dr. alyce su in china in spotlight

2010 | Vol. 4 No. 6 | ASEANAFFAIRS.COM

The Voice of Southeast AsiaASEANAFFAIRS

The Voice of Southeast Asia

Liu Haiyan Xu Kuangdi Alyce Su, Ph. D. Binsheng teng Jeffrey Chen

Li Ruogu Jean-Claude Juncker J.C. ISEUX, CHEN HONG CARLA CICO

Michael Barbalas

Wolfgang Lehmacher

Zhang Jianwei

Thomas Homberg

Nan Cunhui

Charles Tang Han Wei

Lili Zhao Karen Tang

David Huang

Jianwen (Jon) Liao Stan Fung

Aloysius Wee Jim Zhang

Zhang Yue TARIQ AHMED NIZAMI DAN BRUTTO ANDRÉ LOESEKRUG-PIETRI

Jennifer Angenend

China in Spotlight : Pages 35-72The emerging role of China in the 21st century is a focal

point for conjecture and a certain degree of apprehension in the world outside of China. Is China an ally, a competitor, an adversary or perhaps all three?

In this issue, AseanAffairs presents a current picture of China, primarily from the words of its business leaders as well as foreign business persons who have had extensive

experience inside China. We hope this information provides readers with a candid and accurate view of

China today and where the country is heading.

November-December 2010 Vol. 4 No. 6

November-December 2010 I Vol. 4 No.6CONTENTS

8 Your Views

Editorial

Subscription form / Index of advertisers

84 Asean in Figures

Asean Events

87 Asean Bazaar

INSIDE OUT

Asean economies roar

Asean Year in Review

Indonesia

Thailand

Malaysia

Singapore

Philippines

Vietnam

Myanmar (Burma)

22 Brunei

22 Cambodia

22 Laos

ASEAN IN REVIEW

I SEE NO HOPE FOR BURMA

PUSHING FOR QUICKER ASEAN ECONOMIC COMMU-NITY START-UP

LOOKS TOWARD THE 2011 ELECTION

WILL NEW ECONOMIC MODEL WORK?

NEW CASINOS ATTRACT TOURISTS

SECOND-FASTEST GROWING ECONOMY IN ASEAN

WILL THE PRESIDENT STEP DOWN IN 2011?

WHAT HAPPENS AFTER THE ELECTION?

NEEDS A BETTER-TRAINED WORKFORCE

WILL OIL AND GAS MONEY CHANGE THE COUNTRY?

BUCKING ENVIRONMENTAL GROUPS TO HARNESS THE MEKONG

Asean Talk

THE BLACK SHEEP REMAINS BLACK

Asean Talk

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78

78

HOT MONEY FINDS ASEAN

DARK POOLS, HOT MONEY

CSR leads to sustainability

CARGO FOCUS AT THAI

AUSTRALIA-ASEAN TRADENEARS A$100 BILLION

GLOBALIZATION 4.0:TRADE’S NEW CENTER OF GRAVITY

ASEAN’S BOLD NEW WINE INDUSTRY

Asean Money

Asean Money

Asean Environment

Asean Aviation

Beyond Asean

Asean Trade

Asean Traveller

The Voice of Southeast Asia34

CHINA IN SPOTLIGHT

On the following pagesOverview: Horasis Global China Business Meeting, 21-22 Nov., 2010

Honouring the Chinese Business Leaders of the Year 2010

CHINA-ASEAN: BEYOND TRADE?David Swartzentruber

INSIDE CHINA: INSIGHTS FROM THE RED BARONJ.C.Iseux

THE NEW SILK ROAD TO CHINARajiv Biswas

A STRATEGY FIX FOR MNCSJianwen (Jon) Liao

CHINA STILL AWAITINGTRANSFORMATIVE LEADERSBinsheng Teng

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60CHINA’S NEW WORLD ROLEAloysius Wee

CHINA’S ROAD TO DEMOCRACYLili Zhao

MANAGING INVESTMENTS INSIDE AND OUTSIDE OF CHINAAlyce Su, Ph. D.

David Huang

Stan Fung

Andre Loeskrug-Pietri

SUSTAINING GROWTH IN CHINA Karen Tang

Jim Zhang

Jeffrey Chen

In this issue, Asean Affairs examines the relationship between China and the world through the eyes of a galaxy of observers and business leaders both inside and outside of China. Their insights gained from intimate knowledge and firsthand experience provide a deep understanding of doing business in the middle kingdom. Also the advent of the China-Asean Free Trade Agreement on January 1 projects an important new trading bloc on the world stage. But will the trading be one-way out of China or will there be balanced two-way trade? Asean Affairs, as media partner of the 6th Global China Business Meet in Luxembourg (Nov 21-22, 2010), interviewed 23 business leaders and observers of China to produce this unique annual special country feature, China in Spotlight.

BUILDING TALENT IN CHINAWolfgang Lehmacher

SUCCESSFUL STRATEGIES IN CHINACarla Cico

Charles Tang

Tariq Ahmed Nizami

Dan Brutto

Chen Hong

Michael Barbalas

Thomas Homberg

Jennifer Angenend

THE AGE OF THE CHINESE CONSUMERHan Wei


GLOBAL CHINA BU

Synopsis of the 2010 Horasis Global China Business Meeting

The Global Visions Community

The sixth Horasis Global China Business Meeting, Luxembourg, 21-23 November 2010, brought together a large number of CEOs from China with leaders from around the globe to discuss China’s and the world’s current economic state. More than 400 business leaders from 45 countries, including CEOs from the Mid-dle East, Asia, Latin America, as well as Europe and North America, came together to debate the critical requirements for Chinese firms to successfully expand their operations toward a global level playing field. The Horasis Global China Business Meeting was co-hosted by Luxembourg for Business and the China Federation of Industrial Economics.

The following co-chairs represented the meeting vis-a-vis to the government au-thorities from China, Luxembourg and the world: Jeffrey Chen, Chief Executive Officer, Neopac Lighting Group, China, Tai-wan; Carla Cico, Chairman, Rivoli S.P.A., Italy; Boris F.J. Collardi, Chief Execu-tive Officer, Julius Baer Group, Switzer-land; Kolapo Lawson, Group Chairman, Ecobank Transnational, Togo; Liang Xin-

jun, Vice Chairman and Chief Executive Officer, Fosun Group, China; Nan Cun-hui, Chairman, Chint Group, China; Juan María Nin, President and Chief Executive Officer, La Caixa, Spain; Patrick O’Basuyi, Chairman, Obax Group, USA; Dinesh C. Paliwal, Chairman and Chief Executive Officer, Harman International, USA; Sal-man Al Jishi, Chairman, Salman Group, Saudi Arabia; Yat Siu, Chief Executive Of-ficer, Outblaze, Hong Kong SAR; John Tan, Chief Executive Officer, Asia Capital Rein-surance Group, Singapore; Xiang Wenbo, President, Sany Heavy Industry Co., China; Zhang Yue, Chairman, Broad Air Condi-tioning, China; Zhang Jianwei, President, Sinotrans, China; Zhou Xin, Chairman, E-HOUSE China Holdings, China; and Zhu Jimin, Chairman, Shougang Group, China.

Li Dongrong, Assistant Governor, People’s Bank of China, China, said that it was es-sential for developed and emerging coun-tries to continue to support a stable recov-ery. He echoed the outcomes of the G20 Summit which took place 10 days prior to the Global China Business Meeting. “Coop-eration on global and region levels is key,”

USINESS MEETING

Media Partner:

embourg, explained that “while actively coping with the global economic crisis, China attaches great importance to strengthening coordination and cooperation with the European Union.”

The plenary sessions in the main hall were followed by a round of unique and intensive boardroom dialogue sessions, where del-egates interacted with the panellists on a variety of fundamental issues. More than 20 themed panels across the one and a half days embraced a wide variety of topics, some focussing on specific sectors such as energy, infrastructure, or financial services, with others featuring discussions reflecting on the diversification of the Chinese economy and the country’s emerging leadership role in the world.

Dr. Frank-Jürgen RichterPresidentHorasis: The Global Visions Community

he said. ‘The broader message from the G20 meeting was a power-ful recognition of the shift in economic power to emerging nations like China _ away from the western industrial powers,” added Hu Shuli, Editor-in-Chief, Caixin Media, China. Liang Xinjun, Vice Chairman and Chief Executive Officer, Fosun Group, China sug-gested that the G20 process needed to be made more inclusive.

Jeannot Krecké, Minister for the Economy and Foreign Trade, Luxembourg, opened the meeting in a dinner session that was in-formative and candid.

Speaking for the Chinese government, Xu Kuangdi, Vice Chair-man, 10th National Committee of the Chinese People’s Political Consultative Conference, and Chairman, China Federation of Industrial Economics, painted a lucid vision for the future of the Chinese economy.

In a special plenary session on the EU-China Agenda, Lux-embourg’s Prime Minister Jean-Claude Juncker stated that “China’s relations with the European Union are burgeoning.” He examined how China and the European Union can work together to address global and regional issues. In the same session, Zeng Xianqi, Ambassador of China to Lux-

Co-hosts: Co-organizers:

Strategic Partners:Media Partners:Knowledge Partners:


Honouring the Chinese Busin

This year, the Global China Business Meeting has been held in Luxembourg, a small but very dynamic country at the heart of Europe. Around 400 business leaders from all over the world gath-ered here on November 21-22, to share their perspective on China’s development, the globalization of Chinese firms, and their strategy towards future China. PwC is proud to be the strategic partner of the 6th Global China Business Meeting and award four Chinese Leaders who have been chosen by a jury led by Horasis. These Chinese decision makers excel in leadership and business strategy. They are highly significant of the economic development of today’s China.

Even with the economy subdued, however, the tremendous entrepreneurial spirit of Chinese business leaders has driven the economic growth, the development and the influence of China at worldwide level. Therefore, four business leaders have been awarded for their outstanding performance as business leaders this year and for being an example for all the entrepreneurs.

� Mr. Li Ruogu Chairman and President of the Export-Import Bank of China (Exim) since June 2005. China Export-

Mr. Li Ruogu

Import Bank Fully is owned by the Chinese government and is under the direct leadership of the State Council. The Bank has 17 domestic business branches and representative offices as well as three overseas representative offices in South Africa, Paris and St. Petersburg.

� Mr. Nan Cunhui, Chairman of the Board & Chief Execu-tive Officer of CHINT Group Corporation. CHINT Group Corpora-tion, formerly The Switch Factory, was founded in 1984 and is now one of the first class global electrical product manufacturers with 23,000 employees.

� Mr. Zhang Jianwei, President of Sinotrans Limited. He is also the Director of Sinotrans & CSC Group and the Chairman of Sinotrans Air, the managing director and deputy chairman of China Maritime Law Association, as well as vice chairman of China Fed-eration of Logistics & Purchasing (CFLP).

� Mr. Zhang Yue, Chairman of Broad Air Conditioning. He has been granted over 100 patents for his inventions. And he also serves as the Vice Chair of the United Nations Environment Pro-gramme’s Sustainable Buildings & Climate Initiative (SBCI).

Chinese business leaders were recognized for their achie

Mr. Zhang Jianwei

ness Leaders of the Year 2010

Mr. Nan Cunhui Mr. Zhang Yue

EVEN WITH THE ECONOMY SUBDUED, HOWEVER, THE TRE-MENDOUS ENTREPRENEUR-IAL SPIRIT OF CHINESE BUSI-NESS LEADERS HAS DRIVEN THE ECONOMIC GROWTH, THE DEVELOPMENT AND THE INFLUENCE OF CHINA AT WORLDWIDE LEVEL.

hievements at the Sixth Global Chinese Business Meeting


Asean Affairs’ managing editor explores the long and complex rcountries. With the start of the China-Asean Free Trade Ag

An evolving roleDuring the last half of the 20th century

and into the current period, the relation-ship between China and the Asean coun-tries has been marked by periods of friend-ship and animosity, trust and distrust.

Throughout this time China has matured through its period of revolutionary zeal and its role as a diplomatic outcast to become a full-fledged member of the inter-national community. The visit of U.S. Presi-dent Richard Nixon to China in February 1972 was a major breakthrough moment for China and touched off her acceptance into the international community.

Prior to that landmark event, however, Indonesia and Burma were among the first countries (in 1950) to recognize the new People’s Republic of China. Most of the other Asean countries did not estab-lish diplomatic relationships with China until the 1970s. Some of this foot-dragging was undoubtedly caused by concern over China’s aggressive military posturing, as several Asean countries were members of the U.S.-backed regional alliance, SEATO (Southeast Asia Treaty Organization), from 1954-1977.

As U.S.-China relations improved, China took important steps to move closer to the Asean countries. In 1980 China stopped supporting Chinese insurgencies in the region and in 1989 China passed laws requiring Chinese abroad to adopt the citizenship of the countries of residence. This is important as, for example, Asean member Thailand has the largest popula-tion of Chinese-Thai residents of any of the Asean members.

