CHaINA '11 Live: The Global Supply Chain Event for Asia

Board Moves 

MNCs bring their best players to China 

Human Capital and M&A 

Tablet Computers 

Erik Fyrwald, Nalco 

Richard Arnold, Manchester United 

Netherlands Country Focus 

Executive Education Industry Report 

AUG/SEP 2011 

Volume 8: Issue 8 

HKD45 

www.sbr.net.cn 

ISSN: 1813-310X

CONTENTS 

PROFESSIONAL OPINION 54 

Playing Anti-Monopoly 

China’s Anti-Monopoly law is not as restrictive as MNCs 

may have feared 

VIEW FROM THE TOP 55 

Water World 

Nalco’s CEO Erik Fyrwald 

explains why water 

conservation must be 

high on China’s agenda 

INDUSTRY REPORT: EXECUTIVE EDUCATION 56 

Growing Up 

As the China’s market begins to mature, international MBA, EMBA 

and executive education providers already face tough competition. 

How will they cope if rumours of an international business 

education bubble are justified? 

4 

COUNTRY FOCUS: NETHERLANDS 64 

Business is Blooming 

Business is looking good for Dutch companies in China, 

and Chinese FDI into the Netherlands is on the increase 

too 

BUSINESS DIARY 73 

Upcoming business events in Shanghai 

REGULATORY UPDATE 74 

New legal and tax developments affecting foreign invested 

enterprises in Shanghai 

THE VIEW OFFSHORE 76 

New overseas tax developments 

DIRECTORY OF SERVICES PROVIDERS 77 

Key service providers in Shanghai 

SHANGHAI BUSINESS REVIEW AUG/SEP 2011 www.sbr.net.cn

NEWS 

News in Brief 

A summary of China business news for international companies 

news@sbr.net.cn 

ENERGY & INDUSTRIALS 

American reactor arrives in 

China 

The first-ever deployment of 

advanced nuclear-power technology 

from the United States to China has 

started in earnest, with the initial 

delivery made by the Westinghouse 

Electric Company in Zhejiang. 

Westinghouse, the nuclear products 

and services subsidiary of Japan’s 

Toshiba, announced the arrival of 

6 

its AP1000 nuclear-reactor vessel 

at the eastern coastal province’s 

Sanmen nuclear power plant. The 

Pennsylvania-based company, 

backed by financing from the US 

Export-Import Bank, won the twoyear 

bidding process for the project 

in December 2006. 

ArcelorMittal sees steel 

demand buoying profits 

ArcelorMittal, the world’s top 

steelmaker, said it raised its forecast 

China proceeds with AP1000 nuclear plants 

China is proceeding with plans to develop more AP1000 advancedtechnology 

nuclear power plants. Wen Hongjun, the previous 

deputy chief engineer of the planning department at China National 

Nuclear Corp, said that China might become the world’s testing 

ground for the new technology. 

for global steel consumption this year 

due to continued strong demand 

from China. The company, which 

makes 6% to 7% of the world’s steel, 

said apparent steel consumption in 

China, although not a main market 

for the steelmaker, should increase 

by more than 8.5% this year, 

meaning global sector expansion 

would be 7.0% to 7.5%. 

BOMCO joins Brazilian firms in 

partnership 

Baoji Oilfield Machinery Co Ltd 

(BOMCO), the largest oil equipment 

subsidiary of China National 

Petroleum Corp (CNPC), has set up 

a JV in Brazil with local companies 

for oil equipment manufacturing 

and related services, CNPC said. 

The JV, the first of its kind between 

Chinese and Brazilian companies in 

this particular sector, will help CNPC 

become an integrated international 

energy group, said Li Xinhua, vicegeneral 

manager of CNPC. 

Chalco inks deal with 

Mongolian miner 

Mongolia’s state-owned miner 

Erdenes Tavan Tolgoi has agreed 

to sell USD250m worth of coal 

from the east Tsankhi deposit to 

Aluminium Corporation of China 

(Chalco), a move insiders said was 

aimed at raising cash to help fund 

its impending listing fees. Under 

the agreement, Chalco would resell 

30% of the coal to Japanese trading 

houses Itochu Corporation and 

Mitsui as well as state-owned Korea 

Daily news updates 

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Resources Corporation, Erdenes 

said. 

China Investment buys stake 

in French utility unit 

China Investment Corp will buy 

a 30% stake of Europe’s largest 

natural-gas network operator 

GDF Suez SA’s exploration and 

production unit for EUR2.3bn 

(USD3.3bn) to help the French 

energy company to cut debt and 

capitalise on higher demand for 

energy in Asia. GDF Suez is seeking 

to accelerate expansion into “high- 

USD48.2bn 

Total worth of investments in 

China’s electronic information 

sector in the first five months 

of 2011. 

Source: MIIT 

growth” markets including Asia, 

where energy use may rise 2.4% 

a year through 2035, CEO Gerard 

Mestrallet said. 

China more dependent on 

crude oil than US 

China’s foreign crude oil dependency 

ratio recorded 55.2%, the first 

time exceeding that of the United 

States, the Ministry of Industry and 

Information Technology (MIIT) said. 

According to a MIIT report, China’s 

petroleum consumption totalled 


NEWS 

1,980 million tons in the first five 

months of 2011, rising 10.3% yearon-year. 

China Nonferrous Metal 

increases stake in Terramin 

China Nonferrous Metal Industry’s 

Foreign Engineering and 

Construction Co said it would 

increase its stake in Australian miner 

Terramin Australia Ltd in a deal worth 

Rmb32.35m (USD5m). Terramin 

will sell 12.3 million shares to China 

Nonferrous Metal at USD0.406 

apiece in a private placement that 

would increase the holding of the 

Chinese developer to 19.86% from 

14.38%. 

China’s Hanlong bids for 

Bannerman 

China’s Sichuan Hanlong Group 

has made a USD154.9m bid for 

Australia’s Bannerman Resources 

Ltd, eyeing the group’s uranium 

project in Namibia near key mines. 

However, Bannerman said privatelyowned 

Sichuan Hanlong was trying 

to take advantage of recent share 

price weakness in the wake of 

Japan’s Fukushima nuclear crisis. It 

has been trying to find a JV partner 

to help finance, develop and operate 

its 80%-owned Etango project, south 

west of Rio Tinto’s Rossing uranium 

8 

AkzoNobel purchases China’s chemical supplier 

AkzoNobel NV, the world’s biggest paint maker, agreed to 

buy Boxing Oleochemicals, China’s leading nitrile amines and 

derivatives supplier, for an undisclosed sum. The purchase is 

subject to approval of the Chinese authorities and is expected to 

be completed in Q4, the Dutch company said. 

mine and west of Paladin Energy’s 

Langer-Heinrich mine. 

China’s Shenhua in USD7bn 

coal bid 

A venture led by China Shenhua 

Energy Co will hold a 40% stake 

in the western Tsankhi block of 

Mongolia’s Tavan Tolgoi coal 

project, giving Shenhua the biggest 

share of one of the world’s biggest 

coking coal deposit. A Russian-led 

consortium would control 36% 

of the project, while US miner 

Peabody Energy Corp would own 

the remaining 24%, according to a 

draft proposal to be submitted to the 

Mongolian parliament, the Mongolian 

government said in a statement. 

China tops world’s renewable 

energy investment 

China is now the world leader in 

renewable energy investment, 

as developing countries overtook 

developed ones for the first time in 

the value of major “green” projects in 

2010, according to a report released 

in Frankfurt. Renewable energy 

industry saw a great boom last year, 

with a record USD211bn worldwide 

flowing into the sector, surging about 

30% year-on-year, according to 

the report, called “Global Trends in 

Renewable Energy Investment 2011.” 

Chinese firm to supply silicon 

batteries to ROK 

Chinese company SSG Energy 

is likely to supply silicon storage 

batteries to automakers in the 

Republic of Korea (ROK) for 

the production of electric cars, 

according to a framework agreement 

signed between the company and 

an ROK trade delegation. The 

Jingzhou-based company would 

supply batteries worth Rmb250bn 

(USD38.83bn) over the next five 

years, which would be used to 

produce electric cars, said Chen 

Hong, president of SSG Holding 

Group, the parent company of SSG 

Energy. 

CNOOC to buy OPTI Canada 

for USD2.1bn 

CNOOC Ltd has agreed to buy OPTI 

Canada Inc for about USD2.1bn, 

the companies said. CNOOC, 

China’s biggest offshore oil and gas 

producer, will make the purchase 

through its wholly-owned CNOOC 

Luxembourg SA subsidiary, the 

companies said in a statement. 

The deal is subject to regulatory 

approval in Canada and China, but 

the companies said they expect the 

transaction to be completed in Q4. 

CNPC opens Iraqi oilfield 

China National Petroleum Corp 

(CNPC), the nation’s biggest oil 

company by output, said that the 

first phase of the Al-Ahdab oilfield 

in Iraq with an annual capacity of 3 

million tons started operations on 21 

June. The project marks “significant 

progress” in CNPC’s construction of 

key oil and gas cooperative areas in 

the Middle East, said Jiang Jiemin, 

general manager of CNPC. Al-Ahdab 

is expected to produce 25,000 

barrels of oil a day in the first three 

years and 115,000 barrels a day in 

six years. 

CNPC, Shell to launch JV 

Royal Dutch Shell Plc and China 

National Petroleum Corp (CNPC) 

agreed to set up a JV to drill onshore 

gas wells more efficiently in China. 

The partners will have equal shares 

in a well-manufacturing venture 

and will deploy “state-of-the-art 

technologies,” the Hague-based 

company said. The venture is part of 

a global alliance between the largest 

European and Asian oil companies, 

according to the statement. 

CPC, Exxon to jointly assess 

Sichuan’s shale-gas potential 

China Petrochemical Corp has 

agreed with Exxon Mobil Corp to 

jointly assess shale-gas potential in 

138 

Number of Lamborghini cars sold 

on the mainland during H1 2011, 

up 60% from last year. 

Source: Automobili Lamborghini 

south west China’s Sichuan Province 

as China seeks unconventional 

sources of energy. A unit of Sinopec 

Group, as China Petrochemical is 

also known, and Exxon’s Sichuan 

subsidiary signed a deal to survey 

the 3,643.59 sq. km. Wuzhishan 

area, the Chinese company said. 

Exec says China’s scrap 

copper imports to stay high 

Chinese companies will continue 

“madly buying” scrap copper in 

overseas markets for the next five 

years, with industrialisation and 

urbanisation spurring demand, said 

Tao Yonghe, a senior executive at 

the Guangdong Qingyuan Yunnan 

Copper Nonferrous Metal Co. 

The government is supporting 

development of domestic recycling 

operations, but it will take time to 

build up local production of the costreducing 

substitute for virgin copper, 

Tao said. 

Fuel import duty cuts to slash 

oil-firm losses, boost supplies 

China’s latest import duty cuts on 

fuel products could help ensure 

supplies ahead of the peak summer 

consumption season and reduce 

the losses state oil companies suffer 

from overseas purchase, analysts 

said. China will remove import tax 

on diesel and jet kerosene and cut 

tariffs on gasoline and fuel oil to 

1%, effective from 1 July, to boost 

supplies and balance its trade, the 

Ministry of Finance said. 


GDF close to China investment 

deal 

French energy giant GDF-Suez SA is 

in discussion with China Investment 

Corp. of a EUR3bn (USD4.28bn) 

deal which will take a 30% stake in 

the company, a person familiar with 

the matter said. 

Geely head has major 

investment in lithium 

In a move that insiders see as 

groundwork for new energy 

vehicles and batteries, Li Shufu, the 

chairman and largest shareholder 

of automaker Geely, has personally 

invested in the Australian lithium 

compound company Galaxy 

Resources. Li’s wholly-owned 

investment company Strong 

Target International has purchased 

USD31.7m in Galaxy bonds, while 

Fengli Group Co, a steel company in 

Geely’s home province of Zhejiang, 

subscribed to the remainder of the 

USD69m issuance. 

German Lanxess building 

USD40m plant in Changzhou 

German specialty chemical company 

Lanxess broke ground for its largest 

leather chemical plant in Changzhou, 

Jiangsu Province, to meet rising 

demand in China. The USD40m 

plant, the largest of its kind in Asia, 

will come on stream in the first half of 

2013 with an initial annual capacity 

of 50,000 tons. The company said it 

helps customers turn simple animal 

skins into luxurious, high-value 

leather that meet the demands of 

auto upholstery, furniture and fashion 

industries. 

Great Western, China firm to 

build rare earth plant 

Canadian Great Western Minerals 

is teaming up with a Chinese rare 

earth producer to build a rare earth 

processing plant in South Africa, the 

company said. The separation plant, 

a JV with Ganzhou Qiandong Rare 

Earth Group Ltd, will be built close to 

Drilling plan raise stakes in disputed seas 

South east Asia and China face the potential for more trouble 

ahead as oil and gas companies expand their exploration work 

in the contested waters. In the latest move, an energy company 

controlled by Philex Mining Corp of the Philippines plans to drill at 

least two wells and conduct more seismic surveys in a natural-gas 

prospect in the Reed Bank, one of the most-disputed areas in the 

South China Sea near the Philippines, Philex’s chairman said. 

Great Western’s Steenkampskraal 

mine in Western Cape province. By 

working with Ganzhou Qiandong 

to develop the separation plant, 

USD10.8tr 

Wealth of 3.3 million highnet-worth 

individuals in the 

Asia-Pacific Region in 2011. 

Source: 2011 World Wealth 

Report 

Great Western will have access to 

the most advanced technology in 

the rare earth world, Great Western 

Chief Executive Jim Engdahl said. 

Giant ore carrier’s China trip 

called off 

Brazilian miner Vale rerouted 

391,000 tonnes of iron ore aboard its 

China-bound giant bulk carrier Vale 

Brasil to Italy on its maiden voyage 

for commercial, not political, reasons 

and to allow time to finalise talks for 

future port deals, it said. Vale Brasil, 

the world’s largest dry-bulk vessel, 

was rerouted to Taranto, Italy, to 

supply steelmaker Ilva, from its 

original destination of Dalian. 

Hanlong offers USD1.5bn for 

Sundance Resources 

Sichuan Hanlong Group offered 

a bid of AUD0.50 (USD0.53) a 

share for West African iron ore 

exploration company Sundance 

Resources, valuing the company at 

AUD1.4bn (USD1.5bn) in the latest 

move by the private conglomerate 

to broaden its reach in global 

resources. It also marks the second 

takeover offer lodged by Hanlong 

for an Australia-listed company 

exploring for minerals in Africa after 

it bid AUD144m (USD152.5m) for 

Bannerman Resources, which is 

looking for uranium in Namibia. 

Jinchuan in bid for copper 

giant 

Jinchuan Group, the biggest 

Chinese nickel producer, has offered 

USD1.36bn for Metorex Ltd, topping 

a bid from Brazil’s Vale SA as the 

mining companies vie for African 

copper assets. Vale won’t engage 

in a “bidding war” for Metorex, 

CFO Guilherme Cavalcanti said. 

NEWS 

Metorex, which controls almost five 

million tons of copper resources 

in Africa, surged to the highest in 

more than two and a half years in 

Johannesburg trading. 

Jinhai wins big order from 

British firm 

Graig Group, the British ship owner, 

ship design and ship services 

firm, has ordered up to 26 feeder 

container ships from mainland 

shipbuilder Jinhai Heavy Industry, to 

take advantage of a boom forecast 

in intra-Asia trade. Chris Williams, 

commercial director of Graig 

Shipping, said the initial order was 

worth about USD180m for six of the 

newly designed Marlin 2000 Blue 

2,000 TEU containerships. 

Joy Global looks to buy 

China’s IMM 

US-based mining equipment 

maker Joy Global is in talks to buy 

International Mining Machinery (IMM) 

Holdings, a maker of coal-mining 

equipment in China, according to a 

source. IMM, controlled by private 

equity firm Jordan, has a market 

value of USD1.1bn, according to 

Reuters data. Joy Global could 

not be reached for comment, while 

IMM declined comment. The source 

declined to be identified as the 

discussions were private. 

Metso to supply equipment to 

TISCO 

Finland-based Metso Corp will 

supply minerals processing 

equipment to Taigang Group Lanxian 

Mining Co Ltd (TISCO), the largest 

stainless steel manufacturer in 

China. The order comprises seven 

units of vertical plate pressure filters, 

wear and spare parts, as well as 

services related to installation, startup, 

commissioning and technical 

supervision. The delivery, scheduled 

for 2012 Q2, is for concentrate 

filtering for TISCO’s Yuanjiacun iron 

ore processing plant in Lan county, 

Shanxi province. 

Mexican energy and 

electronics industries seek 

Chinese capital 

Mexico is trying to diversify its 

energy mix and exploit the potential 

of renewable energy sources, which 

means new opportunities for Chinese 

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companies, said Carlos Guzman, 

the head of investment promotion 

authority ProMexico. Mexico has 

great potential for solar and wind 

power, and while there are plenty 

of domestic businesses, there are 

opportunities for Chinese companies 

as well, Guzman said. 

Monsanto, Sinochem in deal 

talks 

Chemicals conglomerate Sinochem 

Corp is in advanced discussions 

with Monsanto Co to deepen their 

ties significantly, people familiar with 

the discussions said, an important 

sign of China’s growing appetite for 

US crops and biotechnology. The 

25-27% 

Expected growth of China’s 

pharmaceutical market this year 

to more than USD50m. 

Source: IMS 

two companies have been in talks 

for months, the people said. It was 

unclear what form an agreement 

might take, though arrangements 

could include a large JV, the sale 

of a minority stake or Sinochem 

assuming a larger role marketing 

Monsanto products in China. 

