements. Partnerships between Chinese and foreign tourism providers and developers was an emerging feature of the global tourism landscape in 2014. Collaborations included China Eastern and Qantas, Air China and Air New Zealand, Jin Jiang Hotels and Interstate Hotels, Beijing Capital Land and Pierre & Vacances-Center Parcs, Qyer.com and Airbnb and Singapore NETS and Alipay.

Expect more in 2015.

5) A greater destination spread. According to official data, more than 100 million outbound border crossings were made from China in the first 11 months of 2014. Hong Kong, Macau and Taiwan accounted for 70.4 per cent of those trips, and 89.5 per cent

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

FEATURE

In order to boost trade and tourism, the US and China agreed to significantly extend the terms of short-term tourist and business visas issued to each other’s citizens

JANUARY 2015 www.sbrchina.com

Gary Bowerman

SHANGHAI BUSINESS REVIEW

vey in China. Such reports are sometimes criticised for being a static snapshot, but they can be effective if tourism boards are prepared to ask challenging questions. The palGrave poCket Consultants are ConCise, authoritative GuiDes that proviDe aCtionaBle solutions to speCifiC, hiGh-level Businessduring proBlems the Reputazione Italia presentation 2014 COTRI Welcome China Outbound “Gary Bowerman offers a wide range of insightful snapshots illustrating the multi-faceted reality of China’s outbound tourism, which has already changed the rules of global tourism webinar indo soSeptember, included analysis of and will continue to in the coming years.”

—Dr Wolfgang Georg arlt, Director, China Outbound Tourism Research Institute (COTRI) both positive and negative comments made “Every tourism board in the world must court the Chinese tourist dollar in the coming years. explains why intravellers stunning fashion.” about Italy. Especially byBowerman Chinese —sam Chambers, Editor, Asia Cruise News for a dynamic outbound market like China, “In his efficient, knowledgeable guide, Bowerman casts a light on fast-changing trends, tensions, and opportunities presented by the planet’s largest source of new travelers.” tourism boards should incorporate feed—evan osnos, former China correspondent for The New Yorker, author of Age of Ambition back about what don’t like “Bowerman’s account makes clear howtravellers crucial it is for any business that benefits from as well tourism to understand the major trends taking shape in this travel revolution.” as what pleases them to help frame future —liz flora, Editor, Jing Daily he New Chinese Traveler offers a fascinating explanation of the emerging trends and marketing strategies.

T developments of Chinese outbound travel, alongside the motivations, desires, and expectations of Chinese leisure and business travelers. Featuring on-the-ground interviews, 8)valuable Less fretting about statistics. this book helps business executives around the useless world to better understand the complexities and challenges of Chinese outbound travel, and create and deliver their own and services that will meet thefrom requirementsoverseas of tech-savvy Chinese travellers.

Aproducts frequent query ad agencies Gary Bowermanmany is Co-Foundersocial and Director media of Scribes of theusers Orient, an Asia-based ismarketing “How are there and communications agency. He previously held key positions at leading travel, and consumer publishing companies in the UK, and spent two years as Editor in Chief intrade, China?” is,brands “What of Shanghai Business Review.The Bowermansimple has worked closelyanswer with travel and tourism in China, across Asia, and worldwide. does it matter?” In a market this big, will your strategy be enhanced if the figure is 300, 400 or 700 million? Unless you are “scatter-gunning” all smartphone users in China, which would be a supreme waste of time, marketers should dig deeper and better understand market segments rather than top-line figures. This requires diligence, investment and local expertise. Cathay Pacific is a company that understands the fundamentals, and will invest up to HKD1bn on social media functionality to improve online booking and check-in systems, as well as ancillary products like purchasing insurance. It won’t be the only one.

9) Discount marketing extends beyond UnionPay. Airport duty free stores, retail-

The new Chinese Traveler

of Chinese travellers stayed within Asia.

The US was the only country outside Asia to welcome more than one million Chinese during that period (the other five were Korea, Japan, Thailand, Vietnam and Singapore). While the mass of Chinese travel will remain Asia-based, experienced travellers heading inter-continental will venture to new, more diversified destinations.

6) The roll-out of niche marketing strategies. The fragmentation of Chinese outbound tourism and the quest for new experiences, especially at the top end of the market, is encouraging tourism boards to be more targeted with niche promotions.

Australia is seeking to lure Chinese travellers through its dining offerings, Switzerland has successfully marketed its ski resorts and Canada has promoted winter holiday packages. Cruise marketing will be ramped up in 2015 as bigger ships are based in North East Asia, overseas car hire firms are readying themselves for more Chinese drivers, and backpacker hostels are expecting more Chinese to check in. In short, 2015 will be the year that Chinese travellers are viewed as more than simply a homogenised group of high-spending consumers.

7) Better profiling and market analysis.

Tourism boards such as Australia, New Zealand and Singapore regularly survey Chinese travellers and analyse developing trends, and in 2014, the Finnish Tourism Board published a detailed report entitled Profiling Chinese outbound tourists: an empirical sur-

ers, hotels and ATM providers worldwide have upgraded their systems to accept China UnionPay cards, and to offer seasonally targeted discounts to cardholders. Under World Trade Organisation rules, China must remove UnionPay’s interbank clearing monopoly in 2015,enabling other credit card companies to make a greater claim for market share. Expect a surfeit of credit card advertising targeting Chinese travellers, plus a concerted rise in the profile of Alipay.

10) From Shanghai to Milan. The Shanghai 2010 World Expo was the world’s largest tourism showcase designed to encourage the Chinese to explore the planet. Myriad nations designed elaborate pavilions and flew in national treasures, celebrity chefs, sports and music stars to promote tourism.

At the 2015 Expo in Milan, expect tourism marketing to have matured considerably from the catch-all “Come Visit Our Country” approach in Shanghai. More nuanced, branded and targeted destination marketing will reflect the ongoing diversity of China’s outbound market.

The new Chinese Traveler

Business opportunities from the Chinese travel revolution

Gary Bowerman

About the Author: Gary Bowerman is Director of Scribes of the Orient (www.scribesoftheorient.com), a travel marketing company with bases in Shanghai, Hong Kong and Kuala Lumpur, and author of The New Chinese Traveler: Business Opportunities from the Chinese Travel Revolution(www.palgrave.com/products/title. aspx?pid=747924).

39

FEATURE

Covering the Market The boom of China’s insurance industry has primarily benefited domestic providers, though foreign insurers are closely looking at strategies to become bigger players.

By Alun John

F

ew observers of China’s insurance market fail to comment on the rapid growth that it has seen in recent years.

By the end of 2013, China’s insurance industry had accumulated total assets of USD1.34tr, and research by Munich Re says that between 2006 and 2013 China moved from being the tenth-largest market by premium volume to fourth place. Researchers also predict that China will rise to third in the world by 2020. A range of different players are operating in the sector, including foreign firms, SOEs, domestic Chinese enterprises, and various joint ventures. “It is hardly surprising that foreign insurance companies are interested in China, as premiums are rising by between 15 and 20 per cent annually,” says Andy Ng, China insurance leader at EY. A number of different elements of China’s economic reforms are contributing to this growth. From the perspective of commercial insurance, Tim Mathieson, COO of insurance broker Willis notes that reforms of state owned enterprises mean that many of these industrial behemoths are increasingly trying to manage their risks better. “While this will involve them in activities such as risk assessment, analysis and risk control, risk transfer through insurance still has an important role to play,” he says. “Meanwhile, Chinese companies looking to expand overseas are facing more complex risk 40

Vehicle insurance is one of the fastest growing lines in China

management challenges, and insurance and advisory services from brokers with global capabilities are in demand,” he adds. At the level of private individuals, further insurance is becoming necessary as part of China’s healthcare reforms, more and more cars are on the road which and so need insurance, and as Chinese consumers gain even more possessions, the demand to insure these is also growing.

However, despite the interest in these developments from foreign players, the insurance sector in China remains dominated by the so-called “Big Five” Chinese insurance companies -- China Life, Ping An, China Taiping, PICC, and China Pacific. Together, these firms controlled 75 per cent of the life insurance market and 74 per cent of the property and casualty insurance market at the end of 2013.

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

FEATURE

“Because domestic insurers are so dominant, a foreign player will need to be a highrising star to gain market share,” says Ng. Indeed, foreign insurance companies still have far to go: at the end of 2013, foreign life insurers’ market share stood at just 5.6 per cent, with those in the property and casualty sector even lower at just 1.3 per cent.

Penetration strategies Vittoria Depino, general manager at Pacific Prime (insurance agency), says that “foreign insurers and brokers are more cautious than local players in regard to business target planning and market strategy implementation”. She sees this as being one of the major reasons why foreign players have struggled to gain market share. Another, she adds, is that “Large capital investment and resources are required to achieve a sustainable local operation”. Ng agrees, also noting the need for foreign insurers to put in capital to make progress in China.

However, despite this, Ng says that foreign insurers remain optimistic and are trying to gain share in the China market through acquisitions. This has become increasingly apparent this year. In February, French insurance company AXA announced that it had completed its acquisition of a 50 per cent stake in Tian Ping Auto Insurance Co for Rmb3.9bn (USD630m), and in March, the Starr group, led by Maurice "Hank" Greenberg -- CEO of AIG until an accountSBR_reader_1.pdf 1 15/12/2014 11:04:03

ing scandal intervened -- said it had taken control of Dazhong Insurance.

For Mathieson, this is an interesting development, both for the insurers themselves and the market more broadly. “Foreign insurers who have aligned with local companies may be in a stronger commercial position than the others,” he says. “Also, I think this strategy is most beneficial for the insurance market as well, as you can really get the foreign expertise and the Chinese experience working in harmony. As such, I see this trend continuing into the future.”

On top of these, there are a number of joint ventures between Chinese and domestic players. In the small but fast-emerging health insurance sector, South African insurer Discovery has 20 per cent equity of giant SOE Ping An’s health insurance division, along with open access to each other’s intellectual property. The latter is perhaps particularly significant. Ping An Health’s general manager, Andrew Scott, states that “In 2005, Ping An saw the opportunity in health insurance and won one of four licences to operate in this sector. However, they felt the need for specific expertise in the sector and so approached Discovery about setting up a JV.” As the market for private health insurance grows -- and China’s evolving healthcare system suggests that it will -- Scott sees little chance of the venture collapsing. “Discovery invested for the long haul,” he says, “and there is still a lot to do. How we manage our data will

Pacific Prime is the leading insurance advisor helping you to make informed decisions about your coverage.

· Individuals

· Families

www.pacificprime.cn/en/ sales.cn@pacificprime.com SHANGHAI BUSINESS REVIEW

· Corporations

· Schools

+86 (0)21 24266400 +86 400 920 0755

JANUARY 2015 www.sbrchina.com

be key, and while we now have a platform, we can become an awful lot more sophisticated firm in the future.” For this, experience of other health insurance markets will remain important.

Insurance subsectors Still, despite having seen significant growth in recent years, health insurance makes up a comparatively small percentage of the overall insurance industry in China. Life insurance remains the largest by a wide gap, though vehicle insurance has also risen significantly -- compulsory third-party liability alone accounted for 72 per cent (USD64.6bn) of China’s aggregate non-life premium in 2012, a figure that has increased significantly since then. Changes in regulations in 2012 meant that foreign insurers were able to provide motor insurance, and several players have since done so – the AXA Tianping merger being one of the most significant.