Beijing’s official contact with Asean began in July 1991 when Chinese Foreign Minister Qian Qichen was invited to attend the 24th Asean Foreign Ministers’ meeting. This reaching out by China was in many ways an attempt to overcome the world’s condemnation and sanctions imposed after the June 4, 1989 Tianamen Square mas-

sacre.Since 1991 the relationship between

China and Asean has blossomed, culminat-ing in the China-Asean Free Trade Agree-ment. At the same time, Asean has adopted a “hedging” policy by courting the U.S., par-ticularly as China has been involved in the dispute over territory in the South China Sea. Four Asean countries plus Taiwan claim rights in the South China Sea: Brunei, Malaysia, Philippines, and Vietnam, which has appealed directly to the U.S. about the issue. Japan also has had numerous direct conflicts with China over territorial disputes in the South China Sea.

Asean’s hedging policy has been invigorated by the pro-active policy of the Obama administration, which has shown increased interest in Southeast Asia.

China-Asean Free Trade Agreement

Ten years after it was envisioned, the China-Asean Free Trade Agreement (CAF-TA), the world’s largest free-trade area by population, came into effect on January 1. The agreement between China and the 10-

country Association of Southeast Asian Nations (Asean) cov-ers nearly 1.9 billion people. In terms of economic value, this is the third-largest regional agreement, after only the EU and NAFTA, the North American Free-Trade Agreement.

CAFTA will allow 90 percent of all goods -- that is, around 7,000 items traded between China and Asean countries -- to be zero-tariff in the six richest Asean countries. But the poorest four ASEAN members, Vietnam, Cambodia, Laos and Myanmar, will not need to cut tariffs to the same levels until 2015. Meanwhile, by 2015, duties on other “highly sensitive” commodi-ties will be cut to no more than 50 percent, which would include toilet paper in China, popcorn in Indonesia, and snowboard boots in Thailand.

The level of free trade is short of the EU or NAFTA trade pacts. Many firms fear Chinese competition in various countries. Indonesia, which wanted to reopen parts of the deal, has not readied itself for freer trade. On the other side of the coin are Asean members Singapore, Malaysia, Indo-nesia and the Philippines that are four of China’s major trading partners. The trade pact also lacks a mechanism for the resolu-tion of trade disputes.

The major goods China imports from Asean countries are intermediary goods such as machinery, minerals and fuels, plastics, fats and oils, rubber, and organic chemicals. China uses these imports to manufacture low-cost goods that are ex-ported to the United States and the EU.

In 2010 Asean traded more with both Japan and the EU than it did with China, and other important trade partners are South Korea, Australia and India. Prior to 2009, China-Asean trade expanded rapidly, with volume skyrocketing from US$78 billion in 2003 to US$231 billion in 2008. However, China-Asean trade in 2009 shrank

CHINA-ASEAN: BEY

lines to improve Thailand’s logistics, the groundbreaking ceremony for a China culture center in Bangkok, and increased financing for a Thai-Chinese industrial park in Thailand’s eastern seaboard.

A couple of days after the donation, Thai Prime Minister Abhisit Vejjajiva came out for use of the Chinese yuan in trade matters in Asia, a step that the Asian Devel-opment Bank had also proposed.

These efforts underline China’s increasing role in the seven continental Asean countries, many of them lacking crucial infrastructure that when improved can serve as trade channels into and from China.

Thailand is not alone.

The Laotian government is already taking some steps to prevent Laotian people from being exploited and to protect biodiversity. Most of the illegal wildlife traf-ficked winds up in Chinese restaurants.

“The highest level of government does take illegal wildlife trade seriously,” explains Bouphanh Phanhthavong of the Ministry of Agriculture and Forestry. “The national poverty reduction plan clearly states that environment protection is one of three pillars to reducing poverty. The other two are economic growth and sociocultural development. If the natural resource base is depleted or destroyed, local people’s livelihoods will also suffer and ultimately

cause more poverty.” Despite the apparent desire of the

Laotian government to promote sustainable development, however, it’s apparent that some Chinese companies and individuals are going to require a large measure of control from Beijing.

In Cambodia, at a hydropower dam along Cambodia’s border with Thailand, and in Burma, Laos and even Vietnam, Chi-na is engaged in a massive push to extend its economic influence into Southeast Asia. Using investment, China is transforming a huge swath of territory along its southern border.

“Cambodia is approaching China with open arms. It’s how the United States took over its neighborhood. Its geopolitics,” said Lak Chee Meng, the senior reporter on the Cambodia Sin Chew Daily, one of the coun-try’s four Chinese-language dailies.

The future of China-Asean relations

In the past 15 years the Chinese may have learned much from their relationship with Asean. The list of things that China may have picked up from Asean could include the removal of suspicions, coop-erative security, multilateral consultation, dialogue consensus, and non-coercive ways of handling disputes.

Will these lessons translate into how Chinese conducts itself in Asia and else-where?

A good case to look at is the South China Sea dispute, where China prefers to engage in a unilateral approach in settling the various claims with the four involved Asean countries. The multilateral approach is favored by these Asean members and they have been supported by the United States.

It should also be mentioned that sev-eral Asean countries _ Indonesia, Malaysia, Philippines, and Thailand _ have moved far-ther along the path toward a participatory and democratic system than has China.

Is China’s ascent the start of a new Monroe Doctrine in Southeast Asia?

ex relationship between China and the Asean Agreement this year, what comes next?

8 percent from the previous year, to US$212 billion, and it is expected to fall further this year.

There is growing nervousness that Asean could become China’s domain. Reportedly, every Asean leader to sit with President Obama during his Asia trip asked questions about trade, and they all hope for a more active American presence in the region to strike a balance so that the Asean countries would not be pulled into a China-dominated landscape.

Other signs of edginess are also ap-pearing in news reports from the region such as the “Chinaization” of villages in southern Laos, adjacent to Thailand, as Chinese traders make their presence felt.

The future of CAFTA may well lie in how the Chinese economy can absorb the manufactured imports of the Asean coun-tries rather than just intermediary goods.

The cordiality and investment offensive

There is a decided split within Asean

between the Asean countries that are located on the Asian continent and those offshore-Indonesia and Philippines. The continental countries have a stronger and more tangible relationship with China.

Thailand is a case in point with a large Chinese Thai population and where Chinese-language newspapers are still be-ing printed.

Following the recent flooding in Thailand that claimed more than 200 lives, a Chinese official paid a visit and gave 10 million yuan (US $1.5 million) to aid relief efforts. This followed closely after the Thai Parliament approved a largely Chinese-financed project for two high-speed rail

ASEAN HAS ADOPTED A “HEDGING” POLICY BY COURTING THE U.S., PARTICULARLY AS CHI-NA HAS ADOPTED AN AGGRESSIVE POSTURE IN THE DISPUTE OVER TERRITORY IN THE SOUTH CHINA SEA, OBSERVERS SAY.

By David Swartzentruber

YOND TRADE?


INSIDE CHINA: INSIGHTS FROM TJean Christophe Iseux, Baron von Pfetten, in

an interview with Li Hui Wei of Contemporary World, the official monthly publication of the International Department of the Communist Party of China’s Central Committee (CPCCC), reveals unique insights gained over a decade of working inside China. This interview was published in Chinese in the November 2010 edition of the publication and translated into English for Asean Affairs.

Q: As a French scholar with a noble family background, you are regarded as an “overseas Lei Feng” in China. What at-tracts you to China?A: The two most attractive elements of China for me are:

a. The Chinese people – particularly the good-natured Chinese farmers. I am fond of Chinese cleverness (street wisdom), humor, hospitality, friendliness and sense of honor (face). Since 1997 I have stayed a few days each month in the countryside living with Chinese farmers.

b. The Chinese culture. I am particularly fond of Tang Dynasty porcelain, Ming Dynasty furniture, Qing Dynasty archi-tecture, Beijing Opera and Chinese modern paintings (like the one next to my home). I have visited every Chinese province at least once. On every visit I try to better understand the local culture.

Q: You’ve stayed in China for more than 10 years. How do you perceive China’s achievements in reform and opening up?A: The last 30 years of Chinese achievement since the start of the open door policy is straight-forward:

� Major macroeconomic developments in terms of gross domestic product growth, making China the engine of growth for Asia-Pacific economies.

� Major microeconomic achievements with 20 state-oper-ated enterprises listed in the Fortune 500, with Petrochina topping the list.

� China’s rapid response when faced with major cata-strophic events such as the 1998 flood and the 2009 earthquake. I would like to particularly praise the People’s Liberation Army when more than 1 million soldiers were dispatched for humanitar-

ian relief in both cases.� Major achievements in terms of giving a better standard

of life to the Chinese farmers after successful ongoing land reform policies.

� China’s entry into the World Trade Organization. � Chinese government’s intelligent use of the LU Xun “Yang

Qi” model to take the best from the West and leave the rest.� China’s international status as a “responsible” member of

the international community with well recognized China involve-ment in United Nations peace forces and the exceptional market-ing of the 2008 Beijing Olympics and 2010 Shanghai Expo.

Q: What problems do you think China is still faced with in her economic development?A: The most important problem facing the Chinese economy is the increasing gap between the countryside and the city. China is still a developing country with a rather low gross domestic product per capita.

I would like to add the following: � Continue to expand domestic demand and stimulate the

consumer market away from foreign direct investment and the export oriented economic growth model. Efforts are needed to increase the income of residents in raising the minimum wage standard. It would be helpful to raise the minimum purchase price of grain and boost the income of farmers.

� Manage the growth of urbanization carefully. Implementa-tion of land reform raises the possibility that farmers will trade their land use rights, thus depriving them of an important security.

� Support the service sector, which is environmentally friendly and instrumental in job creation. The government can pro-vide incentives for starting one’s own business, effectively giving more support to the rising private economy.

� Bolster the international influence of the renminbi and encourage Chinese companies to establish international footholds and acquire valuable resources and assets overseas.

I would also suggest that China’s current development trans-formation be accompanied by a profound reform of people’s ideas:

� The phrase “economic growth” should be replaced with “economic development”.

� Local government officials should switch from “rich na-tion first” mentality to “rich people first”.

� The economic cake should be made “better”

JC Iseux, left, with General Fidel Ramos, former president of the Philippines

In 2005, Professor von Pfetten, left, is greeted by General Cao Ganggquan, then Chinese Minister of Defense, right.

THE RED BARON

THE MOST IMPORTANT PROB-LEM FACING THE CHINESE ECON-OMY IS THE INCREASING GAP BETWEEN THE COUNTRYSIDE AND THE CITY. CHINA IS STILL A DEVELOPING COUNTRY WITH A RATHER LOW GROSS DOMESTIC PRODUCT PER CAPITA.

J.C. ISEUX,BARON VON PFETTEN,

instead of “bigger”.� State-owned capital should change from “profit-oriented”

to “public interest oriented”.Such change of the people’s mindset is a prerequisite for a

sound implementation of new rules and regulations enacted from the central government.

Q: We hear that your biggest wish is to join the Communist Party of China (CPC). May we know the reason why you want to join the CPC and what you think about the develop-ment of the CPC?A: Beyond my 1999 party report I would like to add:

� CPC has an historical meaning for the Chinese people: the party assures the stability of the country and is giving the Chinese people back their pride after so many centuries of foreign humiliation.

� CPC has an historical meaning for the world: the CPC-strengthened China is the only country giving alternative ideals since the fall of Soviet Union and insures stable economic develop-ment for the country to enable the country to become the engine of growth for the world at large

� CPC current ideals are very close to those of my great-grand-uncle, Joseph Faisant, that were embodied in the Radical-Socialist Party of France in the1920s. He was MP and helped to organize young Chinese to work and study in France, including Deng Xiaoping in 1921, who worked at the steel mill of my family in Burgundy. These ideals can be simplified into a vegetable called “The Radish”: Red outside (socialist), White inside (traditional values) and always very close to the butter plate (attention to the economy and well-off society). I personally particularly subscribe to the making of an “Harmonious Society” which still remains to be achieved in China and the rest of the world.

Q: Recently, China’s position in the international commu-nity has been rising. However, there are some unfriendly comments about China. In your opinion, how should China improve her image in the international community? A: I am very surprised by the last three years of increased misun-derstanding of China by the rest of the world, particularly Europe, probably due to the financial crisis which is still very damaging in terms of its decreasing wealth and increasingly protectionist mindset. I now feel that the Chinese government should better use China’s rich culture to win the hearts and minds of Western people

by promoting Chinese cultural centers abroad, for instance; and also use foreign voices to represent China outside. Given its rapid eco-nomic growth, some commentators have argued China has become a global power and is no longer a de-veloping country. Others say China should redefine itself a “responsible stakeholder” helping maintain the present international order. These arguments are inconsistent with China’s reality. For all the hype about China’s rise, its per capita GDP ranks 104 worldwide in a World Bank report, lower than many other developing countries. China should and will continue to align itself with

other developing countries.

Baron JC hunting at his estate in Burgundy, France, Nov 2010


Seven centuries ago, the Silk Road described by Venetian trader Marco Polo in ‘Il Milione’ _ the account of his travels to Cathay _ comprised a series of transport routes overland and by sea from Southern Europe through Central and South Asia through to China. In the 13th Century, China was one of the world’s leading civili-zations, and the Silk Road not only opened up flourishing trade between East and West, but also the importation of significant new technology from China that facilitated Europe’s economic development and scien-tific advance.

