Oct- Nov 15

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01 Chinese Entrepreneurs are Rewriting Rule Book 03 07Tata AutoComp Systems Ltd.,

Inaugurated 2nd Manufacturing Plant in Changshu City on 16th Oct 2015

Events

Chinese Entrepreneurs are Rewriting Rule Book

– By Edward Tse

New generation of startups confident-ly  throwing business  caution  to  the wind

Since the early 1990s, China has been the world’s fastest-growing economy. It has opened its economy to the outside world with unprecedented speed and success.

In the process, China has also acquired a large number of critics, who claim that China’s economic success is due, in good part, to unfair practices by China: its mercantilist trade regime, its currency manipulation that keeps the value of the yuan artificially low, its subsidies for manufacturers, and the alleged pirating of foreign goods and technology.

The main beneficiaries of these policies, they say, have been Chinese export manufacturers - those who produce inexpensive smartphones, computers, toys, clothes, and other consumer goods. Another factor frequently cited by overseas critics is the prevalence and influence of State-owned enterprises in China.

The country’s biggest companies - its banks and insurers, oil and energy companies, telecom opera-tors and airlines, leading steel, auto and construction firms - are all government-owned or government-controlled. In mid-2014, some 92 companies on the

Fortune Global 500 list were Chinese, but just 10 of these were privately owned enterprises.

Using money from China’s foreign exchange reserves, many of these businesses have been investing heavily overseas. Since the early 2000s, Chinese State-owned firms have been striking multibillion-dollar deals in Africa, South America and other regions, gaining access to energy supplies, raw materials and even land for farming.

But this view of the Chinese economy as a mercan-tile  juggernaut,  driven  by  a  single-minded  govern-ment,  does  not  tell  the most  dramatic  part  of  the Chinese story.

That is the emergence of a new group of entrepreneurial business leaders, all from the private sector, most of them operating with little direct government influence or support, and all of them transforming their industries.

These entrepreneurial disrupters are among the most successful and powerful individuals in China today. Many are billionaires, and some are multibillionaires. They are the reason that (as of August 2014) China hosts  the  world’s  second-largest  concentration  of billionaires after the United States  - 152 out of the total of 1,645, according  to Forbes magazine.

The Bi-Monthly China Journal of Confederation of Indian Industry

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China remains home to 2.3 million State-owned companies. That number, however, is dwarfed by its other businesses. As early as 2004, China had about 3.3 million privately held companies - many owned by investors with shares traded on public exchanges - and 24 million proprietorships - individual or family-run operations.

By 2013, the country had nearly 12 million private companies and more than 42 million proprietorships. Moreover, the government is firmly committed to increasing these totals. In the first seven months of 2014, thanks to regulatory reforms abolishing regis-tered capital requirements, 1.5 million new private companies were set up-double the number during the same period the year before.

The number of State-owned companies, meanwhile, has fallen by almost half since 2004. And though these companies are far more productive than they were a decade ago, their increase in output is a fraction of that of the private sector.

By 2013, while total revenues at State-owned com-panies had risen just over sixfold from 2000, those in the non-State sector had risen more than 18 times. Profits jumped even more over the same period, up nearly seven times for State-owned companies, but up nearly 23-fold for non-State ones.

Today, the private sector accounts for at least three-quarters of China’s economic output.

Chinese entrepreneurs have thrived, in part, because they created companies able to change as China changed. Many of them first set up businesses when the economy was still dominated by the State. They survived the Asian financial crisis of the late 1990s. They  fought off  competition  from  the flood of  for-eign companies that arrived after China entered the World  Trade  Organization  in  the  2000s.  And  they rode out the worldwide downturn that followed the 2008 global financial  crisis.

China’s entrepreneurs have created an economy largely outside the direct control of the government. They are answerable primarily to the customers who consume the products and services their companies offer. They are typically energetic, imaginative and often idiosyncratic. They are extraordinary individuals in their own right, especially when you consider that they have created successful businesses with little of-

ficial backing within a traditionally risk-averse culture that reveres authority and conformity.