Away from life and motor insurance, other lines are much smaller. “One of the things that surprises me is the limited penetration of insurance at the personal level,” says Mathieson. “Life insurance is a huge market, though still with plenty of room for growth, but health insurance and personal insurance on property is relatively limited. Likewise the insurance penetration in the Small and Medium Enterprise sector is very weak. This is especially noticeable when big earthquakes and other natural disasters hit China: the

Simplifying Health Insurance About the Author: Ed Dean is a Director and Co-founder of JETT customer experience. Established in 2004 JETT work with retail brands, res寰宇保险代理(上海)有限公司 taurant groups, hotels and other service businesses in China to help them measure and maintain their 上海市徐汇区淮海中路1329号云海大厦19楼 service levels and customer 19thexperience. floor, Yunhai Building, 1329 Middle Huaihai road, Xuhui district, Shanghai 41 CIRC Code 保监会注册号 210075000000800

FEATURE insurance loss is embarrassingly low.”

Mathieson attributes this to the fact that insurers have not managed to fully access the market, despite their large sales forces.

“I suppose also there are some moral hazards, and it is a high-maintenance and highcost business,” Mathieson said, “but there is a need to market these products better in China. Foreign brokers are only licensed to handle large commercial clients at present, but local brokers could be helpful in this; however in China growth in the personal lines area will most likely come from greater online sales”.

Scott too remarks on the challenge of distribution. “In the last year or so, we have been fairly successful at selling health insurance to the middle classes, but this is quite a recent development. It has taken us a few years to match the product to the distribution channel,” he says. This is clearly a key consideration, and Ping An Health is in the fortunate position of being able to sell through Ping An Life’s sizeable network of salespeople. Scott adds that “Without this local presence and knowledge, I think it would be very difficult to grow at the rate at which we wish.”

With time this may change, Depino notes that of public awareness of the importance of private insurance will be critical. She predicts that “People and entrepreneurs will be more knowledgeable about insurance needs, as well as risk identification”.

Online marketing An EY report from the start of 2014 suggests that one way foreign insurers can reach Chinese consumers is through the rapidly

Vittoria Depino, general manager at Pacific Prime 42

developing digital sphere. “Foreign insurers see digital channels as a way to overcome their limited geographic presence, to build brand awareness and to offer value products,” the report says. However, the report is careful to note that using online tools for insurance is more than about channels and branding. “It is also about data analysis, smart underwriting, product development, innovative pricing, and interactions with customers and insurance intermediaries,” it says.

Certainly the opportunities online are significant, especially in China. In a survey carried out this year by Accenture, 93 per cent of Chinese respondents said that they would consider buying insurance online – the highest figure of the 11 countries surveyed. One company that has responded to this opportunity is AXA Tianping, which was formed through the merger of AXA and Tianping Auto. Their CEO, Wu Hu, said in a statement that the company would now position itself as an “e-insurance company”, adding that through online and even mobile sales the firm was aiming to drive its direct sales channel to 60 per cent.

Despite these moves by some foreign players, it is still the big Chinese companies that are dominant online. According to the Insurance Association of China, domestic companies had 52.2 million online clients in 2013, relative to 6.9 million in 2011, whereas foreign companies had 2.2 million in 2013 compared to 1.3 million in 2011.

Regulatory rigours One reason foreign insurers surveyed by EY say that they have struggled to make progress in securing business online is regulatory obstacles, though the report does not fully accept this. “It may be somewhat unfair to elevate the regulatory constraints, as the regulator has always encouraged digital developments. Regulatory uncertainty might be a more appropriate concern,” the report says.

Perhaps the most significant regulatory change is the upcoming implementation of a new set of regulations known as the “China Risk Oriented Solvency System (C-ROSS),” which will be introduced in 2015 with the aim of strengthening capital requirements, risk management, and governance in the Chinese insurance industry.

Zhao Yulong, deputy director of finance at the department of China Insurance Regula-

Andrew Scott, general manager of Ping An Health

tory Commission, stated the background to these regulations in a recent article: “A few cases of ‘not looking after the interest of customers’ have been seen in recent years, including misleading sales and difficulties making insurance claims. The China Insurance Regulation Commission (CIRC) conducted an analysis and concluded that the existing simple, but overly strict, regulation environment had contributed significantly to these issues arising, and so brought in the new regulations,” he wrote.

Mathieson says that the new rules include increased capital requirements and more regulatory complexity for insurers, and wonders whether “some smaller non-life companies may be put under pressure”. He also notes, “Barriers to entry seem to have been raised in both the insurance and broking sectors”, a comment that Depino agrees with. Mathieson adds that the implications of these are that the brokerage industry in China might become less vibrant.

Such implications remain to be seen. However, Mathieson remains generally positive about developments in Willis’ particular sector. “The insurance broker market in China has only been in existence for about ten years, and foreign firms arrived at the same time as the market opened,” he says. There are three global broker firms in the top ten in the country, and in contrast to foreign insurers, Mathieson notes that “foreign brokers have made more significant inroads into the market in China than their insurance company counterparts”. He adds that in many developed insurance markets, about 95 per cent of commercial insurance is bought through a broker, so the future for brokers in China looks optimistic.

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

ENTREPRENEUR PROFILE

Exploring New Shores This month, SBR’s Entrepreneurs series looks at Biggi Stefansson, CEO of IS Seafood, who shares his experience of starting a business in China.

By Alun John

B

iggi Stefansson, the chair of the Shanghai chapter of the Entrepreneurs Organisation, did not start life as a businessman. He began as a fisherman, gaining his captain’s certificate at just 18 years of age back in his native Iceland. Like his father and uncle before him, the plan was to spend his life on the sea.

However, it was tragedy that turned him into an entrepreneur and that helped bring him to China. “In 2001, the ship I was sailing in went down, and one of my colleagues with it,” he says. The ship’s captain got separated from the others, and Stefansson, serving as mate, had to take responsibility for the crew. They spent 40 minutes in survival suits floating in the freezing waters of the north Atlantic until they were found by the ship of Stefansson’s uncle. “This was a turning point for me,” he says. “After the tragedy, I decided to focus on the business side of the seafood industry.”

Stefansson went to business school, and then came to China as part of his studies.

He soon found himself at home in Shanghai, and started a trading business. “The problem with this was that I never had any passion for it. The first rule of being an entrepreneur is to do something you are passionate about,” he says. As such, he looked back to his roots, and with the support of his business partner set up IS Seafood three years ago. The company sells Icelandic seafood to hotels, restaurants and the catering industry, in and around Shanghai, and things are going well for them so far.

“Because Iceland has a reputation as a clean and fresh country, people are interest-

SHANGHAI BUSINESS REVIEW

ed in buying our seafood,” says Stefansson.

“They also like the fact that the company is run by a fisherman, as I can thoroughly tell them about our products: where and how they were caught, what happens to them next, how they get to China, and so on.”

Of course, starting up a business is not easy, and Stefansson is quite candid about some of the difficulties. “Building a team is one of the biggest challenges we’ve faced,” he says. “You need to find staff who are passionate about what they are doing.” As a small company of just 30 people, the team at IS Seafood need to work closely together.

“If someone is not a team player, no matter how good they are, they have to leave the company,” says Stefansson. Some past employees have been dismissed on these grounds, and others have been given warnings. “On the other hand,” he says, “many of our people have been with us right from the beginning, and none have left to pursue other opportunities in China.” Stefansson’s passion for his work and his team comes across as rather infectious.

He also attributes the success of the company to the support of the Entrepreneurs Organisation. “There are members from all around the world, all of whom who have built successful businesses, and are happy to share their experiences,” he says. “Certainly I’ve found the support and guidance they provided to be very useful, and they have helped me turn my knowledge of seafood into a successful business in China.”

This shared experience has proved important, as Stefansson, like many before him, has found that the market for his

JANUARY 2015 www.sbrchina.com

products in China is different from what it is elsewhere. “Even in a sector that you know well, like I do with seafood, you still have to do your research and work out what people want,” he says. For example, the cod that Stefansson’s family sell to the UK -- a staple of that venerable institution, the British fish and chip shop -- is much less well known in China. “The common word for “cod” In Chinese is what we would call a sable fish in the West”,” Stefansson says. “To the Chinese, cod is a much fattier and oilier fish, and so the lean flaky cod we provide goes against their expectations.” On the other hand, IS Seafood’s mackerel is very popular -- “much more so than we expected before we started researching the market”, Stefansson says.

As the company expands beyond Shanghai, Stefansson will have to learn about new markets in other Chinese regions – a formidable challenge, according to the experiences of other foreign business owners. However, it seems likely that his passion for the seafood industry will remain intact. After all, like the products he is selling, he too was once picked out of the sea by his uncle’s fishing vessel.

This section is produced in collaboration with the Entrepreneurs' Organization (EO). EO is a dynamic, global network of more than 10,000 business owners in 46 countries. Average member is 42 year old with annual revenues of USD52.3M. Founded in 1987 by a group of young entrepreneurs, EO is the catalyst that enables entrepreneurs to learn and grow from each other, leading to greater business success and an enriched personal life.

For more info about joining the Shanghai chapter, contact sxeoshanghai@gmail.com.

43

VIEW FROM THE TOP

The End of Efficiency Ronnie Tan is President of Franklin Covey Division at Right Management. He is responsible for all of Franklin Covey’s activities in Singapore, and Greater China. Franklin Covey is a global leader in effectiveness training, productivity tools and assessment services for organisations and individuals, and has been operating in China for almost 20 years.

SBR: What brought Franklin Covey to China?

RT: Fundamentally the reasons that brought us to China were the same as those that brought the company anywhere else.

We operate in 69 countries worldwide, and what we provide stems from our founder, Stephen Covey’s book, the Seven Habits of Highly Effective People. Out of this came the various principles that form the foundation of our training courses, and when we bring these into organisations they will help the organisations and their people become effective and not just efficient. In China, just like everywhere else in the world, this has become the focus now that we are living in the knowledge era.

SBR: What is this difference that you draw between effectiveness and efficiency?

RT: The typical textbook definition is that efficiency is doing things faster and with fewer resources, whereas effectiveness is about doing the right things and doing them well. The former is all about working hard and fast, whereas the latter is about working in a way that achieves better results.

Organisations and people everywhere have to deal with the problems of having limited time and limited resources to do what they want to. While you can drive people to get the most out of them, people do not 44

always respond well to this. Today organisations have to shift their attention to get results without driving their people crazy.

To do this you need to develop effective individuals who can make the right decision about how to do what they need to do. That is what effectiveness means in the business world.

While there are differences between cultures and languages, fundamentally people are people, and managing them is much the same. In Thailand, Peru or Wales, you will be told that people there are different from people elsewhere. However, if you look at the challenges people face, and the challenges that leaders face, essentially what they are dealing with is how to get people to achieve what they are hired to do, and that’s the same everywhere.

SBR: While Franklin Covey has been in China, how have companies’ needs changed?

RT: We have been in China for almost 20 years, and as you can imagine the amount of changes we have witnessed. We’ve seen Pudong evolve from being farmland to what it is today. In the past, organisations were very dependent on foreign talent. Today they are managed and led by a very capable group of professional Chinese managers. Alongside this we also witnessed the growth of the local enterprises and the

evolution of the SOEs. None of this reduced demand for our services, in fact demand has grown. We have had to shift from providing basic training to more sophisticated talent development strategies to help companies step onto the world stage.

Also, if you look at those who are operating in China, 15 years ago, MNCs were competing with other MNCs, now they are competing with the local companies in a big way.

Part of this competition is for talent, which has made training even more important.

Employee turnover has always been an issue in China, but as competition intensifies, the demand for skilled talent will increase and training, especially management training, can help stop this. If you look at what companies can do to stop people leaving their job, the most common retention strategy is compensation – offer someone more and they will stay. However, this works only for some employees and some companies. If an employee will move jobs for just a bit more money, then you aren’t going to be able to keep them for long as there is always another employer who can offer more.