More than 700 years later, Europe is beset by structural economic problems, including demographic ageing and rising fiscal burdens of pension and health care provision, amidst fiscal debt crises in a sig-nificant number of EU member countries. With domestic growth and market expan-sion limited, Europe’s focus is again turning to the countries along the Silk Road as the fulcrum of opportunity in the 21st century.

Indeed, the economic regions com-prising the New Silk Road, including China,

THE NEW SILK RWith domestic markets stagnant, European firms may wish

Asean, India, Central Asia and the Middle East, are projected to be the fastest grow-ing regions of the global economy over the next two decades. The markets of the New Silk Road economies therefore offer con-siderable opportunities for European busi-nesses, in contrast to moderate economic growth at best in Europe.

The world economy is currently experiencing a major shift in economic power from West to East, as China and India emerge as new global economic giants. While East Asia’s export-driven growth model during the 1980’s and 1990’s

was heavily driven by the strength of demand from the U.S. and Europe, by 2010 the ascendancy of China as the world’s second largest economy has also resulted in Chinese demand becoming a key driver of exports from other Asian countries.

Over the next decade, the Asia-Pacific region is projected to remain the fastest-growing region of the global economy, with both China and India growing at an average rate of around 8 per cent per year. Within 15 years, by the year 2025, Chinese

nominal GDP is expected to exceed that of the United States, making China the world’s largest economy, broadly similar in size to the combined GDP of the European Union. Indian nominal GDP is projected to exceed that of Japan by 2025, and the size of the In-dian economy is also expected to be larger than any individual EU economy.

The importance of the New Silk Road to the European economy is demonstrated by the rapid growth in EU merchandise exports to China, which tripled between 2000 and 2009. In terms of actual values, total EU merchandise exports increased by 56 billion euro between 2000 and 2009, rising from 26 billion euro in 2000 to 82 billion euro in 2009. With the value of ser-vice exports from the EU to China having reached 18.5 billion euro in 2009, total EU exports to China amounted to around 100 billion euro in 2009. As the global recovery strengthened in the first half of 2010, total EU exports to China rose by 43 per cent over that of a year ago.

With the size of Chinese GDP expect-ed to continue to expand rapidly over the next two decades, the implications for Euro-pean trade and invest-ment are far-reaching. Furthermore, there is a major rebalanc-ing taking place in the structure of the Chinese economy, with a significant shift away from the traditional growth en-gines of exports and investment, towards domestic demand-driven growth. Rapid growth in wages is expected to support strong medium-term expansion in consum-er demand, helping to boost the share of consumption in GDP over the long term.

Mr Liang Xinjun, Vice Chairman and CEO of the Fosun Group, a leading Chinese conglomerate, expects the Chinese consumer market to grow very strongly over the coming decades. Speaking at the Horasis Global China Business Meeting in November, he projected that “within 10 years, China will become the world’s larg-est consumer market. If China’s GDP grows at between 7 and 8 percent per year over the next five to 10 years, domestic demand

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will grow at 15 per-cent per year, with demand for branded goods growing even more quickly, at around 20 percent per year. Western multinationals can no longer operate effectively without a strategic focus on the Chinese market.”

However, other Asian growth engines are also rising in importance, notably India, which within a decade is projected to become an economy roughly the size of China’s economy today. Asean is also expected to become one of the world’s leading growth engines, due to the rapid growth of Indonesia and Vietnam, whose consumer markets are currently growing strongly.

For Europe, which faces the prospect of decades of weak growth in de-mand from domestic consumer markets, the rapid growth in retail sales projected for the Asia-Pacific region, notably for China, offer very at-tractive opportunities for a wide range of export industries.

The Prime Minister of Luxem-bourg, Jean-Claude Juncker, stated at the Horasis Global China Business Meeting in November that “Europe’s 21st cen-tury will be shaped by emerging market

economies, of which China’s economy will be by far the most important. For the EU, China already is a key trade partner, ranking second only to the U.S. China and the EU are strategic partners, with EU-

Rajiv Biswas is a professional economist with extensive experience in Asia-Pacific macroeconomic, trade and financial market issues. He is the Asia-Pacific Chief Economist for IHS Global Insight. His previous experience includes working as the Director for Southeast Asia for The Economist Group and as Executive Director for Asia-Pacific Country Risk for UBS. He has also worked as a senior economist for the Com-monwealth Secretariat and as an international economist for the Royal Bank of Scotland. He is a graduate of the LSE and Imperial College, London University.

China summits which allow for a regular exchange of views. Our positions converge on a significant number of issues.”

The transport routes of the New Silk Road are also strengthening significantly, helping to enable the rapid growth in trade in goods and services amongst the econom-ic regions that comprise the New Silk Road. The traditional sea lane from the Strait of Hormuz to the Malacca Strait and north to the South China Sea remains of vital stra-tegic importance as a key shipping route for Middle Eastern oil and gas to energy-hungry East Asia, and also for exports of East Asian manufactures to European mar-kets. However, China is at the forefront of initiatives to strengthen high-speed rail and highway links across the region, improving land transport links from Northeast Asia to Southeast and South Asia, Central Asia and also to Western Europe. Air transport infrastructure is also being rapidly devel-oped across most of Asia, with significant investment in airport infrastructure and rapid expansion of Asian airline capacity projected over the next twenty years. Oil and gas pipeline networks from Central Asia and Russia to China are also the focus of ambitious development projects.

OUTLOOKThe shift in economic power from

West to East brings new opportunities for Europe at a time when it faces tremen-dous structural challenges from ageing de-mographics, high government debt levels, and deep-seated financial sector prob-lems. With growth in domestic European consumer markets expected to be very weak for decades, the greatest opportuni-ties for European companies will be in the fast-growing consumer markets on the New Silk Road, including the Middle East, South Asia, ASEAN and China.

However, the economic ascendancy of the East is also giving rise to new com-petition for global economic governance, with the rising economic powers of Asia increasingly pressing for a greater role in international political and economic gover-nance. This has already led to the emer-gence of the G-20 as the new forum for international economic policy-making, and greater voting rights for emerging markets at the IMF and World Bank. This poses a challenge to the old governance structures that Europe used to dominate within the IMF, World Bank and BIS.

The Asian ascendancy and rapid growth of the New Silk Road economies brings new hope for Europe at a time when it faces significant structural challenges. However, it also has its price, as Asian countries will increasingly challenge the post-World War Two status quo of a global governance model dominated by the U.S. and Europe.

ROAD TO CHINAwish to travel the New Silk Road to dynamic Asian markets.

ByRajiv Biswas

The Rise of Asian Consumer Markets

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In recent years, the MNCs that once dominated the China market have begun to lose ground to Chinese competi-tors. What brought about this change?

MNCs typically adopt one of two strategies when they expand into China. Some pursue a global strategy that focuses on scale and efficiency. These companies centralize operations such as marketing and R&D. Others take a multi-domestic approach that focuses on responsiveness and localization, with decentralized local operations.

However, the mindsets behind the two strategies remain the same in that MNCs try to extend the business models and core competencies they have already estab-lished in developed countries to China. And in both cases, the MNC business model in China usually targets top-tier customers first. Then they have tried to take a “top-down” approach and leverage economies of scale so that the products or services become accessible to customers in lower-priced markets.

And what has been the strategy of Chinese companies?

Chinese companies take the opposite approach -- the bottom-up approach. In the very beginning, Chinese companies had a hard time competing in tier-one and tier-two markets, so they typically attacked the lower end first. But these companies have gradually started to move up the value chain.

Meanwhile, the problem for MNCs taking the top-down approach is that they often haven’t been able to make their product cheap and competitive enough to penetrate down into the larger market. Sooner or later, they hit a wall in the mid-tier market, beyond which they have no competitive advantage.

What is worse, in industries where MNCs used to have a competitive advan-tage, such as medical equipment, we’ve seen the emergence of Chinese companies. They’ve improved their manufacturing, de-sign and marketing. They’ve become more competitive in higher-value areas that used to be dominated by MNCs.

Take the example of Band-Aid and [domestic bandage company] Yunnan Baiyao. Johnson & Johnson’s strategy is to have their salespeople dress in nice shirts and suits while staying in nice hotels. So what does Yunnan Baiyao do? It takes a

more grassroots approach. In third-tier and fourth-tier cities, their salesmen go store by store to make sales. Johnson & Johnson failed to go the last mile and it has lost 15 percent market share to Yunnan Baiyao over the last three years. And its market share is continuously declining.

Taking this bottom-up approach, Chinese companies are acting as disrup-tors in many industries. Look at Huawei. It went from the countryside to major cities, and then to Southeast Asia, Africa and the Middle East. And it’s now penetrating the mainstream telecommunications market in North America and Europe. Huawei went from the bottom to the top.

What can multinational companies do to remain competitive?

Fundamentally they have to change the way they do business and make China their second hometown, rather than just being visitors here. When these two busi-ness models clash in the middle, there is just one choice -- develop a new business model for the Chinese market that is differ-ent from what they have gotten used to in other markets.

If you look at very successful MNCs, they have been willing to change their strategy in China. They acquire a local Chi-nese brand and then compete against the Chinese. That’s one way to stay competi-tive in the China market. Another way is to develop a low-end brand of product to compete against Chinese companies.

Originally, P&G Rejoice products cost more than 20 RMB. Why did it decide to de-velop products that sell for only 9.9 RMB? It wanted to compete with local produc-ers. P&G basically developed the Chinese shampoo market in the 1980s when we didn’t have any local shampoo. By 2001, fifty percent of the shampoo market had been taken over by local makers.

So P&G had to do something to compete against competitive prices. It had two choices. One was to develop a cheaper product, but at a huge cost -- brand dilution. The other choice was to develop a second brand for direct competition with Chinese producers. P&G wanted to leverage their brand, so it went ahead and produced a shampoo for just 9.9 RMB. In the end, it was willing to suffer some brand dilution to be able to better compete with Chinese companies.

Are there any examples of foreign companies developing successful

new strategies to remain competi-tive in the China market?

GE CEO Jeff Immelt wrote an article recently in the Harvard Business Review about GE’s experience in China producing a low-end ultrasound scanner for hospitals in the countryside, a process he referred to as reverse innovation. The typical ultra-sound scanner in the United States cost $150,000, so GE could only sell the equip-ment to tier-one hospitals in Beijing and Shanghai and other major cities.

There was a big market of consum-ers who could not afford this, so GE established a research center in Wuxi with the goal of researching and developing a lower-end portable scanner hooked up with a laptop. They created something that is completely new, extremely cheap and accessible. That approach is completely different from the company’s conventional ultrasound scanner, which emphasizes sensitivity and image clarity.

Now this product, which was de-veloped for the Chinese countryside, has become a sensation in the U.S. market. It’s very portable, so it’s become popular with doctors working in places where accidents occur.

A STRATEGY FIX FOR MNCS

J&J FAILED TO GO THE LAST MILE AND HAS LOST 15 PER-CENT MARKET SHARE IN THREE YEARS.

JIANWEN (JON) LIAO

Prof. Jianwen (Jon) Liao of Cheung Kong Graduate School of Business explains what MNCs can learn from P&G, GE, and Yunnan Baiyao.


In the 1990s, Austrian economist Peter Drucker predicted that within the next 10 years, China would be producing its own management luminaries. These new leaders would generate innovative strategies and new frameworks for thinking about busi-ness, he said. Regrettably, we have yet to see the emergence of the high-level think-ers Drucker envisioned, and I’m relatively pessimistic about the near-term outlook.

In November 2009, I took Cheung Kong’s EMBA class to Japan for a trip. With great interest we visited Kyocera, a company founded by Kazuo Iwamori, one of Japan’s so-called “four sages” of manage-ment, whose business ideas are grounded in the basic notion of mutual respect. I was struck by the similarity between his principles and the traditional Confucian concepts of benevolence and charity.

Sadly, we don’t yet see these ideas reflected in Chinese business models. In-stead, entrepreneurs and top managers are driven to maximize profits for themselves, both on a personal and a corporate level. Such are the current realities of modern business culture in China.

To be sure, we should approach the situation with an element of humil-ity. We still lag behind other markets on many fronts, and we need to take gradual, practical steps to bridge the gap. We need to work on resolving problems within our legal and regulatory systems, while at the same time strengthening corporate ethics. Only then can we really focus on better business practices.

Our current state of affairs doesn’t inspire optimism. From my standpoint as an academic who concentrates on corpo-

Peter Drucker was wrong – at least in his predictions about Chinese business leadership, says Strategic Management Prof. Binsheng Teng of Cheung Kong Graduate School of Business

rate strategy, at present there are very few enterprises in China that factor ethics into their corporate strategies.

But one such example I have found is Hi-min Solar Energy Group, which has a remarkably enlightened approach to doing business. Hi-min president Huang Ming has said the company’s mission is to develop a profitable business out of a technology that helps protect the environment and by extension, benefits humanity. Both the busi-ness and administrative sides of the com-pany operate on this principle. I believe leveraging socially beneficial technology to create profitable business is an incredibly valuable endeavor. If more business leaders began to employ this approach, it could set a powerful example for other Chinese companies.