Many of today’s most successful Chinese entrepre-neurs had no experience in business when they started their companies. They had to learn things as they went along through a continual process of trial and error. They were “crossing the river by feeling the stones”, as late leader Deng Xiaoping characterized his approach to economic reform.

Among those who started businesses in the period from the 1980s through the early 2000s, not one could have foreseen the China of 2014. Yet these are the people who have played the single biggest role in creating the wealth that exists in China today.

Nicholas Lardy, a senior fellow at Washington DC-based Peterson Institute for International Economics, estimates that privately controlled companies now account for two-thirds of all urban employment - meaning that almost all of the growth in urban employment since 1978 can be attributed to the private sector.

The Chinese entrepreneurs have almost all devel-oped their businesses from the ground up. They built their companies by meeting the needs of their customers, often in businesses that no one else saw as feasible.

These business leaders know that they are riding and contributing to a historic wave of economic activity. As creators of the fastest-growing enterprises in the fastest-growing economy in the world, they recognize that  they have  immense potential  influence.

Running companies that have grown even faster than the Chinese economy, they are establishing the rules that all companies in China will have to follow. Despite having had almost no formal business training, they are moving rapidly to compete with the same com-panies from whom they were drawing inspiration just a few years ago, both in China and internationally.

In the process, they will rewrite the rules of global management.

Edward Tse is the founder and chief executive officer of Gao Feng Advisory Co, a global strategy consulting firm based in China.

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Tata AutoComp Systems Ltd., Inaugurated 2nd Manufacturing Plant in Changshu City on 16th Oct 2015

The second manufacturing plant of Tata AutoComp Systems Ltd. in China was inaugurated on 16th Oct 2015 by Mr. R. Gopalakrishnan, Chairman Tata AutoComp, Changshu Dy. Mayor Mr Shen Xiaodong, Changshu Economic Development Zone (CEDZ) Vice Chairman Mr Fan Jianqing, Mr S. K. Ray, Acting Consul General of India from Indian Consulate, Mr Gerard Beddis, Executive Vice President – CJLR, Mr Zeng Lingpeng, Vice President – CJLR, Mr Ajay Tandon, M.D. & CEO Tata AutoComp, Mr James Zhan, President, Tata Sons Beijing and Mr Arvind Goel, COO Tata AutoComp.

All key senior level officials from CJLR like Dr. Simon Stevens (Executive Vice President – Engineering & New Product Development), Mr Jamie Rudd (Director – STA), and their teams were present.

Representatives of Confederation of Indian Industries, L&T, Axis Bank, State Bank of India, Tata Projects were present on this occasion.

The Inauguration ceremony started with introduction of Chief Guests by Narendra Chavan. This was followed

by lighting of Indian traditional lamp by Chief Guests and dignitaries. Mr Ajay Tandon welcome all guests and expressed his appreciation towards CJLR, CEDZ and Changshu government for giving excellent support to Nanjing Tata AutoComp. Mr. R. Gopalakrishnan Chairman Tata AutoComp, CJLR Executive Vice President Mr Gerard Beddis, CEDZ Vice Chairman Mr Fan Jianqing and Indian Consul General Mr S. K. Ray addressed the gathering and wished Nanjing Tata AutoComp all the best. The formal inauguration of plant was done by Chief Guests by cutting the ribbon in traditional Chinese style. Mr Arvind Goel expressed vote of thanks to Chief Guests, CEDZ officials, CJLR officials, JV partners of Tata AutoComp, Indian Community present and also supplier-partners of Tata AutoComp in China. A plant tour was conducted in 3 batches for all guests. This was followed by lunch.