People join a company because of the company - they are interested in the industry or they like the company’s reputation, and so on - but research has shown that when people leave, they leave because of their leaders.

Franklin Covey has developed solutions to help leaders manage their people effectively.

The sad truth is that for most people who are

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

VIEW FROM THE TOP promoted to managerial roles, they were not given any training in this. They went through a lot of skills training which are jobspecific as well as those which cover handling grievances, sexual harassment and so on. Such skills training has merit but it also has its limitations. While there are so many different situations you can come across in life, what we focus on is developing the principles of leadership. Principle-centered leaders are able to deal with any challenges that they face.

changed behaviour which eventually will change the way people work or live.

Franklin Covey’s mission is ‘enabling greatness in people and organisations everywhere’. Greatness can be defined in many ways , but our task is to enable greatness in orga-nisations. That is the purpose of Franklin Covey’s existence in this world.

SBR: Things like leadership principles feel a bit fuzzy, is it possible to measure the impact of your training?

RT: Building trust is something that is important in organisations in China at the moment. Consumers obviously need to be able to trust a company’s products and their staff, but organisations may also instill trust internally. This is not about whether their employees will trust each other with their bank details, but a different sort of trust, where it is necessary for them to work together as a team. A leader has to trust that his team will do what they say they will, a team will trust their leader that he will ask them to do the right thing, and a leader also trust other leaders who will collaborate when they say they will and not stab

RT: Concepts are hard to measure, but we are dealing with organisational problems.

If you are very clear about the problem you are trying to solve at the beginning, and we provide a training programme that will help with this, then it is easy to measure whether or not what we have provided has solved the problem.

Meanwhile on the individual level, the effectiveness of what we provide comes down to whether or not our training has

SHANGHAI BUSINESS REVIEW

SBR: Aside from leadership training what are some of the other elements of your training that is proving popular in China?

JANUARY 2015 www.sbrchina.com

each other in the back. Once an organisation has created this culture of trust, it creates a foundation from which it can grow and achieve success.

SBR: Are any exciting changes ahead for Franklin Covey?

RT: We will continue along the path that we are on. I think we have proven to ourselves and to our clients that we are relevant, and that what we provide does not go out of date, so we will continue to live our mission.

We have expanded to most places where we think we can help people and organisations achieve greatness. I suppose there are some outlying places where we do not have a presence, and there are some organisations with whom we don't work with for political reasons, but we will continue to find opportunities in the markets in which we already are. For us it is not about just boosting revenue. Ultimately we ask ourselves, ‘If we disappeared from a market, would anyone miss us?’ If we would be missed by people or organisations, then that indicates that we are relevant. We think we would be, and our plan is to remain relevant in the future.

45

PROFESSIONAL OPINION

Countdown to ASEAN Economic Community 2015 With the ASEAN region and its economies now of critical importance, companies operating in Asia must prepare themselves to harness ASEAN’s new efficiencies in order to stay competitive.

By Chris Devonshire-Ellis

T

he term “ASEAN” is cropping up more and more often these days, yet many business executives in China are still unaware of what it is and why it is growing in importance. The answer is fairly simple – ASEAN is at the forefront of free trade in Asia.

That means reduced or zero customs duties across an area of Southeast Asia including ASEAN’s ten member states of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. Collectively, ASEAN represents a market of some 600 million people, with a combined GDP of about USD1.8tr.

If it were a single country, ASEAN would be the ninth-largest in the world in economic terms, and it is effectively situated as a counterbalance to the emerging economies of China and India.

On China’s radar Recognising this potential, and eager to leverage its own growing wealth, China has specifically targeted the ASEAN bloc as a destination for Chinese investment. This makes sense: Chinese companies need to expand overseas, and right next-door they can find a hotbed of growth in sales and trade.

Indeed, ASEAN overtook Japan last year to become China’s third-largest trade partner, with trade figures reaching USD362.3bn – behind only those of the European Union (USD567.2bn) and the US (USD446.6bn).

46

One impact of the ASEAN Economic Community will be that Vietnam will become an even more serious competitor to China for lower-end manufacturing

Even so, aware that not everyone has fully recognised the significance of ASEAN, the Chinese government has been working to strenuously promote Chinese trade with Southeast Asia, as seen through the recent establishment of a China-ASEAN trade office. Notably, China already has double taxation and free trade agreements in place with ASEAN. The ASEAN-China Free Trade Area (ACFTA), being an agreement between China and the ten member states of ASEAN, came into effect in 2010. Combined, the ACFTA is the largest free trade

area by human population and third-largest by nominal GDP in the world. The related free trade agreement reduced tariffs on 7,881 product categories, or 90 per cent of imported goods, to zero.

This reduction has already taken effect between China and the six original ASEAN members: Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. The remaining four countries – Cambodia, Laos, Myanmar and Vietnam – are due to follow suit in 2015. Of these, Vietnam is the most significant player to watch: it shares a border with China and currently boasts wage levels

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

PROFESSIONAL OPINION at 30 per cent of those found in Jiangsu or Zhejiang provinces.

In addition to this, the Vietnamese Government has signalled that it intends to reduce its corporate income tax rate to 20 per cent beginning later next year – a full 5 per cent lower than China’s. The impact will be that Vietnam, once coming into “ASEAN Economic Community (AEC) compliance”, will be a serious competitor to China for lower-end manufacturing.

Furthermore, with 90 per cent of all Vietnamese goods suddenly able to be imported into China duty-free, it will be the “ASEAN price” and not the “China price” that will matter to sourcing companies, buyers and end-users alike.

New strategies China-based manufacturing businesses will need to adapt. At Dezan Shira & Associates, we have noticed that China-based investors who have also set up in Vietnam have typically refrained from closing their China facilities altogether, but rather allowed them to evolve under the new conditions. The “China factory” is still needed

SHANGHAI BUSINESS REVIEW

<< China has

specifically targeted the ASEAN bloc as a destination for investment >> to produce more complicated parts, which are not yet easily made in Vietnam, and is required to penetrate further into the China supply chain.

But less complex component parts can just as easily be manufactured by a Vietnamese subsidiary, imported, and then added into China production. This means that Chinabased WFOEs, FICEs and JVs may need to start thinking about three things: the cost of production in Vietnam, setting up a facility in the country, and a change in their China business scope to allow for both assembly and distribution.

As for the question of its infrastructure, Vietnam will not come close to China’s

JANUARY 2015 www.sbrchina.com

production capabilities anytime soon. But as a general rule of thumb, if the Vietnam facility can get production down to 70 per cent of what it is in China, then it makes economic sense to relocate production.

These questions are crucial for the long-term survival of any China-based manufacturing facility. In this changed environment, if you don’t start looking for cheaper-sourced components from Vietnam or elsewhere in ASEAN soon, then your competitors will first.

By the end of next year, these firms will have their own supply chains in place, and many will have invested in their own subsidiaries as a result. The question that remains is purely this – are you ready for 2015? You will certainly know in 2016, when ASEAN prices begin to seriously erode the cost of producing in China.

About the Author: Chris Devonshire-Ellis is Founding Partner of Dezan Shira & Associates Asia, and is based in Singapore. The practice has 28 offices across China, India and the ASEAN region, assisting foreign investors with their legal and tax services throughout Asia.

47

Industry report: HUMAN RESOURCE

Promising Horizons The growth in China’s domestic consumption has been a blessing to international air cargo providers, who now have fewer government regulations and a market that allows competition.

By Maurits Elen

S

ince the beginning of its economic resurgence, China has consistently recorded a trade surplus. As the largest trading nation in the world, its export sector still remains one of the pillars of its economy, causing China to rely heavily on its air cargo industry. At present, China’s trade imbalance is gradually improving as the country’s local consumption levels are creating robust demand for imported products, thereby rendering new opportunities for the industry at large. Airlines and airports around the globe are now adjusting their strategies to tap into this vast growth momentum, while competing for market share.

According to Dirk Reich, president and CEO at Cargolux Airlines, the key challenge facing the air cargo industry in general is mostly related to regulatory barriers that prevent firms from obtaining the required traffic rights to enter new markets. In this vein, the recent decision by the Chinese government to further liberalise China’s air cargo industry was welcomed by international air freighters with great enthusiasm.

In September, China signed air service agreements with some 115 countries and regions, thereby reducing the access requirements for international air freighters to enter the Chinese market.

Eyeing the north In 2001, just before China entered the World Trade Organization, the country 48

launched its “Go West” strategy with the aim to enhance development in its relatively underdeveloped western parts. As China’s ground infrastructure served only the major coastal cities, large investments were injected into infrastructure projects, and special economic zones were established to attract foreign capital and MNCs inland.

In addition, due to a rise in production costs in China’s sophisticated coastal regions, a significant number of manufacturers moved further inland to hedge production risks, thereby becoming viable international freight hubs. With new economic heavyweight cities sprouting up, such as Chongqing, it has been imperative for airlines to expand their transportation routes in China.

However, according to Christian Haug, director north and central China at Lufthansa Cargo, the “Go West” approach has already been more or less realised “Chongqing and Chengdu are well developed markets,” he says. “For us, the next step is to explore new markets a little bit more up north and develop China into a real gateway system, including feeder services to and from the main hubs.”

Lufthansa Cargo is currently present at seven online stations in mainland China.

At the main gateways of Shanghai and Beijing, it provides freighter and passenger capacity, at Chongqing and Guangzhou it provides freighter services and at Nanjing, Qingdao and Shenyang it

Dirk Reich, president and CEO at Cargolux Airlines

offers the lower deck of passenger planes to freight customers.

In Zhengzhou, situated in North-Central China, a feasibility study is currently in progress for the set-up of a joint-venture cargo airline between Luxembourg-based Cargolux and its shareholder Henan Civil Aviation and Investment Co Ltd. “Our partnership so far has given Cargolux a unique opportunity to further develop our activities in the Middle Kingdom and to become the major cargo carrier between Europe and China,” says Reich.

Cargolux operates five weekly flights to Zhengzhou and a twice-weekly service to

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

INDUSTRY REPORT

Quality and freshness preserved Because maintaining the quality of your produce matters, Qantas Freight’s Q-GO Fresh ensures your fresh seafood, meat, plants and flowers arrive at their destination, with freshness and quality preserved.

Qantas Freight is Australia’s leading air cargo carrier, and with a reach of over 80 domestic Australia destinations and 480 destinations worldwide, you can move your fresh produce to more customers almost anywhere in the world. Fresh and on time.

For enquiries about moving fresh produce or any of the products in the Q-GO range please visit qantasfreight.com

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

49

Industry report: HUMAN RESOURCE the importance of different locations in the Chinese cargo market.

In fact, Cargolux is strongly committed to the development of Zhengzhou as a major cargo hub in China. “Two years from now, Zhengzhou will be the single-biggest platform that we have for our market, even surpassing Shanghai, Hong Kong, Chicago and New York,” adds Reich.

Impacting global trade

Steven Polmans, head of cargo at Brussels Airport Company

Beijing and Xiamen, as well as seven flights a week to Shanghai. The airline company plans to increase the frequency of its flights to Zhengzhou leading up to 2015 and to eventually operate multiple daily flights between Zhengzhou and its main base in Luxembourg.

Both partners anticipate an annual tonnage of 200,000 between the hubs by 2016-2017, which seems feasible, considering the fact that Shanghai Pudong Airport handles roughly 2.9 million tonnes annually.