It’s important for companies to create positive environments, and this represents the first step towards broader changes. But for businesses to truly transform their cultures, we need powerful entrepreneurial leadership.

Consider Japan’s so-called “four sag-es,” of whom Iwamori is one. Each of these business leaders basically made his name in the 70s. At the time, Japan was twenty years into its post-war development, but taking a longer view, the country’s theories of modern business can be traced back to the Meiji Restoration. So basically, busi-ness models in Japan can be said to have over 100 years of continuous and unbroken development and progress.

China’s era of modernity, having begun in the late 19th century, can also claim more than a century of history, and since economic reforms began 30 years ago we’ve experienced a period of ex-tremely rapid growth. Yet as a result of various upheavals in our social history, the development of corporate culture in China has been severely disrupted a number of times over this period. We’re still focused on copying other countries and remaking ourselves. It will take time to forge our own business principles.

The path we have taken in develop-ing our commercial climate and culture is unique. When we established the People’s Republic, we relied heavily on the advice and practices of the U.S.S.R. Later, when we opened up to the world in the 1980s, we aimed to follow in Japan’s footsteps.

Further economic development in and after the 1990s brought about a focus on the business practices of the United States. In addition, China’s own business culture and traditions, including Confucianism and local mutual aid associations, have also contributed to the current business climate.

Some may look to Japan as the most likely model for corporate and economic development, due to our long shared cul-tural history, but I disagree. We may have a number of cultural similarities stemming from extensive interaction in the Tang Dynasty period, but when it comes to us as people, I think we’re much closer to the Americans. The Japanese have a strong tendency to be group thinkers, whereas I believe individualism is deeply engrained in the Chinese people.

Thus, I believe we need to aim for a Chinese corporate culture that lies some-where between Japan and the United States and is infused with our traditional values. In the meantime, we must wait for the emergence of a new generation of innova-tive business leaders before we can know precisely what shape the Chinese business model will take.

This article has been translated from Mandarin. It was originally published in the China Business Journal.

CHINA STILL AWAITINGTRANSFORMATIVE LEADERS

YET AS A RESULT OF VARIOUS UPHEAVALS IN OUR SOCIAL HIS-TORY, THE DEVELOP-MENT OF CORPORATE CULTURE IN CHINA HAS BEEN SEVERELY DISRUPTED A NUMBER OF TIMES OVER THIS PERIOD.

BINSHENG TENG

As China assumes a new world role, Aloysius Wee suggests that China needs to engage its neighbours at the human level

THE DRAGON EMERGESChina is poised to become the next

world superpower. It is already the second largest economy in the world and being in this preeminent position, China finds itself in an awkward situation. The United States is now engaging China in a way that shows it recognizes China’s arrival on the world stage. From human rights to the renminbi revaluation to regional politics, it seems that the U.S. is making its voice heard on China’s moves. The world as we know it is changing.

FLIGHT OF FANCY ANDFIREPOWER

China’s strong military presence in the region has not only caught the atten-tion of the U.S. but also its neighbours who are aware of the military build-up. China is now reasserting herself in the dispute with Japan, Vietnam, Taiwan and the Philippines over territories in the South China Sea. It was not too long ago that an economically weak China was invaded by Japan and ex-ploited by France, Germany, Great Britain, and Russia.

ENGAGEMENT ANDRESPONSIBILITY

For a start, China needs to engage its neighbours at the human level. China has been taking active steps to participate in humanitarian projects involving the military and medical units. In the recent heavy floods in Pakistan in July this year, the People’s Liberation Army of China provided the Pakistani military with tents,

CHINA’S NEW WORLD ROLE

power generation and sludge clearing equipment. They have also participated in various peacekeeping assignments under the auspices of the United Nations.

Politically, China is already assert-ing its dominance in the region. In recent years, Chinese leaders have made many vis-its to strengthen ties with its Asian neigh-bours such as India, Vietnam, Malaysia and Singapore. China is fast replacing the U.S. as the dominant Big Brother in this region. The subtleties are poignant and at the same

time disturbing. As China rises to become a major economic power, its influence will extend to the political sphere as well.

In the area of trade and commerce where China is now leading Asia, it has to find a role as a leader and not as a competi-tor. It has to position itself as pulling or pushing the various economies along rather than competing with them. A step in this direction is the Asean-China Free Trade

ByAloysius Wee

THESE ARE EXCIT-ING TIMES, WHERE ASIANS LIVE IN A WORLD WHERE ECONOMIC AND POLITICAL FOCUS IS SHIFTING BACK TO THIS PART OF THE WORLD.

Agreement that came into effect this year. But a definitive agreement between India and China has not been reached. Once a de-finitive agreement is reached to link India, China and Asean, we will see the birth of a trading and economic zone with a tremen-dous potential for growth.

Apart from the physical infrastructure, there must be a legal infrastructure to sup-port trade and commerce. Already Asean ministers at recent Asean summits have recognized this and have started working towards integrating and streamlining the legal infrastructure to support the arrival of the Asean Economic Community in 2015 and Asean trade with the rest of Asia, particularly China and India.

LINKING ASIA – PAX ASIANAApart from linking these regions

through favourable trade agreements, there should also be the infrastructure to physi-cally link these regions together. There are discussions between various countries to link their current rail networks to each other to enable seamless train travel from Singapore, through Malaysia, Thailand and Vietnam to China, and a possible route via Cambodia and Myanmar into China. When such a network is established, cross-border trade will also increase.

Regional flights are already devel-oping, fuelled by the rise in budget and private airlines across Asia. Air travel has increased significantly in the last decade due to the rise of budget and private air-lines and also governments more receptive to an open sky policy.

These are exciting times, where Asians live in a world where economic and political focus is shifting back to this part of the world. We are looking at a Pax Asiana where we will see improved wealth, peace and prosperity in Asia through cooperation, collaboration and respect for each other. To achieve this, there must be a leader, and in the way things have evolved, this role has landed in China’s lap. How it manages this new role will determine its destiny and the fate of the people that it can and will influence.


CHINA’S ROAD TO DEMOCRACY

Lili Zhao

Would China’s political reform necessarily lead to democracy? Would democracy with Chinese characteristics develop and finally evolve into an established form of government that can

deliver more meritocracy, equitability, prosperity and happiness than democracy?

It has been just over a year since China Ethos magazine hosted a debate on China’s road to democracy at the English speaking Union in London that attracted tremendous interest and participation. It was during the recess period that I re-member being overwhelmed to the point of boredom by the ubiquitous discussions from the media and the experts on the eco-nomic crisis we were facing.

I remember telling a friend enthusi-astically that the debate would be about China and democracy, to which he replied, “You mean China and its lack of democ-racy.” Indeed, China and democracy are usually incompatible, at least in the eyes of the West. The general perception is that China’s phenomenal achievement has been primarily in the economic sphere, while political reform has been sluggish. This is untrue. From Mao’s totalitarianism to Deng’s authoritarianism to the current lead-ership’s socialist approach and discourse on democracy, China has undergone a dra-matic political transformation.

“Democracy with Chinese character-istics” has been hailed as the only logical path to China’s road to democracy by its advocates and regarded as Chinese propa-ganda by its opponents. This has provoked some to question what democracy means for the Chinese. Others in the West are justifiably concerned that China may fundamentally change the perception of – thereby challenging the Western model of – democracy.

However, Chinese leaders, at least in their talk, seem to acknowledge that there is a universally accepted meaning of de-mocracy. Premier Wen Jiabao was quoted in 2006 as saying, “When we talk about de-mocracy, we usually refer to the three most important components: election, judicial independence, and supervision based on checks and balances.”

He has recently reaffirmed his stand for political reform both at home and aboard though his liberal democratic talk was partly censored by his own press. President Hu also repeatedly stated that there will be no modernisation without democracy. Those words are indeed en-couraging, but critics cast their doubt on the party’s genuine commitment to democ-racy and see statements like these more as political rhetoric to win public support and thereby strengthen party power.

China has more than 1.3 billion peo-ple, of which 70 million, more than the total

UK population, are members of the coun-try’s ruling party: the Chinese Communist Party (CCP). Since 1997 CCP membership has grown 13 percent, far greater than the 5 percent population growth during the same period. One is indeed justified to be scepti-cal about the CCP’s full embrace of democ-racy, and the distinctly remote likelihood of a multiparty system.

But does this single-party rigidity pose a problem to its people? Not necessarily!

While there is a general call for more freedom of speech, separation of powers, equality, accountability, and transparency, multiparty elections is not expected or, indeed, desired by China’s mainstream intellectuals and public in the foreseeable

future. The consensus in China is that its road to democracy has to be an incremen-tal one, a continuous and gradual historical process that should take its own course without any pressure from outsiders. Radi-cal political reform, they argue, will inevita-bly create chaos.

Chinese dynasties on average alter-nated every a few hundred years, and no one is more aware of that than the CCP. To stay in power the ruling party will have to evolve, although not necessarily into a de-mocracy, and deliver what Chinese people want: meritocracy, equitability, prosperity and transparency. Democracy is a form of government that should be viewed as a means rather than pursued as an end. The majority of Chinese people are non-ideolog-ical pragmatists who simply want to live in a fairer, freer and richer society, whether it is a democracy with multiparty elections or a democracy with Chinese characteristics.

And what of the Chinese generation that is to propel the shift towards democ-racy? The post-80s generation, a term widely used for people who were born from 1980 to 1989, is a subject which I am particularly passionate about and is of per-sonal relevance. Estimated to be around 200 million, we are often seen as apolitical and money-driven. This, I have to say, is a generalisation well justified. Life for the modern Chinese urbanite is good and they are free to pursue their goals provided they don’t attack the government.

The increasing tide among the post-80s generation is to have a strong and united China. That doesn’t mean we are devoid of dissatisfaction about the govern-ment and are completely oblivious of the injustices taking place in China.

A fairer, freer, richer and more trans-parent society is more of a concrete and immediate concern for most Chinese peo-ple than the distant concept of democracy. Whether this can be achieved through an innovative and disciplined one-party rule or by resorting to western-style democracy remains to be seen.

There is an important consideration that must be borne in mind for all those who are impatient with China’s democra-tisation process. After centuries of humili-ation and a mere three decades of reform and opening-up, Chinese people haven’t savoured, indeed many of them haven’t even tasted, wealth long enough to rank democracy above it.

A FAIRER, FREER, RICHER AND MORE TRANSPARENT SO-CIETY IS MORE OF A CONCRETE AND IM-MEDIATE CONCERN FOR MOST CHINESE PEOPLE THAN THE DISTANT CONCEPT OF DEMOCRACY.

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MANAGING INVESTMENTS INS

Four experienced financial experts with extensive Chinese experience respond to questions about the investlevel of Chinese investment in other countries. They are: Alyce Su, Ph.D., Founder of China Queen Capital; DavidStan Fung, managing director of FarSight Ventures, and Andre Loesekrug-Pietri, Founder and CEO, A Capital, Chi

Q: Does Danone’s experience investing with local entrepreneur, Zong Qinghou, serve as a warning to foreign investors? Qinghou took money and technology from Danone and set up a parallel company. Eventually Danone settled with Qinghou and lost an opportunity to be a player in the Chinese market.Su: If a foreign investor has the luxury to go alone in China, then by all means. If one must find a local partner, clearly one needs to understand whom one is partnering with. Mr. Zong QingHou’s entire generation in China probably suffered more than any foreign investor could imagine.Huang: Let me say this: To state that Danone lost the opportunity to be a player in Chinese yogurt market is not accurate, not even correct. China has 1.4 billion people and hundreds of yogurt brands including many many, foreign brands, a solid company like Danone will never be a loser in the largest market in this globe

if they are doing right. There are many foreign yogurt brands in China and they all live extremely well. Why do we think Danone lost the opportunity? Danone will not be a failure if they do not want to be.

And, I can hardly agree the statement that Qinghou took money and technology from Danone. I am sure that Danone is way too smart to not let Qinghou took money and technology from them. It is business and it is serious business, no one wants to lose. The issue is: United, they stand, otherwise, they both are losers or, at least one of them will think that they are a loser.Fung: When I work with foreign investors and partners in China, and for that matter, in any country, I always recommend patience, caution, and not rushing into a JV or working with the first interested party (from both sides). If possible, work with credible referrals. Even then, start small before growing into bigger commitments. This will enhance the opportunity for

Stan Fung Alyce Su, Ph. D. David Huang

FarSight Ventures TMChina Queen Capital

successes.André Loesekrug-Pietri: This major setback is a reminder that each country has its own business culture, and that China is no exception. I think it should not deter investors to come to China, in particular now when the domestic market is picking up massively. But a lot can be learnt through this case: how important it is to be clear about each parties objectives; how much unstable legal situations, especially for IP, should be avoided; how important is that communication with local governments, employees, consumers are done with a local touch and local experts; and finally that involvement in the operations is crucial, especially for foreign firms, in order to understand better the local way of doing business, track possible misalignment of interests – and correct them while they are manageable.

