developing infrastructure for the chinese...

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Developing Infrastructure for the Chinese Century

• Germany’s Energy Transition Needs Necessary Adjustments • The Shanghai FTZ: Opportunities and Challenges for Hong Kong

Issue I 2014

Dear Members,

As I write this, we are well into the Year of the Horse, which I hope has started well for you.

Taking a look back on the year 2013, the Chinese Ministry of Commerce announced that exports amounted to 13.72 trillion yuan, up by 7.9 percent compared to the previous year. However, growth is slowing down as a consequence of rising labour costs, a stronger yuan and less global demand. In the meantime, Germany is faced with an export surplus higher than ever before and export is stagnating. So for the forthcoming year, China as well as Germany – the current and the former export world champion – are presented with their own respective challenges.

In one area however there are no signs of demand slowing down. Tourism is booming in China, and in recent years China not only surpassed Germany in terms of export revenue, but has also taken the lead in tourism. No other nation spends more on overseas trips than the Chinese, amounting to a total of 2.95 trillion yuan in 2013 from the more than 90 million outbound tourists, a figure expected to rise to 1.7 billion trips by 2030, according to a recent Trip Advisor report.

More and more Chinese are able to afford the luxury of overseas travel, and the destinations go beyond the Asian realms: The USA and Europe are highly popular with the Chinese and their predilection for group tours. But what does this mean for Germany? Sooner or later, China will become Germany’s most important source market in Asia whilst Germany may have been slower in recognising the huge potential of the Chinese tourism market. The majority of the revenue produced in Europe by Chinese travellers still passes by Germany. Still, much is being done to bridge the gap. GNTB lists one of their objectives as “positioning Germany as a diverse and attractive travel destination”. No doubt that Germany offers one of the most diverse geographical and cultural landscapes for visitors, and many new initiatives are in place to promote tourism in Germany. One could argue that Germany’s diversity makes it somewhat difficult to wrap up in neat little package with a clear national identity. Still, the potential is great, the stakes are high, but the competition is strong. Not least of which is from France where new fast track visa rules for Chinese tourists are expected to further cement their position as the leading European destination.

The staggering growth in Chinese outbound travel and the power of the yuan have changed for good the way in which European countries promote themselves as tourism destinations. One area though that hasn’t changed is aviation, still the most vital link, continually contributing to global economic development and cultural exchange. Long may it continue.

Yours sincerely,

Mr. Andrew BunnGeneral Manager, Hong Kong, Taiwan & MacauLufthansa German Airlines

Published byGerman Industry and Commerce Ltd. (GIC) / German Chamber of Commerce, Hong Kong (GCC)3601 Tower One, Lippo Centre89 Queensway Hong KongTel.: +852 2526 5481 Fax: +852 2810 6093General Email: [email protected] Website: www.hongkong.ahk.de

PublisherMr. Ekkehard Goetting

Editor-in-ChiefMs. Monica Murjani

EditorMr. Nicolas Dvorak

ContributorsMr. Gerhard AicherMr. Andrew BunnMs. Katerina KolevaMs. Fiona Paterson

Design and ProductionMr. Sam Ho

Advertisers in this issueLogwin Air & Ocean Far East Ltd.Lufthansa German AirlinesPro. Q. C. System Far East Ltd.Sixt GmbH & Co. KGTutima (H.K.) Ltd.

©2014: German Industry and Commerce Ltd. / GCC. No part of this publication may be reproduced without the publisher’s prior permission. While every effort has been made to ensure accuracy, the Publisher is not responsible for any errors. Views expressed in GC.comm are not necessarily those of GIC/GCC.

| www.hongkong.ahk.de / www.china.ahk.de | Issue I 2014 | 1

Chinese Tourists Heading West at a Gallop

German Chamber of Commerce, Hong Kong (GCC)

Committee Members for 2013-2014

PresidentMr. Horst F. GeickeFounding Partner

PAG

Vice-Presidents Mr. Ekkehard GoettingChairman & CEO

German Industry and Commerce Ltd.

Chairman

GIC Greater China (Taicang) Co. Ltd.

Mr. Günther S. RittnerSenior Advisor

ThyssenKrupp Elevator AGAsia Pacific Office

TreasurerMr. Eberhard BrodhageGeneral Manager

Commerzbank AG Hong Kong Branch

Committee MembersMr. Andreas BinderPresident & CEO

Mercedes-Benz Hong Kong Ltd.

Mr. Andrew BunnGeneral Manager, Hong Kong, Taiwan & Macau

Lufthansa German Airlines

Mr. Reinhold CarlManaging Director

Audi Hong Kong / Volkswagen Group Hong Kong Ltd.

Mr. Michael CiesielskiChief Executive Officer

MGB METRO Group Buying HK Ltd.

Mr. Klaus FestlManaging Director

Schmidt & Co., (Hong Kong) Ltd.

Dr. Michael FuchsMember of Parliament, Berlin

Mr. Mark HellmannPresident & CEO, Asia

Hellmann Worldwide Logistics Ltd.Asian Regional Headquarters

Mr. Hans Joachim IslerManaging Director

H.D. Isler & Co. Ltd.

Dr. Markus KramerPresident, Operating Division, Dispersions & Pigments

BASF East Asia Regional Headquarters Ltd.

Company SecretaryMrs. J. Wu-ScharsigPartner

Jennifer Wu-Scharsig, Solicitor

| 2 | GC.comm | Issue I 2014

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For more details, please contact

Ms. Karen Choi Tel.: +852 - 2532 1230 E-mail: [email protected]

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P.1 Editorial

ContentP.5 In Depth

• Developing Infrastructure for the Chinese Century

• In-Sight Interview with Ms. Fiona Paterson, Managing Director, a. hartrodt Hong Kong Ltd.

P.10 Special Report• The Blue Card:

For International Workers in Germany

P.11 Germany• Germany’s Energy Transition

Needs Necessary Adjustments

P.14 China• The Shanghai FTZ:

Opportunities and Challenges for Hong Kong

P.16 Hong Kong• Hong Kong Economic Outlook in 2014

P.18 GIC – Inside• Sourcing and Sales Services

P.20 GCC – Inside• Member Focus – The Hong Kong Polytechnic University• Member Update• New Members• Flashlights

P.39 Event Schedule

P.40 People • Mr. Gerhard Aicher, General Manager

The Mira Hong Kong

The images above are credited to: Andrea & Stefan (Wind Mills with red sky), Curt Smith (Shanghai skyscrapers), Chi King (HK harbour and ICC).

The cover picture is credited to: Michael Theis (Crossing highways, flickr.com).

Connotations of Beijing’s Infrastructure Policy First and foremost, the main goal of the recent infrastructure development programme, with its backing from the 12th five-year plan, is an economic one: Extending and improving the country’s infrastructural network serves to stabilise volatile growth rates and to open up economic potentials for further exploitation and development. Increasing interactions between cities through highways and high-speed railroads creates business opportunities that have not existed before, whereas the actual financial investment and following construction activities generate employment and demand for goods and services. Furthermore, a sound connectivity plays a crucial role in reducing trade and transaction costs, accelerating existing exchange circles, and boosting the competitiveness of business locations.

When worldwide demand for Chinese manufactured goods fell noticeably after 2008, the government started to follow the current strategy of investment-led growth combined with domestic saving schemes. Building up a physical infrastructure has been and still is the most important instrument in that context, stimulating inland bound potentials to balance export losses in China’s manufacturing industry. Increasing the connectivity of its domestic economy – whether inland or towards world markets – is another goal that Beijing wants to achieve. China’s much debated export miracle would not be possible at all if there was no underlying infrastructure that enables domestic migration of low cost workers, and efficient freight forwarding of goods to the ports.

Besides bringing China’s economy forward, the government’s current focus on infrastructure development also implies political and social considerations. By creating mass traffic corridors that significantly reduce travelling time such as the Beijing – Guangzhou High Speed Line, or the Beijing-Shanghai High Speed Railway, political administration and control can be practiced more effectively throughout a country that covers over 9.5 million square kilometres, and that nearly accounts for one fifth of the world’s population. According to an article of Global Rail News,

Having an effective infrastructure at one’s disposal is a condition and central factor in empowering a country’s economic and social rise. At the same time, improvements of infrastructure networks must also be understood as a result of economic development and the accumulation of funds. It therefore reflects the progress countries have already achieved, and paves the way for further development. For some years already, China has rapidly been extending and advancing all facets of its communication and transportation network; a strategy followed in order to stabilise the country’s growth rates, job creation, and intensify economic potentials.

Like much that led to China’s contemporary boom, the first co-ordinated, yet still somewhat tentative, attempts of infrastructure improvements began in the early 1970s, and especially gained momentum during Deng Xiaoping’s reform era beginning in 1978.

Large scale projects were made possible, mainly due to rural economic reforms generating a labour force surplus in the countryside that was ready to enter the industrial sector in the cities. Now that abundant man power was available, public spending and investments in the transportation sector accelerated and new roads, bridges, rail tracks, waterways, airports and harbours were constructed or upgraded.

This period of early infrastructure spending symbolised a return to normality after turbulent years that saw the devastating economic failure of the ‘Great Leap Forward’ as well as civil upheavals during Mao’s ‘Cultural Revolution’. But building streets and constructing railways did not change the fact that China’s rudimentary infrastructure grid was far from being substituted by substantial and effective transport solutions, and the unlocking of economic potentials remained blocked in most of the country’s regions.

Developing Infrastructure for the Chinese Century

| Issue I 2014 | 5| www.hongkong.ahk.de / www.china.ahk.de

per year, and its ridership reached 100 million by March 2013. More than 90 trains run on the line at a maximum speed of 300 kilometres per hour.

The route Beijing – Harbin’s last section is expected to be completed in 2015, while the last of the five sections of Hangzhou - Shenzhen will be finished this spring. Putting together Beijing – Harbin, Beijing – Shanghai and Hangzhou – Shenzhen, a massive transit corridor has emerged, covering nearly all of coastal China from Dalian in the North to Shenzhen in the South, and via XRL to Hong Kong respectively. The Hangzhou – Shenzhen traverse also bears special economic importance since it brings China’s two main business hubs (Pearl River Delta and Yangtze Delta) closer together.