Christoph Goetzmann, director of sales at Frankfurt-Hahn airport, adds that his airport’s recently established partnership with Zhengzhou International Airport in the World Cargo Airport Alliance clearly shows

From China’s outbound perspective, domestic air cargo providers have, throughout recent years, rapidly touched ground in a myriad of overseas markets. This has resulted in a surging amount of partnerships between Chinese airlines and foreign airports. Last September, Frankfurt-Hahn airport in Germany welcomed Air China Cargo as part of its spectrum of tenants. “The newly opened Road Feeder Service Centre at our airport provides Air China with an easy and effective connection to the pan-European road feeder network,” says Goetzmann. “The air cargo industry remains highly competitive. It is therefore of paramount importance to utilise all cost-saving opportunities along the supply chain. Chinese airlines therefore are looking for airports with excellent access to the central European market at a competitive cost.”

For Belgium’s largest airport, Brussels Airport, there has been a substantial increase of cargo volumes to China. “Nonetheless, exports out of China are still making up for most of the air cargo traffic, so it will take time before the imbalance will be truly improved,” notes Steven Polmans, head of cargo at Brussels Airport Company. Polmans adds that as China

Jamal Zaal, vice president terminal and cargo operations at Dubai International Airport

and the Asia-Pacific will continue to grow more fiercely than the rest of the world, China’s air cargo industry will dramatically affect the course of the global air cargo industry.

Such an impact is already evident in the Middle East, where the improving relationship with China has had a profound impact on the development of the region. Trade and investment, which come with the associated effects on domestic demand, have greatly fostered the region’s growth trajectory, according to a recent report by HSBC. Dubai International Airport offers a total of 53 flights a week with Chinese cities, including Beijing, Shanghai, Guangzhou, Kunming and Urumqi. “Most of the flights are predominantly operated by Chinese airlines, such as Air China, China Southern and China Eastern,” says

Qantas Freight has been flying to China for more than 30 years and was the first air freighter to uplift fresh Australian milk into China

50

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

INDUSTRY REPORT

Christian Haug, director north and central China at Lufthansa Cargo

Jamal Zaal, vice president terminal and cargo operations at Dubai International Airport. “As the Asia-Pacific is expected to account for about two-thirds of global growth over the next 20 years, Dubai and the Middle East will continue to consolidate their positions as regional and global hubs for trade with China,” he adds.

For the Australian air freighter Qantas Freight, which has been flying to China for more than 30 years, one of the most exciting recent developments has been the export of Australian milk.

Earlier this year, Qantas Freight was the first air freighter to uplift fresh Australian milk into China. “Today, we carry the largest quantity of fresh milk between our two countries,” says Nick McGlynn, head of global sales at Qantas Freight Enterprises -- currently the only carrier to operate a direct freighter service between the cities of Shanghai and Sydney.

<< Chinese

airlines are looking for airports with access to Europe at a competitive cost >> In general, air cargo is oriented towards both high-value and time-sensitive products. As such, the air cargo industry will be significantly affecSHANGHAI BUSINESS REVIEW

ted by Chinese consumers’ growing appetite for high-value overseas goods. It has been broadly reported that the Chinese e-commerce boom will further benefit the air cargo industry; however, throughout the industry there is a belief that the developments in e-commerce will not significantly impact the air freight industry in the short term, as most traffic will be regional and will be moved by land rather than by air.

Another driver of growth comes from China’s industrial base itself, which is increasingly producing more technologically-advanced products, such as electronics. More importantly, with the newly signed Sino-Australian Free Trade Agreement, we are likely to see strong demand for time-sensitive products as well, such as beef, fruits and vegetables, and seafood. “As for carrying Australia’s dairy and perishable products to China, air freight unequivocally is the fastest and therefore only viable transportation option,” says McGlynn.

Supply chain in the clouds “The Chinese air cargo industry can best be described as being one of the most dynamic and competitive in the world,” says McGlynn. As reducing costs is therefore an important way to remain competitive, airports and airlines must accelerate the digitisation of their supply chain processes, as well as their operating models.

Haug also expects to see significant improvements in air cargo digitisation in the coming years with the replacement of paper documents by the implementation of eFreight, new tracking solutions and warehouse automation technologies, which will add a dimension of convenience to the way business is being handled.

According to Polmans, digitisation is definitely a tough process due to all the variously different stakeholders in the supply chain. At Brussels Airport they have therefore come up with the idea to create a Cargo Community Platform, which serves as a cargo network system in the clouds, able to link all stakeholders and to start truly managing the cargo flow and integrate different sorts of data. “The first ideas and results so far have been quite promising,” says Polmans. “We feel there is genuine interest from the stakeholders at our airport. They too feel it is time to really make some changes and do things completely differently.”

In addition to improving operational efficiencies, advancements in technology are also needed to improve customer service and transform work practices. At Qantas, a web-based core operating system was adopted more than five years ago, which has been leveraged in a

JANUARY 2015 www.sbrchina.com

Nick McGlynn, head of global sales at Qantas Freight Enterprises

variety of applications that customers see as valuable. These include the implementation of a timesaving self-service kiosk at Qantas’ international and domestic freight terminals, as well as efficient digital warehouse technology processes. Another noteworthy innovation is the use of real-time track-and-trace iPhone and Android smartphone apps, which give customers the ability to keep track of where their shipments are located in the supply chain.

The adoption of electronic air waybills (e-AWBs) over the past few years, by such firms as Emirates SkyCargo, has particularly been one of the main drivers for improving efficiency in the air cargo chain, says Zaal. Especially for tracking and tracing shipments online, electronic air waybills remain one of the most pivotal innovations.

In China, Shanghai Customs recently introduced Customs e-Release, which is an exciting step forward in opening the pathway to operate electronic air waybills into and out of Shanghai Pudong Airport, says McGlynn. As a result, the requirement of paper stamps on customs clearance is no longer required.

More specifically, all capable airlines are now permitted to apply e-AWBs for both the import and export of general freight, with the exception of express cargo. “One of our local top customers has just started to join our e-AWB trial project in Pudong airport, so we are extremely eager to explore and help drive new innovations,” notes Haug. “Without any doubt, beneficial policy changes within the purview of the Chinese government and with regard to trade liberalisation, as well as supply chain digitisation, will provide further leeway for China’s rapid and extensive integration into the global air cargo network.”

51

COUNTRY FOCUS GERMANY

Soaring Together Germany and China continue their strong and stable economic cooperation, with more Chinese firms looking to bring investment westward.

By Alun John

I

n last month’s issue, we observed that in the business relationship between France and China both countries are dependent on exports of consumer goods, making their economies clash and causing imbalances in trade. This is most definitely not the case for Germany, whose economy and trade offerings are well-matched with those of China.

“German exports fit well with China’s growth model,” says Claus Henkel, general manager of SSI Schaefer Automation Solutions. “German products are well-known in the hi-tech sector and automobiles, while in contrast, most Chinese consumers and companies don’t think of other European countries’ industries in the same way. They might want to buy a handbag from Italy or France, but not a piece of precision machinery.” With the current focus in China on boosting high-end manufacturing, advanced industrial products and especially green energy -- all areas where German companies have expertise -- the prospects for further cooperation are strong.

“Business first” This compatibility between the two countries’ economies is strongly apparent in the trade figures. Germany is China’s numberone trade partner in the EU: nearly half of all EU exports to China come from Germany, and Germany receives almost a quarter of imports from China to the EU. In a similar vein, China is now the secondlargest market for German exports outside the EU and is poised to overtake the US as 52

Source: Siemens

German engineering firms play a significant role in China's manufacturing sector, for example Siemens supplies compressor trains to China for the world's largest propylene plant

the largest this year. In purely numerical terms, the value of goods from Germany imported into China rose from USD10.4bn in 2000 to USD94.2bn last year.

One contributing factor to Sino-German growth has been the German government’s so-called “business first” approach to dealing with China. Diplomatic ties between the PRC and the Federal Republic of Germany (i.e. “West Germany”, as it was then known) began in 1972. Since then, German leaders from either end of the political spectrum have generally focused on building a pragmatic business relationship with China and avoiding political difficulties. Current German Chancellor Angela Merkel did deviate slightly in 2007 by meeting the Dalai Lama, but the business-first policy of her

predecessors Gerhard Schroder and Helmut Kohl was soon resumed.

Indeed, some have even described SinoGerman ties as a “special relationship”, and Merkel has visited China seven times since she took office in 2005. Observers have seen the practical result of this relationship in Germany’s opposition to the decision by the EU in 2013 to impose anti-dumping measures on Chinese solar panels. At the time, the New York Times reported that Germany had originally told the European Commission that it would abstain on the decision, but following an official visit from Li Keqiang, Germany announced that it would oppose the measures.

Henkel notes that an additional political boost to Chinese-German trade has been

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

ENTREPRENEUR PROFILE CO-PUBLISHED FEATURE

Schüco Philosophy: Rolling Green and Economical into One Interview with Günter Strauss, Executive Director of Schüco Greater China 2014, the 40th anniversary of China-Germany, witnessed the continued enhancement of Sino-Germany relationship with three high level visits - In March, President Xi Jinping arrived in Berlin and Duesseldorf for his first visit to Germany since he took office in last March.

It was also the first visit by Chinese President to the country since 2005. In July, Chancellor Merkel paid her visit to Beijing and in October, Prime Minister Li Keqiang and the Cabinet of Chinese government visited Berlin. Both sides have benefited from the friendly and cooperative relationship, reaching an agreement on building comprehensive strategic partnership.

“Such an intensive frequency of mutual visit is unprecedented, which means SinoGermany relationship has reached a peak ever since.” Mr. Günter Strauss, Executive Director of Schüco Greater China pointed at the very beginning of the interview. “The comprehensive strategic partnership will absolutely bring new opportunities for high-tech, industrial innovation, sustainable development and environmental protection.”

Schüco is a leading company in the field of sustainable building envelopes, boasting in high quality products of windows, doors, façades and etc. Together with its worldwide network of partners, architects, specifiers and investors, the industrial pioneer creates sustainable products which focus on people and their needs in harmony with nature and technology. “Our solution is a green and sustainable one. More important, it is also an economical one. Featuring the two kind of performance is the core advantage of SHANGHAI BUSINESS REVIEW

Schüco. We call it Schüco Philosophy,” Günter stressed during the conversation.

As an important member of the ChinaGermany Chamber of Commerce, Schüco has played a positive role in the friendly and mutually beneficial Sino-Germany relationship. Entering the Chinese market in 1999, Schüco has transferred the highest German engineering technology and a long lasting history in the curtain wall industry. Relying on its world-leading door, window and façade solutions and innovative technology, Schüco China has positively fulfilled its commitment to construct a “smart China”.

“Germany is the biggest trade companion of China in Europe. And now, China has become the largest overseas market for Schüco, playing as the strong growth engine for our global business.” Rooting in China market for 15 years, Schüco is well commented and recognized by the local market all over China. In the past years, Mr. Günter Strauss has led Schüco China to positively explore the Chinese market, especially in middle and South China based on his rich work experiences in construction industry for almost three decades. For now, with headquarter in Shanghai, Schüco has established regional offices in Beijing for North China, Shenzhen for South China, Chengdu for Central China, as well as sales representatives and offices in Shenyang, Dalian, Qingdao, Jinan, Tianjin, Hangzhou, Nanjing, Anhui, Wu-han, Hainan, Xiamen and Taiwan. He added, “We are establishing a new office in Hong Kong next year.”

“We launch regional offices in order to approach local markets. Obviously, the measure tends to be very effective. Our regional offices can offer full-chain services from planning, design, fabrication and installation, further to enhance the partnership and customer intimacy, as well as to help the company better serve the customers and explore growth opportunities in the emerging region”.