Q: Basically, the question for a foreign

NSIDE AND OUTSIDE OF CHINA

vestment scene in China and the rising avid Huang established TXTD Company, China

Andre Loeskrug-Pietri

investor is, what do you do when a bond issuer fails to pay you, or your equity partner reneges on you?Su: For any debt investment, clearly there needs to be enough collateral, recourse, and collection mechanisms. For any equity partner, clearly one needs to know the character of one’s partner. Hence control premium exists.Huang: I am sorry to know that Danone and Qinghou could not work together but one story cannot be an example of unsuccessful experience. I am sure both Zong and Danone have their own reasons or excuses, their own business values, their own story of their time and their own viewpoint of this case. It is not fair to make a judgment because we only see a small part of this iceberg. To be fair, they both made mistakes in the past. If they start over again, they will see a different result. Also, if A fails to pay B, the most common reason is that they did not build up a reasonable

system, and no solid foundation as well.Fung: China is working very hard to improve its legal structure and financial market to attract foreign investors. However, it is easy to establish laws but it is difficult to enforce laws, given the “newness of laws” to the Chinese contracting parties, and the largeness of the Chinese economy. Thus, it is up to the buyers to perform the appropriate due diligence, and to retain the right counsel in ensuring the proper legal framework and structures in transactions. With these careful measures (which one should exercise in any circumstance anyway), investors can then exercise their rights if situations turned bad.Loeskrug-Pietri: In all the countries of the world, you are always in a less good foot when in a dispute with a local partner, because the local partner knows the rule of the game and has its networks, which allows better information. In case it becomes a public case, he will have an easier way to get the public on his side. The fact that China has, on top of these facts, central and local governments frequently involved, makes these disputes sometimes more challenging to manage for foreign investors. My personal golden rule is to always remain very aware of alignment of interests of all parties, and bring a strong differentiation in your products, services – even in your investment strategy. Otherwise the competition will be too important to survive.

Q: The Heritage Foundation, a U.S. think tank, puts China at 132 in the world on its economic freedom scale, below Yemen, Rwanda, Columbia, and Niger. What’s your opinion?

Su: I usually have no comment on a ranking offered by any entity. Any entity of real substance does not need to offer a ranking of others to boost its own influence. What is the cost to offer a ranking? The same cost as publishing words of the same quantity.Huang: So what? Heritage Foundation put China at 132 even below Yemen, Rwanda, Columbia and so on. If I were the Chinese government, I just skip their evaluation and do not even think about it. I cannot say that they are doing this on purpose or they have some bias on this issue, but I am sure that they can not see the real picture and they did not see the whole picture of China. I do not know what was the value of making this scale? It is easy to open a big mouth and it is OK to be #132. It does not mean anything to me.

There is an old Buddhist saying: If a few blind men touch the elephant, none of them are able to get the whole picture of the huge elephant.

Only when you are in China, can you see the real China and the real business environment. I also know some other think tanks that put China as the #1 investment paradise. I do not even want to think about their rank. Just see those huge/big/medium/small/tiny companies are doing great business in China. Fung: There is a tendency for think tanks (such as The Heritage Foundation), the press and the public to compare countries based on indexes (such as the Index of Economic Freedom) without taking into account other factors that have made countries different. Without going into details on the 100+ factors used to represent a country, I want to point out that leading emerging countries such as

CHINA IS WORKING VERY HARD TO IMPROVE ITS LEGAL STRUCTURE AND FINANCIAL MARKET TO ATTRACT FOR-EIGN INVESTORS. HOWEVER, WHILE IT IS EASY TO ESTABLISH LAWS, IT IS DIFFICULT TO ENFORCE LAWS, GIVEN THE “NEW-NESS OF LAWS” TO THE CHINESE CON-TRACTING PARTIES AND THE LARGENESS OF THE CHINESE ECONOMY.- STAN FUNG.


India, China, Brazil, South Africa, began their reforms only in the past two to four decades, while developed countries such as the United States, Hong Kong and the United Kingdom, have decades and decades of development experience behind them – thus making direct comparisons irrelevant. If one insists on using an index, I would rather look at the trend of the country rankings over a long period of time in order to draw meaningful (but yet not complete) conclusion.”Loeskrug-Pietri: “Regarding the Heritage Foundation, and without being an expert of their criteria, I think this can be explained by the fact that China is still very much influenced by its central planning, which has to be recognized as pretty effective. In private equity, you would say that the ‘Track-record’, i.e. the capacity to deliver on your promises of Central Planning has been remarkable, and that the Five Year Plan is a great tool to anticipate the sectors that will be strongly developed. In some areas requiring a long term vision and heavy investments, this is a real tool for investors. On the other side, being in sectors less favored by the plan makes you swim against the tide – difficult.”

Q: “Unless you live there or have a staff of analysts that does, making consistent money buying individual Chinese stocks is a tough game.”-Harry Domash. Please comment.Su: “I think it’s true anywhere that if one wishes to make consistent money one at least needs intimate knowledge with one’s investments, but having local presence to making consistent money in China is a sufficient but not a necessary condition, an important logical distinction.”Huang: “Harry is 100 percent right, if you

have never been in a country and you do not have staff in an unfamiliar soil, do you have the guts to throw your money in? If you do, you are insane.

Think about this: US stock, UK stock, Japan Stock and you name all the stock markets, which one is not tough? The funny thing is: when you make money from the stock, it is not tough, if you lose, it is tough and it is getting tougher and tougher. Right?

My answer is: Harry is very right, but, all the stocks are tough, not only Chinese stocks.”Fung: “This is just common sense. Will you invest in Brazilian companies, Indian companies, or even United States companies without having done an in-depth due diligence and analysis on the regions, the countries and the companies? Are you going to rely on third party reports to make critical investment decisions? Of course, the answers are NO and NO. Given that said, there is always a home-biased advantage for investors when they are closer to the companies and can visit the companies locally; but then there is also an advantage of being farther away so that investors can get a better sense of the markets and the competition. You have to do both.”Loeskrug-Pietri: “I fully agree. And for a simple reason, China’s years have to be counted in multiples, i.e. things change in China in one year as fast as in 3, 5 or 7 years in the West. Holding boards twice a year, coming here every quarter, flying in and out of fancy hotels will not get you to the heart of the action – the daily transformation of society and business, new consumption habits, trends and gossip, evening drinks with partners keeping you updated on the latest investment opportunities and building long

lasting friendships.”

Q: Many investment advisors recommend putting no more than 5 percent to 10 percent of your investment dollars in this sort of an emerging market (China). Do you agree?Su: “Owning the right companies “in or about China” deserves more than 10 percent of almost any portfolio mandate for the next decade. Clearly I disagree.”Huang: “It is a tough question. Many investment advisors equals who?

I will say this: Investment is always risky, the issue is how to value the percentage of risky. If you are smart enough to analyze the market, the future and the potential, you will minimize the risks. Of course, there is no blind investor.

I hate to blame or laugh at those losers and hate to state that they are not smart enough to control their own investment. If you failed, do not blame the market, do not blame the country, face toward the wall and blame yourself.

There is no one can win his/her investment 100 percent in human history, as I know. As a smart investor, you invest the future, not the past.”Fung: “Investment advisors should assess the Return Objectives, Risk Objective, and Constraints (such as Time Horizon, Taxes, Liquidity, Legal and Regulatory, and Unique Circumstances) of their clients before proposing investment recommendations and recommending asset allocations. Thus, without knowing the specifics of an individual or investment entity, it is difficult to assess the recommended allocation in emerging markets. In the long run, stock prices reflect growth prospects, and discount risk attributes of countries and companies within those countries. If one expects emerging markets to continue their rapid growth, one should participate in their growth through investments in those markets. However, the exact allocation should be case dependent.”Loeskrug-Pietri: “I don’t. Considering that China once represented 25 to 30 percent of the world’s GDP, that you have here some of the most entrepreneurial talents, and that in 2009 alone, 50 percent of the growth, in value, came from this country, I let you do the math if 5 or 10 percent is a high enough allocation.”

Q: One of the difficulties when Chinese companies invest abroad is the huge gulf in corporate culture and often a degree of negativism toward China on the part of politicians. What’s your view on these issues?Su: “China outbound acquisition started mostly with cash-rich State Owned Enterprises, hence the previous episodes.

Reviving Economic Growth session chaired by Alex Wan (2nd from left), China CEO Roundtable; Senior Advisor of China Daily, China at the Global China Business Meeting 2010 in Luxembourg.

Going forward, I think the situation will change with Chinese family-owned businesses with overseas non-Chinese family-owned businesses, as most current generation of resourceful families are somewhat commonly global in nature.”Huang: “I have to say this: There is huge gulf between any two cultures, languages, companies, countries even between two people because they are speaking different languages, living in different geographic locations, under different political arenas, swimming in different business pools and have different values of life.

The issue is to find the way to work together, just like marriage: Make love, not war.”Fung: “Cross-border investment and merger/acquisition is difficult! There are issues related to cultural differences, language barriers, differences in expectations, differences in legal and regulatory frameworks, corporate culture differences, difficulties in cross-border integration and consolidation, etc. These issues are faced not only by Chinese companies investing abroad, but are also encountered by foreign companies investing in China. Beyond these issues, there are additional elements of mistrust and misunderstanding between government and government, and between government and the public (in both directions).” Loeskrug-Pietri: “I fully agree. Chinese investors face multiple challenges when investing abroad. And this is mainly due to the fact that while China is one of the largest exporters in the world, it is still at an infant stage regarding international investments. OECD countries have in average the equivalent of 27.7 percent of their GDP invested abroad. China has only 2 or 3 percent, including investments in resources, which used to represent 2/3 of this pot. This means a low experience

in international M&A and a low use of advisors which could complement these missing skills. The second weakness is a lack of talents to manage foreign teams. Chinese firms are still not at the top of the list of employers for international talents – in parallel and linked to the fact that it is very difficult for foreigners to adapt to a Chinese corporate culture. Lastly, it may be easy to ‘write the check’, but the challenge lie in the integration and capturing the expected synergies, which require strong process, industrial and cross-cultural skills.”

Q: Chinese investment in the west faces three primary challenges. First, the political pressures and name-calling likely to result from any worthwhile and high-profile activity between an established company and its Chinese suitor. Second, Chinese companies have to prove that they can adapt their management cultures to the western way of doing business. Third, the ability to integrate two cultures and execute a business plan that works globally. What are your thoughts on this?Su: “The Chinese company that bought the IBM-PC business offered a good example to this comment, but I think this is case-dependent.”Huang: “First things first, as I know, Chinese people are learning, at least they are willing to learn more. If you knew a Chinese company and an American company doing business together you will realize one simple thing: almost all Chinese can speak English unfortunately, only few Americans can speak Chinese and they have to use an interpreter and most of them do a lousy job.

It is not easy to understand a different political environment but it is not an excuse for not working well. You have to

learn and you have to have the will to learn. At this point, Chinese do a better job of this than other nations.

“Make peace with different people,” Confucius stated 2500 years ago.”Loeskrug-Pietri: “I fully agree with this analysis. Chinese firms should be aware that they are like hot potato and their image is not necessarily good in the public opinion: this is first and foremost because these firms are still relatively unknown to the general public and sometimes even to the business community. Remedies are : minority investments (raising fewer eyebrows since there is no change of control, nor strategy), co-investments with local firms – like us – who will help the Chinese investor be more comfortable about the target company before the deal, navigate the local intricacies (a sort of ‘reverse JV’ as a reverse to what happened in China for 20 years) and finally a strong capacity to create value for the invested company : these deals need to make strong strategic sense, in order to be obviously positive for all parties.”

MANAGING INVESTMENTS INSIDE AND OUTSIDE OF CHINA

Chinese Private Investors: Needs and Strategies session chaired by Boris F.J. Collardi, Chief Executive Officer, Julius Baer Group, Switzerland at the Global China Business Meeting 2010 in Luxembourg.

Alyce Su, Ph. D., Founder, China Queen Capital speaking at the New Frontiers for Overseas Investments session during the Global China Business Meeting 2010 in Luxembourg.


SUSTAINING GROAnalyzing China’s growing economic strength and how it can be sustained

Karen Tang Jim Zhang Jeffrey Chen

When western nations began developing their economic strength during the Industrial Revolu-tion, the sight of factories belching huge plumes of smoke was a comforting sign to many that goods were being produced, creating jobs for the masses and wealth for the owners.

In the 21st century, however, those similar plumes of industrial exhaust are less attractive, as it is now recognized that they bring, along with industrial growth and jobs, environmental consequenc-es.

And at a time when nations are in a race to acquire energy supplies such as coal and oil, the is-sue of economic sustainability comes to the fore.

Jeffrey Chen, CEO of NeoPac Lighting, a producer of sustainable LED lighting; Karen Tang, exec-utive director of the Better Hong Kong Federation; and Jim Zhang, managing director of the North Asia Region (China and Mongolia) for The Nature Conservancy, discussed China’s sustainability is-sues for Asean Affairs.

ROWTH IN CHINA ined without increasing, and even while reducing, environmental damage

Q: With 1.3 billion people squeezed into a country smaller than the United States, is there any hope at all for sustainability in China?Jim Zhang feels that pursuing sustain-ability is the only option for China and the Chinese government. The consumption rate of the average Chinese consumer is lower than that of an average American, noted Karen Tang, and this might help China on the road to sustainability, she believes.