Another very important traffic artery is The Shanghai – Wuhan – Chengdu High Speed Line (SWCHL) that stretches over 2.078 kilometres. Being the most important of the country’s four East – West corridors, it probably will be in service in early 2014, thus reducing travel time between Shanghai and Chongqing to ten hours, compared to 27 hours needed on conventional rail. Freight trains will also commute on its rails, underlining its economic significance in bringing goods from China’s inner provinces to the world’s busiest port in Shanghai.

Growing Number of Airports Running on DeficitsSimilar to railway infrastructure, China is currently investing heavily into its airfreight and air travel industry. A rising number of middleclass households stemming from China’s economic ascent led to increasing demand for domestic and international flight connections. According to an article published by the Centre for Aviation (CAPA), the General Administration of Civil Aviation of China has therefore announced that up until 2015 another 69 airports will be completed in order to match existing needs. In line with the principles of strengthening central governmental control laid out above, it is worth to note that most of these projects lie in the provinces of Xinjiang, Inner Mongolia, Tibet, Yunnan and Heilongjiang according to Centre for Aviation website. Airports are essential when it comes to logistically open up provinces such as Xinjiang, Tibet and Qinghai because their rough terrain aggravates the construction of streets and railroads. At the end of 2013, the number of civil airports in China was 193, ten more than in 2012. According to CAPA, 95 of these were located in the western part of the country, 49 in the eastern region, 29 in the central region, and 20 in China’s northeast.

The growth in airports across China, however, is accompanied by critical voices, stating that expansionism in the air industry is badly funded. As CAPA’s article points

that’s why the current construction of the Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL) is criticised by the anti-establishment camp in Hong Kong that fears an intensification of mainland influence. Lately, Beijing’s interest was especially attracted by infrastructure projects that connect the distant and ethnically diverse Western provinces with the country’s East. The central government’s engagement in airport construction in Tibet and Xinjiang must be understood in this context. Besides political functions such as the consolidation of governmental influence, social aims like a successive equalisation of living standards between the booming coastal provinces and the hinterland are expected to be achieved by bringing the country and its people ‘closer’ together.

Major Infrastructure Projects – Realised, Under Construction and Planned China’s high-speed railway grid is bringing the country closer together: Railways have been China’s most important modern means of transport since they were first introduced by Western powers at the end of the 19th century. Today, China has the world’s third largest conventional rail system, covering over 100,000 kilometres and carrying about a quarter of the world’s total workload. While it’s being permanently extended, the real boom takes place in the field of high-speed connections. Although being a ‘latecomer’, the country already possesses over 10,000 kilometres of high speed lines, and is said to plan having built 50,000 kilometres by 2020.

The Beijing – Guangzhou High-Speed Line (BGHL) was completed in 2012. With a total length of 2.298 kilometres, it is the world’s longest high speed line. According to information from the Term Report 2012-2013 published by The Greater Pearl River Delta Business Council, the BGHL offers immense time reductions by “cutting nearly 13 hours from the former rail ride” to only eight hours. It bears huge strategic relevance since it links the capital with Guangzhou, one of the country’s biggest and most important cities located in Guangdong province, China’s economic powerhouse. Stretching between north and south, it covers a total population of about 380 million.

Like the BGHL, the Beijing – Shanghai High Speed Line (BSHL) is running in a north – south direction, located along the coastline of Eastern China. A recently published article on railway-technology.com on BSHL gives an impression of the economic capacities and engineering achievements that China’s mega projects are able to realise: More than 85 per cent of the route is elevated, crossing the country’s two biggest rivers, the Yellow River and Yangtze. Among its 244 bridges is also the world’s longest, the Danyang-Kunshan Grand Bridge with 164 kilometres of length. The project raised annual freight capacities by 50 million tonnes


departments are in charge of detailed planning, design, construction – and financing.

Chinese Ports Dominate the World’s Top Ten ListFor many centuries, shipping goods via canals and rivers has been the preferred method of long distance trade in China. Today, despite huge quantities of goods and raw materials floating on rivers like the Yangtze or Yellow River, transportation on water has lost much of its former prominence to streets, railways and air-routes. Freight forwarding on water has mainly shifted into the realm of China’s external trade with the world. Here, container trade dominates the picture with significant wharves and sea ports being stringed to the shoreline like pearls on a chain. Seven of the ten busiest ports worldwide – namely Shanghai, Hong Kong, Shenzhen, Ningbo-Zhoushan, Guangzhou, Qingdao and Tianjin – are Chinese. Back in 2002 there were just three, a fact indicating nothing less than revolutionary progress and exorbitant spending must have took place.

Looking at Shanghai’s harbour back in 2002, about 8.6 million TEU (one TEU has roughly the volume of a 20 feet long standard container) were handled by its facilities, making it the world’s fourth busiest port already at that time. In 2005, a huge deep water terminal was initiated in Yangshan, an island located southeast of the Yangtze estuary. The terminal is partly built on ground gained by land reclamation and can serve all types of container carriers. Today, it accounts for 12 million out of Shanghai’s 32 million container movements. The range of economic stimuli it generates helps to illustrate why infrastructure investments are at the bottom of China’s growth strategy: Land reclamation, construction of port facilities, and of Donghai Bridge (the world’s longest sea bridge) linking it to the mainland, maintenance works, as well as regular operation of the port created massive employment and sustainable demand for materials and services, thus having a manifold impact on regional business activities.

What About the Costs of China’s Investment Spree? Supersize projects such as Yangshan terminal, which covers an area the size of many hundred soccer pitches and which literally was built into the sea – lead to the question of financial sustainability. And indeed, a closer look at China’s spending scheme reveals a somewhat troubling insight into the mechanics of funding that are at the bottom of the boom.

Financing infrastructure projects in China is mainly carried out by the respective provinces or municipalities, not by the central government. But since Chinese law prevents local

out “some 90 per cent of the country’s regional airports are operating at a loss, compared with around 50 per cent in Europe, which has become a global benchmark because of the wide variety of airport types that it hosts. 134 of the 182 airports under the control of CAAC reported accumulated losses of 2.9 billion Yuan (US$453.1 million) in 2012, equivalent to 20 million (US$3.1 million) in losses per airport. 2013 figures are expected to be similar.” Although unprofitable, their strategic significance by far exceeds economic disadvantages, and will ensure further investments into this sector.

Overland Transportation: Extending the NTHSThe total amount invested in infrastructure projects and civil engineering in the first half of 2013 summed up to about 160 billion euros, which represents a 21 per cent increase compared to the same period in 2012. Although investment in railroads and airports is substantial, building roads and highways accounts for the biggest share in the government’s total expenditure volume. Examining their geographical distribution in an article, the cement industry’s leading magazine Worldcement cites an expert: “The activities here are increasingly concentrated in the West of the country,” said Bernd Schaaf, Germany Trade & Invest (GTAI). The Chinese government also plans to promote economic growth inland, away from the booming coastal areas in the east of the country, in order to reduce the gap between the urban and rural communities. “Huge investment in transport and infrastructure is needed if this is to be achieved,” commented Schaaf.” Indeed, China’s proclamation of a “Go West” – strategy resulted in Western municipalities and provinces adhering to vast construction programmes, mainly streets and property development. Qinghai and Guizhou target investment scales that are even higher than their respective gross domestic products.

Today, China owns the world’s largest road network. This street grid is the backbone of its transportation system, facilitating the lion share of goods being moved. Yet equally to its railway segment, it was missing a network of high speed travelling for a long time. But then the realisation of a National Trunk Highway System (NTHS) has been announced in 1990, aiming to extend the then existing 147 kilometres of highway roads to 35,000 in 2020. In 2007, 13 years ahead of schedule, this parameter had already been achieved. In 2013 however, the total length of all highways belonging to the NTHS added up to 104,500 Kilometres. Like in other segments of infrastructure, the development of China’s road network is planned and supervised centrally in order to guarantee the government’s influence and align the infrastructure’s function with political interests. Accordingly, the State Council is entitled for overall planning and articulation of standards whereas local


authorities to raise funds directly, many of them turned to state–owned enterprises and ‘shadow banking’ to get loans. This rather unregulated method of financing and the lack of control affiliated with it necessarily resulted in huge debts, placing a severe burden onto local budgets. The manufacturing hub Jiangsu, for example, is said to be China’s most indebted province, facing up to 770 billion Yuan (about 95 billion euros) in outstanding short term loans according to estimates – others get ready to replace Jiangsu soon. Word spread that Sichuan province will engage in a 4.26 trillion Yuan spending programme (about 512 billion euros) bound for major infrastructural, industrial and other projects, comprising about 1.8 times the size of its gross domestic product (GDP) in 2012. Sichuan’s neighbour Guizhou is about to allocate up to three trillion Yuan (about 361 billion euros) for investments in over 200 projects, according to Taiwanese economic magazine Want China Times.

Meanwhile even the Ministry of Finance seems to not exactly know about the precise volume of debt that has been accumulated in the provinces. As Beijing would be the lender of last resort in case of a major credit crunch, the National Audit Office recently was ordered to investigate the situation and compile a detailed report. Rising debt ratios on provincial levels, especially if investments are unsound, can lead to ‘bubbles’ (especially in the area of speculative property construction that doesn’t match existing needs) and is capable of putting China’s financial stability at risk. On the other hand, an investment led strategy mainly based on loans is inevitable in order to support the already flattening GDP growth curve in the short term. With their limited finances, provinces are practically forced to incur debts and resort to land sells when unable to pay back their obligations. There is no easy way out, but economists point at the necessity to bring private capital into the market and thereby complementing established forms of financing by innovative products. Until now, private investors had been crowded out by the preferred treatment that state-owned financial vehicles enjoy.