Oil majors see losses in 

overseas investment 

Two-thirds of three Chinese oil 

majors’ hefty overseas investments 

have sustained losses, the 21st 

Century Business Herald said, citing 

a report from China University of 

Petroleum. China’s three oil giants, 

China National Petroleum Corp, 

China Petrochemical Corporation 

(Sinopec Group), and China National 

Offshore Oil Corporation, invested in 

as many as 144 overseas projects 

to the tune of USD70bn by the end 

of 2010. 

Orix to invest USD1bn in China 

for water treatment 

Japanese financial services provider 

Orix Corp is investing up to JPY80bn 

(USD1bn) in China over two years 

in water, machinery and renewable 

energy. Through private-equity deals, 

Orix aims to buy stakes in Chinese 

companies that provide infrastructure 

such as sewage treatment and 

solar-power plants, President Makoto 

Inoue said, according to Bloomberg. 

PetroChina’s Canada deal 

called off 

Encana Corp and PetroChina Co 

ended a USD5.5bn partnership to 

develop a large tract of shale natural 

gas in western Canada, with both 

sides saying they failed to agree 

on terms. The breakup of the deal 

marks a surprise end to one of 

China’s biggest planned investments 

in Canada, which has recently 

courted Chinese capital, especially 

for its resource sector. 

PetroChina forms JVs with 

INEOS 

PetroChina Co announced it has 

finished forming two JVs with 

INEOS Group Holdings Plc, which 

is headquartered in the United 

Kingdom, to conduct crude oil 

refining and trading. The two JVs, 

INEOS Refining Ltd and INEOS 

Refining II Ltd, will use assets at 

Scotland’s Grangemouth refinery 

and France’s Lavera refinery 

to conduct refining and trading 

businesses, PetroChina said in a 

statement. 

Prices force Blackstone to 

drop China stake 

US private equity firm Blackstone 

pulled out of its investment in a 

Chinese agricultural company after 

the mainland group warned the 

buy-out firm that its involvement 

would complicate moves to raise 

prices, according to sources. The 

case offers a stark illustration of 

the sensitivity surrounding rising 

prices as China seeks to combat 

inflation running at a three-year 

high. Blackstone sold its stake in 

Dili Group, the parent company of a 

Shandong province vegetable trader, 

just weeks before Unilever was fined 

in China for announcing planned 

price rises. 

Sino-Russia power co-opt plan 

on agenda 

With 500-kilovolt (kV) cross-border 

electricity transmission lines nearly 

finished, the second phase of the 

China-Russia power project is about 

to begin, China Business News 

reported. According to the draft plan 

of the second phase of the power 

transmission project, China and 

Russia will likely both invest money 

to build up power plants in Russia 

in order to increase the power 

supply. Xu Bo, a senior engineer 

at the China National Petroleum 

Corporation, said he projects that by 

2015, China’s natural gas imports 

will exceed demand. 

Sinosteel freezes USD2bn 

Australian iron ore project 

Sinosteel Midwest Corp said it 

had put one of China's biggest 

overseas mining projects on 

hold due to uncertainty over the 

more than USD5.3bn Oakajee 

port and rail development in 

Western Australia state. The halt 

to Sinosteel's Weld Range iron 

ore mine, originally slated to start 

NEWS 

Peabody agrees to develop large coal mine project in 

Xinjiang 

Peabody Energy Corp said it has entered into a framework 

agreement with the Xinjiang Uygur autonomous region to develop 

a surface coal mine with annual production of 50 million tons. USbased 

Peabody said it will construct, manage and operate the mine 

and select a final location for the facility with the cooperation of the 

local government. 

production in 18 months, is a sign 

of the stresses in Australia's energy 

and mining sectors sparked by an 

unprecedented resources boom, and 

a further blow to a project hit with 

delays and cost overruns in recent 

months. 

WTO rules China curbs on raw 

material exports illegal 

China said it regretted a decision 

made by the World Trade 

Organization (WTO), which ruled 

China broke international law when 

it curbed exports of coveted raw 

materials. The ruling was issued 

after an 18-month WTO investigation 

of Chinese quotas, export duties and 

license requirements on industrial 

ingredients such as coke, zinc and 

bauxite. China insisted its export 

policies are based on environmental 

and resource protection – a 

justification likely to resonate with 

nations such as Russia, Ukraine and 


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#11920

India that are also reining in their 

resource sales. 

Wind power companies 

breaking into foreign markets 

China’s wind power companies 

are finding their way into overseas 

markets, where fierce competition 

has previously limited their presence, 

mostly by acquiring existing projects 

or investing in JV efforts. China 

Longyuan Power Group Corp 

(CLPG), the world’s third-largest 

wind power operator by installed 

capacity, took its first step overseas 

by acquiring the rights to develop 

a 100 MW project in Ontario, 

Canada from Farm Owned Power 

(Melancthon) Ltd. The deal, costing 

Rmb1.68bn (USD260m), will give 

Longyuan a 20-year contract to 

supply electricity to the local grid. 

FINANCIAL SERVICES 

Alibaba in deal with Western 

Union 

Chinese e-commerce company 

Alibaba.com Ltd said that it has 

signed an agreement with payment 

provider Western Union for its 

AliExpress wholesale platform. 

Alibaba.com ended its partnership 

with PayPal, the online payment unit 

of Ebay Inc, in June after PayPal 

1,500 

Number of jobs created by 

Chinese investors in the UK in 

the year ending 31 March. 

Source: UK Trade and 

Investment 

wanted to increase transactions for 

certain accounts. Under the deal 

with Western Union, users buying 

items on AliExpress will be allowed 

to make cash payments through 

Western Union Agent locations in 

more than 160 countries. 

Alibaba, Yahoo, Softbank 

reach agreement 

The Alibaba Group said company 

and its major shareholders Yahoo! 

Inc and Japan’s Softbank Corp have 

come to an agreement to settle a 

dispute over the status of Alibaba’s 

popular online payment platform, 

Alipay. Under the new agreement, 

Alipay will continue to provide 

payment services to the Alibaba 

Group and its subsidiaries including 

Taobao, China’s largest online 

shopping website, on preferential 

terms. 

Australia’s Westpac applies 

for RMB licenses 

Australia’s Westpac Banking Corp 

has applied to conduct local-currency 

banking in mainland China, joining a 

growing list of foreign banks seeking 

to beef up RMB-related services 

amid increasing use of the currency 

in international transactions. An 

RMB license from the China Banking 

Regulatory Commission would 

boost Sydney-based Westpac’s 

ability to finance cross-border 

trade in the renminbi and to make 

loans in the Chinese currency, said 

Rob Whitfield, head of Westpac’s 

institutional bank group. It expects to 

receive the license by the end of the 

year, he said. 

China moves to improve 

accountancy industry 

China has announced measures 

to consolidate its accountancy 

industry following a string of financial 

scandals that has shaken investors' 

faith in Chinese companies listed 

abroad. Large and medium-sized 

Chinese companies should choose 

from a small group of approved 

auditors, including the ‘Big Four’ 

accountancy firms – KPMG, Ernst 

& Young, PwC and Deloitte – the 

finance ministry said. Sino-Forest, 

software company Longtop and 

China Agritech are just a few of the 

Chinese companies that have been 

targeted by short-sellers alleging that 

auditors had failed to notice fraud on 

their books. 

China suspends RMB loans 

from foreign banks 

Domestic businesses in China have 

been barred from borrowing renminbi 

from foreign banks in the latest 

move to tighten monetary policy, 

Shanghai Securities News reported. 

China’s central bank, the People’s 

Bank of China (PBOC), told banks in 

mid-July that it would stop accepting 

applications for direct offshore 

borrowing from mainland companies. 

Since lending rates in the offshore 

market are lower compared to 

domestic banks, some enterprises 

tend to seek loans from foreign 

banks, the report said. 

Citibank China accelerates 

branch expansion 

Banking giant Citibank is set to 

rapidly increase its presence in 

China as it is one of the most 

important markets in the world, 

CEO Ou Zhaolun said. Citibank 

has spared no efforts to invest 

in China and will accelerate the 

establishment of new branches and 

increase business this year and in 

the near future, Ou said. In the next 

two or three years, Citibank plans to 

establish at least two branches and 

20 sub-branches each year. 

Citibank opens new subbranch 

in south west China 

US-based Citibank established a 

new sub-branch in Chengdu, the 

capital city of south west China’s 

Sichuan province. Andrew Au, 

chairman and CEO of Citibank 

(China) Co Ltd, said that Citibank 

NEWS 

will continue to invest in China and 

that Chengdu will play an important 

role in its investment plan. Citibank, 

the first American bank to establish 

operations in China, has 12 

branches and 38 retail banking 

networks in China, mostly located 

in Beijing, Shanghai, Guangzhou, 

Shenzhen, Tianjin and Chengdu. 

CME broadens currencytrading 

products 

CME Group Inc is revamping its 

offering of RMB futures, taking 

advantage of swelling demand for 

new ways to trade the Chinese 

currency and accelerating a push 

into international foreign-exchange 

markets. In August, the CME will 

introduce new futures contracts on 

the Chinese currency, calculated 

in US dollar terms, refreshing 

a push by the world’s largest 

futures exchange into the world’s 

second-largest economy. An 

average USD21bn in RMB-linked 

derivatives was traded per day in 

2010, according to the Bank for 

International Settlements. 


Bank of China plans global expansion 

Bank of China Ltd (BOC) will continue to expand its overseas 

network, despite becoming much more reliant on the domestic 

market in recent years. The priority of setting up new overseas 

branches will be Asia in the next half year, BOC President Li Lihui 

said, without mentioning any specific country or region the bank 

is eyeing. 

Currency swap bid between 

Singapore and China 

DBS Bank said it has applied to the 

Monetary Authority of Singapore to 

tap the currency swap agreement 

established between the central 

banks of China and Singapore 

to provide RMB financing to 

Singapore-based companies 

exporting to China. By tapping the 

swap line facility, DBS is able to 

provide customers with the option 

of settling contracts in renminbi, 

instead of in US dollars or other 

currencies. 

Dagong Global starts rating 

international financial 

institutions 

The Chinese rating agency 

Dagong Global Credit Rating Co 

extended its reach into foreign 

financial institutions as it published 

its first rating report on a Malaysiabased 

bank. Dagong Global 

assigned the long-term local 

currency rating of Malaysia’s CIMB 

Bank at AA and that of the foreign 

currency at AA-, both carrying a 

positive outlook. 

DBS boosted by 6,000 

transferred clients 

Retail deposits at DBS grew by 

69% in the first half, thanks partly 

to the transfer of retail banking 

clients from Royal Bank of Scotland, 

DBS’s consumer banking head 

said. South east Asia’s biggest 

bank has taken 6,000 retail clients 

with assets valued at USD500m 

from RBS as the Singaporean 

bank seeks to expand its franchise 

in China, said Zhu Yaming, DBS 

Bank (China)’s head of consumer 

banking. 

Fitch sees risk in China 

accounting standards 

Fitch Ratings Inc cited companies’ 

use of Chinese accounting standards 

and their listings on the Shanghai 

Stock Exchange as “key weakness 

indicators” in a report screening 

35 Chinese companies that it 

rates for governance stresses. 

The global agency said that a 

spate of allegations about Chinese 

companies had spurred it to review 

its Chinese corporate portfolio, 

making Fitch the latest ratings firm 

to weigh in on risks at companies 

from the mainland in a nervous 

investment climate. 

Foreign banks OK’d to 

underwrite corporate loans in 

China 

The China units of HSBC Holdings 

and Citigroup Inc have won initial 

approval to underwrite corporate 

debt in China, paving the way for 

them to be the first foreign banks to 

win the coveted licenses, sources 

told Reuters. China’s National 

Association of Financial Market 

Institutional Investors (NAFMII), 

an industry association under the 

central bank that supervises the 

country’s debt market, has given the 

two banks the green light. They will 

still have to register with the People’s 

Bank of China, the central bank, 

before they can start operations. 

Foreign banks play down 

rivalry 

Foreign banks say domestic 

Chinese banks are posing 

less of a competitive threat 

NEWS 

than before, according to a 

PricewaterhouseCoopers (PwC) 

annual survey of 42 foreign banks 

operating in China. The feedback 

contrasted with last year's poll, 

when competition from domestic 

banks was the most pressing issue 

cited by foreign banks because 

economic stimulus plans allowed 

domestic banks to lend quite 

aggressively, said Mervyn Jacob, 

PwC financial services leader 

for China. 

China banks make top 

ten list 

Three banks in China have jumped 

into the top ten ranking of the world’s 

best 1,000 banks, Industrial and 

Commercial Bank of China (ICBC) 

ranked sixth, followed by China 

Construction Bank Corp in eighth 

place and Bank of China at nine, 

Securities Daily reported. The top 

four banks are Bank of America, 

JP Morgan Chase & Co, HSBC 

Holdings and Citigroup, according to 

the news report. ICBC became the 

Aprile International Freight Forwarding 

(Shanghai) Co., Ltd 

“Class A” Freight Forwarding Agent and NVOCC licensed 

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NEWS 

world’s most profitable bank with a 

net profit of USD32.5bn last year. 

ICBC takes over South 

American bank 

Industrial & Commercial Bank of 

China Ltd (ICBC), the world’s biggest 

lender by market value, announced its 

biggest takeover in nearly four years. 

The bank will buy an 80% stake in the 

Argentine division of South Africa’s 

Standard Bank Group Ltd. 

JP Morgan unit enters 

mainland securities market 

JP Morgan First Capital Securities, 

which is one-third owned by the 

American bank and two-thirds 

by Shenzhen-based First Capital 

Securities, has become the third 

Sino-foreign JV investment bank 

allowed to tap the mainland’s 

securities market this year. The 

newly established investment 

bank, which announced that it had 

received government approval, 

will expand JP Morgan’s business 

in China, where it is allowed to 

underwrite share offerings and bond 

issuances. 

16 

Sri Lanka allows renminbi for 

banking transactions 

Sri Lanka’s central bank has 

allowed local banks to use the 

Chinese renminbi for international 

transactions as it is gradually 

evolving into a globally acceptable 

currency. The public can now 

undertake all permitted transactions 

in foreign currency in renminbi 

with banks authorised for such 

transactions, the central bank 

said. It explained that Sri Lanka 

has a growing volume of trade and 

investments with China and the use 

of the Chinese currency in banking 

transactions would significantly 

facilitate such trade and investments. 

Tighter rules for offshore RMB 

deals 

China has tightened regulations on 

offshore RMB transactions to curb 

speculative capital flows. Overseas 

banks doing RMB transactions in 

offshore markets must ensure these 

are backed by trade settlements or 

business needs, and settlements 

must be made within three months of 

the transaction, according to a recent 

Japanese investment firm sets up JV in Tianjin 

Japan Asia Investment Co (JAIC), one of Japan’s largest 

investment firms, has established an investment management 

company in the northern port city of Tianjin, a Chinese partner 

said. The Rmb120m (USD18.46USD) JV with China Binhai New 

Area Venture Capital Guiding Fund Co and the Tianjin Eco-City 

Management Committee will be known as Japan-Asia (Tianjin) 

Venture Investment Management Co. It will target companies at a 

growth stage in Tianjin, especially those engaged in environmental 

technology-related businesses or other promising industries. 

statement issued by the People’s 

Bank of China. Analysts said the 

bank could be trying to create tighter 

supervision to ensure cross-border 

trade is not used to speculate on the 

renminbi’s appreciation. 

Two more red flags for 

Carlyle’s China portfolio 

Questions have been raised about 

the potential weak accounting 

USD1.16tr 

China’s US Treasury holdings 

in May, an increase after five 

months of declines. 

Source: US Treasury Department 

practices at two more companies in 

the Carlyle Group’s China portfolio, 

bringing further scrutiny to the private 

equity firm’s investments in the 

country. Concord Medical Services 

and China Energy Recycling under 

Carlyle, which has seen two of its 

China companies seize headlines 

this year in high-profile accountingrelated 

cases, have gained the 

attention of auditors. 

UBS sets up asset 

management unit in China 

Swiss bank UBS said it has set 

up an asset management unit in 

Beijing to tap China’s rapidly-growing 

USD650bn private equity market. 

China’s strong economic growth has 

positioned the market as one of the 

most promising emerging markets 

globally and resulted in a booming 

domestic equity investment market, 

said Xinyuan Ling, chairman of the 

newly-established UBS Global Asset 

Management (China). 

UK bank seals deal in China 

Standard Chartered Bank signed 

a strategic cooperation agreement 

with China International Marine 

Containers (Group) Coin Shenzhen. 

Under the agreement, the UK bank 

will provide multi-currency combined 

facility of Rmb3bn (USD464m) 

to the Chinese company and its 

subsidiaries. The bank will also 

provide the company with the 

full spectrum of banking services 

globally, including trade finance, 

syndication loan, project finance, 

foreign exchange, capital markets 

and investment services. 

Yihaodian may opt for IPO in 

the US 

Yihaodian, the online supermarket 

whose investors include Wal-Mart 

Stores Inc, may choose the United 

States for an initial public offering 

as it expands to challenge Chinese 

rivals including Alibaba Group 

Holding Ltd’s Taobao. The Shanghaibased 

retailer aims to break even in 

three years and will “most likely” sell 

shares to the public in the United 

States, said Chairman Yu Gang, 

who co-founded the company in 

2008 after working as a supply chain 

executive at Dell Inc and Amazon. 

com Inc. 

HEALTHCARE AND 

PHARMACEUTICALS 

Biotech island breaks ground 

in Guangzhou 

At least 30 foreign and Chinese 

projects are being planned at the 

new Guangzhou International 

Biotech Island as part of efforts 

to expand the high-tech and 

tertiary industries of Guangdong 

province. The first group of foreign 

and domestic enterprises and 

institutions, primarily involved 

in pharmaceuticals, genomics 

and other related biomedical 

research, signed memoranda of 

understanding with local authorities 

to invest and operate at the 

biotech research area three years 

after it was officially designated 

as a national strategic and key 

development programme of 

Guangdong province and its capital. 