Through the national efficient network, the cutting-edge solutions and technologies from Schüco make it possible for private home owners as well as Architects and Developers

JANUARY 2015 www.sbrchina.com

to significantly improve energy efficiency in different weather, creating cost savings in addition to unrivalled sustainability performance.

As the senior executive of the company in China for four years, Günter has not only seen the rapid development and expansion of Schüco China in recent years, but also devoted to boosting its in-depth sustainable development in local market. “As Chinese economy accelerates recently, the construction industry has developed rapidly as well, where customers’ environmental awareness is also greatly enhanced. Therefore, the customers propose higher demand for green, smart and high-quality windows, doors and façades.

As a global market leader in energy-efficient building envelopes, Schüco can satisfy domestic customers’ diverse demands in virtue of cutting-edge technologies, customized and localized systems, green building concepts and expertise in the construction industry.”

“I am so pleased to see that the Chinese government is further improving the laws and regulation, as well as strengthening the law enforcement efforts in environmental protection. As a leading company in green construction in China, we totally support and follow the steps of local policy. Carrying on our philosophy, Schüco will keep cooperating with local partners and customers in order to make contribution to Smart Development of China”, Günter said.

The company also positively participate in various trade shows to closely contact with the customers. In 2014, Schüco showcased at Fenestration China 2014 in Beijing and attracted plenty of spotlights of the audiences. At the exhibition, Schüco has not only amazingly exhibited the four cutting-edge innovative concepts in the industry - international consulting services for customized façades, ASS 77 PD panoramic sliding system, new generation of SimplySmart fittings and LightSkin LED lighting system, but also invited Schüco German experts to deliver presentations with detailed explanation & deep insights for visitors at the booth site.

53

COUNTRY FOCUS GERMANY the tension between China and Japan last year. “When consumers and some companies decided that they were unwilling to purchase Japanese goods, particularly cars or high-tech products, many turned to German goods instead,” he says.

German commitment From a business perspective, an important part of Sino-German business relations has been the willingness of German companies to invest heavily in China. “For many years, German companies have seen China as much more than simply a source of cheap labour, or a large market,” says Henkel. “They have really been keen to invest in R&D and advanced manufacturing in the country.” This is the case across the spectrum: Siemens has 32,000 employees, 20 R&D hubs and 76 operating companies across China; Bosch, a similar number of employees and 17 engineering centres; and Bayer, over 13,000 employees. Volkswagen has 14 subsidiaries in China, and just one of these, Shanghai Volkswagen, has approximately 34,000 employees. The investment by large German MNCs in China is sizeable and still growing.

In addition, a further sign of the importance of China for German MNCs is the efforts they make to emphasise their long history in the Middle Kingdom. This year, Lufthansa have been celebrating the 88th anniversary of their first flight to China, while BASF have been publically recalling how they sent a manager to China in 1885 with the aim of seeking opportunities for the company. “At the time, China was a new market on a largely unknown continent. There was real pioneer work to be done. Today, we are the largest foreign chemical investor in China,” said Martin Brudermüller, vice chairman of BASF’s Board of Executive Directors.

However, away from the large MNCs, German small and medium-sized companies (the so-called Mittelstand) are also significant in China. Of the companies who took part in the German Chamber of Commerce 2014 business confidence survey, 66 per cent had fewer than 250 employees on the Mainland. While few of these can date their time in the Middle Kingdom to before the 1980s, these firms do have a growing experience of 54

the China market. Of the total respondents to the survey, 80 per cent have been operating in China for over seven years.

Chinese investment Mittelstand companies back in Germany are also increasingly a target of Chinese outward FDI. Research published early this year by EY found that companies from China or Hong Kong bought 25 German firms in 2013, three times more than they had a few years earlier (and a figure matched within the EU only by the UK).

As a proportion of total FDI in Germany, China remains a small player, but it is growing fast. According to predictions by research firm Prognosis AF – using data from MOFCOM, China’s Ministry of Commerce – the flow of annual Chinese overseas FDI to Germany will quadruple by 2020, to reach USD2.2bn.

Some widely reported acquisitions of German “hidden champions” by Chinese firms include Putzmeister, a manufacturer of concrete pumps acquired by Chinese MNC Sany; electronics company Medion, taken over by Lenovo; and Kion, the largest forklift truck-maker in Europe, one of whose major stakeholders, Weichai Power, is a subsidiary of state-owned Shandong Heavy Industry. Such acquisitions bring with them a number of advantages for Chinese investors, such as technical know-how and much-desired patents. The reputation, both worldwide and especially in China, of German engineering is an additional bonus. Nonetheless, the benefits are not solely on China’s side: at a time when economic growth in Europe remains sluggish, additional sources of capital can be helpful, as can support for accessing Chinese markets.

There is certainly the political will on both sides for further increases in Chinese investment into Germany. The Chinese Ministry of Commerce have published a document entitled “Invest in Germany”, which has been described by the Bertelsmann Foundation as “reading like a marketing brochure of a German investment promotion agency”. The report explains how “Made in Germany” is a mark of quality, points to Germany’s world-famous consumer and industrial brands, draws attention to the deeply-rooted awareness of environmental

Claus Henkel, general manager of SSI Schaefer Automation Solutions

protection, and emphasises Germany’s reputation as a high-tech nation. The German side is also interested in Chinese investment.

In early 2014, German Vice-Chancellor and Economy and Energy Minister Sigmar Gabriel said at the opening ceremony of the Chinese Chamber of Commerce in Berlin that the German government welcome Chinese investors and would make efforts to dissolve public scepticism.

Such investment and overall business prospects between China and Germany have been strengthened by improvements in the transport and logistics links between the two nations. Lufthansa now offer daily direct flights from both Munich and Frankfurt to Beijing and Shanghai, as well as direct routes to a range of other cities across China including Nanjing, Chengdu and Qingdao. As German companies’ investments in China become more diversified, and as Chinese firms from across the country look to Germany, the numbers of flights and destinations seem set to increase. With trade in goods still a vital part of the Sino-German business relationship, a number of train lines between the two nations exist, including a thrice-weekly Chongqing-Duisberg route and a less-frequent Hamburg-Zhengzhou line. With trade between the two nations still growing, these routes are likely to become even more popular in the future.

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

ENTREPRENEUR PROFILE CO-PUBLISHED FEATURE

German Insight China, 80 per cent of people are myopic and need glasses, but this can be treated via laser vision correction. Dr Joergensen is proud that EuroEyes is the first clinic in China to be certified with SMILE technology instead of Lasik, which means the surgery only needs to be performed once and has a much lower risk than Lasik. China has a lot of people with very high myopia, and this can be corrected at EuroEyes by inserting ICL lenses, which are very popular.

Again, EuroEyes was the first clinic in China to offer this treatment, cementing its reputation as a pioneer of leading technology. In addition to these procedures, Dr Joergensen states that “trifocal lenses, which allow people to read, see far and see into the intermediary distance, will soon be coming to EuroEyes” - something that has not been seen before in China.

Sourcing quality, reliable healthcare is becoming increasingly important for those living in Shanghai, and EuroEyes has made a name for itself in the city providing state of the art German eye care. Dr Joern Joergensen, founder of EuroEyes clinic group, states that ‘until now, there have been no high end clinics in Shanghai, and most clinics are state owned’ and this was why he brought EuroEyes from Europe to China. EuroEyes originated in Germany and is one of the most popular clinics in Europe, with over 20 years of experience, promising the best doctors, technology and quality. In China, healthcare practices often find it hard to fulfil such promises, but EuroEyes are staying true to their roots, bringing high quality German eye care to the Chinese market, and establishing themselves as a totally different alternative to the local hospitals.

Dr Joern Joergensen, founder of EuroEyes SHANGHAI BUSINESS REVIEW

Dr Joergensen of EuroEyes noticed the high volume of Chinese patients visiting the many EuroEyes clinics in Germany and Denmark, and saw a space in the Chinese market for a German eye clinic. Since then, he has successfully established EuroEyes in Shanghai and Beijing, bringing German healthcare practices to China - Chinese patients no longer need to go on medical tourism trips to Europe or America. The Chinese population has significant eye problems and so desperately needs reliable eye care in the country.

The need for trustworthy, quality eye treatment also extends to expats living in China, who do not want to rely on local clinics.

EuroEyes has established itself in the heart of Shanghai in the Jin Mao tower to serve both domestic and international clients. The EuroEyes experience in their Shanghai and Beijing clinics rests on precision and pioneering technology, established in Germany and brought to the Chinese market. Dr Joergensen points out that ‘the Chinese traditionally trust Germans’ and EuroEyes is helping to bring this reputation to today’s Shanghai. German doctors, German technology and German quality are all highly desirable elements of eye care that are now accessible in Shanghai, and provide a reliable and trustworthy name and experience in the Chinese market.

The key features of EuroEyes which sets it apart from other eye care clinics in the city is their German doctors, German technology and German quality. Dr Joergensen points out that the clinic is operated by solely German doctors, and EuroEyes’ doctors are all part of the German EuroEyes group and work part-time in China, ensuring they stay up to date with precise German practices.

The techno-logy and practices that the clinic uses is state of the art, yet well-established, ensuring that clients are not taking risks with their vision when trusting EuroEyes.

EuroEyes performs four types of operations in China: correctional treatment for presbyopia, cataracts, myopia and high myopia. Presbyopia is particularly prevalent in those aged 45 and over, and EuroEyes performs the highest number of correctional treatments for this condition in Europe. In

JANUARY 2015 www.sbrchina.com

55

*Wanna be our global partner? Please contact us

Belle Placenta Ampule Sheep placenta is typically used by consumers to produce clear and healthy skin, free of wrinkles and blemishes. Belle Placenta Ampule is specially designed to help reduce the wrinkle around the eye and mouth areas as well as lifting and whitening your facial skin.

It will visibly and dramatically improve your skin in 30 days. It makes your skin look younger and firmer.

Bee Propolis Another name for bee propolis is bee glue. It is a waxy, sticky substance that is naturally manufactured by bees and is said to have antifungal, anti-microbial, antiviral and anti-inflammatory properties. Bee propolis has an abundance of antioxidants called bioflavonoids, amino acids, minerals, vitamins and enzymes in it.

Liver Tonic A very famous liver herb, having been recommended for liver disorders since the late 1600â&#x20AC;&#x2122;s.The active ingredient in milk thistle is silymarin, thefunctions of which include: altering the outer membrane of liver cells, preventing toxic substances from entering t h e l i v e r, s t i m u l a t i n g t h e regenerative capacity of the liver by increasing ribosome synthesis, clearing free radicals from the liver.

*Wanna be our global partner? Please contact us

LAW & TAX

Regulatory Update New legal and tax developments affecting foreign invested enterprises in Shanghai.

Provided by CCH China

Legal News

Supreme Court Releases Provisions on Jurisdiction of Beijing, Shanghai and Guangzhou IP Courts

Shanghai to Further Regulate Bulk Commodity Market Trading Administration in SHFTZ

On 3 November the Supreme Court held a press conference to release the Provisions on Jurisdiction for IP Courts in cities Beijing, Shanghai and Guangzhou, which mainly refers to case jurisdiction and the level of trials for IP courts, including jurisdiction of first instance, cross-regional jurisdiction, exclusive jurisdiction, jurisdiction of second instance, jurisdiction for appeals as well as jurisdiction for unclosed cases.

Three departments including the Shanghai Municipal Commission of Commerce have recently jointly released a circular to print and distribute the Administrative Rules for Bulk Commodity Market Trading in China (Shanghai) Free Trade Zone (Rules), which emphasises that market operators and their employees are banned from participating in market trading in any way.