OutlookAs we have seen, with the endorsement of the 12th five-year plan, China is investing much energy and vast sums of money to modernise, and extend all sectors of its infrastructure. This is an evolutionary process, in China’s economic and industrial development. Due to its immense population, vast dimensions and amplitude, the intensity and speed of changes is breath taking. China is currently building a base that facilitates further growth, and once it has fully developed infrastructures that fit demands, it will allow for an even higher efficient operation of its economy. Furthermore, this domestic investment may give rise for its population to benefit from the economic ascent and creating new middle classes. In the process, the central government should be aware of long term dangers that result from high debt levels and inefficient investment schemes that can lead to distortions especially in the property market. Going forth, the strategy to invest in further infrastructure will probably lay the fundament for China’s continual global power, a position it has held for many centuries. n

This article was based on following information sources provided by: www.globalrailnews.com, How high-speed rail will bring Hong Kong and China closer together; http://centreforaviation.com, Inside the world’s biggest airport construction projects in 2013/14; www.worldcement.com, Potential for the construction industry as China invests in transport infrastructure; www.wantchinatimes.com, Chinese municipal gov’ts to invest RMB20tn in infrastructure by Dai Rei-fen, Li Changan and Staff Reporter; The Greater Pearl River Delta Business Council Term Report 2012 – 2013 pages 36 – 38; The Consulate General of the Kingdom of the Netherlands Guangzhou Report, Understanding the PRD. Looking at the sector tendencies behind the economic power house of the Pearl River Delta in China; http://theloadstar.co.uk, Hong Kong must boost logistics facilities as competition on the mainland grows by Alex Lennane. The photo is credited to: Tauno Tõhk (www.flickr.com)


GC.comm: Being a representative of a company that is active in the transportation business, how would you comment on the state of infrastructure in Hong Kong, the Pearl River Delta and China? What has changed over the course of the years?

Ms. Paterson: The infrastructure developed in China over the last decade is impressive - ports, airports, highways, railways have been built or upgraded basically without stop. It is contributing massively to the competitive edge of China as business platform. China is no longer the cheapest in terms of production cost, but what makes difficult to migrate production elsewhere is the infrastructure China has developed. For Hong Kong it is a bit different because the high cost of land and scarcity of available areas are limiting the upgrade of the existing infrastructures.

GC.comm: How do you assess the region’s infrastructural grid and the improvements that are under way such as the Hong Kong – Zhuhai – Macau bridge?

Ms. Paterson: The bridge will shorten the distance between Western and Eastern Guangdong, transit of goods to/from Hong Kong may benefit from it however Hong Kong should evaluate the possibility to upgrade its logistics facilities starting from the airport and the debated need for a third runaway.

GC.comm: For several years already, Hong Kong and China have been following a strategy of closer economic and political co-operation. Can you describe how, if any, this policy has affected the infrastructure development and facilitated the logistics industry in Hong Kong and the Mainland?

Ms. Paterson: The privileged relationship of Hong Kong with China has allowed Hong Kong to become

the main world hub in terms of logistics, still today there is a very important quantity of goods to and from China to transit in Hong Kong as gateway. And the moment that Hong Kong port was no longer capable to handle the required volumes; Hong Kong terminal operator took the lead to develop port infrastructures in Shenzhen area.

GC.comm: China is rapidly improving all segments of its infrastructural network. Is there a specific segment that is of particular interest to a. hartrodt – for example the Beijing-Guangzhou railway link?

Ms. Paterson: Among various projects, we are interested about the development of the new airport in Beijing, and how the airfreight handling will benefit in North China.

GC.comm: If yes, please describe how this will affect a. hartrodt’s business?

Ms. Paterson: a. hartrodt has deployed investments and resources in developing its own network in North China with particular attention to the airfreight services, in this respect any upgrade in infrastructure and cargo handling capacity would be interesting for both our customers in the region and those overseas.

GC.comm: The ports in Hong Kong and China are among the busiest in the world. Can you describe (in rough percentage) the volume of your trading activity that goes through each of the ports that you use?

Ms. Paterson: 50% of our volumes are handled through the port of Shanghai while 30% of business is related to South China with Hong Kong and PRD counting equal figures. n

In-SightMs. Fiona Paterson

Managing Director

a. hartrodt Hong Kong Ltd.


The Blue Card

The European Commission has introduced the EU ‘Blue Card’, which is similar to the Green Card in the United States. The Blue Card makes it easier for businesses to employ overseas staff on a temporary basis.

The Blue Card entitles international workers to stay in any EU member state such as Germany in order to practice a gainful employment. It can be received by qualified employees coming from outside of the EU holding a university degree, as well as a German contract of employment requiring an annual salary of at least 46,400 euros gross salary. In occupation jobs, such as doctors and engineers, an annual income of 36,200 euros is sufficient to receive the Blue Card.

A prerequisite for obtaining the blue card is characterised by the fact that international workers are not allowed to work in Germany for longer than four years. However the Blue Card can be converted into a permanent residence permit after 21 or 33 months, and if the applicant also proves sufficient knowledge of the German language. After one and a half years, the blue card holder is allowed to move to other EU countries (e.g. UK, France or Spain). Also, family members may accompany the cardholder in order to work and live in one of the EU countries. Furthermore, the blue card holder can stay outside of the EU up to 12 months without losing their right of residence in Germany, having once received the Blue Card.

A Closer Look at the Bilateral Business Relation Between Germany and ChinaGermany represents one of China’s most important trading partners within the EU. Over the past 40 years (1972-2012), Sino-German economic relations have evolved into the great success story they are today. China is Germany’s second biggest export market outside Europe, after the United States, and was its fifth most important export market overall. In 2012, the main German exports to China were motor vehicles and vehicle parts (accounting for 29% of exports), machinery (25.3%), data-processing equipment, electrical and optical goods (8.8%), electrical equipment (8.7%) and chemical products (6.2%).

Due to the excellent business relationship between China and Germany, the EU Blue Card mainly addresses experts

and specialists coming from foreign countries like China to live and work in Germany. The requirements for foreign experts to obtain the Blue Card are defined in the way that they can actually be fulfilled. This makes the card more attractive than its previous models. Currently about 900 Chinese companies are active and employing international expats and engineers in Germany.

With the steady increasing importance of Asia generally and China in specific, a stay within the European Union and especially Germany as a career stopover in order to return back to China in higher positions is increasingly considered by many employees. The Blue Card really could develop into a German-Chinese success story, for both sides.

For the issuance of the EU Blue Card, the application must be submitted by the employees before coming to Germany in one of the representative offices in their home country. Please note: The final decision on being granted an EU Blue Card is made by the responsible municipal or district immigration offices. The municipal or district immigration office at the place of residence is responsible for foreigners who have held an EU Blue Card issued by an EU member state for at least 18 months. One can also apply for an EU Blue Card valid for Germany at the municipal or district immigration office responsible for your intended place of residence before your arrival in Germany. The application for an EU Blue Card has to be filed within one month after your arrival in Germany. The municipal or district immigration office at the place of residence is responsible for workers who are already residing in Germany and possess a residence permit, as well as for workers who are allowed to enter the country without a visa. n

This article was kindly provided by Ms. Katerina Koleva, Counselhouse, for further information or queries please contact at: Tel.: +49 (0) 6181 250 332, [email protected], www.counselhouse.hk. Counselhouse supports companies planning to expand their business operations in Germany by employing qualified and international workers and experts, including supporting international employees to benefit from the non-contributory family insurance – when relocating with their family to Germany.

For International Workers in Germany



Germany’s Energy Transition Needs Necessary Adjustments

When the modern ecological movement arose in the 1970s and 1980s, it successfully gained ground in both German states that existed at the time. Awareness for environmental issues and the principle of sustainability were propagated by its activists, and after the Green Party surprisingly entered the German Bundestag in 1983, it successively became part of the political mainstream. From the beginning, the anti-nuclear movement was an integral part of the social milieu out of which this newly established political camp arose.

Another milestone of environmental policy was laid in 2000, when the German Renewable Energy Act (Erneuerbare-Energien-Gesetz – EEG) came into force. Founded by the ruling Coalition of Social Democrats and Greens dealing with improved energy efficiency, renewable energies and sustainable development. The EEG that obliged Germany to turn to regenerative forms of energy generation in the years to come, and to successively phase out all of its nuclear plants. The mission to fundamentally change the energy supply mix Germany was embarking on, soon thereafter was branded ‘Energiewende’, a term that is often used by international commentators as well. In the years following the EEG, some achievements had been realised, but the speed of change was slow, and the direction of transitions rather unclear. The Energiewende was lacking

impetus and some critics began to doubt the promise that it will ever be fully achieved, especially after 2010, when Chancellor Merkel and her liberal coalition partners ordered the nuclear phase out to be stretched in time.

But the day came in March of 2011 that changed everything. Shortly after the catastrophic incidents in Fukushima happened, Chancellor Merkel ordered an inspection of the country’s 17 nuclear plants. In August of the same year, eight of them were unplugged while the remaining nine will be removed from the grid by 2022. While public opinion was and still is in favour of the measures taken, the vast extent of transformation that was decided upon within a relatively short time imposes uncertainty on Germany’s future energy supply.

Driving the Energiewende Generally speaking, the envisaged restructuring of the country’s energy supply mix pursues several goals, whose extent of fulfilment will determine how successful the Energiewende will be.

One the main ideas behind the concept is a significant reduction of hydrocarbon emissions stemming from the use of fossil fuels for energy generation. Renewable sources of energy like wind and solar power are therefore understood as clean methods of ensuring a reliable supply, while reducing dangers for nature and the people, and thereby contributing to internationally concluded climate goals.

Furthermore, the German government since 2000 supported renewables in order to replace nuclear energy, which for decades has been Germany’s second most important form of electricity generation behind brown coal (see Graph I). In that respect, green energy is meant to prevent the possibility of nuclear catastrophes such as those happened in Chernobyl and Fukushima, and to provide the country’s energy policy with a sustainable fundament.

Last not least, geopolitical implications are complementing the drivers of

Graph I


change. Water, wind, solar and biomass power is potentially unlimited and very cheap once the respective infrastructure has been implemented. Existing dependencies from exporters of fossil fuels such as natural gasoline (Russia), mineral oil (Nigeria, Middle East) and stone coal (Colombia) would be dissolved. So, besides contributing to the wellbeing of German citizens, and benefitting the natural environment they live in, the EEG also aims to establish autarky in the energy sector.

The Energiewende in Real Life There are only very few countries in the world that promote a governmentally backed exit strategy for nuclear and fossil energy forms, and the German attempt has widely been recognised with benevolence. However, recent developments show that there are several issues capable of delaying, if not, entirely putting an end to the whole ambitious project.