BMS ups investment in China 

China is expected to become the 

second- or third-largest market for 

international drug maker Bristol- 

Myers Squibb’s (BMS) within a 

decade. The country is currently the 

eighth-largest market for the USbased 

biopharmaceutical company 

and is expected to become the 

sixth-largest by next year. The target 

will be achieved by collaborating 

with local partners and doubling 

R&D staff within two years, senior 

executives said. 


NEWS 

China’s Simcere, Merck to form JV 

China’s Simcere Pharmaceutical Group inked a deal with Merck 

&Co to form a JV, aiming at serving China’s rapidly expanding 

health care needs. The strategic partnership will merge extensive 

resources and expertise of a global health care company and a 

leading Chinese pharmaceutical company in support of their goals 

in development, registration, manufacturing and sales capabilities, 

according to the agreement. 

www.ansarchitects.com 

18 

GE bases X-ray unit in China 

General Electric Co said it is moving 

its X-ray business HQ to China to 

accelerate sales in the country’s fastgrowing 

health-care market, the latest 

sign of China’s growing importance 

to the giant US conglomerate. The 

X-ray unit will be the company’s first 

business to be based in China. 

Medtronic eyeing M&A 

possibilities with local firms 

Medtronic Inc, the world’s largest 

independent medical device 

company by sales, will strengthen 

cooperation with Chinese players 

probably through a series of JVs 

and M&As, said Jean-Luc Butel, 

executive vice-president and group 

president of Medtronic International. 

The company invested more than 

USD220m to set up a JV with 

Shandong Weigao Group Medical 

Polymer Co Ltd in 2008. 

Nanjing Pharmaceutical plans 

to work with Alliance Boots 

Nanjing Pharmaceutical Co Ltd said 

that its parent company intends 

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to reach a cooperative agreement 

with the UK-based pharmaceutical 

giant Alliance Boots to boost its 

market innovation ability and 

improve its competitive position. 

Nanjing Pharmaceutical Group, 

the controlling holder of Nanjing 

Pharmaceutical Co Ltd, and British 

Alliance Boots signed a letter of 

intent on cooperation, to build 

Nanjing Pharmaceutical Co Ltd into a 

market innovator in quality products 

and service, as well as a leading 

chain drug retailer, the company 

said. 

Novartis eyes international 

board listing 

Swiss drug maker Novartis is 

considering a possible IPO in China, 

joining a growing list of MNCs eyeing 

a listing on Shanghai’s planned 

international board, two people with 

knowledge of the situation said. 

Novartis is studying the feasibility 

of a China IPO and has been 

consulting relevant government 

agencies, according to the sources. 

Selling shares in China would enable 

Novartis to raise money to fund rapid 


expansion in China and for potential 

acquisitions, as it competes fiercely 

with rivals such as Roche Holding 

and Eli Lilly in the country. 

Siemens’ health unit to focus 

on smaller cities 

China is expected to be the secondlargest 

market in the world for 

Siemens Ltd’s healthcare sector 

over the next two years, driven by 

the company’s new five-year plan 

focussing on the development 

of basic medical care. Siemens’ 

healthcare division will make great 

efforts to enter the medical care 

market in China’s second- and 

third-tier cities and rural areas, Wu 

Wenhui, sector cluster lead of North 

East Asia for the division, said. 

Social security set to cover 

foreign workers 

Foreign workers in China will soon 

be covered by the country’s social 

security programme, according to 

the Social Insurance Law. It will 

allow foreign employees to receive 

medical, work injury, retirement, 

unemployment and maternity 

benefits similar to those for Chinese 

citizens. Detailed regulations are 

yet to be published. In early June, 

the Ministry of Human Resources 

and Social Security solicited public 

opinion on a set of temporary 

measures for the programme, which 

stipulates that all registered foreign 

workers with a valid work permit in 

China should be covered. 

INTERNATIONAL TRADE 

& INVESTMENTS 

Argentina in drive for more 

Chinese capital 

More Chinese investments are 

expected to flow to Argentina this 

year as the two governments signed 

several economic cooperation 

agreements, said Luis Kreckler, 

Argentine secretary of trade and 

international economic relations. The 

agreements cover sectors including 

agriculture, energy, transportation 

and mining, Kreckler said, without 

disclosing details. 

Bank of America in talks to 

sell CCB stake 

Bank of America has held exploratory 

talks with the principal investment 

funds of Kuwait and Qatar about 

selling part of its 10% H-shares in 

China Construction Bank (CCB), 

sources with direct knowledge of the 

talks said. The largest bank in the 

United States by assets is likely to 

sell half its stake to shore up its tier-1 

capital. Analysts believe the bank 

needs about USD50bn to meet new 

capital requirements. 

Beijing to trial foreign RMB 

investment 

China has formalised rules 

allowing foreign firms to use 

renminbi raised overseas to make 

investments in the country as part 

of moves to internationalise its 

currency, according to the China 

Business News. A trial scheme 

will permit overseas companies 

to use Chinese currency raised 

USD2.57bn 

Q2 net profit of BMW AG, more 

than double from the previous 

year thanks to China’s booming 

demand for luxury cars. 

Source: BMW AG 

offshore to set up companies, make 

acquisitions, increase stakes in 

subsidiaries and provide loans, but 

they will be banned from investing 

in certain industries, the report 

said. The statement marks the first 

time China has issued specific rules 

on RMB-denominated FDI in the 

country. 

CCB makes bid for Indonesian 

lender Maspion 

China Construction Bank (CCB), 

the world’s second-largest lender 

by market value, has made a 

preliminary bid for control of Bank 

Maspion Indonesia, people with 

knowledge of the matter said. 

Shareholders of Maspion planned 

to sell more than 50% of the lender, 

which is valued at about USD200m. 

The CCB said earlier they were 

interested in seeking merger and 

acquisition opportunities in emerging 

markets, where financial services are 

underdeveloped. 

NEWS 


NEWS 

China appeals to WTO against 

US duties on Chinese diamond 

saw blades 

The Ministry of Commerce 

announced the country has made 

an appeal to the World Trade 

Organization (WTO) to conduct a 

review of the zeroing measure used 

by the United States in slapping 

anti-dumping duties on diamond saw 

blades from China. The Ministry said 

the country has made the request 

following its previous complaint to 

the WTO in February for a similar 

measure used by the United States 

in calculating dumping margins for 

certain frozen, warm-water shrimp 

from China. 

China-Britain trade targets 

USD100bn in 2015 

With a rapid growth in bilateral trade 

during the first six months of this 

year, China and Britain are aiming 

at an ambitious trade target of 

USD100bn in 2015. That target was 

set by leaders of the two nations 

during PM David Cameron’s visit to 

20 

China in November. Two-way trade 

in goods and services between the 

two nations hit an all-time high of 

USD60bn last year, a rise of 28% 

from the previous year. 

China calls on United States to 

‘protect investors’ 

China has called on Washington 

to bolster international faith in its 

economic policies amid signs that 

Beijing has cut its purchases of 

US government debt. The State 

Administration of Foreign Exchange, 

which manages China’s currency 

reserves, said it had noted warnings 

by rating agencies Standard & Poor’s 

and Moody’s of a possible sovereign 

rating downgrade for the United 

States if lawmakers do not reach 

an agreement on the country’s debt 

ceiling. 

China ends policy favouring 

local firms 

China’s Ministry of Finance said 

it is scrapping certain rules that 

foreign companies say favoured 

domestic products for government 

procurement, a significant step 

toward easing concerns that global 

companies would be excluded 

from billions of dollars in contracts. 

As part of a broader government 

initiative to foster “indigenous 

innovation,” the Finance Ministry 

had issued a series of regulations 

in the past several years requiring 

products bought by the government 

to have Chinese intellectual 

property, triggering a backlash 

among foreign companies. 

China, EU to start investment 

talks 

China and the European Union will 

start negotiations on investment 

agreements as soon as possible, in 

a bid to enhance bilateral economic 

relations, top trade officials from 

both sides said. During a joint news 

briefing in Beijing, Chinese Minister 

of Commerce Chen Deming and 

EU Trade Commissioner Karel 

De Gucht said each welcomed 

investments from the other. 

European countries are major 

investors in China, with the United 

Kingdom, France, Germany and 

the Netherlands among the top ten 

foreign direct investors. 

China in top five of global ODI 

table 

China climbed up the world 

rankings to fifth-largest outbound 

direct investor (ODI) last year, 

rising one place to pass Japan and 

the United Kingdom, the United 

Nations Conference on Trade 

and Development (UNCTAD) and 

economists said. The recently 

released World Investment 

Report also said China will continue 

to remain the top destination for 

foreign direct investment (FDI) over 

the next two years, despite growth in 

this sector declining over the last six 

months. 

China Investment to buy stake 

from IFC 

China’s sovereign wealth fund China 

Investment Corp is buying a 7% 

stake in the Bank of Shanghai from 

International Finance Corp (IFC), 

DOUBLETREE BY 

HILTON 


a member of the World Bank. IFC 

said it has fulfilled the job of helping 

the Bank of Shanghai improve its 

corporate governance, portfolio 

quality and risk management since 

becoming a strategic partner. HSBC 

is reportedly considering selling its 

8% stake in the Bank of Shanghai, 

which is seeking an IPO. 

China leads increasing 

demand for NZ exports 

New Zealand’s exports and imports 

last month were both up from 

May last year, with China leading 

increased demand for New Zealand 

exports, the government’s statistics 

agency reported. Merchandise 

exports were valued at USD3.69bn, 

up 10% from May 2010, according 

to a Statistics New Zealand report. 

China recorded the largest increase 

among importers of New Zealand 

goods, up by 24% or USD87.5m 

across a range of commodities. 

China-NZ biosecurity pacts 

benefit consumers 

Agreements to protect biosecurity 

between China and New Zealand 

are bearing fruit for markets in both 

countries by enabling traders to 

take advantage of New Zealand’s 

free-trade agreement with China, 

while keeping New Zealand’s 

environment free of biosecurity risks, 

New Zealand’s Ministry of Agriculture 

and Forestry said. The ministry’s 

plant standards team is working with 

Chinese authorities to put in place 

import health standards and approve 

associated quality assurance 

programmes, it said. 

China proposes cooperation 

with European countries 

Visiting Chinese Premier Wen 

Jiabao made a five-point proposal 

to enhance China’s cooperation 

with countries in central and eastern 

Europe. Wen said cooperation 

in various fields between the two 

sides had made tremendous 

progress, referring to the rapid 

growth of two-way trade, the 

burgeoning of mutual investment, 

the expansion of cooperation areas 

and the improvement of cooperation 

mechanisms. China encouraged its 

companies to “go global” and saw 

central and eastern Europe as a 

strategic priority, he said. 

China’s largest state-owned 

investment company to invest 

more abroad 

China’s State Development and 

Investment Corporation (SDIC) 

will fully institute the strategy of 

“going global” to invest and trade 

more abroad, according to SDIC 

Vice President Shi Hongxiang. Shi 

recently said in Moscow that the 

SDIC has fixed plans on further 

promoting its international growth by 

expanding international trade and 

projects and outbound investment. 

The SDIC has established wholly 

owned subsidiaries of China SDIC 

International Trade Co Ltd and 

China National Complete Plant 

Import and Export Corporation 

(Group) to facilitate its international 

development. 

China trade surplus up as 

imports slow down 

China posted a much wider 

than expected trade surplus of 

USD22.27bn in June on the back 

of slower than expected growth in 

imports of 19.3% at USD139.71bn. 

Economists attribute these results 

to moderating domestic demand, 

7-9% 

Rise of China’s spot alumina prices 

since June due to increased 

demand. 

Source: China Daily 

falling commodities prices and 

supply chain disruptions caused by 

Japan’s earthquake in March. While 

this may give the excuse for Western 

nations to pressure Beijing to hasten 

the RMB appreciation and raise 

concerns of a hard landing of China’s 

economy, economists played down 

both concerns. 

China, United States to sign 

MoU on antitrust co-op 

Chairman of the Federal Trade 

Commission (FTC) of the United 

States Jon Leibowitz said in Beijing 

that the United States will sign a 

MoU with China on antitrust and 

antimonopoly cooperation. Leibowitz 

said the MoU is mainly about merger 

reviews and will include information 

exchange, training programmes 

and workshops as well as providing 

comments on rule-making. 

China welcomes WTO finding 

against European Union 

China welcomed findings by the 

World Trade Organization (WTO)’s 

Appellate Body in a Chinese 

antidumping case against the 

European Union, China’s Commerce 

Ministry said. The Appellate Body 

supported China’s position on the 

European Union’s application of 

antidumping tariffs to imports of 

certain metal fasteners from China. 

Both the European Union and China 

had filed appeals after the WTO in 

December condemned the tariffs, 

handing Beijing its biggest legal 

victory so far at the WTO. 

Chinese rating agency 

downgrades US credit rating 

after debt limit increase 

Chinese rating agency Dagong 

Global Credit Rating Co said it 

has cut the credit rating of the 

United States from A+ to A with a 

negative outlook after the US federal 

government announced plans to 

NEWS 

Chinese bicycle makers urge European Union to drop 

duties 

Chinese bicycle makers condemned the proposed extension of the 

anti-dumping duties on their products as “unwarranted,” urging the 

European Union to drop the 18-year-old duties. 

increase its debt limit. The decision 

will not change the fact that the US 

national debt growth has outpaced 

that of its overall economy and fiscal 

revenue, which will lead to a decline 

in its debt-paying ability, Dagong 

Global said. 

D&O premiums skyrocket in 

China 

The price of directors and officers 

liability insurance (D&O) in China 

has gone up more than 20% this 

year, after a series of class-action 

lawsuits against US-listed Chinese 

companies pushed up riskinsurance 

premiums, according to 

Wei Gang, senior vice president of 

Marsh (Beijing) Insurance Brokers 

Co Ltd. In some cases, insurance 

premiums have almost doubled for 

companies listed or seeking a 

listing in the United States, 

Wei said. 

Four-year EU programme 

boosts IPR enforcement 

The nearly 13,000 filings received 

from China by the European Patent 

Office (EPO) last year was an 

increase of 54% from 2009 and an 

astounding 96% surge from 2008, 


NEWS 

according to EPO Vice-President 

Raimund Lutz. Lutz attributed the 

growth to increased cooperation 

between China and the European 

Union, and the national intellectual 

property strategy unveiled in 

2008 that shows the Chinese 

government’s reinforced effort to 

shift the trade from products made 

in China to technologies developed 

in China. 

FTA between China, Costa 

Rica to enter into force 

The Free Trade Agreement between 

Costa Rica and China, the first 

such pact inked between China and 

a Central American country, will 

enable 99.6% of the Costa Rican 

exports to China to enter the market 

duty-free. These include products 

such as tilapia fish, shrimp, flowers, 

ornamental plants, cocoa, yucca, 

chocolates and palm heart, Foreign 

Trade Minister Anabel Gonzalez 

said. 

Haitong to set up a fund for 

M&A 

Haitong Securities Co is expected 

to set up a Rmb10bn (USD1.55bn) 

fund to help domestic firms acquire 

overseas assets amid growing 

22 

China backs imports of 

Japanese products 

China will support 

Japanese products 

entry into the Chinese 

market on the basis that 

they are safe, Minister of 

Commerce Chen Deming 

said. China is willing to 

help Japan with its postdisaster 

reconstruction 

and economic recovery, 

Chen said while meeting 

Japan’s Minister of 

Economy, Trade and 

Industry Banri Kaieda 

in Beijing. He said the 

country will arrange a 

special exhibition area 

for the promotion of 

Japanese goods at 

the upcoming 110th 

Canton Fair, or China 

Import and Export Fair. 

willingness among Chinese 

entrepreneurs to expand in foreign 

markets, media reports said. The 

M&A fund, to be managed by 

Haitong’s private equity unit, will 

raise Rmb3bn (USD463.8m) initially 

and eventually reach its target of 

Rmb10bn (USD1.55bn). Reuters 

reported that Haitong has already 

committed Rmn1bn (USD154.6m) to 

the fund, which is also backed by the 

Shanghai government. 

IFC to continue investments in 

China 

International Finance Corp (IFC), a 

member of the World Bank Group 

that focusses on the development 

of the private sector in emerging 

markets, plans to invest more than 

USD500m in China during its next 

fiscal year. The funds will be mainly 

used to support private enterprise 

in western China in the fields of 

renewable energy, rural finance and 

agribusiness, according to Karin 

Finkelston, the company’s vice 

president for the Asia-Pacific region. 

IMF urges China to reform 

economy 

The International Monetary Fund 

(IMF) urged China to embark on 

sweeping financial system reforms 

to shore up long-term growth, 

starting by freeing up its undervalued 

renminbi. The IMF praised marketoriented 

changes already underway, 

but said China needed to embark 

on a complex “rebalancing” plan 

that would take the country from an 

export focus to a more domesticconsumption 

model. 

Israel signs deal with NDRC 

Israel signed a cooperation 

agreement with China’s top 

economic planning agency as 

companies such as Bank Hapoalim 

Ltd and Nice Systems Ltd seek 

to expand business in the world’s 

fastest growing major economy. The 

agreement will raise Israel’s profile 

among the decision-makers and 

those who are in key positions in the 

competitive and difficult trade with 

China, said Eliran Elimelech, Israel’s 

commercial attaché in Beijing. The 

sides will meet to plan joint projects 

in fields including biotechnology, 

agriculture and water technology, the 

ministry said. 