Tata AutoComp Changshu Plant Facility Description: The TACO’s Changshu plant consists of manufacturing area of 5,000 sq meters and an office area of 1,500 sq meters (total 6,500 sq meters). The plant is equipped with 3 robotic welding cells and 1 welding Special Purpose Machine (SPM) and these equipment’s will

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be producing plastic assemblies for CJLR vehicles like “Land Rover Evoque”, “Land Rover Discovery” and “Jaguar XF” car. The Changshu plant is located in CEDZ Special Auto Component Zone and is just 4 kms away from CJLR manufacturing facility. This gives advantage to TACO to work very closely with CJLR and respond to any requests in short time. TACO has invested RMB 25 mln to establish this manufacturing facility and will be employing 25 people in the first phase of operation which will increase based on the CJLR volume ramp up.

TACO started its operation in China by setting up its first manufacturing plant in Nanjing city in year 2008. The plant was set up as Wholly Foreign Owned Enterprise (WOFE). The Nanjing plant is supplying parts to automotive OEMs in China and overseas. Changshu plant is the second plant of TACO in China and is mainly set up to cater to needs of CJLR.

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Events

Interactive session with Shanghai Agriculture Delegation

An interactive session was organised during the visit of a high level delegation from Shanghai Agriculture Department of China on 27th October at the CII Headquarters in New Delhi. The 12 member delega-tion comprising of senior government and industry representatives was led by Mr. Jiang Ping, Member of the Standing Committee of CPC Shanghai Committee. Senior representatives of the Bright Food Group and Liangyou Group, two of the leading agriculture companies of China, were also a part of the delegation.

The session was chaired by Mr B Thiagarajan, Chairman of the CII National Committee on State Level Coordination in Agriculture and Executive Director, Blue Star. Representatives from Indian industry and the CII Food & Ag-riculture Centre of Excellence (FACE) partici-pated at the Session.

Group photo of CII IBF member companies interacting with Mr. Ashok K. Kantha, Ambassador of India to China and Mr. Prakash Gupta, Consul

General of India, Shanghai on 4th November 2015 in Shanghai.

Interaction  with  Ambassador  of  India  to China  in Shanghai

CII IBF China organized an interactive session with Mr. Ashok K. Kantha, Ambassador of India to China on 4th November 2015 in Shanghai. The session was chaired by Mr. Prakash Menon, Co-Chairman, CII IBF China. IBF member companies Infosys, Micromactic,

Discussions were held to understand various policies related to research and investment in different fields of the Agriculture sector in India & China. Both sides were keen to initiate exchanges between agri related enterprises, farmers and agricultural research insti-tutes to learn more about non-chemical agricultural practices, water utilization techniques and genetically modified crops.

Aurobindo and Axis Bank gave the sector brief on IT, manufacturing, pharmaceutical and financing to the Ambassador on the market trend, challenges they met in China and opportunity. Mr. Kantha conveyed that Embassy of India as well as Consulate General of India in Shanghai and Guangzhou will provide full support to the Indian companies. While, more and more Chinese companies are looking India as invest-ment destination. He also reiterated that we should work on a framework to lead the greater engagement between India and China. There are 18 companies attended this interaction.

Workshop series on “India: Navigating your next Growth Opportunity”

CII organized workshop series on “India: Navigating your next Growth Opportunity” with the support of

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Mr. James Zhan, Chairman, CII IBF China delivering a speech at the workshop in Beijing on 17th November.

Embassy of India and CCCME in Beijing, Consulate General of India in Shanghai, Guangzhou and Hong Kong, in partnership with AZB & Partners, Deloitte, GMR Group and Kelly Services from 17th to 20th November in Beijing, Shanghai, Guangzhou and Hong Kong respectively. Our 4 partners gave the detailed presentations on business landscape in India; the op-

portunities that exists in various sectors and provinces; the compliances in areas such as taxes, regulatory and legal; the diverse cultures that exists in India leading to effective management of human resources and lastly the role the special economic zones are playing to facilitate the investment. We had more than 300 representatives from Chinese companies attended the workshop in the 4 cities.

Session on China as a Partner for the “Make in India” policy

CII along with Smadja & Smadja and Center for China and Globalization organized a session on China as a Partner for the “Make in India” Policy on 21st November 2015 in Sanya, coinciding with the 2nd China Outbound Forum scheduled from 20th to 22nd November 2015.