The EEG Surcharge, Rising Costs and Changes in Public Perception Electricity prices have been increasing sharply since the EEG came into effect at the beginning of the millennium. In 2000, the price for private households was slightly below 14 cents per kilowatt-hour (kWh). In 2013 it had nearly doubled reaching 28.83 cents (as reported in the Deutsche Umwelthilfe, see Graph II). One main drivers of this price increase is a surcharge that has been imposed in order to balance the enormous costs that are caused by the restructuring of Germany’s power infrastructure – the so called EEG surcharge. It’s the difference between fixed revenues that the government grants to providers of renewable energy over long periods of time, and costs those providers face in generating electricity. It is mainly paid by private consumers, as certain companies are freed from the surcharge. And while the share of green electricity in Germany’s grid is rising from year to year, so do the prices – albeit decreases in stock exchange prices for electricity and costs for solar plants.

But it’s not only the EEG surcharge’s influence on price spikes that spurs opposition among consumers and small scale businesses – it’s also the growing exemption of energy intensive industries from the rule. (see Graph III) Georg Molz from Economists at Large writes in his article dealing with the Energiewende: “One factor that is too often overlooked, however, is the increasing number of exemptions from the surcharge, which results in the remaining, non-exempt consumers paying more. In 2010 approximately 650 companies were not required to pay the whole EEG-surcharge. The electricity consumption by these companies represented one-third of Germany’s total industrial electricity consumption for 2010 (ca. 67 gwh out of 237 gwh).” If prices keep going up, the solid backing the EEG has enjoyed among the public and within the business community so far will be more and more undermined. Furthermore, future Energiewende financing by means of EEG surcharge has become somewhat uncertain, since the European Commission launched an investigation in last December questioning whether German state aid for renewables’ providers and surcharge exemptions would contradict European competition laws.

The Energiewende Paradox: Relying on Fossil Energy to Facilitate Nuclear Phase Out The transition project also led to a rather odd phenomenon that economists have repeatedly hinted at: The ongoing nuclear phase out programme initiated a revival of hydrocarbon intensive coal incineration, whose role in the energy mix has become more substantial in recent years.

In 2013 for example, brown coal accounted for 162 billion kWh of electricity – the highest amount since 1990 when many East German plants were still part of the grid. Stone coal processing saw even higher gains since electricity originating from this resource grew by eight billion kWh. As much good will be spent on improving technology and infrastructure of wind and solar power – the utilisation of coal still is a favourable and necessary form of backup

13,9

4

14,3

2 16,1

1 17,1

9

17,9

6

18,6

6

19,4

6 20,6

4 21,6

5 23,2

1

23,6

9 25,2

3

25,8

8

28,8

3

0,20 0,25 0,30 0,41 0,58 0,68 0,88 1,02 1,12 1,13 2,05

3,53 3,59

5,28

0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

30

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

[ct/kWh] Development of Electricity Prices for Private Households (Household consis�ng of 3 persons, annual consump�on: 3500 kWh)

Electricity Price (including EEG - surcharge)

Share of EEG - surcharge

Sources: BMU, BDEW, Stat. Bundesamt, Graph: DUH

Graph II

0,35 0,49

0,63 0,76 0,74

1,46

2,74 2,72

4,00

5,10

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

(Special Compensa�on Regula�on)

In billion Euros

*) Predic�on of common carriers v. 15.10.2013

Sources: BMU/BMWi, ÜNB, BAFA; Graph: DUH

Financial Exonera�on of the Economy from EEG Surcharge

Graph III


energy: Brown coal can be excavated in Germany itself and is one of the very few market segments where troubled German utilities providers such as E.ON or RWE can be profitable right now.

Even more, the controversially debated method of fracking led to an increased exploitation of shale gas, and brought down world market prizes for stone coal. This “renaissance of coal” inevitably entails an increase in hydrocarbon emissions – whose reduction is one of the two central goals of the Energiewende. One might correctly argue that there is a system of hydrocarbon emission regulation in force, implemented to hamper an extensive use of fossil sources. However, hydrocarbon certificates traded at European energy stock exchanges are way too cheap at the moment in order to turn coal into an unprofitable business.

The issue touches a much deeper problem that is able to shake Germany’s energy transition to its very foundations. Coal provides more than 45 per cent of the country’s electricity today, and one is eligible to ask whether there is enough wind blowing and sunlight shining at all to fundamentally change the way energy for the world’s fourth biggest economy is generated. Recently, well known economist Hans Werner Sinn gave a presentation where he stated that Germany cannot have both – phasing out its nuclear infrastructure and substantially cutting the share of fossil sources in the energy mix. Against the background of nuclear capacities being shut down, the rise in coal consumption is therefore consequent.

Scarce Potentials: Wind and Solar Power Not Fully Ready Yet?Indeed, renewables seem not to be ready yet to replace the two traditionally most important forms of energy provision at the same time. Hydro power, for example, has reached its maximum capacity in Germany years ago and its output is therefore stagnating (see Graph I). Electricity stemming from bio mass holds a major share among renewables, but contains incineration of wood (pellets), food and waste, and is therefore not really compatible with the green goals that characterise the Energiewende. The project’s effectiveness therefore depends on how much energy wind and sun can deliver, how efficiently these potentials are exploited, and how quickly a smart infrastructure can be integrated into the existing grid.

Theoretically, the potentials are impressive. But since the performance of wind mills and photovoltaic installations is confined by external influences, the real power outcome is far smaller than nameplate capacity indicates. Calm, night and a cloudy sky set natural limits that just cannot be overcome. Adding to the problem of capacity restrictions is the fact that wind and solar technologies are subject to

extensive volatilities. The absence of a continuous stream of energy, as well as natural peaks and lows in production that do not necessarily reflect the industry’s needs, add a momentum of uncertainty to the energy supply and complicate planning. The option of storing excessive electricity is difficult to realise, cost intensive, and would have a similar effect on consumer prices as the much debated alternative of extending off-shore wind parks.

OutlookThe general direction the Energiewende is heading towards, and the specific aims it wants to achieve are nearly unchallenged in the German media landscape today, and there is strong public consent to stay on track. According to an article published on The Carbon Brief website, 40 per cent of Germany’s installed renewables’ capacity was owned by community co-operatives in 2010. A fact that to some extent explains the lasting support the Energiewende enjoys among the population.

The mission to abandon nuclear energy and cut emissions, the German government has been embarking on since the year 2000 is very reasonable, and some important progress unquestionably has been achieved. Due to recent price increases, however, for the first time critical voices appeared on the screen, stimulating investigations on the issue and revealing severe problems.

Germany is rightly sticking to the targets of zero nuclear power and hydrocarbon emissions, but serious adjustments to the reform programme, and its instruments are almost inevitable. Concerning the foreseeable future, a ‘second grid’ either consisting of nuclear plants or coal power plants will be necessary to ensure electricity supply, and by doing so helps to gain time to improve renewable technologies until they are powerful enough not to need backup support anymore. n

This article was based on following information sources provided by: www.carbonbrief.org, The Energiewende: An introductory look at Germany’s energy transformation by Mat Hope; www.marketoracle.co.uk, Germany Will Dilute - Not Abandon Its Energiewende Plan by Andrew McKillop; www.germanenergyblog.de, Commission Opens State Aid Investigation into German Renewables Surcharge Reduction for Energy-intensive Companies and Green Electricity Privilege by Dr. Matthias Lang; www.ecolarge.com, Economists at Large, Why are electricity prices increasing in Germany? by Georg Molz; Graphics from Deutsche Umwelthilfe report, Die Energiewende und die Strompreise in Deutschland - Dichtung und Wahrheit by Dr. Gerd Rosenkranz and Jürgen Quentin.


The Shanghai FTZ

The newly-established Shanghai Free Trade Zone enjoys many of the privileges long exclusively enjoyed by Hong Kong. Far from proving a competitor to the city, however, this latest mainland economic new development could provide a whole host of new opportunities.

When the mantle of power passed to the Xi-Li administration in November 2012, the incoming government made clear its intention to deepen reform and allow market forces to play a greater role in raising overall productivity. The communiqué of the Third Plenary Session of the 18th CPC Central Committee, which closed on 12 November this year, reinforced this, clearly stating that deepening economic reform remained its priority. It also singled out, as a key issue, the proper handling of the relationship between the government and the market, and the importance of letting the market play a decisive role in the allocation of resources. The communiqué concluded with a call for the transformation of government functions in order to allow them to better meet development needs.

Part of this transformation came on 27 September 2013, with the State Council’s announcement of the General Plan for the China (Shanghai) Pilot Free Trade Zone (FTZ), with the FTZ officially launched on 29 September. Although many of the regulatory measures have yet to be finalised and liberalisation is unlikely to be delivered overnight, there is no doubt that the establishment of the FTZ will send an important message with regard to China’s latest round of opening up to the outside world and the deepening of its reforms. Put simply, China will continue to reform and to follow a market-oriented direction in terms of its economic development. The launch of the FTZ gives by far the clearest indication yet of the general direction of this likely economic restructuring programme.

Implications Beyond ShanghaiThe true significance of the FTZ is outlined elsewhere in the communiqué: “In line with the new realities of globalisation, we must promote the orderly and free-flow of international and domestic production factors, widen market access for foreign investors and speed up the development of free trade zones.” The establishment of this first FTZ, then, represents a true milestone along the mainland’s opening up process, and one likely to have implications well beyond Shanghai in the long term. As part of its initial General Plan for the FTZ, the State Council indicated that it wished to learn replicable lessons from this pilot, with a view to establishing similar free trade zones elsewhere on the mainland.

In light of this, it is not difficult to foresee that the economic and reform lessons learnt from the FTZ will be applied on a far larger scale in the future. Inevitably, such moves should help improve efficiency and productivity, produce a tangible pay-out in terms of a “reform dividend”, and take the mainland’s economic development to a new level. As the established international trading platform for China, Hong Kong will undoubtedly benefit from the new opportunities set to emerge.

A number of the characteristics of the proposed FTZ – its open market, its freedom from the majority of tariffs and its liberal investment policies – will give it a great deal in common with the current policies operated in Hong Kong. Inevitably, this could see Hong Kong facing fresh competition in those areas where its free trade environment has traditionally given it a unique advantage. In the long run, though, it seems highly likely that the city will gain more from the mainland’s continuing economic expansion than it actually risks losing to any new competitor.