Shanghai Releases New Housing Accumulation Fund Loan Policy

Shanghai FTZ Approves Six New Foreign Investment Measures in 2014

On 4 November the Shanghai Housing Accumulation Fund Management Centre released a new policy, clarifying that policies for the first housing loan shall be implemented for families that own a house, have settled their housing loans and are reapplying for a housing accumulation fund loan to purchase ordinary commercial housing to improve their living conditions. In addition, Shanghai will withdraw compulsory institutional guarantee charges for individual housing accumulation fund housing loans.

IP Issues in Pudong District Defined The Shanghai Municipal Government has recently released the Decision of the Shanghai Municipal Government on Issues Concerning Intellectual Property Matters in Pudong District (Decision), which is scheduled to be carried out on 1 January 2015.

According to the Decision, administrative processing of patent infringements, administrative penalty rights for profiteering through issuing false patent review reports and other illegal means, registration of foreign book publishing contracts, and filing of activities held for overseas copyright trading will be handled by the Pudong District Intellectual Property Administrative Department.

58

Tax & Finance News

According to the Shanghai Transport Administration Commission, nine measures to open up transport areas have been approved since the launch of the Shanghai FTZ, hereinto the following six new measures were approved in 2014: 1. Foreign businessmen are allowed to invest solely in the railway freight transportation business; 2. Foreign businessmen are allowed to undertake road freight traffic business through foreign cooperation; 3. Investors coming from Hong Kong, Macao and Taiwan are allowed to participate in entry-exit automobile freight transportation business in the form of joint ventures (where the proportion of shares shall not exceed 40%) or cooperation; 4. Foreign investors are allowed to undertake cargo handling for international sea carriage, international maritime container stations and storage yard business; 5. Foreign investors are allowed to participate in public international shipping agency business in the form of joint ventures and cooperations, where the proportion of shares held by foreigners is relaxed to 51%; 6. Foreign investors are allowed to undertake the construction and operation of local rail-

ways, bridges, ferries and stations in the form of solo investments.

State Council Releases Document to Promote the Development of Health Insurance On 17 November, the State Council released Several Opinions on Accelerating the Development of the Health Insurance Industry (Opinions). The Opinions proposes to enhance health insurance products and encourage commercial insurance agencies to actively develop health insurance products related to health management services. At the same time they ought to improve insurance coverage for medical practitioners, and support medical institutions and physicians to purchase medical liability insurance, where the medical liability insurance that a physician purchases applies to all practice locations.

Moreover, the Opinions emphasises the need to comprehensively promote commercial insurance agencies to undertake critical illness insurance for urban and rural residents, increase the governmentâ&#x20AC;&#x2122;s procurement of healthcare services, improve the cooperative mechanisms of commercial insurance agencies and medical and health organisations, and encourage medical and health organisations to cooperate with commercial insurance agencies and become designated medical institutions of commercial insurance agencies.

Shanghai FTZ's 10 Innovations in Tax Services to Extend to the Whole City Over the past four months, the implementation of innovative initiatives for ''tax network services'' that Shanghai FTZ began in June 2014 has achieved outstanding results and there are plans to progressively extend the pilot to the whole city.

Specifically, from 15 November, Pudong district will implement automatic tagging on the internet, while simultaneously implementing four other innovations in the whole city, and will

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

LAW & TAX

extend the six remaining innovations to the whole city from 15 December.

The ten innovations in “tax network services” bring about immediate tax treatment, and enable the first modern service industry electronic invoices to be issued, which extends the scope of electronic invoices beyond e-business. They also permit qualified VAT taxpayers to carry out quarterly online reporting, which will then cause an increase of about 900 million yuan in working capital for the relevant companies.

CIRC Strictly Regulates the Sale of Insurance Products On 18 November 2014, CIRC released the Circular of the China Insurance Regulatory

Commission on Strictly Regulating the Sale of Non-Insurance Financial Products (Circular), which clearly points out that the relevant financial supervisory authorities have banned insurance companies and professional insurance agencies from selling unapproved noninsurance financial products. Insurance companies and professional insurance agencies should meet the pre-sales qualification requirements of non-insurance financial products as stipulated by laws and regulations.

In addition, the Circular requires insurance companies and professional insurance agencies to carry out unified authorisation and centralised management for branches selling non-insurance financial products.

PBC to Cut the Benchmark Interest Rates of RMB Loans and Deposits for Financial Institutions and Expand the Deposit Interest Rate Floating Range PBC has decided, from 22 November 2014, to cut the benchmark interest rates of RMB loans and deposits for financial institutions. It has reduced the one-year benchmark lending interest rate by 0.4% to 5.6%; and the benchmark one-year deposit interest rate by 0.25% to 2.75%. Meanwhile to promote interest rate liberalisation reforms, the bank has changed the deposit interest rate floating range limit of financial institutions from 1.1 times the benchmark to 1.2 times. Other benchmark lending and deposit rates have also been adjusted, and it will degenerate the benchmark interest rate maturity level.

China Law & Reference PC: http://law.wkinfo.com.cn

Mobile: iPhone

Android

Product Value

With China Law & Reference, you can:

• Market leading coverage with a searchable library of over 4,800,000 laws, regulations and cases from a single source • Daily updating ensures currency of content • Bilingual daily news and case studies alerts keep users informed • Practical commentary and articles from respected expert authors adds relevant insight • Accurate English translation • Easy-to-use documents and templates

◆

Access all the laws, regulations, cases, articles, news and commentary by user-friendly search engine and Multi-dimensional filters quickly and accurately.

◆

Keep Track of the latest regulatory changes. Our dedicated team tracks regulatory changes and keeps you informed with bilingual Daily News Alerts on the latest regulatory developments, industry trends and breaking cases with sources and related information, emailed directly to you.

◆

Benefit from commentary by respected industry experts, providing valuable insight on laws and regulations, practice guidance, tips, templates, tools and examples.

◆

Utilise our quick and expert translation services. Wolters Kluwer’s dedicated translation team has a trusted reputation for translation excellence.

Key Features • Search platform that is intuitive and user-friendly • Multi-dimensional filters eliminate non-relevant results ensuring focused research • Powerful advanced search for more precise results • Accurate validity label for legislation • Convenient related material links helps reduce research time and cross-referencing errors • Free and customize homepage content to suit your needs

Scan it to get new regulations, hot cases and articles in law industry for free.

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

Apply For A Free Trial Now • Call toll-free number: 400 066 5518 • Email us at support@cchchina.com.cn or fax to 400 066 5518 • Log in to www.wkinfo.com.cn to access other vertical products

59

view OFFSHORE

The View Offshore New overseas tax developments Provided by Sovereign Trust (Hong Kong) Ltd

Credit Suisse ordered to pay USD1.8bn to finalise US guilty plea A US court accepted, on 21 November 2014, a guilty plea by Swiss bank Credit Suisse to close a criminal case in which it was accused of helping wealthy Americans avoid paying taxes. The bank was ordered to pay around USD1.8bn in fines and restitution.

Credit Suisse agreed to the payout as part of a more than USD2.6bn settlement with several government authorities.The payout includes a USD1.14bn criminal fine and a nearly USD667m payment to the Internal Revenue Service. An additional USD100m will be paid to the Federal Reserve and USD715m to the New York State Finance Department.

Microsoft to pay China USD137m for “tax evasion” It was reported on 23 November 2014 that the Chinese authorities have levied USD137m in back taxes and interest against an unnamed US multinational – understood to be Microsoft Corporation – in the first major case concerning cross-border tax evasion in the country.

According to an article published by China's Xinhua official news agency, a US multinational identified as “M” must pay the Chinese government RMB840m (USD137m) in back taxes and interest, as well as more than RMB100m in additional taxes a year in the future.

The report said “M” had reported losses for six years in China of more than RMB2bn while its competitors posted profits; the tax authorities concluded its behaviour was unreasonable. It said the US company admitted tax avoidance and its mainland subsidiary had agreed to pay the levy.

The article said "M” was one of the world's biggest 500 firms and had established a whollyowned foreign subsidiary in Beijing in 1995.

Microsoft is the only company that fits the given description.

According to its fiscal 2014 annual report, Microsoft's overall effective tax rate was 21 per

cent - well below the standard US corporate rate of 35 per cent - primarily because it channels earnings through "foreign regional operations centres" in countries Ireland, Singapore and Puerto Rico.

G20 leaders back drive for transparency on beneficial ownership The Group of 20 leading nations published, on 16 November 2014, a set of principles to enable governments to find out who is the beneficial owner of shell companies. The commitment will intensify pressure to address the issue of corporate secrecy, which has moved up the political agenda as part of the crackdown on tax evasion and illicit financial flows following the financial crisis.

“We endorse the 2015-16 G20 anti-corruption action plan,” said the G-20 leaders in the final communiqué following their summit in Brisbane. “We commit to improve the transparency principles of the public and private sectors, and of beneficial ownership, by implementing the G20 high-level principles on beneficial ownership transparency,” it added.

Leaked documents detailing Luxembourg’s corporate tax deals published The International Consortium of Investigative Journalists, a global network based in the US, published, on 5 November 2014, leaked documents describing the Luxembourg tax arrangements of more than 340 multinationals.

Having examined nearly 28,000 pages of documents concerning special tax deals granted by the Luxembourg tax authorities, the ICIJ said its findings showed how hundreds of companies had funnelled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes. “In some instances, the leaked records indicate, companies have enjoyed effective tax rates of less than 1 per cent on the profits they’ve shuffled into Luxembourg,” it said.

Singapore to adopt OECD information exchange standard by 2018 Finance Minister Tharman Shanmugaratnam said, on 4 November 2014, that Singapore would implement the OECD’s new global standard on Automatic Exchange of Information (AEOI) by 2018, provided certain conditions were met.

"There must be a level playing field among all major financial centres, including Hong Kong, Dubai, Switzerland and Luxembourg, to minimise regulatory arbitrage," he said in a written response to a parliamentary question.

Tharman also said Singapore would only agree to exchange information with countries that can ensure the confidentiality of the data they provide and offer reciprocity. "These conditions are necessary to make sure that we continue to respect legitimate expectations for taxpayer confidentiality," he said.

In October, finance ministers and tax chiefs from 51 countries, including Luxembourg, signed up to be "early adopters" of the new OECD standard. Singapore, Hong Kong, Switzerland and the United Arab Emirates were not among the signatories, although they have all signalled their intent to adopt the pact.

Singapore, which had more than USD1.4tr in assets under management at the end of 2013, brought in new rules last year to make tax evasion a criminal offence under its money laundering rules and has signed up to previous OECD standards on tax transparency.

For further information on how Sovereign can help your international tax planning, please contact: Joe Cheung, Managing Director Sovereign Trust (Hong Kong) Ltd. +852 2542 1177 email: jcheung@sovereigngroup.com Lilian Ling Li, Liaison Officer Sovereign Trust (China) Ltd. +8621 6103 7089 Email: lli@sovereigngroup.com

60

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

Directory

Directory of Services Providers Are you reaching your customers?

Hangzhou Branch Room 601, Heng Tong Building, 328 Yan An Road, Hangzhou City, Zhe Jiang Province 310006, PR China T: +86 571 8606 7600 中国杭州市延安路328号恒通大厦601室

Take out an enhanced entry and increase your exposure to thousands of potential clients.

Contact Sales@mk-media.net for further details.