Japan increases investment in 

Jiangsu 

East China’s Jiangsu Province has 

become one of the destinations 

No. 5 

China’s world ranking as outbound 

direct investor last year, 

passing Japan and the UK. 

Source: UNCTAD 

for Japanese investors as they are 

increasing investment outside the 

country as part of Japan’s efforts to 

transfer production capacity after a 

massive earthquake and tsunami in 

March. According to the provincial 

industry and commerce authority, 

Jiangsu saw the establishment of 

80 Japanese-funded businesses 

between mid-March and the end of 

May, a rise of 31.1% over the same 

period last year. 

Local governments sign deals 

with US 

At least 20 agreements were 

inked between local governments 

of China and the United States 

at a grand signing ceremony at 

Little America Hotel. Officials from 

Zhejiang, Qinghai, Yunnan and 

Anhui provinces made deals across 

different sectors, from trade to 

education, environmental protection, 

culture and interpersonal exchange. 

SMEs from Zhejiang province, which 

boasts the most active private sector 

in China, will work with the Delaware 

Department of International Trade 

and Development to further explore 

more business opportunities in the 

United States. 

Min secures China’s first top 

post at IMF 

China secured its first top 

management post in the International 

Monetary Fund (IMF), in a move 

aimed at recognising Beijing’s 

growing clout in the global economy. 

New IMF Managing Director 

Christine Lagarde named Chinese 

economist Min Zhu, 58, a former 

deputy governor of the People’s 

Bank of China and a special adviser 

to the fund, to a newly-created 

deputy managing director post. 

Mitsubishi, Creat form 

USD120m PE fund 

China’s fast growing private equity 

market has attracted Japan’s largest 

general trading firm Mitsubishi 

Corp to set up a USD120m fund 

with Beijing-based Creat Group 

Co. Each company will hold a 50% 

stake in the Hong Kong-based MC 

Great Fund Management Ltd JV. 

The dollar-denominated fund will 

target opportunities for cooperation 

between Chinese and Japanese 

firms with the ultimate goal of helping 

them to get listed in mainland and 

Hong Kong stock markets. 

Monsanto targets China for 

long-term investment 

The world’s largest seed company 

Monsanto said they would deepen 

long term alliance with the China 

market amid rising incomes and 

surging demand. Monsanto also 

said it was deepening its ongoing 

alliance with Chinese chemicals 

conglomerate Sinochem Corp. 

More fledgling Chinese firms 

seek to list 

In the first half of 2011, 339 


enterprises listed in 13 overseas 

and three domestic markets. Of 

these, 207 companies were 

Chinese companies, who raised 

USD35bn in total, accounting for 

38.9% of the total funds raised, 

according to data released by 

Zero2IPO, a leading service 

provider in the venture capital and 

private equity industry. 

Pace slows in electronic 

exports 

Growth in China’s exports of 

electronics dropped in the 2011 

Q2 due to decreasing demand 

in Western countries, China’s 

top industry and information 

technology regulator said. Export 

growth continued to decrease in 

April and May, mainly in materials, 

telecommunications devices and 

home appliances, the ministry said. 

In the first five months, electronics 

exports grew 17% to USD248bn, 

up 17% from a year earlier. In May, 

China exported electronics worth 

USD9.6bn to the United States, 

down 3.3% from a year ago. 

Pudong to set up eight bases 

for multinationals 

The Pudong New Area will 

establish eight bases to attract 

more multinational corporations to 

set up their regional headquarters 

in the area, officials announced. 

Pudong, which is now home to the 

regional offices of 164 multinational 

companies, issued preferential 

policies to attract multinationals, 

including improved customs 

clearance services and simpler 

foreign exchange administration. 

Thirteen firms signed contracts worth 

USD800m with the government to 

erect new headquarters or increase 

the capital for existing headquarters, 

including BP, which plans to set up 

its China headquarters in Pudong. 

Rousseff helps industry fight 

China imports 

Brazil will provide USD16bn in tax 

breaks and toughen trade barriers 

to protect manufacturers hurt by a 

currency rally that is fuelling a surge 

in imports from China. The targeted 

tax breaks and incentives - which 

amount to USD16bn over two years 

- were announced by President 

Dilma Rousseff after a report showed 

industrial production plunged 1.6% in 

June, the second biggest drop since 

2008. 

Shanghai ranked sixth on 

financial centre list 

A recently released financial index 

ranks Shanghai as the world’s sixth 

prominent financial centre, two 

positions behind Hong Kong. Experts 

USD18bn 

Worth of overseas-related 

contracts signed at China Harbin 

International Economic & Trade 

Fair. 

Source: China Daily 

said mature market regulations 

and more diversified investment 

channels are necessary to boost the 

city’s competitiveness. Shanghai 

moved up two spots from last year, 

surpassing Paris and Frankfurt. 

Beijing was ranked 14th and 

Shenzhen was 21st. The traditional 

financial centres of New York, 

London and Tokyo remained in the 

top three positions in this year’s list. 

Smaller cities lure foreign 

investors 

Foreign institutional investors have 

increasingly been exploring China’s 

third- and even forth-tier cities, even 

though the central government 

is considering a list of smaller 

cities that will see home purchase 

restrictions. One such example is 

Deutsche Bank, which is planning to 

finance a large-scale property project 

in Tieling, a small city in Liaoning 

province, industry sources said. 

Trade zone to boost DPRK 

economy 

A free-trade area and a tax-free 

zone will be set up as part of the first 

special economic zone straddling 

the mainland and the Democratic 

People’s Republic of Korea (DPRK), 

a Chinese government official told 

China Daily. Dai Yulin, secretary 

of the Dandong committee of the 

Communist Party of China, said the 

area will help boost FDI, turning 

the zone into a hot investment 

destination. He said both domestic 

and foreign investors have shown 

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NEWS 

great interest in joining the economic 

zone. 

US ruling upsets China 

The US government’s decision 

to maintain export controls on 

high-tech products to China was 

“discriminatory,” a spokesman for 

China’s Ministry of Commerce said. 

Ministry spokesman Yao Jian said 

the persistent US discrimination 

against China is not in line with 

the efforts to establish a Sino-US 

cooperative relationship of mutual 

respect that benefits each other. 

The remarks came after the US 

Department of Commerce rejected 

the inclusion of China on its new list 

of license exception, Strategic Trade 

Authorization, which was revealed in 

early June. 

LOGISTICS & 

TRANSPORT 

China may lift anti-dumping 

measures 

China’s Ministry of Commerce 

announced it will reexamine 

24 

lifting anti-dumping measures on 

epichlorohydrin imported from 

four countries and will evaluate 

the possibilities of dumping and 

damages if the measures are lifted. 

The ministry imposed five-year 

anti-dumping duties of up to 71.5% 

on epichlorohydrin from Russia, 

South Korea, Japan and the United 

States in June 2006, after finding 

the imports hurt the domestic 

sector. The chemical is widely used 

in medicine, organic solvents and 

plastic manufacturing. 

DHL enlarges warehousing 

capacity to tap China’s 

logistics growth 

Global logistics company DHL will 

expand its warehousing facilities by 

a third to tap into China’s growing 

supply chain market after getting rid 

of its money-losing domestic express 

business. DHL plans to add up to 

200,000 sq. m. of facilities in China 

in the next two years, in addition 

to 600,000 sq. m. of warehousing 

space it currently operates across 

the country. 

Deutsche Post sells express service 

Deutsche Post AG has sold its money-losing domestic express 

delivery service on the Chinese mainland and will focus on 

international business in future. DHL-Sinotrans International, 

a 50-50 JV by the German company and China’s Sinotrans Air 

Transportation Development Co Ltd, said it had sold its domestic 

courier business to Shenzhen Uni-top. 


HNA in talks on buying GE 

container unit 

HNA Group Co, the airline and 

hotel operator controlled by China’s 

Hainan province, is in exclusive talks 

to buy a shipping-container lessor 

co-owned by General Electric Co, 

according to a source. The price 

under discussion values GE SeaCo 

at more than USD1bn or about 

USD2.5bn including debt, the person 

9.5% 

China’s GDP growth in Q2 2011, 

1% lower than y-o-y growth in 

H1 2011. 

Source: National Bureau of 

Statistics 

said. A successful bid for SeaCo, the 

world’s fifth-biggest container lessor, 

would be the latest demonstration 

of Chinese companies’ appetite for 

global acquisitions. 

Korean Air launches cargo 

flight between Seoul and 

China’s Chengdu 

Korean Air has launched a regular 

cargo flight between south west 

China’s city of Chengdu and Seoul, 

airport authorities confirmed. A 

Boeing 747-400F cargo plane with 

a capacity of 100 metric tons will be 

used for the flight. The first cargo 

flight took place on 20 July. 

Movers pick up China 

business 

The rising numbers of US workers 

and students moving to China are a 

bright spot for moving companies like 

St. Louis-based UniGroup Worldwide, 

which has seen domestic business 

decline. The closely held company, 

an affiliate of Mayflower Transit and 

United Van Lines, handles moves for 

corporate clients that pay to relocate 

employees. Between 2008 and 2010, 

the number of moves from the United 

States to China that the company 

handled grew nearly 47% to 396. 

Regulator provides directions 

for Google and Microsoft 

China’s industry regulator will not 

shut down online mapping services 

provided by Google Inc and 

Microsoft Corp, the State Bureau of 

Surveying and Mapping said. The 

remarks – the first time the regulator 

has firmly denied that it intended to 

close the companies’ online mapping 

services – has banished concerns 

that Google may have to cancel its 

service in China, which has been 

losing market share. 

Shenzhen Airlines signs Star 

Alliance MoU 

Shenzhen Airlines signed a MoU with 

Star Alliance, becoming the second 

domestic airline to join the world’s 

largest air alliance after its parent 

Air China. The signing comes two 

weeks after China Eastern Airlines 

joined SkyTeam. By joining Star 

Alliance, led by Lufthansa and Air 

Canada, Shenzhen Airlines will have 

access to 1,160 destinations in 181 

countries and regions. The airline is 

expected to help the alliance boost 

destinations in southern China. 

US officials to restart talks on 

inspecting Chinese auditors 

US and Chinese officials will 

restart talks on a potential deal 

to allow US examiners to inspect 

auditing firms based in China amid 

heightened concern about Chinese 

“reverse merger” companies using 

backdoor methods to tap the US 

capital markets. A delegation of staff 

from the Securities and Exchange 

Commission and the Public 

Company Accounting Oversight 

Board (PCAOB), which oversees 

audit firms, will meet in Beijing with 

senior leadership of the China’s 

Finance Ministry and the China 

Securities Regulatory Commission, 

the PCAOB said in a statement. 

MANUFACTURING & 

AUTOMOTIVE 

Air China aims high with plans 

to boost fleet size 

Air China plans to more than double 

its fleet of wide-bodied aircraft in 

five years, reinforcing its ambition 

to become one of the world’s top 

carriers, according to He Li, the 

company’s vice president. The 

mainland’s flagship carrier, the 

world’s most profitable airline and the 

one with the biggest market value, 

expects to own 100 wide-bodied 

SSIS 

NEWS 


NEWS 

26 

China to remain world’s toy factory despite costs 

US toy companies are sticking with China as their factory of 

choice, saying its workmanship and infrastructure are enough to 

offset rising costs that are forcing some Western fashion brands to 

seek cheaper locations. The chief executives of Hasbro, LeapFrog 

Enterprises and Toys “R” Us said that China’s considerable 

advantages as a manufacturing mecca meant it would remain 

toymaking’s main hub. 

planes by 2015, compared with more 

than 40 now. 

Airlines could save big with 

just a little bio fuel 

China’s carriers may be able to 

save the Rmb800m (USD124m) 

penalty they are set to pay upon the 

implementation of a new European 

emission standard next year, if they 

replace a tenth of the jet kerosene 

they now use on European routes 

with bio fuels, experts say. That 

should amount to only 100,000 

tonnes of alternative fuel for the 

country’s three largest carriers – Air 

China, China Eastern Air, and China 

Southern Air. 

Applied Materials establishes 

producing base in Chinese 

mainland 

US-based Applied Materials, the 

world’s largest semiconductor 

equipment producer, will establish 

an equipment-manufacturing base 

in eastern Jiangsu province - its 

first in the Chinese mainland, local 

authorities said. The project, 

scheduled to start at the end of 

2011, will be built in the economic 

and technology development zone 

of Yangzhou city, mainly focussing 

on producing solar photovoltaic 

machines. The Yangzhou base 

is estimated to reach an annual 

output of 300 machines with an 

annual production value of Rmb2bn 

(USD309m). 

AVIC in JV for airplane seats 

Aviation Industry Corp of China 

announced at the Paris Air Show it 

will set up a EUR1bn (USD1.44bn) 

JV with a Swiss air seat company. 

The venture plans to capture 20% 

of the global market for commercial 

airplane seats. Jointly formed by 

AVIC Aerospace Life-Support 

Industries Ltd and a Swiss air seat 

technology company, it will be based 

in Xiangyang City in Hubei Province 

and capable of producing 110,000 

airplane seats annually. 


Approval for JV boosts PSA’s 

presence 

PSA Peugeot Citroen’s presence in 

the world’s biggest auto 

market received a boost as the 

Chinese government has approved 

its JV, Changan PSA Automobile 

Co, with China’s Changan 

Automobile Group. The approval 

from the National Development and 

Reform Commission, China’s top 

economic planning body, allows 

Changan to be the second JV 

partner of the French car maker 

in China. PSA also produces 

passenger cars, including Peugeot 

307 and Citroen C5 sedans, 

in China through a tie-up with 

Dongfeng Motor Corp. 

Audi plans to double output 

German luxury carmaker Audi 

AG plans to more than double its 

production capacity in China over 

the next four years in an aggressive 

move to continue its reign in the 

fast-growing luxury segment. An 

Tiecheng, president of Sino-German 

JV FAW Volkswagen Automobile 

Co Ltd said the tie-up will hike 

production capacity of Audi cars to 

around 700,000 units a year by 2015 

from 300,000 units this year. 

Benz Jan-July China sales rise 

50% 

German carmaker Mercedes-Benz 

sold 109,510 vehicles in China in 

the first seven months of 2011, an 

increase of nearly 50% from a year 

earlier, Bloomberg reported. More 

than 14,470 passenger cars were 

sold in July, according to the report. 

Benz to unify sales for 

‘strategic move’ 

German luxury carmaker Mercedes- 

Benz plans to combine sales 

management for imported and 

locally made products in China to 

eliminate internal competition and 

clear the way for accelerating growth 

amid increasing stakes in the luxury 

segment. 

Cessna in talks with China’s 

Avic 

US-based Cessna, the leading 

light and mid-size business jet 

manufacturer, is in talks with Aviation 

Industry Corporation of China (Avic) 

to jointly develop the mainland 

market, as it bets an increasing 

number of buyers will see private jets 

as more than a high-altitude sports 

car. Although Cessna produces 

some of the best high-performance 

jets in the world, Cessna has thus far 

failed to appeal to affluent buyers on 

the mainland. 

China-based car maker loses 

suit against Fiat SpA 

China-based Great Wall Motor Co 

has been banned from selling its 

Peri compact car in Europe after 

the carmaker lost a lawsuit against 

Fiat SpA for copyright infringement. 

A court in Turin, Italy, has ruled that 

Great Wall’s Peri copied the design 

patent of Fiat models. It ordered 

the Chinese firm to pay EUR15,000 

(USD21,200) in compensation, Great 

Wall said. 

China beefs up its smart grid 

with Echelon 

Silicon Valley-based Echelon Corp, 

which designs networks to connect 

electronic devices, announced 

a partnership with China Holley 

Metering Ltd, currently the biggest 

meter manufacturer in China. The 

partnership, which will provide smart 

metering products for the Chinese 

market, would be Echelon’s first 

foray into the smart grid market in 

China. 

China drives up profit at BMW 

BMW AG said its Q2 net profit 

more than doubled due to booming 

demand for luxury cars in major 

markets such as China. The German 

vehicle manufacturer’s net profit 

jumped to USD2.57bn, compared 

with USD1.18bn in the same period 

a year earlier. Revenue rose 17% to 

USD25.5bn from USD21.9bn. 

China Eastern joins SkyTeam 

alliance 

China Eastern Airlines and its 

subsidiary Shanghai Airlines 

joined the SkyTeam Airline Alliance 

to gain access to the alliance’s 

global network, which is expected 

to generate Rmb1bn (USD155m) 

of revenue for the carrier annually. 

Shanghai-based China Eastern, 

the country’s second-largest 

carrier by fleet size, will fly to 921 

destinations in 169 countries and 

regions across the world by joining 

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NEWS 

the alliance, which consists of 14 

airlines including China Southern 

Airlines, Korean Air and Air 

France-KLM. 

China, Iran to sign USD4bn 

metro contract 

China and Iran will sign a USD4bn 

contract for development of an 

underground transport system 

in Iran, according to Iran’s state 

television. As the second biggest 

importer of Iranian oil after Japan, 

China has long been involved in 

infrastructure projects in Iran. Iran 

said in February that China had 

signed a USD13bn contract to build 

a railway network. 

China now world’s largest 

market for sedans 

China surpassed the United States 

as the world's largest car market 

on sales of sedans. Future growth 

lies with sport-utility vehicles. 

SUV deliveries rose 30% this year 

through May, compared with a 6% 

gain for total passenger-car sales, 

according to the China Association of 

Automobile Manufacturers. Sales of 

SUVs in the world's second-largest 

economy will increase 33% in the 

two years through 2012, almost 

twice the pace in the United States 

and four times that of Western 

Europe, according to Lexington, 

Massachusetts-based IHS 

Automotive, an industry consultant. 