It is widely held that these new policies will give the mainland’s economy increased scope for growth, with private companies, in particular, likely to flourish. As a result, Hong Kong, as an important international trading platform, should find greater demand and further development opportunities for its highly-regarded international financial and commercial sectors.

Distinct Catchment AreasThere are a number of factors that make Hong Kong an im-portant trading platform and a flourishing cargo transhipment sector. Chief among these are its strategic location, its free port policy, its high quality infrastructure, its efficient customs clearance procedures and its transparent legal system. Over recent years, the territory has also become well established as a regional logistics hub. It seems entirely possible that the FTZ may develop similar strengths in the future, increasing its status as a potential competitor to Hong Kong.

Despite any apparent overlap, each city will have its own distinct catchment area and its own particular strengths in term of services. This will nurture a degree of “division of labour” between the two centres. As a transhipment centre, most of the goods handled by Hong Kong originate from the Pearl River Delta (PRD). According to China’s Customs statistics, nearly 80% of the mainland exports to Hong Kong between January and September 2013 were PRD-originated. It seems likely, then, that much of this existing and long-standing trade will remain focussed on Hong Kong, while Shanghai develops its own proprietary trading relationships.

Opportunities and Challenges for Hong Kong


As a regional distribution centre (RDC), Hong Kong has the capacity to provide a higher level of value-added services, and to handle more high-value goods and bulk cargo than any other centre in the region. Hong Kong also distributes a substantial number of high-value commodities for retail purposes. While the city will inevitably continue to develop as a preeminent electronics and garments RDC for wider Asia, it is also looking to develop its import/export portfolio of higher value items, notably luxury items, wines and pharmaceuticals.

Overall, as its manufacturing sector completes its transformation and upgrade programme, the mainland will see far greater levels of imported high-value-added goods. With economic growth set to be driven by domestic consumption rather than exports, there will clearly be a greater demand for imported consumer items. This new reality will see China – and, indeed, the whole of Asia – require the development of a new generation of distribution centres to meet growing domestic consumer demand across the region.

Removal of Professional Service Barriers on the MainlandApart from the free flow of goods, the opening up of the service sector is another important concession for the new FTZ. At present, while many of the major obstacles preventing Hong Kong service suppliers operating on the mainland have been removed, there remain a large number of less substantial bars to entry. One of the key issues here is the disparities between Hong Kong and the mainland in terms of trade structures and management systems. In a move to ease the problem, the FTZ has adopted a “negative list” of areas prescribed for foreign investment. Investment was only previously possible in specified pre-agreed areas.

The change from a system of “examination and approval” to a streamlined “record filing” approach will also clear the way for Hong Kong service providers to enter the mainland market. This change will facilitate Hong Kong firms in establishing a foothold in the FTZ and, subsequently, develop service networks in the Yangtze River Delta and beyond in line with the new and increasing emphasis on both globalisation and all-China development.

RMB Market ImplicationsAside from its reduction in trade restrictions, the FTZ will also enjoy a number of RMB convertibility privileges, including the wider use of the RMB for cross-border businesses, and the adoption of market-oriented interest rates on a first-to-do and first-to-try basis. This will make the FTZ the first “offshore RMB centre” based within Chinese territory. While this development, again, represents an increased level of competition for Hong Kong, the higher level of RMB internationalisation and the wider use of the RMB in the international market should have a compensatory impact on RMB transactions in the city.

As an international financial centre, Hong Kong has long played a pioneering role in China’s financial reform and RMB internationalisation programme, giving it a substantial track record in this area. Its pedigree in this sector gives it the “first mover” advantage in terms of global offshore RMB business. Tellingly, Hong Kong’s RMB business continued to grow even after the launch of apparently competing offshore RMB business agreements in both London and Singapore. In terms of RMB cross-border trade settlements, Hong Kong still accounts for about 80% of China’s transactions in this area. Overall, the RMB trade settlements handled by Hong Kong increased from an average of RMB 31 billion per month in 2010 to RMB 219 billion per month in 2012. In the first half of 2013, the figure reached a truly impressive RMB 280 billion per month.

The development of free RMB convertibility in the Shanghai FTZ will provide another channel for the flow of offshore RMB capital back to the mainland. It will also generate more opportunities for Hong Kong, by giving the RMB in Hong Kong more channels for the repatriation of cross-border investment, and by increasing activity in the overall RMB business sector.

Regional Development a must for Hong Kong’s CompetitivenessA more market-oriented and growing mainland economy will undoubtedly be good news for Hong Kong, and will only elevate its status as an international trading platform. Despite this, though, Hong Kong would be well-advised to boost its own competitiveness. In terms of its RDC role, for instance, Hong Kong needs to continuously improve both its global transport links and ensure that its operating costs remain competitive across the whole region.

In the longer term, there are other benefits that may accrue to Hong Kong should the Shanghai FTZ model be extended to other areas of the mainland. One likely beneficiary here is Guangdong, which is reportedly seeking permission to establish a Nansha-Qianhai-Hengqin FTZ, which would, ultimately, extend further to include Hong Kong and Macau.

If Guangdong’s ambitions prove successful, Hong Kong would play an active role in this new FTZ, especially given its close trade and geographical ties with Guangdong. With the favourable conditions extended through such an FTZ arrangement, Hong Kong would benefit hugely from integrating its functions as an internationally renowned commercial centre, while serving as the front end of such a liberalised and globally-appealing business region. n

This article was reprinted with permission from Mr. Billy Wong, Principal Economist (Greater China) at HKTDC Research Department, HKTDC, for further information please visit: http://hongkong-economy-reserch.hktdc.com.


Hong Kong Economic Outlook in 2014

In the first eleven months of 2013, the value of total exports of goods rose at a modest 4% year-on-year. As the external environment improves, Hong Kong exports will experience a gradual pickup, providing the main impetus of growth in 2014.

Economic Environment Stabilising in Advanced EconomiesThe US economy is recovering steadily, and the job market is brightening. The unemployment rate dropped to 7% in November from 7.9% at the beginning of the year, while non-farm payrolls rose by a monthly average of 188,545 during the first eleven months of 2013, up from an average of 179,455 in the same period in 2012. Moreover, residential housing prices increased at an annualised rate of 13.6% in last October. This solid performance should persist in 2014, outweighing the headwinds of QE3 tapering and controversy over the debt ceiling.

Worries over the health of the eurozone have, on the other hand, yet to dissipate. The economy expanded by a disappointing 0.1% quarter-on-quarter in Q3 2013, indicating that the nascent recovery remains fragile. Moreover, the eurozone remains haunted by a high unemployment rate, reaching 12.1% in November. The Composite Purchasing Managers’ Index (PMI) has edged over 50 since July, suggesting economic conditions have stabilised. Overall, however, eurozone demand for Asian exports is expected to remain sluggish in early 2014.

Mixed Economic Outlook for ChinaOn a year-on-year basis, China’s export sector rose at a moderate 7.9% during 2013. Softer growth has led to slower income increases. Consequently, retails sales rose 13.0% during the first eleven months, the lowest figure since 2003.

The improving US economy shall boost China’s exports sector in 2014. Manufacturing PMI readings from both HSBC and official sources have crossed the 50 threshold since last August, indicating that economic growth has gained momentum. China’s exports are projected to grow by 10% in 2014. However, it will take time before the pickup in manufacturing translates into stronger income and consumer spending growth.

Meanwhile, the Chinese government will take advantage of a more stable economic environment to tackle the Mainland’s structural economic problems. During 2008-12, total loans jumped by 96.8%, outpacing the 67% increase in nominal GDP. High leverage has been compounded by the rapid expansion of shadow banking. A restrictive credit policy is expected to be implemented to contain loan growth. Local governments and industries with excess capacity, such as steel, will face pressure to scale down their projects.

The surging property market is another concern. Property prices jumped more than 20% year-on-year in major cities like Beijing and Guangzhou. Besides credit tightening, more austerity measures could be in the pipeline to keep the market in check. These measures will drag investment growth, diluting the positive impact


of improving exports. The Chinese economy is expected to expand at 7.6% in 2014.

All in all, while demand from the EU and Mainland China will remain moderate, the US recovery is expected to accelerate and translate into higher demand for Asian exports. Growth in Hong Kong exports will improve to 7% in 2014.

Driving Force of Retail Sales is SubduedDespite the slow exports growth during 2012-13, Hong Kong’s real private consumption registered robust growth of 3% in 2012 and 4.4% in the first three quarters of 2013. This was mainly due to the tight employment market. The unemployment rate remained low throughout this period, dropping to a low of 3.3% in November 2013.

Hong Kong’s economy has been supported by economic forces from Mainland China. Catalysed by Chinese enterprises that consider Hong Kong their favoured platform for overseas investment, employment in business-related services (including finance, insurance, real estate, professional services, and business services) has experienced remarkable growth.

The labour-intensive retail, accommodation, and food services have enjoyed the fruit of blossoming Mainland tourist spending over the last several years. Mainland retail spending accounted for 29.2% of total consumer goods expenditure in Hong Kong in 2012, up from a 16.6% share in 2007. Mainland tourists have been an important cornerstone for the retail sales market, leading to a remarkable expansion of employment in retail services.

However, data show that the expansion of the retail sector has subsided in recent months, casting uncertainty over the employment outlook. On a year-on-year basis, while retail sales rose by a strong 15.2% in the first half of 2013, growth softened notably to 7.4% during July-November. One reason was the slower growth in income and spending in Mainland China. Annual growth of Mainland visitor arrivals slowed to 15.8% in Q3, down from a spectacular 24.2% rise in 2012. Furthermore, as a more frugal lifestyle is being promoted by the central government, Chinese tourist spending on luxury items in Hong Kong will be hampered. The surge in retail sales driven by Mainland tourist spending in recent years may be subdued.

Furthermore, domestic demand is also losing steam as seen in recent months. Deducting jewellery, watch, valuable gift, and department store purchases – all of which are mainly made by Mainland shoppers – retail sales grew at just 3.7% during July - November of 2013, significantly down from the 8.8% increase in the first half of the year. As a result,

retail service employment suffered quarter-on-quarter declines in both the second and third quarters of 2013, the first consecutive quarterly drops since the first half of 2009.