INDUSTRY CATEGORIES Accounting AIRLINES AUTO & AUTO SERVICES BUSINESS CONSULTANTS CONSTRUCTION Exhibition venues HEALTH SERVICES HOTELS HUMAN RESOURCES RECRUITMENT & CONSULTING INSURANCE INTERNATIONAL COURIER SERVICES INTERNATIONAL SCHOOLs & LANGUAGE TRAINING

Accounting

IT SERVICES LAW FIRMS LOCAL COURIER SERVicES Logistics MARKet RESEARCH MISCELLANEOUS OFFICE FURNITURE & DESIGN MBA PROGRAMMES PROFESSIONAL TRAINING SERVicED ApartMEntS SERVICed OFFICES & BUSINESS CENTRES SPORTS CLUB

AUTO & AUTO SERVICES

AVIS Car Rental and Leasing Co.,Ltd 1387 Changning Road, Shanghai 200051 T: 400-882-1119 上海市长宁路1387号

388 Hongbaoshi Road, Changning District, Shanghai T: +86 21 6053 4311

BUSINESS CONSULTANTS

上海长宁区红宝石路388号

Sovereign Trust (China) Limited.

Level 29, Shanghai Kerry Centre, No. 1515, Nanjing West Road, Shanghai 200040 T: 6103-7089 上海南京西路1515号嘉里中心29楼

Exhibition Venues Shanghai United Family Hospital

1139 Xianxia Road, Changning District, Shanghai 200336 24-hour Emergency: 021 2216 3999 T: 021 2216 3900/400 639 3900 上海市长宁区仙霞路1139号

Huashan Pudong Hospital International Division - Managed by United Family Healthcare

525 Hongfeng Road, Ground Floor, Area A, Jinqiao, Pudong District, Shanghai 201206 T: 021 5030 9907

Macau No.367, Avenida da Praia Grande, "Keng Ou" Commercial Building #16, A & B, Macau T: +853 2835 5015

上海市浦东新区红枫路525号一楼A区

澳门南湾大马路367号京澳商业大厦16楼AB座

United Family Minhang SRC Clinic ShanghaiMart

No 2299, West Yan’an Road, Shanghai 200336 T: 2325-5282 LehmanBrown International Accountants Beijing 6/F, Dongwai Diplomatic Building, 23 Dongzhimenwai Dajie, Beijing 100600 T: +86 10 8532 1720 北京朝阳区东直门外大街23号东外外交办公 大楼602室

Shanghai Room 1501 & 1504, WanTai International Building, No.480 North Urumqi Road, Shanghai 200040 T: +86 21 6249 0055 上海市静安区乌鲁木齐北路480号万泰国际大厦 1501&1504室

Guangzhou Room 3317, China Shine Plaza, 9 Lin He Xi Road, Guangzhou 510610 T: +86 20 2205 7883 广州市林和西路9号耀中广场3317室

Tianjin Unit 2901 - 104, The Exchange Tower 2, 189 Nanjing Road, Heping District, Tianjin 300051 T: +86 22 2318 5056 天津市和平区南京路189号津汇广场2座29层 2901-104室

Shenzhen Room 3206, News Building 2, Shennan Middle Road T: +86 755 8209 1244 深圳市深南中路2号新闻大厦3206室

Hong Kong Unit 1902, 19/F, Asia Orient Tower, 33 Lockhart Road, Wanchai, Hong Kong T: +852 2426 6426 香港湾仔骆克道33号中央广场汇汉大厦19楼 1902室 SHANGHAI BUSINESS REVIEW

St. Michael Hospital

上海市延安西路2299号

HEALTH sERVICES SBA Stone Forest Corporate Advisory Shanghai Branch

Shanghai Racquet Club, Ground Floor Clubhouse, Lane 555, Jinfeng Road, Huacao Town, Minhang District, Shanghai 201107 T: 021 2201 0995 上海市闵行区华漕镇金丰路555弄上海网球俱乐部内

United Family Quankou Clinic

8 Quankou Road, Changning District, Shanghai 200336 T: 021 2216 3900/400 639 3900 Dental appointments: 021 2216 3909 上海市长宁区泉口路8号

5th Floor, Yangtze Center, No. 2111 Yan'an Road (West), Changning District, Shanghai 200336, PR China

HOTELS

中国上海市长宁区延安西路2111号扬子中心5楼

www.sbasf.com Beijing Branch Room 2102, Block B, Office Park, No. 10 Jintong Road (West), Chaoyang District, Beijing 100020, PR China 中国北京市朝阳区金桐西路10号远洋光华国际大 厦B座2102室, 邮编：100020

Shenzhen Branch Room 701 & 710, New World Centre, No. 6009 Yitian Road, CBD Futian District, Shenzhen 518038, PR China T: +86 755 8381 7600

Tel：400 720 7999 EuroEyes Shanghai

5S-(05-11) , J-Life Center, Jin Mao Tower, No. 88 Century Avenue, Pudong, Shanghai, China 上海市浦东新区世纪大道88号金茂大厦裙楼 五层5S-(05-11)

www.euroeyes.cn

中国深圳市福田区益田路6009号新世界商务中心 701、710室

DoubleTree by Hilton Jiaxing

688 Ju Xian Road, Xiu Zhou District, Jiaxing , Zhejiang Province, China T: +86(0573) 82666666 中国浙江省嘉兴市秀洲区聚贤路688号

Chengdu Branch Room 2002, Yanlord Landmark Plaza, No. 1, Section 2, Renmin Road (South), Jinjiang District, Chengdu 610020, PR China T: +86 28 8667 7621 中国成都市锦江区人民南路二段1号仁恒置地广 场写字楼2002室

Suzhou Branch Room 903, Building 1, Genway Tower, No. 188 Wangdun Road, Suzhou Industrial Park, Suzhou 215028, PR China T: +86 512 6292 0081 中国苏州市苏州工业园区旺墩路188号建屋大 厦1幢903室

JANUARY 2015 www.sbrchina.com

Shanghai Redleaf International Women’s Hospital

No.1209 Middle HuaihaiRoad(near DonghuRoad), Xuhui District.24-hour appointment Hotline:6196-3333.

E-mail: marketing@redleafhospital.com 上海徐汇区淮海中路1209号 www.redleafhospital.com

Grand Mercure Shenzhen

Zhuzilin, Shennan Boulevard, Futian District, Shenzhen 518040 P.R China T: (86 755)8350 0888 中国深圳市福田区深南大道竹子林 61

Directory Hyatt Regency Chongqing

11 Paradise Walk, Jiangbei District, Chongqing, Chongqing, People's Republic of China 400020 T: +86 23 6775 1234

Finance Centre, No. 8 Century Avenue, Pudong Shanghai, China 200120.

T: 6062 3000

Emerging Asia Group

153 Jumen Road, Block 8, Suite 301, Luwan district, Shanghai 200030 T: +86 21 6191 1101

上海市浦东新区世纪大道8号国际金融中心大厦2座8层

上海市黄浦区局门路(近丽园路)153号8号楼301室

中国重庆江北区北城天街11号重庆富力凯悦酒店

www.emerging-asia.com

Synovate Business Consulting

Kerry Hotel Pudong, Shanghai

5/F., World Trade Tower, 500 Guangdong Lu, 200001 T: 6132-0170

No. 1388 Hua Mu Road, Pudong, Shanghai, 201204 T: (86 21) 6169 8888

SCIS - Hongqiao Main Campus

上海浦东新区花木路1388号

1161 Hongqiao Road, Shanghai, China 200051

www.thekerryhotels.com

上海广东路500号世界贸易大厦5楼

MBA Programs

上海虹桥路1161号200051

T: 86-21-6261-4338

Robert Walters China

36/F Tower 2, Jing An Kerry Centre, No.1539 West Nanjing Road, Shanghai, 200040 T: +86 21 5153 5888 上海市南京西路1539号静安嘉里中心办公楼 二座36层 200040

Talent-Spot MGM Grand Sanya

Yalong Bay National Resort District, Sanya 572000, Hainan P.R. China Tel: +86 898 8863 9999 中国海南省三亚市亚龙湾国家旅游度假区

www.thekerryhotels.com

Okura Garden Hotel Shanghai

Hua Min Empire International Plaza Unit 12J, No.726 West Yan’An Road, Changning District, Shanghai T: 021-52389290 上海长宁区延安西路726号华敏翰尊大厦12 楼J座

INSURANCE

No. 58 Maoming Road (S.), Shanghai 200020 T: 6415-1111

Pacific Prime

上海茂名南路58号

上海市徐汇区淮海中路1329号云海大厦19 楼

19th Floor, Yunhai building, 1329 Middle Huai Hai Rd, Shanghai T: 400 920 0755 www.Pacificprime.cn/en

INTERNATIONAL SCHOOLS AND LANGUAGE TRAINING

British International School Shanghai Puxi Campus Sheraton Shanghai Pudong Hotel & Residences No. 38 Pujian Road, Shanghai 200127 T: (86)(21) 5089 9999 上海浦建路38号

Wyndham Grand Plaza Royale Hangzhou

No 555 Fengqi Hangzhou, 310006 CN T: 86-571-87616888 杭州市凤起路555号

HUMAN RESOURCESRECRUITMENT & CONSULTING

111 Jinguang Road, Huacao Town, Minhang.

201107 T: 5226 3211 Email: admissions@bisspuxi.com www.bisspuxi.com 上海闵行区华漕镇金光路111号201107

Pudong Campus

600 Kang Qiao Ban Dao, 2729 Hunan Road, Pudong 201315 T: 5812 7455 Email: admissions@bisspudong.com www.bisspudong.com 浦东新区沪南公路2729号康桥半岛600号 邮 编 201315

kellyservices.cn

Michael Page

11F Tower 2, Jing An Kerry Centre, No. 1539 West Nanjing Road, Shanghai, 200040 T: 3222 4758 上海市南京西路1539号静安嘉里中心2座11层

Level 8, Tower 2, Shanghai International

SCIS - Pudong Lower School

800 Xiuyan Road, Kangqiao, Pudong, China 201315 上海浦东康桥秀沿路800号201315

SCIS - Pudong Upper School

198 Hengqiao Road, Zhoupu, Pudong • Shanghai, China 201318 上海浦东周浦横桥路198号201318

T: 86-21-5812-9888

Hangzhou International School

78 Dongxin Street,Bin Jiang District, Hangzhou 310053

International Business School Suzhou at XJTLU

Xi’an Jiaotong-Liverpool University, 111 Ren’ai Road, Dushu Lake Higher Education Town, Suzhou, Jiangsu Province, P R China, 215123 T: +86 (0)512 8816 1700 江苏苏州工业园区独墅湖高教区仁爱路111号，西 交利物浦大学

杭州滨江区东信大道78号310053

T: 86-571-8669-0045 www.scis-his.org

Shanghai Singapore International School MinHang Campus (Preschool / Primary / Secondary/ High School) 301, Zhu Jian Road, MinHang District, Shanghai PRC 201106 Tel : 8621-62219288 Fax :8621-62216276 上海闵行区朱建路301号

XuHui Campus (Preschool / Primary) 1455, Hua Jing Road, XuHui District, Shanghai PRC 200231 Tel : 8621-64965550 Fax : 8621-64965071 上海市古北新区华泾路1455号

Yew Chung International School of Shanghai

18 West Rong Hua Road, Gubei New Area, Shanghai 201103 T: 8621-6219 5910 x 222

英国曼彻斯特商学院 中国中心 Manchester Business School The University of Manchester

Suite 628, 6/F| 1376 Nanjing Road West Shanghai 200040 T: +86 (0) 21 6279 8660 上海南京西路1376号上海商城628室

The Henley Flexible Executive MBA in Asia Henley Business School, University of Reading 2501, Tai Tung Building, 8 Fleming Road, Wanchai, Hong Kong T: +852 2529 9377