China’s Chery to build cars in 

Brazil 

Chery Automobile Co, one of 

China’s biggest auto makers, began 

construction of its first factory in 

Brazil in the hope of expanding its 

share in the world’s fourth-largest 

auto market. Its factory, located in 

the city of Jacarei about 100 km 

from Sao Paulo, will begin producing 

28 

106.5 

Consumer price index in July 

2011, up from 100 in July 2010. 

Source: National Bureau of 

Statistics of China 

about 50,000 vehicles a year by 

the end of 2013 and expand to as 

many as 170,000 vehicles a year, 

Luis Curi, chief executive of the 

company’s Brazilian unit, said. 

China’s toy industry facing 

challenge as EU tightens rules 

The New European Union Toy 

Safety Directive, which imposes 

stricter safety requirements for toys, 

came into force in the EU market, 

posing a challenge to China’s toy 

manufacturing industry. Chinese toy 

makers are particularly affected by 

tighter control over chemical use, 

as the EU-wide regulation contains 

a ban of CMR (carcinogenic, 

mutagenic and reprotoxic) 

substances, not only limiting the 

use of allergenic fragrances in toys 

but raising the number of restricted 

harmful chemicals from eight to 19. 

Chinese auto parts firm sets 

sights on German brakes unit 

Chinese auto parts maker BWI 

Group is the frontrunner to acquire 

the brakes manufacturing unit of 

German automotive supplier Robert 

Bosch GmbH, according to a BWI 

manager in the United States. The 

Bosch deal is projected to strengthen 

the capacity of BWI’s business in 

brakes and suspension systems, 

said Steve Lin, an engineering 

manager at BWI Group’s Michigan 

office. 

Chinese, Russian automakers 

form JV 

China’s fifth largest automotive 

group, Beijing Automotive Group 

(BAIC Group), announced the 

establishment of a JV with Russia’s 

AMS Auto. The Beijing-based BAIC 

Group said total investment in the 

JV, BAW-RUS Automotive Co Ltd, is 

about USD176m, with a registered 

capital of USD20m. The JV is 

expected to produce 60,000 units per 

year by 2017. 

Chrysler recalls vehicles in 

China 

China’s top quality watchdog said US 

automaker Chrysler will recall 1,708 

Dodge JCUV vehicles imported 

to the Chinese mainland over 

defects of the vehicle theft deterrent 

module. Defects in the vehicle theft 

deterrent module may cause the 

engine to shut down while running. 

The recall involves type JCUV autos 

produced between 3 August 2009 

and 23 January 2010, Chrysler said. 

Daimler shifts to compacts for 

China market 

German luxury carmaker Daimler AG 

plans to increase the presence of 

its Mercedes-Benz cars in China by 

focussing on premium compacts as it 

seeks strong growth amid higher fuel 

prices and intensified competition. 

The carmaker plans to produce four 

new models in China after Daimler 

and Beijing Automotive Industry Corp 

signed a EUR2bn (USD2.9bn) deal. 

As early as 2020, at least one in five 

premium compact cars is expected 

to be sold in China, said Dieter 

Zetsche, CEO of Daimler. 

Destination Japan for low-cost 

Spring Air 

China’s only budget carrier Spring 

Airlines plans to set up a subsidiary 

in Japan to gain a foothold in the 

north east Asian travel market 

despite nuclear leak threats. 

The subsidiary would enable the 

company to park airliners in Japan 

to fly domestic routes as well as 

routes from Japan to north east 

Asian countries, a spokesman for the 

carrier said. 

Full speed ahead for highspeed 

patents overseas 

China’s railway sector will stick to 

its strategy to explore high-speed 

rail markets overseas, a railway 

ministry spokesman said. China is 

now filing patent applications for its 

high-speed railway technologies in 

regions including the United States, 

Brazil, Europe, Russia and Japan, 

which is an indispensable step for 

tapping overseas markets, according 

to Li Jun, director of the general 

affairs office of the transport bureau 

under the ministry. He said 21 patent 

applications have been filed under 

the Patent Cooperation Treaty in 

these regions. 

Hainan carrier weighs 

European presence 

HNA Group, China’s fourth-largest 

airline group, is seeking to become 

the first Chinese airline to invest 

in the European aviation sector by 

bidding for a Hungarian carrier and a 

German-based airport operator. Wu 

Feng, manager of the brand centre 

of HNA group, said his company is 

targeting Malev Hungarian Airlines 

and Hochtief Airport Ltd Co, an 

airport management company that is 

based in Essen, Germany. 

HNA may purchase stake in 

GE SeaCo 

China’s fourth biggest aviation 

company HNA Group is reportedly 

bidding for a stake in GE SeaCo, a 

container leasing unit under General 

Electric Co, as it continues efforts 

to expand overseas. HNA, parent 

of Hainan Airlines, is competing 

with private equity firm Kelso & Co. 

Foreign media reports said the deal 

could be valued between USD2.5bn 

and USD3bn including debt. 

Honda cuts mainland sales 

target by 13pc 

Honda said it was cutting this 

year’s car sales target for China 

by 13% after Japan’s earthquake 

and tsunami in March disrupted its 

supply chain and forced production 

cutbacks. Japan’s number three 

automaker lowered its sales target 

for China to 638,000 cars, down from 

its initial target of 731,500, and 2% 

lower than its last year sales. 

GM expects to close deal on 

China JV 

General Motors Co (GM) expects 

to conclude a deal to bring the 

automaker’s stake in its China JV 

back to 50%, Reuters reported, citing 

Chief Executive Daniel Akerson. GM 

has told its China partner, SAIC, that 

it wants to buy back the 1% stake 

in Shanghai GM that it sold to the 

Chinese automaker in 2010 for about 

USD85m, Akerson said. 

GM starts sales of China-only 

sedan to woo first-time buyers 

General Motors Co., China’s largest 

overseas automaker, introduced its 

first sedan under a new China-only 

brand to cater to entry-level buyers in 

the world’s largest auto market. GM 

joins Honda Motor Co. in creating 

cheaper China-only brands to boost 

sales among first-time buyers as 

overall vehicle deliveries slow this 

year after the government phased out 

incentives and imposed ownership 

restrictions to curb traffic congestion. 


‘Green’ Porsche sales centre 

to open 

Jebsen Group, a marketing and 

distribution organisation for premium 

products, said it will build an 

environmentally friendly Porsche sales 

and service centre in Shanghai. With 

China’s strong and steady growth in 

the luxury market, the centre will meet 

surging demand for premium cars, 

especially in and around Shanghai, 

according to Mark Bishop, group 

director of Hong Kong-based Jebsen. 

Lenovo and NEC in deal to be 

Japan’s top PC maker 

Unfazed by a forecast decline in 

information-technology sales in 

Japan this year, Lenovo Group and 

NEC launched a JV that has become 

the country’s biggest personal 

computer supplier. NEC Lenovo 

Japan Group, in which Lenovo 

has a 51% stake, is estimated to 

account for about 25% of annual 

personal computer sales in Japan, 

the industry’s third-largest market. 

The transaction marked Lenovo’s 

third-biggest expansion initiative 

since it acquired the global personal 

computer business of IBM for 

USD1.75bn in 2005. 

Mercedes opens global design 

centre in Beijing 

German automaker Daimler AG 

inaugurated its fifth Mercedes-Benz 

Global Advanced Design Centre 

Rmb48,855 

Average bid-winning price for 

Shanghai car number plates in 

June 2011. 

Source: China Car Times 

in Beijing, a sign of the growing 

importance of the Chinese automobile 

market’s influence on the changing 

needs and trends in vehicles. It is 

the first functional design centre 

established by a premium vehicle 

brand in China. Another German 

luxury car brand, Audi AG, is also 

considering establishing a design 

centre in Beijing. 

Mitsubishi forms JV with 

China’s Qiming 

Mitsubishi Electric Corporation has 

signed a deal with China’s QiMing 

Information Technology Company Ltd 

to establish a JV company to develop, 

manufacture and sell car multimedia 

products in China. The new company, 

tentatively named Changchun Qiming 

Lingdian Automotive Electronics Co 

Ltd, will be established in Changchun, 

Jilin, this August and begin operating 

in January 2012. The two companies 

have cooperated in the development 

of car multimedia software since 

2004. 

Nissan sets China expansion 

plan 

Japan’s Nissan Motor Co 

announced a significant expansion 

of its production capacity in China, 

including a JV plant to produce 

micro minivans. Nissan’s China 

expansion plans are part of an 

ambitious six-year growth strategy 

the company unveiled in Japan last 

month. Dongfeng Motor Co., a JV 

between Dongfeng Motor Group Co 

and Nissan, said it plans to invest 

NEWS 

Rmb50bn (USD7.8bn) in China to 

expand auto production capacity by 

2015. 

Nissan to expand capacity in 

China 

Nissan Motor Co, Japan’s secondlargest 

automaker, plans to boost 

production capacity in China by as 

much as 600,000 vehicles over the 

next six years. China and North 

America are also the “two main 

contenders” as possible locations for 

a plant to produce Nissan’s luxury 

Infiniti brand vehicles, CEO Carlos 

Ghosn said. Nissan aims to increase 

its share of the global car market 

to 8% over the next six years from 

5.8% last fiscal year as it expands in 

fast-growing markets such as China. 

Nissan to focus on emerging 

markets 

Japan’s Nissan Motor Co recently 

announced plans to nearly double 

its market share in China by 2016 as 

part of its global focus on emerging 

markets. The company said it is 

aiming for 10% of the Chinese 

market and will also increase its 


NEWS 

presence in Brazil, Russia and 

India. Last year, Nissan moved more 

than a million vehicles in China as 

the country surpassed the United 

States and Japan as the automaker’s 

largest single market globally. 

Partnership formed for C919 

plane 

The Commercial Aircraft Corp 

of China Ltd (COMAC), which is 

undertaking the construction of 

large domestic passenger jets, 

began its first JV with a foreign 

company in hopes of using worldclass 

manufacturing techniques in 

the production of the homegrown 

C919 airplane. The partnership 

between the Shanghai Aircraft 

Manufacturing Co Ltd (SAMC), 

a subsidiary of COMAC, and the 

United States-based Eaton Corp, 

a company specialising in systems 

used to control and distribute energy, 

is among 17 strategic agreements 

COMAC has reached with various 

aviation companies. 

30 

Saab gets big order from 

Chinese firm 

Troubled car maker Saab Automobile 

AB has received a EUR13m 

(USD18.4m) car order from a 

Chinese company that could help 

pay this month’s salaries, its owner 

Swedish Automobile AB said. The 

company, previously known as 

Spyker Cars, claimed the deal with 

an unnamed Chinese company 

would provide the ailing car brand 

with enough funds to also pay back 

parts of its debt to suppliers. Saab 

has recently announced that it had 

run out of cash to pay its 3,700 

workers. 

SAIC’s new shares 

SAIC Motor Corp said it has won 

conditional approval from China’s 

securities regulator for its planned 

issue of new shares to buy additional 

assets from parent SAIC Group. The 

regulatory approval enables China’s 

largest auto group to move forward 

toward its group listing. Under the 

plan, SAIC will issue 1.73 billion 

AGSFW_Shanghai_11-07-012-D_en_(w)100mmX(h)130mm_SBR Aug-Sep 11_CTP.pdf 1 2011/07/20 10:26:27 AM 

Hongqiao lands annual business jet show for 2012 

Attracted by China’s growing number of super rich, a US business 

aviation association signed a contract with the Shanghai Airport 

Authority to hold a business jet show in the city for the next five 

years. The first Asia Business Aviation Conference and Exhibition 

will be held from 27 March to 29 March next year at Hongqiao 

International Airport. 

shares at Rmb16.50 (USD2.50) and 

receive Rmb28.6bn (USD4.44bn) 

worth of assets, including the 

group’s assets in parts making, 

trading, service and new-energy car 

operations. 

SAMC in JV with Eaton 

Diversified industrial manufacturer 

Eaton Corp inaugurated a USD18m 

conveyance JV with Shanghai 

Aircraft Manufacturing Co to 

support China’s homemade jumbo 

jet project. Shanghai Aircraft 

Manufacturing Co, a subsidiary of 

C919 jet maker Commercial Aircraft 

Corp of China, will own 51% of 

Eaton SAMC (Shanghai) Aircraft 

Conveyance System Co Ltd, with 

Eaton holding the balance. The 

Shanghai-based JV will focus on the 

design, development, manufacturing 

and support of fuel and hydraulic 

conveyance systems for the 150seat 

C919 jets. 

Sun set to shine on Inalfa deal 

Beijing Hainachuan Automotive Parts 

Co Ltd, a subsidiary of BAIC Group, 

said its acquisition of Inalfa Roof 

Systems will be completed soon after 

it passes antitrust scrutiny by the 

Chinese government. Hainachuan 

reached an agreement to buy 100% 

of the Netherlands company in April 

after beating out four other bidders 

including Austria-headquartered 

assembly giant Magna Steyr. Inalfa 

is one of the world’s largest suppliers 

of systems and components used 

in sunroofs. Hainachuan will pay 

about EUR190m (USD271m) in the 

acquisition, said its President Guo 

Xinmin. 

Volkswagen approved in China 

German auto maker Volkswagen 

AG said it has won approval from 

the Chinese authorities to build 

two additional plants in China in 

an attempt to boost production 

capacity by 3 million units over 

the next five years. The two new 

car manufacturing plants—one 

in Foshan, Guangdong Province, 

and the other in Yizheng, Jiangsu 

Province—will each have an annual 

production capacity of 300,000 units, 

the auto maker said. The two plants 

were part of Volkswagen’s Eur10.6bn 


com and other websites to imitate 

legitimate vendors and sell products to 

businesses outside China, spokesman 

John Spelich said. Alibaba.com 

refunded USD1.94m to victims of the 

scam, according to its website. 

Men’s magazines make their 

mark 

France’s Hachette has launched 

its first fashion magazine for men 

in China, Elle Men. According to a 

survey by KY-Research, a Beijingbased 

media analysis company, Elle 

Men enjoys the top sales ratings in 

cities including Shanghai, Beijing and 

Guangzhou, with an average market 

share of 40%, far higher than that of 

China veterans GQ and Esquire. 

Plug pulled on BYD financing 

venture 

Domestic automaker BYD has 

agreed to terminate a planned JV 

with a subsidiary of French bank 

Société Générale (CGL) that would 

have offered financing for new car 

purchases, according to the carmaker. 

BYD said the deal with the bank’s 

subsidiary CGL fell through due 

to the lender’s doubts about the 

Chinese auto market. According to 

an agreement between BYD and CGL 

signed last summer, the two sides 

were to establish a JV with Rmb500m 

in registered capital – BYD for an 80% 

stake and CGL for the remaining 20%. 

Sohu.com profit rises 32% 

Sohu.com Inc said its Q2 net 

profit rose 32% from a year earlier 

because of strong advertising and 

online gaming revenue growth. The 

US-listed Chinese Internet portal 

said in a statement that its net 

profit for the three months ended 

30 June rose to USD44.27m from 

USD33.45m a year earlier. 

Tudou.com to launch 

USD120m IPO in United States 

Chinese online video website 

Tudou Holdings is ready to launch 

its USD120m US initial public 

offering (IPO) after postponing it last 

November, International Financing 

Review (IFR) reported. Tudou filed 

for an IPO last year, seeking to raise 

up to USD120m to purchase content. 

However, the plan was stalled and 

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its rival Youku.com Inc managed to 

beat it to the market, soaring in its 

market debut. 

Weibo expands services 

overseas 

Sina Corp has partnered with a 

Japanese Internet company to 

expand its microblog site Weibo.com 

outside China. Under the agreement, 

Find Japan Inc will provide Weibo 

account verification services for 

Japanese institutions and celebrities 

starting next month. The partnership 

will allow Japanese companies 

and individuals to have a chance to 

communicate with more than 140 

million Weibo users in Chinese. Sina 

said earlier that it plans to roll out an 

English version of its Weibo service 

at the end of this year. 

Zynga, Tencent plan 

cooperation 

San Francisco-based Zynga, the 

world’s largest social game operator, 

has teamed up with Tencent to 

introduce the Chinese version of its 

CityVille, called Zynga City, in an 

effort to benefit from Tencent’s vast 

NEWS 

user base in the country. Tencent will 

operate the game on its Pengyou 

platform and later will introduce it 

to the company’s social site Qzone. 

Tencent’s Open Platform will 

work with other social game 

developers. 

PROPERTY & 

CONSTRUCTION 

Caterpillar plans new facility 

in China 

Caterpillar Inc, the world’s 

largest manufacturer of 

construction and mining 

equipment, diesel and natural 

gas engines and industrial gas 

turbines, said it plans to open 

a new manufacturing facility in 

China to produce undercarriage 

components used in hydraulic 

excavators. The facility will be 

located in the Xuzhou Economic 

Development Zone and when fully 

operational will employ about 400 

people, Caterpillar said. Production 

at the facility is scheduled for mid- 

2012, the company said. 

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NEWS 

Bright Food denies rumours of 

wine investment 

China’s Bright Food Group said 

it was not in discussions to buy 

Australian wine assets, denying a 

media report that it was considering 

bidding for Australia’s Treasury Wine 

Estates Ltd. Currently, food giant has 

no Australian wine acquisitions in 

the works, said Pan Jianjun, general 

manager of the firm’s public relations 

department. However, Pan said the 

Shanghai-based conglomerate could 

in the future consider acquiring wine 

assets in Australia, France, Chile 

and the United States to broaden its 

brands portfolio. 

Bright Food to buy Australian 

foods group 

China’s Bright Food Group is in 

advanced talks to buy Australian 

branded food business Manassen 

Foods from Champ Private Equity, 

two sources with direct knowledge of 

the matter told Reuters. If successful, 

the deal would mark Bright Food’s 

first major overseas acquisition after 

missing out on some large deals in 

36 

Adidas eyes smaller Chinese cities 

Adidas Group China, a unit of Adidas AG, plans to expand 

aggressively into lower tier cities to compete with Chinese rivals. 