Mr. Claude Smadja, President Smadja & Smadja Strategic Advisory chaired the session. The speak-ers from India side Mr. Y K Sailas Thangal, Consul General of India in Guangzhou; Mr. U Vittal Mallya, Country Head – China, Larsen & Toubro Limited and Mr. Sreedhar Pothukuchi, Vice President – Business Development, GMR Group discussed the opportunities where Chinese companies have lots of opportunities in India such as infrastructure, manufacturing, ect. And the speakers from Chinese side Mr. Tang Xiuguo, President of SANY Group; Mr. Hong Qing, President of ICBC Mumbai Branch and Mr. Liu Zhengyu, Chief

Group photo of speakers for the workshop in Beijing on 17th November

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(L-R) Mr. Hong Qing, President of ICBC Mumbai Branch, Mr. Y K Sailas Thangal, Consul General of India in Guangzhou, Mr. Tang Xiuguo, President of SANY Group, Mr. Claude Smadja, President Smadja & Smadja Strategic Advisory, Mr. Liu Zhengyu,

Chief Executive Officer, Guangzhou Sky-Tech Cloud, Mr. U Vittal Mallya, Country Head – China, Larsen & Toubro Limited and Mr. Sreedhar Pothukuchi, Vice President – Business Development, GMR Group in the session on China as a Partner for the

“Make in India” Policy on 21st November in Sanya.

Executive Officer, Guangzhou Sky-Tech Cloud (TCL Group company) who have already had presence in India shared their experience in India and encourage Chinese companies to look at India as an investment destination as there are lots of advantages such as low cost, huge market. However, there are challenges also like labor, land, language, culture etc. In conclu-sion, it was identified that there is huge opportunity in India and Chinese companies can contribute a lot in MII policy. The session attracted more than 200 participants to attend.

India  China  (Nantong)  Service  Outsourcing Investment Cooperation Seminar

Confederation of Indian Industry along with Nantong Municipal People’s Government organized an India China (Nantong) Service Outsourcing Investment Cooperation Seminar in the “Garden city of India - Bengaluru” on 23rd November 2015. The aim of this seminar was to attract more investments from Bengaluru based enterprises.

The Indian enterprises that participated in the event showed interest in developing business cooperation

with Nantong enterprises & wished to enhance co-operation with Nantong to facilitate joint growth. So far Indian enterprises have invested in 20 projects in Nantong & also the value of import & export between Indian & Nantong has also reached to USD 606 million. Last but not the least, India has maintained close ties with Nantong in business trade and education.

Ms. Shan Xiaoming, Vice Mayor, Nantong Municipal Government mentioned Nantong’s as the preferred destination in China for Investments with favour-able investment policies. She further highlighted the development of infrastructure, resource availability - physical and labour, productivity and workforce skills, and the development of the business value chain are also the key factors in Nantong from the prospective investments point of view as well; the structure of the legal & the regulatory environment, conducive busi-ness environment, political & economic stability of the country, huge un – tapped business market in Nantong & openness to regional & International trade are the key attraction for the investments in Nantong. She mentioned that China & Nantong economy continues to prosper, evolve and mature, higher-end industries such as Pharmaceuticals & Healthcare, Information

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technology & BPO, Manufacturing & Engineering, Robotics and luxury goods among others can gain a bigger footprint in Nantong as its local conditions, resources and other FDI are enhanced.

The seminar session lasted for 2.5 hrs with the Indian Business enterprises looking very positive to enhance & extend the trade relations between both nations in various sectors.

Interaction with National People’s Congress of China delegation

CII organized a Roundtable discussion with select Indian industry and delegation from the National People’s Congress of China who visited Mumbai on

Friday, 27 November 2015 at CII Western Region, Mumbai.

The purpose of the delegation being establishing new associations and sharing trade opportunities with Indian companies that may wish to do business with Chinese companies, few important points have been discussed during the meeting -

1. Indian State government’s role on the policies of Solar / Renewable Energy.

2. Proactive role played by the Indian government on FDI to India.

3. Other related issues discussed were manufacturing of solar equipment and subsidy provided by the Indian government in supply of electricity, export and import of renewable/solar energy. And also the payment methods which can be used for power purchase agreement.