Downbeat on the Property MarketThe correction of residential property prices may further erode domestic demand. This will not only affect consumer sentiment, but also the employment market in related sectors, such as real estate and furnishing. With a low transaction volume in the property market, the number of real estate agents employed shrank by 2,700 quarter-on-quarter in Q3 2013. The situation will deteriorate further in 2014 as the property price correction continues. Hence, despite improving employment conditions in export-related sectors, the overall unemployment rate is expected to edge slightly higher, reaching 3.5% sometime in 2014. This will slow the growth of private consumption to 3.2% in 2014, down from an expected 4.1% gain in 2013.

Following the introduction of demand-side cooling measures for the property market, transaction volume dropped markedly by 37.7% on a year-on-year basis to 50,676 in 2013. Property developers will be conservative in pricing strategies in face of subdued trading, attempting to speed up the selling of new residential projects to make up for sales losses in 2013. This will put pressure on overall property prices in the coming year. The beginning of QE tapering announced by the US Federal Reserve Bank preludes the end of the ultra-low interest rate era. It is expected that the US will raise the federal funds rate in the second half of 2015. With the prospect of rising funding costs, investors will sell properties at hand at an increased pace, further pushing prices downwards. Residential property prices are expected to fall by 10% in 2014.

Economic Outlook in 2014Inflation has been relatively high, misaligning economic performance. The main culprits are the continued soar in food prices and housing rents, which together accounted for 59.1% of CPI weighting. Easing residential property prices and rentals shall alleviate inflation momentum, and inflation is expected to moderate at 3.7% in 2014.

We expect that investment will see a moderate increase as ongoing large-scale public infrastructure projects and government spending are outstripping sluggish private construction. This, together with a stronger performance for exports, should compensate for weaker private consumption growth. Hong Kong’s real GDP is projected to grow by 3.5% in 2014. n

This article was reprinted with permission from the Economic analysis, BEA Economic Research Department, Bank of East Asia. The photo is credited to: Dennis Wong (Flickr.com)


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Hong Kong is such a compact place so getting around is extremelyeasy.Ourwell-developedpublictransportationnetwork and bilingual signage ensure your quick,convenient and easy access to almost anywhere in the city. More importantly, PolyU is located right in the heart of HongKongsoyoucouldevengetaroundinflip-flopsandget anything you need in the neighbourhood. As a student, you can also enjoy a vast range of discounted offers, from transportation to different kinds of entertainment.

AccommodationInternationalstudents inpubliclyfundedundergraduateprogrammes can apply for accommodation at our Student Halls of Residence, which are within walking distance from the campus, at a monthly rental of approximately EUR127(HKD1,340)forasharedroom(doubleoccupancyin4-person-suite).

Dependingonyourpreferenceandbudget,someofyoumight like togo forother formsofuniversity-managedaccommodation including private premises near the campusorarrangeourownaccommodationoff-campus.OurStudentAffairsOfficecanprovideinformationtohelpyou get started.

Forfurtherinformation:www.polyu.edu.hk/iaoForenquiry:[email protected]

An Internationally Recognised University – Located in the heart of Asia


Member UpdateBMW Invites GCC Members to the Unveiling Ceremony of its all-electric i3In December 2013, BMW Group was proud to launch the BMW i3 – its first zero-emissions electric vehicle – in Hong Kong. The BMW i3 fulfils the Group’s promise of sheer driving pleasure and commitment to sustainable global development. The launch ceremony was officiated by Financial Secretary, Mr. John Tsang, JP at the Jockey Club Innovation Tower at The Hong Kong Polytechnic University. Following this on January 4th, 2014 BMW Concessionaires (HK) Ltd. proudly invited members of German Chamber of Commerce, Hong Kong to their all-electric BMW i3 - VIP Closed Room Event. Members were able to have an exclusive look at BMW’s all-electric i3 model, a locally emission-free vehicle for city driving. n

Jebsen & Co Ltd. Launches Online Shop ‘J – Select’ Jebsen& Co, a leading marketing and distributor of premium products across Greater China announced the launch of their first Jebsen-branded online retail shop called ‘J-Select’ (www.myjselect.hk) in Hong Kong in December 2013. J-Select is a lifestyle enrichment retail brand that brings together the various premium products that Jebsen markets offline into an online platform to provide a one-stop shopping experience to consumers. The products at J-Select are diverse – from home enrichment, consumer electronics, beauty and health, to watches and fine wines – and include brands such as Dyson, Jarre, Airfree, Ya-man, and Nomos. The J-Select online shop will be launched in China this year whilst bricks-and-mortar J-Select shops will also be opened in both markets. n

GCC Donates Christmas Tree and Candy DecorationsThe German Chamber of Commerce, Hong Kong donated the Christmas tree and decorat ions filled with candy from the German Christmas Party 2013 to Feeding Hong Kong, a charity founded in 2009, whose mission is to fight hunger in Hong Kong and reduce the amount of quality food that is being sent to our city’s landfills. Three of the four Christmas Community Meals that were organised by Feeding Hong Kong in December 2013 around Hong Kong, totalling 152 guests and various charity and volunteer partners made use of the tree and candy filled decorations. Guests included students enrolled in their Breakfast Club programme, and families and seniors receiving support from their food bank partners.

Feeding Hong Kong works to raise awareness about poverty, food insecurity and food waste in Hong Kong, and promote healthy eating and nutritional education to the most vulnerable groups in our community. They are Hong Kong’s sole accredited member of the Global Food Banking Network, an international organisation dedicated to creating and strengthening food banks and national food bank networks. For more information please visit: www.feedinghk.org n


B. Braun Celebrating 175 YearsThis year, B. Braun Melsungen AG is celebrating its 175th anniversary. On 23 June 1839, Julius Wilhelm Braun purchased the Rosenapotheke, a pharmacy in Melsungen, and thus laid the foundation for today's global group of companies with subsidiaries in 61 countries and 50,000 employees worldwide. Under the motto “175 Years of Leading Innovation”, B .Braun will be showcase many examples throughout the year of what innovation means at B. Braun as stated by Prof. Dr. Heinz - Walter Große, CEO of B. Braun Melsungen AG. Many product milestones throughout history give proof of the company’s contribution to progress in medicine. n

TÜV Rheinland Named a CarbonSmart Diversified Service ProviderOn 30 October, TÜV Rheinland Hong Kong was named a “CarbonSmart Diversified Service Provider” at the CarbonSmart Forum cum Partner Commendation Ceremony. It was the only testing and certification company among 100 qualified service providers (QSPs) to receive the award, which was given in recognition of services provided to several sectors. TÜV Rheinland Hong Kong has successfully helped hotel, restaurant and office-based companies such as; MGB Metro Group and the Crystal Group to conduct carbon audits.

The CarbonSmart Programme aims to encourage and sustain concerted industry efforts to audit and decrease carbon levels, shape a low-carbon economy and facilitate the development of related environmental industries. Upon notification of each successful application, a carbon audit must be completed within 6 months for fund disbursement. Successful applicants may receive a grant of up to 50% of the approved cost of the carbon audit (up to HK$30,000 for each application).

Hamburg Süd: Christening of ‘Cap San Augustin’ in Hong KongOn 29 November 2013 Hamburg Süd celebrated the christening of its container ship ‘Cap San Augustin’ at the Kai Tak Cruise Terminal in Hong Kong. With a nominal slot capacity of 9,600 TEU, the newbuild is one of the largest ships owned by the Group. At the same time, with its 2,100 reefer plugs the ‘Cap San Augustin’ is currently one of the largest reefer capacity ships worldwide. The Sponsor of the ‘Cap San Augustin’ is Yuki Wei, the wife of Li Dongsheng, Chairman of TCL Corporation, one of Hamburg Süd’s important customers in the Region Asia Pacific (RAP). The ‘Cap San Augustin’ is the third container ship in a series of six newbuilds in the new ‘Cap San’ class. After delivery from the Hyundai Heavy Industries shipyard in Ulsan (South Korea), the ship was introduced into the Group’s liner service between Asia and the South American East coast at the beginning of September 2013. n

(l. to r.) Stefan Kirschner, Michael Britton (both Regional Management Region Asia Pacific), Yuki Wei (Sponsor), Captain Uwe Köhler and Dr. Heino Schmidt (Member of the Executive Board, Hamburg Süd).

AGS Four WindsFor the third year running, AGS has been awarded Gold Supporter by the FIDI Academy. A remarkable achievement, confirming AGS’s focus to invest in driving and promoting industry knowledge amongst their employees acknowledged Chantal Fera, Manager of the FIDI Academy. FIDI - the quality benchmark for international moving companies - established the Academy to develop and promote high industry standards. Recognising the many variables in organising a move, they’ve designed tailor-made training courses to inform affiliates of important industry changes and technicalities. FIDI Academy empowers their members to become “movers of choice” by providing them with exceptional training material, experienced industry leaders and best practices from around the globe. n


BASF supports Typhoon victims & is named one of China’s Top Employer Last November, the Board of Executive Directors of BASF SE contributed €300,000 to relief efforts in the Philippines. With funding from BASF Stiftung, a charitable foundation based in Germany. The donated funds will be used to deploy relief measures from typhoon Haiyan (or Yolanda) in the Philippines such as emergency food supplies, therapeutic food for children, health kits, water, and hygiene kits.