The company will open over 2,500 additional stores in the next 

few years in lower tier cities, expanding city coverage to more than 

1,400 cities. 

its past few attempts. Despite the 

setbacks, Bright Food was keen 

to expand into overseas markets 

to grow its dairy, sugar, wine, food 

industry and agriculture businesses 

among others, a company 

spokesman said. 

City orders closures of two 

fake Apple shops 

Chinese officials in Kunming 

ordered two fake Apple shops to 

close, an apparent reaction to a 

storm of media attention about an 

unauthorized and elaborate hoax 

store in the south western city. After 

an investigation of 300 shops in the 

city, officials found five self-branded 

“Apple Stores” to be operating 

without authorisation from Apple Inc. 

All five shops were selling genuine 

Apple products, but two were told to 

shut down because they did not have 

an official business license. 

Coca-Cola defends safety of 

its mainland products 

Although the Coca-Cola products 

that tested positive for a banned 

preservative in Taiwan have been 

recalled, Coca-Cola Co said its 

products on the Chinese mainland 

are completely safe to drink. Recent 

media reports that a batch of Coke 

Zero concentrate from Shanghai 

contained the banned preservative 

methyl-p-hydroxybenzoate sparked 

concern about safety. Coca-Cola Co 

said the preservative has been used 

in many areas including the Chinese 

mainland, Hong Kong and the United 

States. 

COFCO tightens hold on Tully 

Sugar 

A takeover battle for Tully Sugar Ltd 

appears to be over, with China’s 

state-owned COFCO Corp taking 

a 61.25% stake, including a 6.9% 

stake formerly held by agribusiness 

Bunge Ltd, said Keith De Lacy, 

vice chairman of COFCO’s local 

unit. Tully Sugar is one of the last 

grower-owned milling companies 

in Australia. It also holds property 

assets in far north Queensland, 

making it an attractive target amid a 

global increase in takeovers of foodingredient 

producers. 

COGO takes a step closer to 

debut on HK exchange 

Nasdaq-traded IT supplier COGO, 

previously Comtech, has moved 

a step closer to a planned listing 

in Hong Kong, after completing a 

change of domicile to the Cayman 

Islands from the United States. The 

change allows the group to go public 

in Hong Kong while continuing to 

trade on Nasdaq. 

Copycat Apple store prompts 

China investigation 

Chinese authorities in the south 

western city of Kunming have 

launched a sweeping investigation of 

electronics stores after media reports 

said one retail outlet seemed to be 

copying Apple Inc’s store format. 

The inspection will cover business 

licenses, authorised permits of brand 

use, and the purchasing channels of 

each store. Results of the inspection 

will be announced to the public soon. 

De Beers eyes China 

expansion 

De Beers SA, the world’s largest 

producer of rough diamonds, said 

it plans to further expand its retail 

outlets in China this year as it 

expects China, India and the Middle 

East to outpace US demand by 

2015. The Johannesburg-based 

company said it will open a second 

store in Hong Kong and more stores 

in mainland China. Chief Commercial 

Officer Bruce Cleaver said the 

company expects China, India and 

the Middle East to account for 40% 

of global consumer demand for 

diamonds by 2015. 

Diageo’s China deal marks 

rare success 

London-based beverage company 

Diageo has been approved by a key 

ministry to take control of Sichuan 

Swellfun, China’s fourth-largest 

premium white spirits maker by 

volume, confirming that foreign 

takeovers of Chinese brands are 

possible. Ever since Chinese 

regulators blocked Coca-Cola’s 

USD2.4bn bid in 2009 for the 

country’s top juice maker, Huiyuan 

Juice, investors have worried such 

deals were effectively off the table. It 

is a question that is bound to come 

up again as Nestlé eyes a possible 

USD2.6bn deal to buy sweet maker 

Hsu Fu Chi International Ltd. 

Diamonds make the cut for 

big, small firms 

Overseas diamond retailers are 

paying close attention to the booming 

diamond market in China with a 

view to cashing in on the country’s 

growing purchasing power. Figures 

from the Diamond Administration of 

China (DAC) show that the annual 

turnover at the Shanghai Diamond 

Exchange reached USD2.81tr in 

2010, an increase of 88.1% from 

2009. According to DAC, China is 

the second largest diamond-buying 

nation in the world after the United 

States. 

Dairy Queen admits its raw 

mix comes from Baxi 

US-based ice cream chain Dairy 

Queen admitted the raw mix they 

use to make ice cream is produced 

and provided by Beijing-based Baxi, 

which specialises in making milk 

products. Reporters also discovered 

the so-called fresh jam and imported 

jam the ice cream maker uses may 

also come from a domestic provider 

in Tianjin. 


German luxury company plans 

further expansion in China 

For Montblanc International GmbH, 

China will become the destination 

for the German luxury goods 

manufacturer with the largest 

investment and an intense focus, the 

company’s CEO Lutz Bethge said. 

China’s rapidly growing economy, 

and the company’s strenuous 

efforts in the local market, made 

the country its largest market 

within just two years, he said. The 

manufacturer of writing instruments, 

watches and accessories will open 

its first Concept Store in Beijing in 

September. 

Gitanjali Gems eyes China 

acquisition 

India’s largest jewelry retailer 

Gitanjali Gems Ltd will acquire a 

Chinese manufacturing unit and 

jewelry retail firm by the end of 

2011 as it looks to expand its global 

footprint and boost sales, Reuters 

reported. Gitanjali, which retails 

diamond jewelry under the brands 

Gili, Nakshatra, Asmi and D’Damas 

in India, has not yet released any 

financial details about the China 

deal. 

IKEA aims for 15 stores in 

China by 2015 

Eyeing increasing demand in the 

home products sector, Swedenbased 

retailing giant IKEA is 

accelerating its expansion in China 

and plans to have 15 stores in the 

country by the end of 2015. Currently 

it operates nine outlets, including 

new premises in the Shanghai 

Pudong New Area. The company will 

have 11 stores in China by June next 

10% 

The drop in UC’s mobile browsing 

market share in Q2. 

Source: StatCounter 

year. The Pudong store is the largest 

in Asia with a floor area of 49,400 sq. 

m. Shanghai has become the only 

city in China with two IKEA stores. 

Italian police raid Chinese 

businesses 

Police seized EUR25m (USD36m) 

in assets from Chinese-owned 

companies in Italy’s storied textilemaking 

areas near Florence in an 

antifraud crackdown on Chinese 

producers that have become an 

increasingly dominant presence in 

the Italian fashion industry. Italian 

police, who said they had been 

conducting their investigation for 

a year, searched the premises 

of 70 Chinese leather and textile 

businesses based in Florence, 

Pisa and the textile hub of Prato. 

According to the police, the 

businesses sent a total of EUR238m 

(USD342.5m) from Italy to China 

without paying taxes. 

Japan’s Kao sees need to step 

up in China 

Admitting that Kao Corp hasn’t been 

aggressive enough in China, the 

chief executive of the big Japanese 

consumer-products group said 

his main focus is to expand the 

company’s Chinese presence and 

better than triple sales in the country 

to JPY100bn (USD1.26bn) within five 

years. Kao, known for such brands 

as the Jergens, Bioré and Molton 

Brown skin-care lines, has lagged 

far behind global rivals Procter & 

Gamble Co and Unilever in the 

world’s fastest-growing market for 

consumer products. 

Japanese noodle bosses reach 

out to China diners 

Several major ramen noodle chains 

whose business was impacted by the 

earthquake and tsunami in Japan are 

eyeing expansion in Hong Kong and 

the mainland to help make up for lost 

volumes back home. Kouji Tashiro, 

managing director of the Menya 

Kouji restaurant chain, said he is 

in talks with ten potential Chinese 

franchises, eight from Hong Kong 

and two from the mainland, with two 

noodle shops set to open in Dalian 

in October. 

Longchamp to expand in China 

The French luxury brand Longchamp 

SAS will accelerate its expansion in 

China to make the country one of its 

top-three markets in three years, said 

Jean Cassegrain, the company’s 

CEO. The company’s business in the 

first six months in China increased 

67% over last year, making the 

nation the fastest-growing market 

in our global business, Cassegrain 

added. The French family enterprise 

is considering opening six to 12 

stores annually in the next two to 

three years in China, the world’s 

second-biggest market for luxury 

products. 

McDonald’s sales surge in 

China 

McDonald’s Corp, the world’s largest 

restaurant chain, said sales at 

stores open at least 13 months in 

China rose 5.1% in July as Chinese 

consumers dined out more. Analysts 

projected a gain of 4.7%, the 

average of five estimates compiled 

by Bloomberg News. 

Nestlé offers USD1.17bn for 

60% stake in Hsu Fu Chi 

Nestlé SA is seeking to buy a 60% 

stake in Chinese candy maker Hsu 

Fu Chi International Ltd for about 

USD1.7bn, the companies said, in 

what could be one of the largest 

foreign takeovers of a Chinese 

NEWS 

company. The Swiss foods giant 

is offering to pay USD3.56 a share 

and is proposing to acquire a 43.5% 

stake of Singapore-listed Hsu Fu 

Chi, the companies said in a joint 

statement. If that succeeds, Nestlé 

would then seek to buy another 

16.5% stake from members of the 

Hsu family. 

Nike targets younger Chinese 

consumers 

Nike is expanding its target 

consumers in smaller cities and 

the younger generation in China. It 

expects to double its annual revenue 

in China from 2010 fiscal year’s 

USD2.1bn over the next five years, 

the firm said. It will develop more 

products for kids and offer Chinese 

consumers in large, medium and 

small cities with diversified products 

and prices, the company said. 

PepsiCo looking to farm 

Chinese market 

PepsiCo Inc, the world’s secondlargest 

food and beverage 

company, will continue its 

investment in China’s agricultural 


NEWS 

sector. The move is designed 

to provide a secure supply 

of raw materials, protect the 

local environment and promote 

cooperation between the company 

and Chinese farmers. Indra 

Nooyi, chairman and CEO of 

PepsiCo, told China Daily that 

the US company is planning to 

establish new farms in China. 

She also said the introduction 

of more environmentally friendly 

technologies and equipment 

to farms in China is always a 

consideration for the company. 

SABMiller increases China 

stake to 100% 

SABMiller, the world’s second largest 

brewer, moved to expand further 

in China by increasing its stakes to 

100% in two brewers in the Zhejiang 

province for USD47m in cash, 

Reuters reported. The London-based 

group said its China Resources 

Snow Breweries Ltd (CR Snow) JV 

will acquire the remaining 55% stake 

in Hangzhou Xihu Beer and the 

remaining 25% interest in Huzhou 

Brewery from Japanese brewer 

Asahi. 

Scorching pace for luxury 

brand sales 

Despite cooling in the overall auto 

market in China, luxury car brands 

maintained a scorching pace in the 

first half of this year. Audi, the luxury 

brand of Volkswagen Group and 

the premium car sales champion in 

China, sold about 140,000 vehicles 

on the mainland and in Hong Kong 

between January and June this 

year, a 28% growth from over a year 

ago. BMW, the second-largest luxury 

carmaker in China, reported a 61% 

surge in mainland sales in the first 

half to 121,614 vehicles. 

Sogou strives to pass Google 

in China market share 

Sogou, the search engine unit of 

Chinese Internet company Sohu.com 

Inc, is aiming to overtake Google 

Inc by market share in China within 

a year in light of the US company’s 

decision to pull out of China’s web 

market. Sogou’s revenue would likely 

exceed USD20m in Q4, CEO Wang 

Xiaochuan told Reuters. Sogou is 

also looking to increase its staff 

headcount by more than 30% to 800 

by the end of the year, helped by 

38 

an upcoming venture with Alibaba 

Group to create a web browser for 

e-commerce. 

Starbucks to launch JV with 

Chinese coffee-growing firm 

Starbucks Coffee will launch a 

JV with a Chinese coffee-growing 

company later this year as the two 

sides signed a business cooperation 

MoU. John Culver, president of 

Starbucks Coffee International, 

signed the deal with Liu Minghui, 

founder and chairman of Ai Ni Group, 

a coffee-growing and -processing 

firm in the south western province of 

Yunnan at a ceremony held at Little 

America Hotel on the sidelines of 

the inaugural China-US Governors 

Forum. 

Subway eyes further China 

expansion 

After overtaking McDonald’s 

Corporation in the number of its 

outlets globally, US fast food giant 

Subway now aims to more than 

double the figure in China over the 

next five years. It also wants to 

become more localised, capitalising 

on China’s huge urbanisation 

programme and the fast-growing 

catering industry. The sandwich 

maker, which currently has 73 stores 

in Beijing and 220 stores in China, 

expects to have more than 90 stores 

in Beijing and nearly 300 in China 

by the end of this year, a Subway 

official said. 

Target’s suppliers use underage 

labour: watchdog 

Three mainland suppliers of giant 

US retailer Target have been 

accused by a workers’ rights group 

of violating child labour regulations. 

China Labor Watch claimed that its 

investigation last month uncovered 

the violations at the factories of 

Ningbo Lucky Craft Co, Hangzhou 

Ownseas Pen Co and Dongguan 

Fuxiang Garment (B&N Industrial) 

Co. It alleged that these labourers 

were being made to work between 

11 and 13 hours a day “in return for 

little compensation”. 

Tesco, Gome enter strategic 

cooperation 

Tesco PLC, the world’s third-largest 

grocery chain by sales, signed a 

strategic cooperative agreement with 

Gome Electrical Appliances Holdings 

Ltd in a move that signals a further 

step in the UK retailer’s development 

of shopping malls and underlines 

its ambition in the Chinese market. 

Tesco’s CEO Philip Clark said Tesco 

will invest Rmb53bn (USD8.2bn) in 

the Chinese market. Remco Waller, 

CEO of Tesco China Property Co, 

said that the company chose to 

work with Gome because they share 

similarities in operational philosophy, 

expansion strategy and brand 

background. 

Wal-Mart sets up global 

ecommerce HQ in Shanghai 

Wal-Mart Stores Inc, the world’s 

largest retailer, announced that it 

will establish its China ecommerce 

HQ in Shanghai by Wal-Mart’s 

Global ecommerce unit, and signed 

a memorandum of understanding 

with the Shanghai Commission of 

Commerce. The move represents 

Wal-Mart’s commitment to bringing 

e-Commerce services to a booming 

Chinese market. Wal-Mart is now 

finalising a site for construction, and 

will offer more information when 

operations are ready, a company 

head said. 

TECHNOLOGY & 

TELECOMMUNICATIONS 

Apple surpasses Lenovo 

revenue in China 

Apple Inc may have surpassed 

Lenovo Group Ltd’s revenue in 

China for the first time in at least 

a decade as the iPhone-maker’s 

surge in sales hurt growth at the 

biggest Chinese computer maker. 

Lenovo’s total revenue in China last 

quarter lagged behind the USD3.8bn 

for Apple, according to four analysts 

surveyed by Bloomberg News. 

Apple’s China revenue 

increases six-fold 

Apple Inc reported that its China 

market revenue grew six times 

in Q3 ending on 30 June, thanks 

to booming sales of iPhones and 

iPads. In Q2, Apple’s revenue in 

China was USD3.8bn, six times 

more than from the same period 

in the previous year. During the 

quarter, Apple’s iPhone sales in 

China increased five times. 

Canon eyes 30% growth in 

Chinese market 

Japanese camera maker Canon said 

they would aim a 30% annual growth 

in China in the next five years after 

reporting a 20% decline of Q2 profits. 

The March earthquake destroyed 

Canon’s Japanese factories but their 

middle- and high-end professional 

cameras are still the best-sellers in 

China, Canon China Vice President 

Tatsuo Yoshioka said. 

Cisco poised to help China 

keep an eye on its citizens 

Western companies including 

Cisco Systems Inc are poised 

to help build an ambitious new 

surveillance project in China — a 

citywide network of as many as 

500,000 cameras that officials say 

will prevent crime but that humanrights 

advocates warn could target 

political dissent. The system, 

being built in the city of Chongqing 

over the next two to three years, 

is among the largest and most 

sophisticated video-surveillance 

projects of its kind in China, and 

perhaps the world. 

China comes second in iPhone 

app downloads 

The Chinese mainland has become 

the world's second-biggest market 

for iPhone application downloads, 

behind only the United States, 

according to Distimo, a Netherlandsbased 

mobile analytic company. 

It showed the wide popularity of 

Apple Inc's smart phone in China. 

In the first five months, application 

downloads on the Chinese mainland, 

Hong Kong, India and Japan grew 

rapidly while they decreased in 

countries such as France and 

Germany, according to Distimo. 

China eyes higher global 

innovation ranking 

China hopes to raise its global 

innovation ranking from 21st to 18th 

over the next five years, according 

to a newly issued national scientific 

and technological (S&T) blueprint. 

The blueprint, issued by the Ministry 

of Science and Technology, maps 

out the country’s S&T development 

goals for the coming five years. 

The blueprint’s objectives include 

significant growth in innovation 

capacity, greater international 


NEWS 

influence in the S&T sector and 

more breakthroughs in the research 

and development (R&D) of crucial 

technologies. 

China Mobile cuts 

international roaming fees 

China Mobile Ltd cut international 

roaming fees charged for 38 

countries and regions by as much 

as 80% with the hope of maintaining 

high-end users’ loyalty amid the 

increasingly intense domestic 

competition. The carrier, which had 

616.8 million mobile subscribers by 

June, said it cut the roaming charges 

in countries and regions including 

Australia, Germany, Canada and 

Singapore - popular destinations for 

Chinese travelers. 