NPCC has requested CII to help with more updates on sectors such as Agriculture, Pharmaceuticals and Internet Start-ups.

Interaction  with  Business  Delegation  from Hong Kong

CII had an interaction with a 17 member business delegation from Hong Kong led by Mr. Will Li, Se-nior Product Promotion Manager, Hong Kong Trade Development Corporation (HKDTC) on 27 November 2015 in New Delhi. The delegation comprised of com-

panies from various sectors such as electronic CF instruments, LED equipment, Bluetooth accesso-ries, Watch components, Fashion accessories and Garments.

The delegation was briefed about the functions of different verticals of CII and various issues related to import – export were discussed. Both sides agreed to continue regular exchange of information and participate in various events, seminars and exhibitions orga-nized by CII and HKTDC.

(L-R) Mr. Sanjeev Babel, Mindtree Ltd., Ms. Shan Xiaoming, Vice Mayor of Nantong Municipal Government; Ms. Gu

Shuying , Director of Nantong Bureau of Commerce; Mr. GK Moinudeen, Director & State Head, CII Karnataka at the India China (Nantong) Service Outsourcing Investment Cooperation

Seminar on 23rd November in Bengaluru

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The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the development of India, partnering industry, Government, and civil society, through advisory and consultative processes.

CII is a non-government, not-for-profit, industry-led and industry-managed organization, playing a proactive role in India’s development process. Founded in 1895, India’s premier business association has around 8000 members, from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 200,000 enterprises from around 240 national and regional sectoral industry bodies.

CII charts change by working closely with Government on policy issues, interfacing with thought leaders, and enhancing efficiency, competitiveness and business opportunities for industry through a range of specialized services and strategic global linkages. It also provides a platform for consensus-building and networking on key issues.

Extending its agenda beyond business, CII assists industry to identify and execute corporate citizenship programmes. Partnerships with civil society organizations carry forward corporate initiatives for integrated and inclusive development across diverse domains including affirmative action, healthcare, education, livelihood, diversity management, skill development, empowerment of women, and water, to name a few.

In its 120th year of service to the nation, the CII theme of Build India - Invest in Development: A Shared Responsibility, reiterates Industry’s role and responsibility as a partner in national development. The focus is on four key enablers: Facilitating Growth and Competitiveness, Promoting Infrastructure Investments, Developing Human Capital, and Encouraging Social Development.

With 66 offices, including 9 Centres of Excellence, in India, and 8 overseas offices in Australia, Bahrain, China, Egypt, France, Singapore, UK, and USA, as well as institutional partnerships with 312 counterpart organizations in 106 countries, CII serves as a reference point for Indian industry and the international business community.

Translation Disclaimer: English is our official business language. Due to the complexities of the human language, and the possibility of a number of different translations and interpretations of particular words and phrases there are inherent limitations in translations. Thus, the CII accepts no responsibility or liability for the accuracy of the translation of its contents (wherever applicable), its study and test materials, submissions, comments, reviews, correspondence, and external links, etc.

Disclaimer: This document is being shared for information purposes only and is therefore not intended to substitute for formal professional advice. All information in this document has been compiled and/ or arrived at from online sources in the public domain.

CII India Office

Vijaya Bajpai, Head - East Asia DeskConfederation of Indian Industry

The Mantosh Sondhi Centre23 Institutional Area, Lodi Road, New Delhi-110003

Tel: 91-11-2462 9994-7; Fax: 91-11-24601298Email: v.bajpai@cii.in; Website: www.cii.in

CII China Office

Madhav Sharma, Chief RepresentativeConfederation of Indian IndustryRoom No 11A47/49, Shanghai Mart,

2299 Yan’an Road (West), Shanghai 200336, ChinaTel: +86 (21) 62360969; Fax: +86 (21) 32283510Email: ciichinarep@cii.in; Website: www.cii.in