BASF for fourth consecutive year was named one of China’s Top Employers. This prestigious award recognises BASF’s continuous achievements in HR management and people development. The evaluation was conducted by the Top Employers Institute, one of the world’s leading research institutions in the field of HR, leadership and strategy. “Human capital development is one of the key levers of BASF’s Asia Pacific strategy. At BASF, our employees are empowered to fully explore their potential while integrating their personal vision and professional endeavours.” stated Johnny Kwan, Senior Vice President, Country Platform & Functions, Greater China. n

Dornbracht’s Innovative Spa Seriescolourliving, leading lifestyle store presented Dornbracht’s award-winning luxury spa series Sensory Sky and Foot Bath at an exclusive product preview in November. With Sensory Sky, Dornbracht makes showering a unique experience that stimulates all the senses. Different types of rain, fog, light and fragrance complement one another to create complex choreographies inspired by weather phenomena and the moods of nature, which are produced using high-quality natural essential oils and balms. Sensory Sky combines technological complexity with minimalistic design. The wide and flat rain panel has separate shower fields with a head sprinkler, body sprinkler and rain curtain, a cold-water fog nozzle and light and fragrance functions. Controls are easy and convenient to use thanks to Smart Tools – a digital system Dornbracht developed on the basis of Smart Water technology. n

The First Mercedes-benz Diesel Passenger Car in Hong KongThe new ML 250 BlueTEC: This The third generation Mercedes-Benz M-Class scores particularly high on outstanding energy efficiency, and on average the new model range consumes 25 percent less fuel than the previous models. One true champion in terms of fuel consumption is the ML 250 BlueTEC 4MATIC, which boasts an NEDC consumption of just 6.0 l/100 km (158 g CO2/km) and has a range of up to 1,170 kilometres on a full tank. Further strengths of the premium SUV with permanent all-wheel drive include exceptional safety and well-balanced ride comfort as well as excellent driving dynamics both on and off the road. January, Mercedes-Benz Hong Kong introduced its diesel technology and its first diesel passenger model, ML 250 BlueTEC, to the Hong Kong market. The fact that the new ML 250 BlueTEC is as fuel-efficient as the economical saloon cars displaying the Mercedes star makes the all-wheel-drive model even more desirable. A range of state-of-the-art engines, a class-leading cd figure (drag coefficient) of 0.34 lays the foundations for outstanding energy efficiency. n

Euler Hermes GCC named ‘Specialty Lines Insurer of the Year 2014’ The MENA Insurance Review (MENA IR) named Euler Hermes GCC the ‘Specialty Lines Insurer of the Year 2014’. The MENA Awards recognise companies “who have set the bar that others must match”. The MENA IR panel, composed of independent industry experts, explained that this year’s award focused on businesses, all of whom demonstrated the highest standards of professionalism, ability and business innovation that will continue to drive the sector forward over the next year. n

Dear Members,

If you have any news you would like to publish, please send your press releases to:

[email protected]


Member IntroductionDBK Technology Ltd.21/F, Harbour Commercial Building122 Connaught Road Central, Sheung Wan, Hong KongTel.: +852 2401 1011 | Fax: +852 2401 [email protected] | www.dbk-group.de

DBK Technology Ltd. is a member of the DBK group of companies, owned by David & Baader GmbH in Germany, one of the world’s leading manufacturers of heating systems. The company provides electric heating solutions and related technologies to a range of industrial and automotive clients around the globe. DBK Technology Ltd. in Hong Kong was established in 1989, and serves as the regional head-office managing its Asian subsidiaries. The firm’s Asia operations have been expanding rapidly over the past 10 years with facilities engaged in product development, design in support, testing and manufacturing in Hong Kong and China. Recently DBK established its own industrial heater production in Hong Kong (CEPA-Certified), automotive heater production plant in Guangzhou and a sales office in Shanghai in order to meet new customer demand in the competitive Chinese market. In addition to the Chinese market, DBK sells to a global client network through affiliated offices. For more information please visit our website (www.dbk-tech.com). Business partners of DBK benefit from the company’s 25-year track record of managing growth successfully in the dynamic and challenging markets of China and the rest of Asia. n

Corporate Member

Mr. Friedrich von der LüheManaging Director,

DBK Technology Ltd.

President, DBK Asia Operations

DIY Consulting Ltd.3801A Skyline Tower39 Wang Kwong Road, Kowloon Bay, Kowloon, Hong KongTel.: +852 2362 7900 | Fax: +852 2362 [email protected]

DIY Consulting Limited was founded in 2007, with its offices in Hong Kong and Shenzhen it acts as the sole sourcing agent for the HELLWEG Group within the Asia-Pacific region.

HELLWEG Die Profi-Baumärkte GmbH & Co. KG, originally founded in 1905 as a lumber retailer, has been operating in the Do-It-Yourself industry for the last 42 years, and is still a family-owned business. The company operates from its headquarters in Dortmund with 92 HELLWEG stores in Germany and Austria, 56 BayWa Bau & Garten stores in Southern Germany and 6 Gartencenter Augsburg stores in North Rhine-Westphalia.

DIY Consulting Limited is sourcing tools, power tools, lighting, sanitary, home decoration, garden furniture, garden tools, and all kinds of DIY and home improvement related products. n

Corporate Member

Mr. Andreas DoemmeckeManaging Director


EURASIA Global Concept Ltd.3207 Tower 6, The Gateway, Harbour CityTsim Sha Tsui, Kowloon, Hong KongTel.: +852 2117 8286 | Fax: +852 2117 9290info@eurasia-global-concept.comwww.eurasia-global-concept.com

EURASIA Global Concept Limited Hong Kong, was established 2008 by Prof. Dr. Merkel as new platform and headquarter for all activities and services, our group of companies is providing to their clients in Europe and Asia since more than 15 years.

EURASIA is working with brands and retailers to organise their distribution into the Chinese market through competitive points of sale. EURASIA is focusing on lifestyle products i.e. mainly fashion/apparel (men’s wear, women’s wear, kid’s wear), beverages and food products. The company provides modular services for their clients. With the combined experience and knowledge of the European and Asian markets, EURASIA is able to serve their customers with the most efficient services and ‘best of breed’ solutions.

Together with PROLOGUE, the supply chain specialist division of the group, the company is able to provide their clients with all kinds of services along their entire supply chains, including transportation, sea freight, air freight, warehousing, distribution and many other value added services. n

Corporate Member

Prof. Dr. Helmut MerkelChairman and Founder

Gentherm Electronics (Shenzhen) Co,. Ltd.1/F, Paradise Hasee Industrial Zone466 Jihua Road, Bantian, Longgang District518112 Shenzhen, P.R. ChinaTel.: +86 755 2829 7651 | Fax: +86 755 2829 [email protected]

Gentherm Electronics (Shenzhen) Co., Ltd. is a wholly owned foreign enterprise, whose headquarter is based in Michigan USA. As a leader in thermal technology, we design, develop, and manufacture automotive heated seating, climate seating, electronics, and cables for our customers worldwide. Our main customers are: BMW, Benz, Volkswagen, Ford, GM, Toyota, Honda, KIA, etc.

We have more than 5,000 employees worldwide and locations in 11 countries, of which Shenzhen Electronics plant was set up in 2012. We are located in Bantian Longgang (close by Huawei), with a spacious and bright office and wholly air-conditioned workshop. n

Corporate Member

Mr. Eric VoigtManaging Director


Kathrein China Holding Ltd.3005-08 One Midtown11 Hoi Shing Road, Tsuen Wan, N.T., Hong KongTel.: +852 3188 9786Fax: +852 3188 [email protected]

Katherein China Holding Ltd. is a subsidirry of Kathrein Werke KG, which is the biggest antenna producer with a long history. We are located in Hong Kong and work on investment. n

Corporate Member

Mr. Yun-Cheng LiBoard of Director/ CFO

Mr. Dong Xia15/F, Cityplaza Three14 Taikoo Wan Road, Taikoo Shing, Hong KongTel.: +852 [email protected]

Commodity management director, who is a high professional on sourcing & procurement, supply chain management and general-project-management, with long term and extensive experiences of different mobile phone companies and with excellent reputation in mobile device industry! Not only loyal team player but also strong team leader. Group business goals are achieved through my key values and intercultural abilities of leadership, people, vision & innovation, strategy creation and solid implementation. A specialist for sourcing & procurement, at the same time a generalist capable to meet challenges of all-round areas. Highly motivated, dedicated and determined in all aspects to achieve the demands of industries striving for excellence. n

Individual Member

Director Commodity Management

c/o BlackBerry Hong Kong Ltd.

Mr. Mark Bernard205 Haleson Building 1 Jubilee Street, Central, Hong KongTel.: +852 3460 3288Fax: +852 3460 [email protected]

OfficeAsia TCN Worldwide provides Independent Tenant Representation and Transactional Management services in Hong Kong and Greater China office markets. Our experienced professionals and customer-centric approach allow us to deliver the best solutions to meet your corporate real estate requirements in each of these areas:- Tenant Representation- Transactional Management- Office Leasing - Corporate Strategic Advice

Headquartered in Texas, TCN Worldwide comprises more than 70 offices worldwide, serving 200 markets in the United States, Australia, China, Europe, Canada and India. With approximately US$31.9 billion in annual transactions and over 80 million square feet of space under management in 2013, TCN Worldwide is ranked as one of the largest service providers in the industry. n

Young Entrepreneur Member

Managing Directorc/o OfficeAsia TCN Worldwide


Mr. Claudius GrossmannElbstrasse 3621481 Lauenburg, GermanyTel.: +49 177 485 7364Tel.: +852 6232 [email protected]

Based on long and extensive experience of its founder in Eastern Asia, the company is active in the field of consulting - acting mainly for German/other foreign SMEs advising on:- Strategy and Management- RMB Funding issues- HR issues and dispute resolution- Restructuring strategies for existing units- Set-up procedure and time management for planned or just newly set-up units operating region-wise in Asia, with special emphasis on China and Japan. n


Ownerc/o HOKU Trade and

Investment Ltd.

Mr. Martin PalmerSuite 8089, 3905 Two Exchange Square8 Connaught Place, Central, Hong KongTel.: +852 9137 [email protected]

Thomas Palmer Fine German Wines (H.K.) Ltd. is a boutique German wine company in Hong Kong which specialses in the ‘VDP Grosse Lage’ (Grand Cru) wines of Germany. We are the exclusive importer and distributor in Hong Kong of six VDP German wine estates from the Nahe and Mittelrhein wine region of Germany: Tesch, Kruger Rumpf, Ratzenberger, Gut Hermannsberg, Dr. Crusius and Toni Tost. Our company’s owner/director, Martin Palmer, comes from a wine village in the Nahe wine region and is at your service at anytime regarding wine recommendations for any occasion or to host a German Grand Cru wine tasting for your next fine wine dinner, celebration or corporate event. n


Owner / Directorc/o Thomas Palmer Fine

German Wines (H.K.) Ltd.

Mr. Ricky Shon807 Tower B, Manulife Financial Center223 Wai Yip Street, Kwun Tong, Kowloon, Hong KongTel.: +852 3101 1433 | Fax: +852 3101 [email protected]

Our fully owned operations in China and Asia-Pacific region, long lasting partners in Europe, and 150 logistics professionals enables us to provide Origin/Destination 3PL, end-to-end order management, integrated e-business solution, IoT technology as well as traditional forwarding.