“The ‘Scientific Development Con-cept’ incorporates a nation’s sustainable development, social welfare, increased democracy and the creation of a har-monious society, and the concept is the socioeconomic ideology of the Chinese government,” according to Jeffrey Chen. However, he noted that the overpopulation issue in China strains land, energy, water and other environmental resources, creat-ing obstacles to sustainability.

Q: A study by the Netherlands Environmental Assessment Agencyshows that China has already become the predominant source of carbon dioxide, the main global warming emission. What efforts are being made to reduce this?A: The combined forces of developing na-tions switching their manufacturing bases to China and China’s economic growth and domestic growth in manufacturing were described by Jeffrey Chen as factors in the growth of carbon emissions in China. He cited the development of solar energy, vehicles using alternative energy sources, smart grids and LED lighting as significant tools to fight carbon emissions. The Nature

Conservancy was able to assist the Chinese government on emissions in the forestry sector and was working with local govern-ments in Sichuan and Inner Mongolia to restore forests, Jim Zhang said.

Q: The desert is sweeping into China’s valleys, choking rivers and consuming precious farm land, and the green walls to stop it do not appear to be working. Is this a coming disaster?A: Both Jim Zhang and Jeffrey Chen said that in some areas, the “green wall” approach was working, and adopting the right technologies and policies could pre-vent increased desertification.

Q: The disregard of the environment is one of the major causes of the current severe status of China’s pollution. Is this attitude changing in China?Jim Zhang: “China is no different than any other country in the world in this respect, but it is encouraging how quickly the situ-ation is changing. Take me for example. I come from the business world with little previous engagement in the environment and now I am dedicated full time to envi-ronmental issues by managing The Nature Conservancy North Asia region. Chinese public awareness and engagement are mov-ing very fast.”

Q: China is moving aggressively on clean energy, outpacing both the U.S. and EU in green investment. Still, while the nation has put in place many environmental laws, these regulations appear to need better implementation and monitoring. Do you agree?Karen Tang: “China is a big country, and

not just environmental laws, but most laws, need close monitoring. However, with the success that China has been demonstrating in the past two decades, once they have the will/target, they can make it.”Jeffrey Chen: “These are very complex is-sues. I think that developed countries have more experience and can do something to help China in this regard.”

Q: Just over 15 percent of China is now protected as natural reserves; logging of natural reserves has been banned since 1998; and the government has pledged to cut CO2 emissions intensity per unit of GDP by 40-45 percent by 2020 from 2005 levels. Will these measures work?Jim Zhang: “Considering China’s determi-

Jim Zhang (Left) Managing Director, Nature Conservancy and Karen Tang (3rd from Left) speaking at the Quest for Sustainability session during the Global China Business Meeting 2010 in Luxembourg.

Jeffrey Chen, Chairman/CEO, NeoPac Lighting Group speaking at the Sustainability session.


nation and quickness on the ground, these measures will very likely succeed. Take the nature reserve system as an example. The more than 2500 nature reserves covering 15 percent of China were established in a very short period of time, mostly over the last three decades.”Jeffrey Chen: “The Chinese government has strong intentions to reach this goal. Between 1980 and 2000, the average annual growth rate of China’s energy consumption was 4.3 percent and the average growth rate of the gross domestic product (GDP) was 9.6 percent. The energy consumption intensity of GDP during the past 20 years was actually reduced from 3.79 kilograms of coal equivalent/dollar in 1980 to 1.20 kilogram coal equivalent/dollar in 2000.

Q: Jianguo Liu, Michigan State University Distinguished Professor of Fisheries and Wildlife, who holds the Rachel Carson Chair in Sustainability, says the Chinese government should enact new policies to stem the growth of households. Is this a practical idea?Karen Tang: “China is moving to a more open society with higher expectations from its citizens, and the government has to adopt a more relaxed policy on giving birth, especially to ethnic minorities and to those who have a single child in their family.”Both Jim Zhang and Jeffrey Chen think the One Child Policy is on the way out, and Zhang noted that “most of the Chinese eco-

nomic experts have suggested the govern-ment change the policy to stem the rapid growth of the real estate market boom in China.”

Q: An encouraging note is that sustainability reporting is increasing among Chinese corporations and stakeholders in these corporations are paying more attention to these reports. Is that enough?Jim Zhang: “Paying more attention is not enough! A best practice in every corpora-tion and stakeholder will also be crucial.”

Q: If China hopes to meet the needs of the growing population, it needs to radically alter its current methods of resource management on a large scale.

Your view of this statement.Karen Tang: “We need to think out of the box, and I believe technology, including green energy technology on combating drought or flooding, which helps food grow, will definitely be useful. Also, birth control in China has proved to be very encourag-ing. I think the population issue in China is more or less contained. As it moves toward modernization and urbanization, popula-tion, will, to a certain extent, be more natu-rally contained.

Q: As is the case in many countries, the flight from rural areas to the cities is occurring in China. Does this pose a risk to effective land management?Jeffrey Chen: “It is actually an urbaniza-tion policy and process in China. By enforc-ing the policy, the Chinese government intends to get more land from farmers and manage the land more effectively. This is also a land redistribution process.”Jim Zhang: “As the gap between rich and poor enlarged, and the rural people’s in-come rose less than the average growth of the urban society, this kind of problem has occurred. China will have no way to keep doing what she has done in the past 30 years. Her economic development model needs a big change. This will be clearly seen in the upcoming Five Year Plan (2011-2015). A more sustainable policy set is at the gate to come out next year.

SUSTAINING GROWTH IN CHINA

CHINA WILL HAVE NO WAY TO KEEP DOING WHAT SHE HAS DONE IN THE PAST 30 YEARS. HER ECONOMIC DEVELOPMENT MODEL NEEDS A BIG CHANGE.

(R-L) Wolfgang Lehmacher, Former CEO, GeoPost Intercontinental, Richard Jian Li, Executive Director, Golden Concord Holdings, Hong Kong SAR, S. Roy, Founder & Chairman, AseanAffairs, Thailand, and Xiang Bing, Dean, Cheung Kong GSB, China speaking at the Designing China’s Entrepre-neurial Ecosystem session during the Global China Business Meeting 2010 in Luxembourg.


Many changes have taken place in human resource management since the 1978 economic reforms. Would you please ex-plain these to our international readers?

“The exponential growth of business in China since the late 1970s to the present has created various challenges and sig-nificant developments in terms of human resource management, in roughly three phases.

In the third and current phase which started in the early 2000s to the present, the theme has been heavy competition. Private-ly owned enterprises have become sizable, state owned enterprises have grown larger, and it is commonplace that in each industry more than two large foreign players exist who compete head to head. Based on the abundance of choice for employees, reten-tion has become a core challenge. Foreign companies need to protect their staff from being hired not only by other foreign com-petitors but by state owned and private Chinese companies as well.”

Is the lack of educated professionals in business still a problem in China?

“China is currently moving from a pro-duction-based economy to an innovation-based economy, which requires new skills and knowledge. At this point, two classes of imperatives to improve talent exist.

The first imperative to develop this can be classed as organic. Various Chinese commitments have been made to liberalize education by removing barriers on foreign education which existed previously. This has allowed local talent to be developed on par with foreign standards, with increasing participation rates for secondary and terti-ary education.

The second imperative to develop this can be classed as inorganic. Over the last ten years, a wave of Chinese returning to China has been witnessed – bolstering the talent available.”

Is the emphasis on technical skills over business skills still a problem in China?

“This area represents a huge devel-opment and optimization potential for Chinese companies. For those Chinese enterprises having international expansion ambitions, business acumen and skills will be paramount. Internationalization re-quires that the entire approach to business needs to be reviewed and various questions answered – outside of the operational com-petencies which employees hold specific to their profession and industry.”

Wolfgang Lehmacher

Is there still frequent “poaching” of key personnel by other foreign compa-nies in China?

“The ‘war for talent’ is not a Chinese phenomenon and can be witnessed in almost every single developed and fast growing economy. China recently ranked high among those countries where people often changed their job – a shift from the traditional single corporation loyalty which is prevalent in Asian economies. This shift in attitude is opportunistic in nature, and a rational response to the employment potential which exists in one of the world’s fastest growing economies.”

It is often cited that multinational corporations in China must change their HR strategies to enable them to keep pace with surging market competition and with changing employee needs and profiles. Have these changes occurred and what are they?

“Indeed, employee needs and profiles have changed over the years. During the rise of China, many employees were over-whelmed by the opportunities available and were focused and driven solely by financial aspirations. In recent years, it seems that many Chinese employees have realized that remuneration is only one facet to work life and satisfaction. Equally important criteria include the working environment and the learning opportunity as well as the growth prospects available within the company.”

It is often said that companies in China too often “buy” talent for the short run rather than “build” talent for the long run. Is this still the case?

“Sincerely, I do not believe that poach-ing and buying practices are a sustainable business practice, and they definitely provide negative signals to the market, the ecosystem and the employees. Companies with a long term interest and strategy need to build talent. I believe sustainable busi-ness success is not built on individuals but on well functioning teams. Building these teams needs time, staff and knowledge continuity. High team productivity requires that people work together and grow over a certain period of time.”

Understanding and shaping a com-pany’s employment image can boost employee engagement. Do companies do this in China?

“International companies which have understood and incorporated the dimen-sion of company image with the aim of at-

tracting and retaining human capital have proven immensely successful, e.g. Intel, Procter and Gamble and Google, and will follow the same proven strategy in China. As the Chinese employment market is so large and dynamic and a constant influx of talent is needed, companies are well ad-vised to leverage the entire range of instru-ments which assist this, including building an appealing image to enhance their hiring capabilities.”

Multinationals, particularly U.S. firms are seeking to ensure upward mobility for talented Chinese nationals and are often dissatisfied with the pace of “localization” or their overreliance on expatriate leadership. To counter this, they bring in expatriate talent at the professional and technical levels on short-term assignments of less than two years. Is this still a familiar pattern?

“In the short term, new entrants have been known to bring expatriates into China to bridge gaps of knowledge, corporate cul-ture and expertise between the foreign head office and local practice. In the long term, I have always believed in local talent, in man-agers and employees knowing the market and the local ecosystem as well as the mi-cro markets the company operates in. For this need and first-hand local knowledge, local employees are indispensable.”

BUILDING TALENT IN CHINAAn interview with Wolfgang Lehmacher

Robert BreitenfeldAviation Marketing & Business Development

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SUCCESSFUL STRA

CARLA CICO CHARLES TANG TARIQ AHMED NIZAMI

DAN BRUTTO

With a population of more than 1.3 billion, China is the world’s largest menter its market. But the Chinese market in line with other countries with extgions and provinces. The question remains what is the best and most cost-effe

Asean Affairs invited a group of eight executives to share their experiences and insights on doing business in China. Panel members were: Jennifer Angenend of Water Filled Barrier Systems; Michael Barbalas, currently president of Goodrich China and former president of the Ameri-can Chamber of Commerce in China; Dan-iel Brutto is president, UPS International; Dr. Hong Chen is the founder, chairman and CEO of The Hina Group; Carla Cico, CEO of Rivoli Group S.p.A., a leading international Italian company in civil in-frastructure; Thomas Homburg, corporate vice president and head of strategic coor-dination at EADS; Tariq Nizami, CEO and founder, CEO Clubs, United Arab Emirates and Charles Tang, president of the bina-tional Camara de Comercio and Industry Brazil-China.

Q: What is the best way for entrepre-neurs and companies to learn about Chi-na before entering the Chinese market?Angenend: “From the perspective of an entrepreneur who has expanded into new regions and marketplaces, the best way to learn about any market before entry is by comprehensive study and research; this not only includes understanding laws and eco-nomic trends but also cultural customs and

Eight business leaders discuss the strategy for foreign firms to e

(L-R) Jeffrey Chen, Chairman/CEO, NeoPac Lighting Group, CARLA CICO, CE0, Rivoli S.P. A. Italy, Liang XinjHorasis, Switzerland, Nan Cunhui, Chairman, Chint Group, China, John Tan, Chief Executive Officer, Asia CapPlenary Session: Envisioning the Post Crisis World Economy during the Global China Business Meeting 2010 in

ATEGIES IN CHINA

CHEN HONG JENNIFER ANGENENDMICHAEL BARBALAS THOMAS HOMBERG

st market and sends out a siren song beckoning companies worldwide to h extensive land mass, is not homogenous, there is great diversity between re--effective way to enter the Chinese market?

the external environment of business in the region of interest. Being the extremely attractive emerging marketplace that it is, there is a wealth of information available to those seeking opportunity in China. Ad-ditionally, and perhaps more importantly, seeking insight and information from those who are intimately familiar with China and have lived, worked and found success there can be an invaluable tool and provide an extremely beneficial perspective.” Cico: “To talk with people that have al-ready had the experience. It is important to talk with as many people as possible, because each case has its own reality and to have a broader understanding can help you to have a better overview of the real situation. A due diligence process is very important in order to try to limit future ma-jor problems. China is not easier or more difficult than any other new market, but because of the competition both interna-tional and local now days it takes more in term of resources to open a market there. One of the major problems is to find good and reliable persons, with experience and understanding of the local mentality, if they are foreign, or of the international mental-ity, if they are local.”Nizami: “I have been doing business with

to enter the Chinese market and what it takes to be successful.

g Xinjun, Vice Chairman and Chief Executive Officer, Fosun Group, China, Frank-Jürgen Richter, President, ia Capital Reinsurance Group, Singapore and Patrick O’Basuyi, Chairman, Obax Group, USA speaking at the 010 in Luxembourg.