China Mobile likely to roll out 

iPhone 

A new iPhone with China Mobile’s 

network will debut and the 

cooperation will be announced 

in September, China Mobile’s 

40 

Huawei seeks help from the US FCC 

Huawei Technologies Co, China’s largest maker of networking 

equipment, asked the US Federal Communications Commission 

(FCC) to help it sell equipment to states and localities building 

high-speed emergency communications networks. Shenzen-based 

Huawei hasn’t gained entry to a US programme that assesses 

equipment to be used in the networks, and asked the FCC to 

support its entering the programme, Huawei said. 

Beijing-based marketing official 

Liu Yang said on his microblog. At 

present, China Unicom is Apple’s 

sole partner for the iPhone on 

the Chinese mainland. A recent 

photograph of Tim Cook, Apple’s 

chief operating officer, in China 

Mobile’s office in Beijing has 

spread online, generating further 

speculation the companies are 

close to signing a deal. 

China pledges stronger IPR 

protection for foreign investors 

In a meeting with Microsoft CEO 

Steve Ballmer, Vice Premier Wang 

Qishan made the pledge to further 

enhance efforts on intellectual 

property rights (IPR) protection 

and create a better environment 

for foreign investors. Wang said 

the government will endeavour 

to build a long-term mechanism 

on IPR protection, and noted that 

the campaign against copyright 

infringement launched last October 

had been effective. 

China’s electronic exports up 

China’s electronic exports, especially 

of telecommunications equipment 

and mobile phones, jumped 15.8% 

on an annual basis in the first half of 

this year, the Ministry of Industry and 

Information Technology said. In the 

first six months, China’s electronic 

exports hit USD303.5bn, accounting 

for 34.7% of the country’s total 

exports. Exports to Germany and 

Britain fell in the period while those 

to Asian regions, including Japan, 

surged. 

China’s HiSoft acquires 

American IT consulting 

company 

Chinese technology company 

HiSoft Technology International Lt 

has announced that it has acquired 

100% of the equity interest in 

Nouveon Technology Partners, 

a provider of value-driven IT and 

process consulting services in the 

United States. Under the agreement 

between the two parties, HiSoft will 

reportedly first pay USD5.5m in 

cash and the company may pay an 

additional consideration based on 

Nouveon’s financial performance 

over the next two years. HiSoft 

said that Nouveon’s expertise and 

HiSoft’s global offshore delivery 

capabilities will create powerful value 

for customers. 

China’s ZTE to build ten 

international innovation 

centres 

Chinese telecom equipment maker 

ZTE Corporation has announced 

that it will cooperate with mainstream 

telecom operators to create ten 

international innovation centres in 

Europe and America. ZTE said the 

ten international innovation centres 

will be comprised of location-specific 

cooperative operations, including 

laboratories and operations and 

testing centres. 

Chinese capital eyes Brazil’s 

high-tech sector 

China will invest USD4.5bn in 

Brazil’s technology sector this 

year, as Chinese investment in 

the Latin American country shifts 

from agriculture and mining. 

Chinese investment is expected to 

hit USD9bn this year, with half of 

it going into high-tech industries, 

according to Alessandro Teixeira, 

deputy minister of Brazil’s Ministry of 

Development, Industry and Foreign 

Trade. China has been Brazil’s 

biggest trading partner since 2009, 

a position previously held by the 

United States. 

Congo in French Telecom’s sight 

France Telecom SA may make the 

Democratic Republic of Congo its 

next target for African expansion 

after entering into exclusive talks 

with China’s ZTE Corp to purchase 

a majority stake in Congo China 

Telecom, the country’s fourth-largest 

mobile operator. The French telecom 

could later purchase the 49% of 

the operator held by the Congolese 

government as part of a call for bids, 

in addition to ZTE’s 51% stake, said 

Beatrice Mandine, a France Telecom 

spokeswoman. 

Corning sets up research JV 

on mainland 

US-based Corning Inc, the specialty 

glass and ceramics company, started 

its first JV laboratory on the Chinese 

mainland with the Chinese Academy 

of Sciences’ Shanghai Institute of 

Ceramics. The joint research facility 

is aimed at exploring technologies 

to support the development of future 

Corning products that will address 

needs in China and worldwide, said 

Mark Newhouse, chief technology 

officer of Corning Asia. The opening 

of the new laboratory is indicative of 

Corning’s determination to possess 

more technology and businessdevelopment 

resources in Asia. 

Dell opens IT solution centre 

in Chengdu 

Dell, the world’s second-biggest 

supplier of personal computers, 

moved another step closer to 

completing its infrastructure 

expansion in western China with the 

launch of an “information-technology 

solution centre” in Chengdu. The 

centre will be part of the Texas-based 

company’s second mainland flagship 

manufacturing and customer-support 

complex, which is due to open later 

this year. The first such complex was 

built in Xiamen. Dell had earlier said 

it would boost investment on the 

mainland, its second-biggest market 

after the United States, to more than 

USD25bn a year in this decade. 


EC clears Lenovo’s Medion 

takeover 

Lenovo Group moved a step 

closer to expanding its operations 

in western Europe after the 

European Commission approved 

its EUR466m (USD664m) purchase 

of a controlling stake in German 

firm Medion. The transaction, when 

completed, will mark Lenovo’s 

biggest acquisition since it bought 

the personal computer business of 

IBM Corp for USD1.75bn in 2005. 

Foxconn to use one million 

robots to replace workers 

Foxconn Technology Group plans 

to use one million robots to replace 

simple working employee over a 

three-year span, said tycoon Terry 

Guo, owner of Foxconn. Foxconn, 

the largest original equipment 

manufacture electronics company in 

China, currently employs 1.2 million 

people along with implementing 

10,000 robots. The company has 

established an automated robotics 

division. 

Fujitsu looks into Chinese 

market 

Fujitsu Ltd aims to at least double its 

revenue from China in three years. 

The Japanese technology giant is 

planning to increase the proportion of 

revenue earned in overseas markets 

and to join the growing number of 

technology companies developing 

cloud-computing services. Masami 

Yamamoto, president of Tokyobased 

Fujitsu, told China Daily that 

last year, the company’s revenue in 

China was JPY110bn (USD1.36bn), 

which was just around 2.5% of its 

global total. 

Haier to buy Sanyo Electric 

The Japanese electronics giant 

Panasonic Corp plans to sell its 

subsidiary Sanyo Electric Co Ltd’s 

washing machine and refrigerator 

operations in Asia to China’s Haier 

Group Corp, a report said. Sanyo will 

sell all its shareholdings in around 

ten subsidiaries and affiliates in 

Japan and South east Asia. The sale 

price is estimated at about JPY10bn 

(USD129m). The deal is scheduled 

to be completed by March next year. 

HiChina inks deal for internet 

domain name opportunities 

Internet domain name registry 

service provider Afilias Ltd is working 

with Alibaba.com’s HiChina to help 

Chinese brands take advantage 

of ICANN’s new TLD program. 

The agreement names HiChina as 

Afilias’ preferred new TLD partner in 

China. Chinese brands who intend 

to establish a dot brand presence 

online will benefit from the combined 

resources of Afilias, a global leader 

in new TLD registry services, and 

HiChina, a trusted Chinese market 

Internet expert. 

HP signs deal with Shanghai 

government 

Shanghai government and Hewlett- 

Packard Development Co (HP) 

signed a MoU that may increase 

the technology giant’s investment 

in the city. HP said it intends to 

expand its manufacturing base 

NEWS 

in Shanghai, consolidate existing 

sites into one multi-purpose 

campus and establish Shanghai 

as a China headquarters for HP’s 

Personal Systems Group. The 

company promised to collaborate 

with the Shanghai government to 

apply technology to tackle complex 

infrastructure, energy and health 

care transformations. 

HP unveils China initiatives 

Hewlett-Packard Co executives 

pledged to expand manufacturing 

and other operations in China to 

bolster the company’s position in 

a vital market where it has been 

losing ground to rivals in its 

flagship personal-computer 

business. CEO Leo Apotheker 

announced the new initiatives— 

which include new cloud-computing 

offerings and new research-anddevelopment 

centres—and said 

the company hopes to renew the 

focus on accelerating HP’s growth 

in China. 


NEWS 

Huawei hires former UK 

official as cyber-security 

officer 

Chinese telecommunicationsequipment 

maker Huawei 

Technologies Co said it has hired a 

former chief information officer for 

the UK government as a cybersecurity 

official, as the company 

faces continued scrutiny in developed 

markets where it aims to expand. 

Huawei has faced political obstacles 

to expansion in developed markets, 

especially in the United States, over 

what critics call close ties to the 

Chinese government - something 

Huawei denies. 

Huawei tunes strategy to stay 

ahead in Europe 

Huawei, the second-largest telecom 

solution provider in the world is now 

giving the final touches to a strategy 

that it hopes will further consolidate 

and strengthen its presence in the 

highly innovative and demanding 

European market. The company, 

which had a global turnover of 

USD28bn last year, was just behind 

its European rival Ericsson, which had 

a comparative figure of USD30bn. 

Intel chips in with Chinese 

investment 

Intel Capital, the global investment 

arm of the chipmaker Intel Corp, 

announced that it has invested 

USD22m in three Shanghai-based 

technology companies this year and 

will invest in least six more in the 

next five months. All three Chinese 

companies in which it has invested 

are in the mobile Internet industry, as 

the company is hoping to be not only 

a hardware maker but also a solutions 

provider. 

Lenovo completes agreement 

with Medion 

Chinese PC group Lenovo has 

announced that it has completed 

the share purchase agreement with 

Gerd Brachmann, Medion’s largest 

shareholder, founder and CEO, 

marking a significant milestone for 

its acquisition of the German PC 

company. 

Lenovo launches second 

smartphone 

Lenovo Group Ltd, China’s largest 

personal computer maker by 

42 

market share, launched its second 

smartphone to compete with 

international rivals such as Apple’s 

iPhone and RIM’s BlackBerry. 

Customers will get the new A60 

smartphone for free if they subscribe 

to two-year contract at Rmb96 

(USD15) a month with China Unicom, 

official partner of the iPhone. 

Microsoft to add more R&D 

staff to China operation 

Microsoft Corp plans to add 750 

employees to its research operations 

in the Asia-Pacific region during the 

second half of this year, a move 

to boost R&D outside the United 

States. The Chinese staff has been 

responsible for much R&D work on 

Microsoft products, said Zhang Yaqin, 

corporate vice-president of Microsoft 

and chairman of the Microsoft 

Asia-Pacific R&D Group. The hiring 

drive, which will start in September, 

will boost the regional staff to almost 

4,000. 

Motorola, China Mobile to 

open online app store in China 

Motorola Mobility and China Mobile 

announced that they will open an 

online application store in China, 

a mobile phone market with more 

than 900 million handset users. The 

cooperation will regulate the market 

of Android operating system-based 

applications, which have been 

unstable and prone to viruses, 

industry insiders said. Meanwhile, 

both sides also jointly launched Moto 

MT870, the world’s first Android 

phone from an overseas handset 

manufacturer using China’s homegrown 

3G technology. 

Nokia loses Chinese market 

Nokia isn’t just losing mobile phone 

market share to iPhone maker Apple 

Inc, but is also losing its dominance 

in China as prices sink, Bloomberg 

reported. Nokia’s Q2 handset 

shipments in China fell to 11.3 

million, less than half of Q1’s number 

and 41% less from a year ago. 

That, combined with a 30% drop in 

European sales, contributed to a 

greater-than-estimated 20% slump 

in Nokia’s handset sales worldwide, 

according to the report. 

Philips buying Shanghai Povos 

unit for USD355m 

Royal Philips Electronics NV 

plans to buy a unit of Chinese 

home appliance maker Shanghai 

Povos Enterprise Group Co for 

Rmb2.3bn (USD355m) to Rmb2.5bn 

(USD386m), Xinhua News Agency 

reported, citing people familiar with 

the transaction. The unit, Povos 

Appliance (Shanghai) Co, will 

become a wholly owned subsidiary 

of the Netherlands-based Philips 

after the deal, Xinhua said. Details 

of the acquisition will be announced 

within one to two months after 

both companies complete relevant 

procedures, it said. 

Sony Ericsson, China Mobile 

to develop 4G phones 

Sony Ericsson Mobile 

Communications AB will cooperate 

with China Mobile Holdings Ltd to 

develop mobile phones that support 

China’s domestic fourth-generation 

telecommunications technology, 

said Bert Nordberg, Sony Ericsson 

Mobile’s global president and CEO. 

The company hopes to work on the 

time division long-term evolution 

(TD-LTE) technology, which is going 

global, Nordberg added. Operators 

in Japan, India and the United States 

have already adopted the technology. 

Suning to take controlling 

stake in Laox 

Suning Appliance, China’s biggest 

electronics retailer, said it will take a 

controlling stake in Japan’s Laox in 

a deal aimed at boosting overseas 

business and broadening revenue 

streams. Suning and its parent would 

buy JPY9bn (USD110.9m) worth of 

newly-issued Laox shares, giving 

them a combined 65% stake in the 

money-losing Japanese retailer, it 

said. Currently, Suning has a 34% 

stake in Laox. 

US firm plans for Shanghai 

data centre 

SuccessFactors, an online supplier 

of software for human resources 

management, aims to become 

the first major so-called cloudcomputing 

services specialist to 

run its own data centre operation 

on the mainland. The Californiabased 

software company applied to 

mainland authorities for permission 

to establish a data centre business in 

Shanghai that will support its growing 

number of domestic customers. 

Cloud users may access such a 

server using a wide range of devices 

including computers, netbooks, tablet 

computers or smart phones. 

ZTE boosts investments in 

Brazil 

ZTE Corp, China’s biggest listed 

telecommunications equipment 

maker, plans to invest several 

hundred million dollars in Brazil to 

make the region its biggest overseas 

manufacturing base for handsets and 

tablet computers, the company said. 

Shenzhen-based ZTE – now the 

world’s fifth largest handset vendor – 

also plans to double its mobile phone 

sales in Brazil this year to ride on the 

growing smart phone demand, said 

Wei Zheng, the firm’s VP for Brazil. 

TRAVEL & HOSPITALITY 

BC Hotels heads to Beijing 

BC Fine Living, an international 

boutique hotel run by Bernd 

Chorengel, the former CEO of 

Hyatt Hotels Corp, has decided 

to open its first hotel in China at 

MOMA in Beijing in partnership with 

the Beijing-based Modern Green 

Development Co Ltd. The BC Hotel 

and Residence consists of more 

than 100 rooms and 44 serviced 

apartments. The second BC Hotel 

will be situated in Taiyuan, Shanxi 

province, also together with MOMA. 

Budget carrier Jetstar puts its 

focus on China 

Jetstar plans to operate flights to 

as many as 12 cities in China by 

the end of the year. The budget 

carrier, owned by Qantas Airways, 

announced in Beijing that it would 

start daily services from Melbourne 

to Beijing via Singapore from 24 

November. It will use an Airbus 

A330 on the route, offering about 

8,000 seats a week between the 

three cities. Bruce Buchanan, chief 

executive of Jetstar Group, said 

China would be a focus market in the 

group’s future development strategy. 

China contributes to Virgin’s 

profit soar 

Virgin Atlantic reported a GBP18.5m 

(USD30.1m) profit and a 31% rise 

of revenue thanks to its China route 

sales which grew 41% with 25,000 

more revenue passengers carried 

than the previous year. The China 


evenue was boosted because of 

a 57% gain of leisure travel and a 

42% increase of corporate travel 

compared to the previous year. 

Chinese go abroad for 

bargains 

Major global cities are witnessing 

shopping sprees by hordes of 

Chinese buyers. In 2010, more than 

57 million Chinese travelled abroad, 

up 20.4% from a year earlier. They 

spent a staggering USD48bn in 

overseas destinations, according to 

the National Tourism Administration. 

Chinese tourists earned themselves 

the title of the biggest spenders in 

France and the United Kingdom last 

year. The country’s international 

travel market is expected to grow by 

17% annually over the next decade 

and to reach some Rmb1.54tr 

(USD237.84bn) in 2020. 

Cost of living in Beijing higher 

than New York 

The results of a survey conducted 

by Mercer, a global consulting firm 

for trusted HR and related financial 

advice, products and services, 

showed that the cost of living in 

Beijing is higher than in New York. 

Supporting role 

As China’s FDI hits new heights, there is an increasing need for business consultants with 

the capabilities and the connections to support new business ventures. AST Consulting’s 

General Manager Fabien Thuilliez explains how supportive partners can play a vital role. 

Last year China’s foreign 

direct investment (FDI) 

experienced record growth, 

registering a 17.4 per cent 

year-on-year increase and 

bringing the total investment 

to USD105.74bn at the end of 

2010. New investors are 

eager to capitalise on the 

opportunities presented by 

China’s huge and increasingly wealthy markets. However, 

many feel the need for third-party advisors to assist them in 

setting up shop. The best corporate service providers have 

found that they are in demand. 

“AST Consulting has experienced rapid growth within and 

outside of China. We have seen a notable increase in our 

clientele, who are from all the different continents. Our 

European offices are bringing in many new investors and 

we’re also seeing increasing interest in established and 

emerging markets in North and South America. In China, 

in addition to our Shanghai office, we’re opening a new 

branch in Beijing to help meet the growing customer 

demand”, explains Fabien Thuilliez, general manager at 

AST Consulting, which specialises in the establishment 

and management of new enterprises in China. 

Chinese cities made the list of the 

world’s top 50 most expensive cities: 

Hong Kong, Beijing, Shanghai, 

Guangzhou and Shenzhen, ranking 

ninth, 20th, 21st, 38th and 43th, 

respectively. New York ranked 32nd. 