We support any organisation to manage their current and future growth strategies, by achieving continual reductions on their ‘cost to serve’ to support their value proposition, to improve speed to market and mitigate the risk of late delivery, and providing advanced Information management systems to improve visibility and transparency of costs. n


CEOc/o ACA International

(Hong Kong) Ltd.


Ernst & Young 22/F, CITIC Tower1 Tim Mei Avenue, Central, Hong KongTel.: +852 2846 9888Fax: +852 2868 4432www.ey.com

Martin is an international tax partner at EY. Martin leads the firm’s transfer pricing practice in Hong Kong, with previous postings in London and Washington DC. Martin holds a bachelor and master’s degree from the London School of Economics. n

Change of Chamber Representative

Mr. Martin RichterPartner

Neumann Partners 12/F, Kinwick Center32 Hollywood Road, Central, Hong KongTel.: +852 3798 2898Fax: +852 3583 0855daniela.faustino@neumannpartners.com.hkwww.neumannpartners.com

Daniela is Managing Director Asia Pacific in Hong Kong.

She specialises in Procurement Chain Management, Buying and Trading Business, and Architecture Executive Search.

Daniela has been living in Beijing and Hong Kong for the past 16 years and developed a deep understanding of the Chinese culture thanks to her affinity to languages and people. She has an extensive experience in the Electronics and Consumer Goods Industry, and has an extended cross-cultural network in Hong Kong and China.

Prior to joining Neumann, Daniela has served successfully at Elka Pieterman Asia Ltd (accessories and spare parts for household appliances) as Managing Director Asia Pacific for 14 years. Daniela also developed her natural talent as an interior designer, and has done residential and commercial renovations in Hong Kong since 2005.

German native, Daniela holds a Master degree in Economics & Sinology from Leiden University, The Netherlands, as well as a diploma for Interior Design and Decoration.

Daniela is fluent in German, English, Mandarin, French, Dutch and Portuguese. n

Change of Chamber Representative

Ms. Daniela FaustinoManaging Director


04.12.2013GCC AGM & Luncheon:Chinese Outbound Investments – Between Hype and Reality

German Chamber of Commerce ended the year 2013 with its Annual General Meeting and Luncheon. Enjoying lunch at Harcourt Suite of Hong Kong Club, guests and members listened intently to Prof. Dr. Lutz-Christian Wolff, Associate Dean and Head of the Graduate Division of Law of the Faculty of Law at the Chinese University of Hong Kong. During his speech he explained among other points, the historical development of Chinese outbound investments, as well as the opportunities and risks of Chinese outbound investments in particular from the viewpoint of Western societies and of the overseas business partners of the Chinese outbound investors. n

Flashlight


Come join us at

our networking event

GC.N@work

held regularly throughout the year.

For more information please contact:

[email protected]


06.12.2013The German Chamber Christmas Party 2013

Thanks to all our generous sponsors, naming just here the Platinum category: BMW Concessionaries, Deutsche Bank HK Branch, Jebsen & Co. Ltd., and Mercedes-Benz HK Ltd., the German Chamber of Commerce warmly welcomed members and friends to its Christmas Party 2013 at the poolside of the Royal Hong Kong Yacht Club. Wearing the theme colours of the evening – red and gold – and sitting at the Yacht Club’s poolside enjoying Wan Chai’s skyline, guests had a great time with a buffet dinner, unlimited supply of wines and beers, live music (sound sponsor Sennheiser HK Ltd.), dancing, food and wine tasting, games, lucky draw, table prizes and door gifts. What more to tell? n


16.01.2014Lunch Seminar: Salary Developments 2014 (Mainland)

GIC/GCC organised a seminar focused on questions surrounding salaries in mainland China. Mr. Max Zenglein, Economic Analyst Greater China, GCC South & Southwest China, responsible for all previous GCC surveys on wages and salaries in China, revealed his findings from the latest survey, and his insights on labour market, expected developments, and payments levels of 18 different job categories. n

21.01.2014Briefing for Hong Kong Baptist University Students

As an integral part of the European Studies Seminar ‘Economic relations between Germany and China’, organised by the Hong Kong Baptist University, students attend a briefing hosted by GIC on the role of the German Chamber organisation with a particular focus on the activities of German companies in Hong Kong and the Pearl River Delta. Some 20 international and Hong Kong students attended the well-received briefing held by Wolfgang Ehmann, Executive Director of GIC, followed by a question and answer session. n

23.01.2014 International Business Community Luncheon with the Honourable Leung Chun-ying, Chief Executive of the HKSAR

Chief Executive, the Honourable Leung Chun-ying spoke to representatives of all chambers of commerce and business associations in Hong Kong, on the occasion of the jointly organised Post Policy Address Luncheon. The Chief Executive further elaborated on his Policy Address he gave to the Legislative Council on January 15th. The event took place at the Grand Hall of Hong Kong Convention and Exhibition Centre. n


22.01.2014GC.N@work

Wan Chai’s Tamarind Pan-Asian Restaurant & Bar held the latest edition of German Chamber’s GC.N@work networking series. GCC members and friends interested in mixing and mingling with representatives of Hong Kong’s international business community were welcomed at this great networking event – an invitation many followed. n


Upcoming GIC/GCC Events

GCC Date Name of Event Venue

March

11 March 2014 Workshop: Richtig versichert im Ausland? Worauf deutsche Expatriates im Ausland achten sollten GIC/GCC Boardroom

20 March 2014 Sourcing in Asia: Consumer influence on sourcing strategy Harbour Grand Hong Kong

20 March 2014 Joint Business Community Post Budget Luncheon with the Hon. John Tsang, Financial Secretary, HKSARG HKCEC, Wanchai

25 March 2014 Lunch Seminar: Employer’s duties – update your knowledge about Social Security, Tax, Payroll and Employer’s Return obligations GIC/GCC Boardroom

April

02 April 2014 GC.N@work Spasso- ItalianBar-Restaurant-Terrace

May

15-16 May 2014 Asparagus and German Wine tasting La Brasserie, Conrad Hong Kong

Upcoming Trade Fairs

Hong KongDate Name of Event Location

March

03-07 March 2014 Hong Kong International Diamond Gem And Pearl Show AsiaWorld-Expo

04-07 March 2014 Asia Fashion Jewellery & Accessories Fair AsiaWorld-Expo

05-09 March 2014 Hong Kong International Jewellery Show Hong Kong Convention and Exhibition Centre

19-21 March 2014 Interstoff Asia Hong Kong Convention and Exhibition Centre

21-23 March 2014 Affordable Art Fair Hong Kong Convention and Exhibition Centre

April

06-09 April 2014 Hong Kong International Lighting Fair (Spring Edition) 2014 Hong Kong Convention and Exhibition Centre

13-16 April 2014 International ICT Expo Hong Kong Convention and Exhibition Centre

20-23 April 2014 Hong Kong International Home Textiles Fair Hong Kong Convention and Exhibition Centre

20-23 April 2014 Hong Kong Houseware Fair Hong Kong Convention and Exhibition Centre

26-27 April 2014 Hong Kong Wedding Showcase Hong Kong International Trade & Exhibition Centre

27-30 April 2014 Hong Kong Gifts & Premium Fair Hong Kong Convention and Exhibition Centre

27-30 April 2014 Hong Kong Printing & Packaging Fair AsiaWorld-Expo

May

03-04 May 2014 Hong Kong International Education Expo Hong Kong Convention & Exhibition Centre

07-09 May 2014 HKTDC Hong Kong International Medical Devices & Supplies Fair Hong Kong Convention & Exhibition Centre

15-18 May 2014 Art Basel Hong Kong Hong Kong Convention & Exhibition Centre

24-26 May 2014 Asia International Arts & Antiques Fair Kowloon bay International Trade & Exhibition Centre (KITEC)


Point of View A Member’s Point of View When and why did you decide to come to Hong Kong?I was transferred by my former company to Hong Kong in March 2005. Initially it was planned that I would be transferred to Shanghai, but then the project got delayed and I was offered Hong Kong instead… and I am still here!

In your opinion, how have Hong Kong and South China changed since your arrival?A lot of development has happened since I first arrived. Macau only had a few local casinos and crossing the border into Shenzhen was still sort of an adventure, which completely changed with the Beijing Olympics. Hong Kong is an ever changing city and just simply by looking at the increase in tourist arrivals from the mainland over the past few years, it clearly shows that the rapid growth and change of mainland China has had a significant impact on the Hong Kong economy. The tallest building, ICC, has been built and opened in record time since I arrived, as an addition to the already impressive skyline.

What would you say are the advantages/disadvantages of doing business in Hong Kong?Clearly the proximity to the mainland as well as a mature and developed legal system to protect businesses are some of the many advantages. The airport, which is well connected is another advantage, and not to forget the attractive tax system in Hong Kong. On the downside high rents and air pollution are having a negative impact on businesses and to attract talents.

How do you see the development of Hong Kong in relation to China in the next years?The growth of the Hong Kong economy will very much interlink with the growth in Mainland China. A further integration of both economies is clearly visible with the construction of the High Speed Rail Link and the Hong Kong – Macao – Zhuhai bridge.

How well are German companies doing in Hong Kong / South China in your opinion?As I don’t work for a German company I am not in a position to comment. However, for any foreign company Hong Kong is an attractive city due to its proximity to mainland China, and as a gateway for doing business with the mainland as well as other parts of Asia.

Looking into the future, what are the main challenges facing your work/company?A shortage in the work force in some areas of our industry has become a challenge. Air pollution has become more and more of a problem for Hong Kong and shows an impact on attracting talents from abroad. The huge increase in visitors from the mainland is an opportunity, but also poses a challenge for Hong Kong that is already very densely populated especially in the main tourist and business districts.

How long are you expected to stay?I came to Hong Kong thinking to stay for a few years and then move on to another country/city as this is common in the hospitality industry. After 9 years I am still here and Hong Kong is the city that I have spent the most time since starting my career. Difficult to say for how long I will stay, but Hong Kong has treated me very well so far and it has become home for me and my family.

Thank you for your interview Mr. Aicher.

Mr. Gerhard Aicher

General Manager

The Mira Hong Kong

GC_Com_2013 May.pdf 1 16/05/2013 11:22 AM

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