SUCCESSFUL STRATEGIES IN CHINA

China for the last 6 years but before any or first business I had to visit for more than a year to learn and understand the local mar-ket. China has to be studied very carefully in any industry before moving into the mar-ket as China is a very different local market because of their consumption patterns, spending habits and most of all culture. In doing business with China you are never late because the market is so big. I always say that China is like a big ocean and there are fish for everyone, it depends on if you are prepared to catch the most from the market.”Brutto: “Research is essential before entering any market, and China is no ex-ception. A vast, complex nation, China is anything but a homogenous market. The world’s most populous nation is a rich mixture of languages, cultures and ethnici-ties. Economic development and average per-capita income varies by province and by city. Therefore, it is essential to gather specific, local information from reliable sources about a broad range of topics, in-cluding local business life and government regulations for foreign companies.

Above all, entrepreneurs and busi-nesses need to look at their own strengths and resources, know what they can do best, and have a clear vision for what they want to achieve in China. As China is a vast market with very different characteristics, China is not right for every company.”Chen: “China is a very dynamic, vast, and complicated society. The ways the busi-nesses are conducted are quite different from the rest of the world where a lot of legal systems are being improved. Before getting into China, it is best to find some-one or firm who knows China very well, and recruit such a person as either consult-ants or doing a field study on the relevant industry. You can also talk to the Chamber of Commerce of your country in China, and seek their help. Of course, going to vari-ous conferences or events related to China would also be a good thing to do.”

Q: An often-overlooked issue for compa-nies to consider is intellectual property protection. China’s software piracy rate has been reported as high as 92 percent. What’s your view on this issue?Angenend: ”For some industries, the state of intellectual property protection may not matter as much; however, for many indus-tries it certainly serves as a deterrent to entry into this marketplace. Before entering the Chinese market, it is essential that an entrepreneur or company realistically visit this IP protection and enforcement issue, understand if and how it could impact their success, and formulate a dynamic plan along with strategies for actively address-ing it. For some, this may mean fundamen-tally altering the way they do business rela-

tive to other regions. We are all moving for-ward into a more global marketplace, and I believe that there are always solutions to any challenges or problems that may arise; awareness of these potential challenges is key to ensuring potential success in this or any other business climate.”Barbalas: “China has been putting in place the legal system needed to protect intellec-tual property including patents, trademarks and copyrights. It is important for new companies coming in to use the legal sys-tem to protect their intellectual property in the same way and to the same extent they would do in their own home market. Be-yond this, business associations from both the US and Europe continue to highlight intellectual property protection as one of the top 10 issues for companies doing busi-ness in China. Within your own company there are many practical steps you can take to protect your intellectual property while you build your business in China.”Brutto: “China’s software piracy rate has decreased to 79 percent .”Chen: “Depending on the industry, things have changed quite a bit, and Chinese gov-ernment start to get tough on piracy. For instance, a few years ago, a lot of TVvideos could be downloaded for free, andeach episode was sold for 2000 RMB online. Now, companies who bought the legal rights of the TV series, such as Sohu, are suing those who pirated it. Thus, each epi-sode now is sold for 20,000 RMB online. So things are improving quite a bit. An advice to foreign companies is that they should treat the Chinese market differently than European countries or US, where the GDP per capita is many times higher than that

of China. They should lower the price of the software for China market. As China is huge, they can then sell more copies and actually get more revenue and profit. Au-todesk did this, and is very successful.”Homberg: “For every company, IP protec-tion and technology transfer are of the highest importance everywhere in the world. Consequently, it is encouraging to see that the Chinese government continues to improve intellectual property protection. This is essential for China’s industry in or-der for it to be a reliable business partner, and to engender trust between investors and Chinese companies.”

Q: Starting “small” is often suggested as a good way to start, do you concur?Cico: “Small” related to China is always a relative term! No matter what you are do-ing in China, in which industry you are in and what are your objectives : it is always money and time consuming. I think that what is important is to decide in which part of China you want to establish your pres-ence, if you are a new comer. Now days the location is very important and considering the extension of the Chinese market and the difference among the local markets and customers behavior, this aspect needs to be considered very carefully.”Nizami: “In China small is big as the mar-ket is growing tremendously with over 1 billion people. So be prepared to expand your business much before than in your business plan especially if you are moving from the west. In China the demand of In-ternational brands is growing the fastest in the world.”


S Roy, Founder & CEO, Asean Affairs, (Centre), chairing the session with Daniel J. Brutto, Presi-dent, UPS International (R) and Alan Hassenfeld, Chairman of the Executive Committee, Hasbro (L) at Horasis Annual Meeting January 2010, Zurich, Switzerland


Barbalas: “Starting small is a good strategy to minimize your risk and build up your knowledge and experience. Staying small is not a good idea though. One secret to success in China is to grow fast. It may take a while to find the right strategy and approach for your business in China. Once you do, however, it is important to grow as fast as you can.”Tang: “Depends on the business one in-tends to start. Sometimes one must start with sufficient scale.” Brutto: ”To many foreign businesses, China is still a new and untried market. So starting small and growing organically often is the most solid path to long-term success.

Starting out with smaller projects, finding the right local employees and part-ners, and verifying the quality standards of local suppliers are important to estab-lishing a strong foundation in China and developing the expertise needed to grow over time.

Some of the world’s biggest compa-nies grew in China by starting small. UPS first began modest operations in China back in 1988. Through organic, steady growth, we now serve 330 cities and oper-ate 198 flights every week that connect China to the rest of the world. “

Q: China is often cited as a good location for commodity products but what about niche players?Angenend: “There is no argument that China is an excellent place for production of commodity products…however, with the increasing attractiveness of investment in

China, I believe many niche market players will find ways to create successful busi-nesses.”Tang: “The Chinese market absorbs all types of products, whether from com-modities, or not. In China one can see the amount of foreign brand cars, higher tech-nology machinery that have made Germa-ny’s economy so strong, wines from France and other countries.

There are many niches still to be filled in the Chinese markets. One example is a Brazilian manufacturer of cheap hot water taps and shower heads for about US$ 10 each. Normally hot water in China comes from boilers that are large, expensive and costly to install.”

Q: It is often thought that the best way for a company to enter China is with a Chinese partner. Any suggestions for finding a good partner?Tang: “Depending on your field of busi-ness, you may not need a Chinese partner. Our chamber has introduced many strong partners to companies wanting to do busi-ness in China.”Homberg: “Let me say that the partnering selection is crucial for both the Chinese partner and the foreign investor.”Brutto: “Finding a logistics partner is also critical to success in China. When seek-ing a partner it’s critical to find a company that can move products to and from China quickly, efficiently and cost-effectively, helping to carve out a competitive edge.”

Q: Is the Starbucks model for success in China still a good model to follow? Are there others?

Angenend: “The Starbucks model for suc-cess will not be right for every business, industry and idea, regardless of where it is. Of course, there are key components to the success of this model that any company or entrepreneur can learn from and incorpo-rate into their own business.”Barbalas: “I don’t think there is one model for success in China. Those companies that have done best have understood the Chinese consumer, adapted their business models to the Chinese realities and stayed nimble to adjust to changes in the business environment.”

Q: It is often mentioned that it takes longer to create a brand image in China. Why and how long does it usually take?A: Angenend: “The distinct culture of each Chinese province makes the time frame longer for a brand and company reputation to be established. There could be several factors at play, especially depending on the industry in question. In regard to consumer products, the Chinese have an expectation of demonstration of reliability which is perhaps more stringent and pronounced than in other places. In general, much like it takes time and reliability to build trust in interpersonal relationships; these are also components that contribute to build-ing trust in a brand. Additionally, each of China’s provinces is distinctive and it may not only take time but also proven per-formance to establish a good reputation throughout each. When other things are not necessarily as transparent, establishing the accountability essential to building a solid brand may not take some time.”

(L-R) CARLA CICO, CE0, Rivoli S.P. A. Italy, JENNIFER ANGENEND, Director and Co-Owner, WaterFilled Barrier Systems, USA. and THOMAS HOMBERG, Corporate Vice President, EADS, speaking at the respective session during the Global China Business Meeting 2010 in Luxembourg.

Barbalas: “New companies coming to China can expect to invest for one or more years before they start seeing results. It takes time to build the China team, under-stand the market and build the customer recognition that a successful business needs to take off.”Cico: “There is no a rule or a criteria for this and very much depends to the prod-ucts (and brand) that you want to sell. In reality the time and effort that you need in China are the same that you need in any new market. The fact that people think that in China takes longer, it is because a lot of people were expecting it to be easier and faster to do it in China. It was easier until 10-15 years ago, when there were few foreign brands in China and very little competitions from local brands. Last, but not the least, the consumers were less so-phisticated and easier to be pleased. Now the consumer is not buying a product only because it has a foreign name, but also for the price and the quality.

Another problem is that you have to study carefully where to position the prod-uct, and this positioning can be different than the one in your home countries and/or others markets.”Chen: “China is a huge country and creat-ing a brand in China will take a lot of effort and money to do so. Especially, China has different cultures across the country. One brand that is making sense in the south may not be making sense in the north. It all depends on a company’s marketing strate-gies and how people implement them. So in general, I agree with you that it takes longer to create a brand image in China. However, there are also exceptions. With today’s Internet media, as well as impact of celebrity marketing, certain brands may get created in a short period of time, say 1 to 3 years.”Nizami: “I have been involved in China for some time and have seen things moving very slowly, but it all depends on the prod-uct, services and most of all timing. For a good brand it will take years. I have been involved with the Buddha Bar brand from France for a year and now it is coming into the reality of making one. We had to do an extensive study of the local Shanghai mar-ket, the spending habits and evening activi-ties before deciding to move to Shanghai, the city with the largest international com-munity.

Brand recognition in China is one of the toughest jobs for the local brand own-ers because in the last decade only, Chinese people have been exposed to the interna-tional market in China and outside. Brands must have a good local marketing company especially in small cities in China. Only in the last 15 years have worldwide brands

been introduced in the China market.”Tang: “This would depend on many fac-tors and type of products. Some brands are launched within a short period of time, while others take longer to firm their im-age.”

Brutto: “To succeed in China, a company must work closely with local communities and governments. Although there is no set time frame for building a strong brand in China, it’s critical to understand that busi-ness in China is based on relationships and trust, which takes time to develop.

First of all, it is important for a com-pany to demonstrate its operational com-petence and be recognized by the Chinese government and regulatory authorities as being valuable to the economic and overall development of China.

Second, foreign enterprises must un-derstand that China is not a homogeneous market. To enhance a brand’s chance of success, a company should offer products targeted to specific regions and demo

graphics within China, and then develop an appropriate marketing strategy to sup-port that image. A marketing strategy that works in the U.S. might not necessarily work in China. A company must maintain enough flexibility to adapt to shifting needs and stay abreast of consumer demands.”

Q: Are the government restrictions to distribution, particularly in the retail sec-tor, a problem?Agenand: “As with anything, these issues have a variable impact depending on the industry and business type in question. Be-ing aware of the challenges and being real-istic about one’s own business and industry as well as how it may be impacted by these challenges creates an opportunity to for-mulate new and innovative approaches to expand and grow.”Chico: “Restrictions are always a prob-lem!”Barbelas: “Groups such as the American Chamber of Commerce continue to report that getting the required licenses is still an issue.”

IN CHINA YOU WILL BE ALWAYS A GUEST: NEVER FORGET IT.MANY YEARS AGO, THE CEO OF A VERY IM-PORTANT SWEDISH INDUSTRIAL GROUP DEFINED THE JOINT VENTURE WITH A CHI-NESE PARTNER AS “..A MARRIAGE WHERE YOU DO NOT LOVE EACH OTHER BUT YOU ARE FORCED TO SLEEP TOGETHER”.TWENTY-THREE YEARS LATER I THINK THAT THIS DEFINITION STILL STANDS. -CARLA CICO


(L-R) Frank-Jürgen Richter, President, Horasis, Switzerland, Jean-Claude Juncker, Prime Min-ister of Luxembourg and Xu Kuangdi, Chairman, China Federation of Industrial Economics - China and World Economic Outlook at the Global China Business Meeting 2010 in Luxembourg.


Tang: “We had a success story when the Brazilian instant coffee brand,’Pele,’ was introduced through a Chinese distributor without any problems.”Hong: “No. I don’t think the government restricts the distribution in the retail sector. The market is pretty free unless someone

Q: What is a realistic time frame for suc-cess in China?Barbalas: “New companies coming to China can expect to invest for one or more years before they start seeing results. It takes time to build the China team, under-stand the market and build the customer recognition that a successful business needs to take off.”