香港湾仔菲林明道8号大同大厦25楼01室恒睿国 际商学院

www.henley.asia

CBC Building, 49A Wuyi Road, Shanghai 200050 T: 021 5155 2000

Kelly Services

上海市徐汇区淮海中路1010号嘉华中心1705-1706室

T: 86-21-6295-1222

CBC Marketing Research

上海市南京西路1717号会德丰国际广场3001

Unit 1705-1706, K.Wah Center, No. 1010 Huai Hai Middle Road, Xu Hui District, Shanghai 200031 T: 86-21 5403 1333

上海虹桥路2212号200336

MARKET RESEARCH

Unit 3001, Wheelock Square, No. 1717 West Nan Jing Road, Shanghai, 200040 T: +86 21 2322 9600

上海市四川北路中信泰富申虹广场1350号9楼901单元

2212 Hongqiao Road, Shanghai, China 200336

上海市古北新区荣华西道18号

Hays Recruiting Experts Worldwide

Unit 901, CITIC Plaza Shenhong, No.1350 Sichuan Road (N), Shanghai PRC 200080 T: 86-21 5240 0840

SCIS - Hongqiao ECE Campus

www.concordiashanghai.org

上海市武夷路49号A幢CBC大楼

Concordia International School Shanghai

999 Mingyue Road, Jinqiao, Pudong Shanghai 201206 T: +8621 5899 0380

UBC IMBA

Room 104, South Building, 535 Fahua Zhen Rd, Shanghai, PRC, 200052 T: (86) 21 5230 1552

上海浦东金桥明月路999号

上海市长宁区法华镇路535号南楼104室

EF Corporate Language Training

1/F Jinling Haixin Building 666 Fuzhou Road, Shanghai T: 6133-6318 上海福州路666号金陵海欣大厦1层英孚企业培训

GIA Business Consulting (Shanghai) Co., Ltd

PROFESSIONAL TRAINING CONCHIUS (Shanghai) Ltd

Unit 2602, 26th Floor, UPI Plaza, No. 1158, Jiangning Road, Shanghai 200060, P.R. China

27F-G, Liang Feng Building, No. 8 Dong Fang Road Shanghai 200120 T: +86 21 5888 3170

上海市江宁路1158号友力国际大厦26楼2602室

上海市浦东新区东方路8号良丰大厦27F座

T: +86 21 6279 0197 www.globalintelligence.com

62

SHANGHAI BUSINESS REVIEW

JANUARY 2015 www.sbrchina.com

Directory

C

Room 9H, Ladoll International Bldg., No. 831, Xinzha Road, Jing An District, Shanghai 200041 T: 5228-2950

Y Regus Shanghai Centre 雷格斯上海商城

中心 [NEW]

5/F, West Office Tower, No.1376 NanjingCM Road West, Jing’an District

上海静安区新闸路831号丽都新贵9楼H座

SERVICED APARTMENTS Central Residences II 1038 Hua Shan Road, Shanghai 200050 T: (8621) 6226 - 6633

Park View Apartment

上海市华山路1038弄嘉里华庭二期

E-mail: centralresidences.SH@ kerryprops.com Fraser Suites Guangzhou

OneLink Walk, 232_2, Tianhe Road, Tianhe District, Guangzhou, China 510620 T: +86 20 2863 0800 中国广州市天河区天河路232号之二万菱汇广 州辉盛阁国际公寓

M

Regus Shanghai (26 Locations)

New Concept Mandarin

上海市静安区南京西路1376号上海商城5层

MY

Regus Plaza 66 雷格斯恒隆广场中心

CY

15/F, Tower 2, No.1266 West Nanjing Road, CMY Jing’an District

Block 1-4, No. 888 Changning Road Shanghai, 200042 T:+86 21 5241 8028

上海市静安区南京西路1266号恒隆广场二座 K 15层

上海市长宁路888弄兆丰嘉园园景公寓1-4号楼

31/F, 88 Shiji Avenue, Pudong Lujiazui

THE ONE Executive Suites managed

by Kempinski - Shanghai No.601 Fengyang Road (Nanjing Road), Shanghai, 200041 T:+86 21 61571688 http://www.kempinski.com/shanghai 上海市凤阳路601号（南京路）

Reservation toll free number 400 610 6808

Regus Jin Mao Tower雷格斯金茂大厦中心 上海市浦东新区世纪大道88号金茂大厦31层

Regus Aurora Plaza 雷格斯震旦国际大 楼中心

11/F, No.99 Fucheng Road, Pudong Lujiazui 上海市浦东新区富城路99号震旦国际大楼11层

Regus Shanghai Bund Centre 雷格斯

上海市静安区南京西路1788号1788国际中心9层

Regus One Corporate Avenue 雷格斯上 海企业天地中心

15/F, No.222 Hubin Road, Huangpu District

Fraser Suites Top Glory Shanghai No.1, Lane 600 Central Yincheng Road, Luijiazui, Pudong New District, Shanghai 200120 T: 6378-8888 上海市浦东新区陆家嘴银城中路600弄1号

Fraser Residence Shanghai

No. 98 Shouning Road near HuaiHai Middle Road, Shanghai 200021 T: 2308 0000

Windsor Place Service Villas

2222 Jianhe Road, Changning District, Shanghai 200336 T: 86-21-6262-8118 上海市长宁区剑河路2222弄温莎豪园

SERVICED OFFICES & BUSINESS CENTRES

上海市寿宁路98号近淮海中路

Level 23, 5 Corporate Avenue No.150 Hubin Road, Huangpu District, Shanghai

The Executive Centre – K.Wah Center

9/F, 1788 Nanjing West Road, Jing’an District

sales.frshanghai@frasershospitality.com

The Executive Centre – 5 Corporate Avenue

上海黄浦区湖滨路150号企业天地5号23楼

国际中心

+86 21 2308 0000

上海市浦东新区世纪大道8号 上海国金中心二期8楼/ 36楼

18/F, 222 Yan’an Road East, Huangpu District

Regus Shanghai Eco City 雷格斯1788 GOLD-STANDARD

Level 8 & 36, International Finance Center Tower II, No.8 Century Avenue, Pudong, Shanghai

外滩中心 上海市黄浦区延安东路222号外滩中心18层

SERVICED RESIDENCES

The Executive Centre – International Finance Center

Level 27, K. Wah Center, No.1010 Middle Huaihai Road, Xuhui District, Shanghai

上海市徐汇区淮海中路1010号嘉华中心27楼

The Executive Centre – CITIC Square

Level 42, CITIC Square No.1168 West Nanjing Road, Jing’an District, Shanghai

上海市黄浦区湖滨路222号企业天地一号楼15层

上海市静安区南京西路1168号中信泰富广场 42楼

Regus Raffles City 雷格斯来福士广场中心

The Executive Centre – Xintiandi

51/F, No.268 Xizang Zhong Road, Huangpu District 上海市黄浦区西藏中路268号来福士广场51层

Regus Shui On Plaza 雷格斯瑞安中心

12/F, No.333 Huaihai Road Middle, Huangpu District 上海市黄浦区淮海中路333号瑞安广场12层

Regus ICC 雷格斯上海环贸广场中心

Level 5, Xintiandi No.159 Madang Road, Huangpu District, Shanghai 上海黄浦区马当路159号新天地5楼

The Executive Centre - Chong Hing Finance Center Level 12, Chong Hing Finance Centre No.288 West Nanjing Road, Huangpu District, Shanghai

7/F, No.999 Middle Huaihai Road, Xuhui District

上海黄浦区南京西路288号创兴金融中心12楼

上海市徐汇区淮海中路999号上海环贸广场7楼

Level 20, The Center No.989 Changle Road, Xuhui District, Shanghai

The Executive Centre – The Center

上海徐汇区长乐路989号世纪商贸广场20楼

The Executive Centre, Guangzhou HNA Tower, Level 10 8 Linhe Zhong Road, Tianhe District Guangzhou 510610, P.R.China T:+86 20 2831 7333

Jumpstart Business Centre Kerry Residences, Jing An Kerry Centre 1515 Nanjing Road West, Shanghai 200040 T: (8621) 62791515 上海市南京西路1515号 静安嘉里中心

Enquiry: Kerryresidences.SH@kerryprops.com

Lanson Place Jin Qiao Serviced Residences

No. 18, Lane 399 Zao Zhuang Road, Pudong New District, Shanghai 200136 T: (86) 21 5013 3888 上海市浦东新区枣庄路399弄18号

E-mail: enquiry.lpjq@lansonplace.com

25F, Wheelock Square, 1717 Nan Jing W. Rd/ HuaShan Rd, Jing’An, Shanghai 上海市静安区南京西路1717号会德丰广场25 楼/近华山路

25F, Central Plaza, 381 HuaiHai M. Rd/ MaDang Rd, Lu Wan, Shanghai 上海市卢湾区淮海中路381号中环广场25楼/ 近马当路

15F, L’Avenue, 99 Xianxia Rd / Zunyi Rd, Changning, Shanghai 上海长宁区仙霞路99号尙嘉中心15楼 / 近遵义路

T: 400-1199-775

Lanson Place Jinlin Tiandi Serviced Residences No. 3, Lane 168 Xingye Road, Luwan District, Shanghai 200020 T: (86) 21 2306 1888

广州市天河区林和中路8号海航大厦10楼

Servcorp At the Bund

5th Floor Somekh Building, Bund, 149 Yuanmingyuan Road, Huangpu District Shanghai 200002 中国上海黄浦区圆明园路149号外滩哈密大 楼5楼

Servcorp, Citigroup Tower

Level 23, Citigroup Tower33, Huayuanshiqiao Road, Pudong, Shanghai 200120

E-mail: enquiry.lpsh@lansonplace.com No.28 Jiaogong Lu, Hangzhou 310012 T: 0571-8899-3131 Ext.72 浙江省杭州市教工路28号310012

Servcorp, Kerry Center

SPORTS CLUBS

Oakwood Residence Shanghai

103 Wuning Road, Putuo District, Shanghai 200063 T: 6183-0830

Servcorp, Fortune Financial Center Regus Serviced Office

· Flexible office leases from 1 Day to 1 Year · Quick and easy to set up from 1-200 people · Prices from RMB 180 per month · Find more on regus.cn

上海市普陀区武宁路103号 SHANGHAI BUSINESS REVIEW

Kerry Plaza Tower 2, Level 15 1 Zhong Xin Si Road, Futian District Shenzhen 518048, P.R.China T: +86 755 3304 3333

中国深圳市福田区中心四路1号嘉里建设广场 2座15层

中国上海市静安区南京西路1515号嘉里中心29楼

Oakwood Residence Hangzhou

广州市天河区天河路385号太古汇一座7-02室

The Executive Centre, Shenzhen

中国上海浦东花园石桥路33号花旗集团大厦23楼

Level 29 Shanghai Kerry Centre, 1515 Nanjing West Road, Jing An District, Shanghai 200040

上海市卢湾区兴业路168弄3号

Taikoo Hui Tower 1, Level 7-02 385 Tianhe Road, Tianhe District Guangzhou 510620, P.R.China T: +86 20 2886 1555

Kerry Sports

1388 Hua Mu Road, Pudong, Shanghai, 201204 T: (86 21) 6169 8858 上海市浦东新区花木路1388号

Level 26, Fortune Financial Center,No. 5, Dong San Huan Zhong Road Chaoyang District, Beijing, 100020 China

www.kerry-sports.com

中国北京市朝阳区东三环中路5号财富金融中心 26层邮编：100020

Transhorsa

TRANSLATORS & INTERPRETERS 2601 Xietu Road, T1-16D Gateway Plaza, Shanghai 200030 T: 3319-7968 上海斜土路2601号嘉汇广场T1-16D室

JANUARY 2015 www.sbrchina.com

63