Q: Are joint ventures a viable alternative to direct investment in China?Angenend: “There are quite a few things to consider when entering into any joint venture, in China or otherwise. Entering into a joint venture can be a viable strate-gic way to enter the Chinese marketplace, but, as with anywhere, it is essential to do your due diligence and understand the intangibles when embarking on this type of investment. For some companies and businesses this may be a viable alternative, and for others it may not be. Overall, when considering expanding into a completely new market, I believe there are universal principles for success: know your business, know your industry, gain a comprehensive understanding of the operating climate and external environment of business in the area of interest, be realistic, and strive for innovation and adaptability. This may take quite a bit of time and effort, and for some companies and entrepreneurs, expanding into China may not be the best decision at this point in time, but to those who can make it work, there is unquestionably much to be gained. “Barbalas: “When you have joint ventures between companies from different coun-tries, cultures and systems, I do not think that you can expect the success rate to go up. Making a joint venture work for both parties requires putting in the hard work up front to make sure that there is a long-term alignment of interests and then to put in the management resources that can man-age the joint venture and relationships that make it work.”Brutto: “A company’s goals and operation-al philosophies should be the key factors when deciding whether to choose a joint venture or direct investment structure.

In general, a partnership with a Chinese enterprise can help a company overcome start-up difficulties, create dis-tribution networks and attain vital market information.

There are challenges associated with

a joint venture. These include an often complicated application procedure with ap-provals required from several government authorities. In addition, the foreign investor must be willing to share company technol-ogy, know-how, and sensitive business in-formation with third parties.

On the positive side, joint ventures significantly reduce business risk to foreign investors. And a Chinese partner may be more familiar with dealing with Chinese authorities and bureaucracy, and offer advantages in terms of existing business contracts, product markets, distribution networks and business connections.”Chen: “It depends on how a firm defines “success” in China. Different industries and different expectations all vary. Internet companies, such as Baidu, Tencent, and Alibaba, all become $30-$40 billion USD market cap companies in 10 years. Certain companies, with the help of venture capital, and private equity, went from nothing to a public companies in 2-4 years. However, in general, it takes about 10 years to build something meaningful.”Cico: “Yes, they are, but you need to be very careful during the selection of the partner, the negotiation of the agreement and never think of your partner as one of your friend. Last , but not the least remem-ber, to include in the contracts already a clear way out methodology, in case some-thing goes wrong in the relationship.In China you will be always a guest: never forget it.

Many years ago, the CEO of a very im-portant Swedish Industrial Group defined the joint venture with a Chinese partner as “..a marriage where you do not love each other but you’re forced to sleep together”.

Twenty-three years later I think that this definition still stands.”Homberg: “Joint ventures are always a viable alternative. EADS, jointly with our partners, manages numerous, successful joint ventures, comprising global leaders like ATR in turboprop aircrafts. One pre-requisite for success in joint ventures is to carefully craft industrially roles and leader-ship, in order to enable dynamic business development and company evolution over time.

As I mentioned earlier, in the aero-space sector we are often obliged to es-tablish joint ventures when entering new markets, given the nature of the business and existing regulations. In China, EADS found highly motivated and capable part-ners with which we have established very successful joint activities. One example in the Space segment is our joint venture “Be-jing Spot Image” with the Chinese Centre for Earth Observation and the Digital Earth (CEODE) for Geo Information Services.” Tang: “Joint ventures are a viable alterna-tive to direct investment in China and some wholly owned foreign companies have also been successful in China.”Nizami: “Definitely, joint ventures are the key to a secure investment in China, with-out local direct investment you will be lost and taking a big risk in the China market where language and introduction plays a viable role. I suggest finding the right joint venture partner is the key to success but the question is how to find the right partner in China as they all look the same.

Finally, I would say that we all should learn from the past to correct our present for a better future in the Chinese market.”


Networking at the Global China Business Meeting 2010 in Luxembourg


Q: Are Chinese consumers still wary of new brands?A: “According to a Chinese retail market research report by Deloitte & Touche, one of the world’s leading accounting firms, Chinese consumers like to try new brands, especially consumers in second-tier cities. According to direct consumer experience, many Chinese people favor foreign brands. Some Chinese enterprises use foreign brand names, such as ‘Younger.’ ”

Q: The Chinese tend to trust local brands. What is a strategy for marketers to overcome this?A: “Cooperate with Chinese enterprises and use Chinese brands.”

Q: Is the generation in their late teens and early twenties the ideal target for new brands?A: “For people in their early 20s, compared with their predecessors, there is greater emphasis on personal feelings and faster acceptance new brands.”

Q: Chinese like to impress with a qual-ity brand but research indicates that they are willing to pay only a 2.5 percent premium for branded products. How can marketing people deal with this di-chotomy?

In this interview, Chinese business executive Han Wei answers questions about the Chinese consumer, developing consumer mar-kets in China and what foreign companies need to do to be suc-cessful in China.

Han Wei

A: “I see this in two ways. On one hand, China overall is still a developing country and most people’s consumption is limited; therefore, there is not much high-end pur-chasing power. On the other hand, there are many rich people in China and their purchasing power is amazing. It is most im-portant to target the rich people, and target your marketing.”

Q: Many international and Chinese brands have not succeeded because they did not recognize the many different types of Chinese consumer; they locked into the stereotypes. Do you agree?A: “Yes. You need to know China well. If you want to make foreign brands success-ful, localize appropriately rather than stick-ing to stereotypes. For example, McDon-ald’s launched a “spicy chicken” and other foods in many markets, rather than staying with their standardized menu.”

Q: Research indicates China is not as ho-mogeneous as one might believe; there are thought to be seven regional mar-kets. Do you agree? Is a separate strat-egy needed for each market?A: “In China, different regions require dif-ferent marketing strategies. The regions are usually divided into seven or at least several, and there is no standard classifica-

THE AGE OF THE CHINESE CONSUMER

Virtual Ribbon Cutting Ceremony with the co-hosts and co-organizers

The Voice of Southeast Asia72 Magazine • November-December 20107

IF YOU WANT TO MAKE FOREIGN BRANDS SUCCESS-FUL, LOCALIZE AP-PROPRIATELY, RATH-ER THAN STICKING TO STEREOTYPES.

THE AGE OF THE CHINESE CONSUMER

tion. This needs to be based on the product itself.”

Q: Are there different attitudes between the regions when it comes to consumer behavior?A: “Consumer habits are different in dif-ferent regions. For distance, buying vegeta-bles in the north is in “pounds”, however, in Shanghai, quantities may be much smaller. Another one is that different regions have different habits about whether to use a shopping bag.”

Q: Chinese consumers have a last-minute decision making style. How can marketing plans cash in on this?A: “Chinese consumers think that products on the same shelf would all be the same. But the top-rated product would be by itself, more expensive and more diffi cult to purchase. Marketing, promotional and other activities, need to be systematic, not just a one-time occurrence.”

Q: Coastal Chinese consumers are bet-ter off than inland consumers. Do com-panies have to acknowledge this in their marketing plans?A: “China has a vast area and a large population due to historical and political reasons. There are economic disparities be-tween urban and rural areas and between east and west. When doing the market-ing plan, the company cannot ignore this factor, in pricing, channel development, brand communication and product differ-entiation. For example, with China’s “Move

home appliances to the country” campaign, the government and companies embarked on a strategic action for the rural market.”

Q: Research by Gallup indicates that brand preference was in decline in the last decade dropping from 78 percent to 67 percent in 2004, for example. Is this trend still continuing?A: “I disagree. During the last decade, China’s rapid economic development has strengthened the brand concept. Chinese consumers are more concerned about the “brands” themselves. But, at the same time, as the product of enrichment, there are many brands in each product line, so the preference of Chinese consumers to a par-ticular brand is declining. Especially with China’s economic development, a number of domestic brands have grown up, rival-ing international brands. For international brands, quality, service and other aspects of continuous improvement are based on the Chinese market.”

Packed Hall of the Global China Business Meeting 2010, at Congress Center in Luxembourg

November-December2010•Magazine9

The Save Our Planet Forums were started by Swarup Roy, founder of Asean Affairs - the Global Publication of Southeast Asia. The confer-ences started in March 2010 in Bangkok (12th March and 25th March) and continued in Malaysia (3rd Aug 2010 in Kuala Lumpur). It contin-ues in 2011 in Thailand, Singapore, and Malaysia. Plans to organize the series in India, Vietnam, Indonesia and China are on the drawing board, culminating in a mega conference at the end of the series of events.ConceptIt is now apparent to many that the task of implementing measures to combat climate deterioration falls on the private sector, including companies and individuals. To accomplish this, shared solutions need to be produced. The goal of the Save Our Planet conferences is to develop and define these practical solutions.Who’s Who Speakers and Hi-Profile Delegates from 12 countries at SOP 1 & SOP 2SOP 1 was an international event with 17 speakers and 200 delegates attending from 12 countries. Inaugurated by the Chairwoman of Ase-anAffairs, Her Highness Princess Mom Luang Rajadarasri Jayankura of Thailand, we had such distinguished speakers as Dr. Michael Nobel of the Nobel Charitable Trust, Dr. Haans Schumacher, the Ambassador of Germany to Thailand; Dr. Art-Ong Jumsai Ayuthaya, Dominikus von Pescatore of BAYER, David Oberhuber from The German Technical Cooperation, Tony Novak of EMERSON, Chris D’Couto, CEO of Neah Power Systems, USA; Niraj Sharan from Aura Inc Italy & India, Sumit Phokrel from the Asian Development Bank, Shayne Heffernan from Ebeling Heffernan, The Honorable Barry Gusi from the Philippines, and Stuart Scott of the Climate Summit.Save Our Planet - MalaysiaA total of 200 leaders from business, government, think tanks, embas-sies, chambers of commerce and media in Malaysia attended the Save Our Planet Forum, 3rd August 2010, at the Mandarin Oriental Hotel.

The keynote addresses were given by Peter Chin, Malaysia’s Minister of Energy, Green Technology and Water; and Rafidah Aziz, MP, former Malaysia Minister of International Trade and Industry. The remaining 17 speakers hailed from 12 different countries.Corporate partnersThe Save Our Planet concept has attracted a wide range of partners including Bayer, Biersdorf, Ebeling Heffernan, Emerson, PTT Public Company - Thailand, the German government through its local embas-sies, German Technical Cooperation (GTZ), Siemens, European Union and Tesco.Potential partners looking to support the Save Our Planet initiative are the US$29 billion dollar Birla Group, the French energy giant US$110 billion GDF Suez Group, the Hinduja Foundation of Switzerland and London, and the heads of state of Asean and European countries.Save Our Planet FoundationThe creation of the Save Our Planet Foundation as a nonprofit organi-zation to fight climate change is another goal. The foundation would support innovations in technology, processes and methods across Asia and fund startup companies to fight climate change. The foundation would create various mechanisms to achieve these goals, one of them launching an “Asian Green Awards” for the best innovations and com-panies involved in the eco-economy.Final report to the United NationsAt the conclusion of the Save Our Planet mega conference, a compre-hensive report will be produced and submitted to the United Nations Environment Programme (UNEP), anticipating that this report would be viewed as a major Asian contribution to the climate crisis issue.

We seek your support to Save Our Home and Our Planet.

Sponsors and partners of Save Our Planet-Malaysia L-R: Swarup Roy, Founderand CEO of Asean Affairs; Pierre Barthes, General Manager, Mandarin Oriental,

Kuala Lumpur; Seitle S. Dhillion, Vice President and Head of Oil and Gas Division,Siemens Malaysia; Herbert Dittmar, Managing Director, Bayer-Malaysia; Peter Chin,

Malaysia’s Minister of Energy, Green Technology and Water; Tony Novak, CountryGeneral Manager, Emerson-Thailand; Rafidah Aziz, Former Minister of InternationalTrade and Industry, Malaysia; H.E. Vincent Piket, Ambassador and Head of EuropeanUnion Delegation to Malaysia; Natasha Zulkifli, Executive Director, Malaysia Europe

Forum; and Shayne Heffernan, Founder, Heffernan Group and Ebeling Heffernan(Bahamas).

A message from the founder of Asean AffairsJOIN US TO SAVE OUR ONLY HOME

Swarup [email protected]

Left: Save Our Planet, Bangkok, 12th March, 2010. (L-R) Mr. Dominikus von Pescatore, Senior Bayer Representative for Country Group North ASEAN and Managing Director of Bayer Thai Co., Ltd.; Dr. Michael Nobel, Founder, the Nobel Charitable Trust; Dr. Hanns Schumacher, Ambassador of the Federal Republic of Germany to Thailand; Dr. Raphael L’Hoest, Counsellor for Economic Affairs Ger-man Embassy, Bangkok; Swarup Roy, Founder & CEO of AseanAffairs; Mr. David Oberhuber, Country Director Thailand of GTZ; Mom Luang Rajadarasri Jayankura, Chairwoman of Asean Affairs; Stuart Scott, Director, The Climate Summit, USA.,

Right: Save Our Planet 2, Thursday, 25th March, 2010, Queen Sirikit National Convention Center, Bangkok.

www.aseanaffairs.com/sop

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