CYTS looks to smaller cities 

for tourism sector 

China CYTS Tours Holding Co Ltd, 

a leading tourism service provider in 

China, is seeking a stronger foothold 

in second- and third-tier cities, along 

with an improved service standard to 

survive weak inbound market growth, 

the agency’s top executive said. 

There will be ten new stores opened 

in North China this year, mainly in 

the areas around Beijing including 

Tangshan, Dalian and Qingdao, said 

Zhang Lijun, president of CYTS. 

HNA bids for Hochtief’s airport 

assets 

China’s government backed HNA 

Group Co, parent company of the 

country’s fourth-biggest airline by 

revenue, is bidding for Frankfurtbased 

construction company 

Hochtief AG’s airport assets, which 

is valued at more than EUR1bn 

(USD1.43bn). The move is 

reportedly part of HNA’s overseas 

expansion amid falling global asset 

prices. The company said they had 

USD48.2bn 

Total worth of investments in 

China’s electronic information 

sector in the first five months 

of 2011. 

Source: MIIT 

joined Bravia Capital of Hong Kong 

to buy a shipping-container lessor 

co-owned by General Electric Co. 

in a deal valued at USD1.05bn. 

Mainland airlines look to 

challenge emissions trading 

scheme 

Mainland airlines plan to file a 

lawsuit to challenge the EU’s 

emissions trading scheme that fines 

airlines for exceeding emission 

quotas on all European flights from 

next year. Flag carrier Air China and 

the China Air Transport Association 

plan to bring the case to court. 

The company has attracted attention from the new wave 

of foreign investors by cultivating strategic partnerships 

across China and around the world. These relationships 

allow their clients to accelerate through the early stages of 

building their business. “We have strong connections 

where it matters. In China, we have spent years building 

the local relationships our clients need to get started and 

to grow, and beyond China, we have partnerships 

everywhere – Europe, America, Asia, Australia – to tap 

into the available expertise in fields such as accounting 

and auditing,” says Thuilliez. 

“AST Consulting specialises in the 

establishment and management of new 

enterprises in China.” 

This approach allows AST Consulting to tailor its services 

to a particular company’s specific needs. Their consultants 

are consequently able to undertake projects across a wide 

variety of regions and sectors, including garments, FMCG, 

F&B, HR, Green Energy and IT. “It isn’t always easy to see 

the best way to set up a specific business model in 

China; but we can. We are able to fast-track all kinds 

of projects by introducing investors to relevant 

incentives, tax optimisation strategies and key partners. 

We can also leverage our in-house talent, which includes 

NEWS 

Sino-Russian border island 

opens to Chinese tourists 

Public security and border defence 

authorities of north east Heilongjiang 

province officially set up a checkpoint 

for the new tourism destination 

of Heixiazi Island. According to 

local authorities, all persons and 

vehicles of construction enterprises 

and tour groups will be inspected 

at the checkpoint, and persons or 

vehicles without permission are 

strictly prohibited from coming to the 

island. The western half of the 335 

sq. km. island of Heixiazi belongs to 

China while the other half belongs 

to Russia. 

Soluxe goes overseas for hotel 

management 

Beijing-based international hotel 

operator Soluxe Hospitality Group is 

seeking to export its management 

expertise. The company is helping the 

Angkor Palace Resort & Spa in Siem 

Reap, Cambodia with its management. 

Soluxe has already established a 

presence in the emerging economies 

of Africa, South America and Europe 

and is reportedly seeking opportunities 

with countries like Germany, Italy, 

France and Spain. 

team-members with extensive experience in finance, 

auditing and law; and we use our own local licenses – that 

means we can cut out the middleman, and secure more 

affordable prices for our cutomers,” says Thuillliez. “The 

whole process – from setting up the enterprise to 

delivering a fully-functioning business – is part of a 

comprehensive package according to the tailored contract 

after the initial discussions with clients. It’s a very practical 

and transparent system.” 

As companies continue to find success and to see new 

opportunities on the mainland, Thuilliez anticipates that 

this kind of approach will attract more interest from larger 

groups. He is optimistic about the future for foreign 

investors and the companies that support them. “As well 

as reaching out into new markets and expanding our 

client-based and partnerships, we anticipate becoming 

involved in larger-scale projects with bigger organisations. 

We’ll grow with our clients.” 

For more information, contact: 

ASt Consulting 

Hotline: 400-8838-278 

e-mail: contact@ast-consulting.fr 

Website: www.ast-consulting.fr

AROUND TOWN 

ShanghaiBeat 

The summer heat didn’t slow down the beat in Shanghai 

n On Tuesday 28 June, Transtar International Freight held 

the grand opening of its new Shanghai office at CHAR Bar 

& Grill at the Hotel Indigo on the Bund. The launch event, 

which was attended by both local and international guests, was 

officiated by Tom Connor, the Australian Consul-General in 

Shanghai. Transtar, a privately-owned international logistics 

company based in Australia with particular expertise in Asian 

markets, plans to accelerate the expansion of its presence in 

Asia with Shanghai acting as the focal point, said Annie Meyer, 

Transtar’s Hong Kong-based director and Asia CEO. With the 

largest number of staff of all the company’s branches outside 

of Australia, the new Shanghai office is expected to overtake 

Transtar’s major Australian office by the end of the year, 

Meyer said. 

44 

n On Thursday 7 July, the European Chamber of Commerce 

hosted the ‘Outbound Conference’, which provided a diverse 

range of practical insights into Chinese overseas investments. 

Held at The Longemont Hotel, the half-day conference focussed 

on both foreign MNCs expanding into China and the recent trend 

for Chinese companies to ‘go global’, exploring markets such 

as Africa, Europe and Latin America. The event, moderated 

by Piter de Jong, vice president and chairman of the Shanghai 

Board at the European Union Chamber of Commerce in China, 

presented the following speakers: Fu’An Kong, deputy director 

of Foreign Economic Cooperative Division at SCOFCOM; 

Dr. Jochum S Haakma, director of Group Business Development 

at TMF Group B.V. and chief advisor of Public Affairs European 

Region at Huawei Technologies; Wang Junhao, CEO of the 

Junyao Group; Tao Feng, senior director of Strategy Planning, 

Finance and Accounting Department at Shanghai Fosun High 

Technology (Group) Co Ltd; Charles-Edouard Bouée, senior 

partner at Roland Berger Strategy Consultants; Begoña Suso, 

senior associate at Garrigues, and Diego Dalma, associate at 

Garrigues; and lastly, Dr. Edward Tse, Greater China chairman 

of Booz & Co. 

n The Spanish Chamber of Commerce held a seminar entitled 

‘Why and When to Use Hong Kong as the Gateway to China’ 

on Monday 11 July. The speaker was Renee Rodriguez, the 

Latin Desk advisor at CWCC Hong Kong. Rodriguez highlighted 

the many advantages of starting an entity - a representative 

office, branch or HK Ltd - in Hong Kong, including free flow 

of capital, low tax rates, favourable policies and easy access 

to China. She added that under the 2010 Closer Economic 

Partnership Agreement, Hong Kong policies particularly provide 

incentives for the following sectors: education, medical services, 

testing and certification, environmental industry, cultural and 

creative industries, and innovation and technology. In addition, 

starting an entity in China is not only a practical route into the 

competitive China market, it is also a way to protect the capital 

and reputation of one’s company at home, Rodriguez said. 

n On Monday 11 July, Three on the Bund hosted a THREE 

Talk entitled ‘Creating ‘Billions of Entrepreneurs’’ with Professor 

Tarun Khanna from Harvard Business School as the keynote 

speaker. The event was in conjunction with the Chinese launch 

of Khanna’s recently co-authored book, Winning in Emerging 

Markets: A Roadmap for Strategy and Execution. Held at Space 

by Three, Three on the Bund, the event was moderated by 

Sun Yang, standing council member of the South Asia 


Association of China. India’s Consul General of Shanghai 

Riva Ganguly Das offered some introductory remarks, expressing 

that India and China are increasingly becoming the global 

“centre of gravity” for businesses and entrepreneurs. The core 

of Khanna’s speech illustrated the entrepreneurial successes 

of Dr. Devi Shetty, who has revolutionised India’s health care 

by offering cutting-edge medical services at a fraction of their 

typical cost by implementing economies of scale. By combining 

cutting-edge science with altruism, Dr. Shetty demonstrates social 

entrepreneurism at its finest, Khanna said. 

n At a press conference held at Le Royal Meridien on Monday 

11 July, Starwood Hotels & Resorts announced the launch of a 

new global programme specifically designed to cater for Chinese 

travelers. ‘Starwood Personalised Travel’, which has debuted at 

19 Starwood hotels in gateway cities around the globe, will offer a 

number of specialised amenities for Chinese guests, including inroom 

tea kettles, translated welcome materials, on-site translation 

services and Chinese breakfast delicacies. The launch of the new 

programme was attended by Starwood’s President and CEO, 

Frits van Paasschen, and coincided with the conclusion of the 

month-long relocation of the company’s entire senior leadership 

team to China, further underscoring Starwood’s dedication to 

its largest hotel market outside the United States. With 75 hotels 

already in China and nearly 100 in the pipeline, Starwood will 

open one hotel in the country every two weeks throughout 2011. 

n On Thursday 28 July at the Grand Hyatt Shanghai, the 

Australian Chamber of Commerce, in conjunction with the 

SEPTEMBER 

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The 

AROUND TOWN 

British Chamber of Commerce and the Canadian Chamber 

of Commerce, hosted a keynote luncheon and discussion as 

a part of its Economist Series, titled ‘Towards Sustainable 

Development in China’. Dr. Yolanda Fernandez Lommen, 

currently head of the economics unit at the Asian Development 

Bank, was invited to discuss methods to avoid the middle 

income trap, the difficulty associated with transitioning from a 

middle-income to high-income status. Dr. Lommen highlighted 

the importance of economic restructuring and improving living 

standards. She also analysed policymaking trends and expressed 

concerns about the country’s fiscal policies and the viability 

of the 12th Five-Year Plan. Guests followed up Dr. Lommen’s 

presentation with further discussions about the Chinese economy 

in an international context. 

n On Thursday 28 July at Puruan Mansion, Shanghai Pudong 

Software Park, the Zhang Jiang Innovation Park launched 

its new brand and presented its vision, strategy and mission 

as a State Council approved Innovation Demonstration Park. 

Long considered a hub for technological development since 

its establishment in year 1992, the park hopes to increase its 

influential sphere through the new brand. Present at the event 

were senior government officials and senior executives including 

General Manager Ding Lei from Zhang Jiang group, Chairman 

Shi Yuzhu from Giant Interactive, Chairman Guo Guangchang 

from Fosun International Ltd, Chairperson Zhang Yuliang 

from Shanghai GreenLand Group, Founder and President Bill 

Yao from PPlive, and Chairman Dr. Chang Zhaohua from 

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COVER FEATURE 

The Great Executive Shuffle 

MNC operations in China have evolved from early rep office to sophisticated HQs; and now board 

members and global leaders are following their teams East 

By Katrina Hamlin 

Earlier this year, a study co-authored 

by Roland Berger Strategy 

Consultants and the European Union 

Chamber of Commerce in China 

(EUCCC) hit the headlines when it claimed 

that Shanghai is considered the most attractive 

location for a company’s Asia-Pacific 

headquarters, beating more established contenders 

such as Hong Kong and Singapore. 

Other studies seem to confirm the trend 

of migration eastward: Cartus, a company 

specialising in relocation, and counting 

60 per cent of the Fortune 50 among its clients, 

has seen China included in its top five global 

relocation destinations over the past five years. 

This year, the trend moved a step further. 

MNCs are now sending some of their most 

experienced leaders to join their China 

team; many companies have, for the first 

time, placed members of their Board of 

Directors and other key executives here. 

Leading the Way 

In June, Starwood — which manages nine 

prominent hotel brands, including Sheraton, 

46 

China is doing 

things differently. 

The business 

environment here 

is unlike anywhere 

else. You need to 

be on the ground to 

understand better 

Westin, St. Regis and Le Méridien — 

relocated its entire board to China for a 

month. Their arrival followed an influx of 

other big names, including several Fortune 

Ten leaders. In March 2011, General 

Electric (GE) brought in 17-year veteran, 

Mark Hutchinson — previously president 

of their Asia-Pacific operations — to China 

as the new president and chief executive 

officer (CEO) of GE China. In the auto 

sector, GM rearranged its global leadership 

team by relocating the executive director 

– North American Exterior Design and 

Global Architecture Strategy of GMIO 

Design to Shanghai. Meanwhile, European 

companies are following suit, with giants 

such as the Dutch Philips looking to 

decentralise global management structures 

as they declare China “a second home 

market”. 

“This is a clear trend,” says Charles- 

Edouard Bouée, president, Asia, and 

member of the global executive committee 

at Roland Berger. Bouée was himself also 

the member of the Roland Berger Global 

Executive Committee to be based outside the 

company’s global headquarters in Munich. 

“In every industry we see global 

executives and their advisory boards being 

set up in or relocated to Asia, especially 

Shanghai and Beijing,” says Alex Eymieu, 

a partner at CTPartners, which specialises 

in executive search and conducts related 

research. 

China Now 

Although regional headquarters and 

accompanying teams have been drifting 

towards China for some time — to 

Shanghai, in particular — relocating 

high-level executives is a relatively recent 

phenomenon. 

China attracted their attention as the 

country’s huge market potential began to 

come to fruition in the wake of the global 

financial crisis. This was what originally 

inspired many companies to relocate first 

their headquarters and teams, and later, 

their very best talent. “The market is 

driving the thrust; it is the most important 

factor behind this trend in China, especially 

in Shanghai. It overrules all other factors 

governing the relocation of regional 

headquarters. Consequently, high-level 

executives begin to move over to be closer 

to clients and teams in China,” says Bouée. 

The global financial crisis and the process 

of recovery accelerated the process by 

rebalancing global markets. “I came to 

this company just after the global financial 

crisis started. At that time it was important 

to stay focussed on resolving the crisis. It 

The significance of the China market was 

an early driver for relocation to China, says 

Joseph Hinrichs, president of Ford Asia- 

Pacific and Africa and chairman and CEO 

of Ford Motor (China), Ltd. 


wasn’t that it wouldn’t make sense to take 

China seriously, but we had to concentrate 

on the issues at hand. Upon emerging from 

the crisis, things were different. We needed 

a new stage for the business and we found 

this in China,” says President and CEO of 

Starwood Hotels and Resorts Worldwide, 

Frits van Paasschen. “Now, 70 per cent 

of the world’s economic growth — and 

probably 70 per cent of the world’s new 

hotels — are found in emerging markets.” 

“There’s been a rebalance in the global 

client base. Prior to the crisis, for example, 

if around 5 per cent of profits were coming 

from this region, the figure is now closer 

to a quarter or a third of profits,” says 

Eymieu. “So the top leaders want to 

understand this new and very significant 

part of their business.” 

Communications 

When MNCs first responded to growing 

markets and post-crisis opportunities, they 

attempted to develop China operations 

without the presence of these key 

leaders. But China-based teams risk being 

estranged from the rest of the company 

if global management structures are 

not decentralised, which can in effect 

jeopardise their ability to cooperate with 

other divisions and cause high-level 

decision making to become very difficult. 

“There are drawbacks for companies that 

make China a second home market — it 

can lead to China becoming separated 

from the rest of Asia,” explains Bouée. 

Decentralised management can help 

bridge the gap. “China is doing things 

differently. The business environment here 

is unlike anywhere else. You need to be 

on the ground to understand better,” says 

Eymieu. “Having someone on the ground 

enables a company to communicate the 

situation to investors so that decisions are 

made quickly. Asia is emerging and there 

are things happening here that are not 

happening in Europe or the United States. 

Executives need to be present here to deal 

with these grey areas.” 

Asked to describe the most significant 

lessons from the Starwood senior leadership 

team’s month in China on the final day 

of his visit, which was spent in Shanghai, 

communications and decision-making 

capabilities were at the top of van Paasschen’s 

list. “This visit has been an extension of the 

dialogue we’ve had with our teams here 

over the past four years. We’re closer to our 

associates and our properties in China. This 

is important because even in the absence 

of the senior leadership team, we have to 

be ready to make decisions concerning our 

operations in China. Although decisions 

will always be specific and applicable to a 

particular situation, having been exposed 

to the team and markets will enable us to 

do better,” he says. 

This aspect of the role of the Chinabased 

leader could become even more 

significant as China’s business advantages 

extend beyond market share. As the 

country increasingly becomes a more 

sophisticated business hub, MNCs in 

China may need to be able to export 

not only products, but made-in-China 

concepts across their global networks. 

“Asia is becoming a place for innovation. 

Companies are finding new ways of doing 

things; high-level executives need to have 

a keen view of what’s going on around 

them,” says Eymieu. 

Financial Times 

The development of the market has 

also helped Shanghai grow as a financial 

centre, and this is another point that 

demands global executives’ attention. The 

Roland Berger-EUCCC study highlighted 

this significant factor. 

“Shanghai’s status as a financial centre 

and attractive city for domestic and 

international financial institutions stems 

from the city’s proximity to markets, 

businesses, and clients,” notes the report. 

“As the city emerged as an internationally 

recognised business centre in one of 

the world’s fastest-growing economies, 

Shanghai has progressively become 

more lucrative for the service-driven and 

client-focused financial industry. During 

the qualitative interviews conducted 

to supplement the survey, executives 

underscored the importance of strong 

local economic performance.” 

The stock exchange has helped to 

nurture the financial industry. “The reopening 

of the Shanghai Stock Exchange 

(SSE) in 1990 provided an incentive 

for national and international banks to 

open local branches. Shanghai has a 

long-standing reputation as a financial 

marketplace and the government’s recent 

re-establishment of the exchange is clear 

strategic milestone. As of December 

2010, the SSE is the world’s sixth largest 

stock market by market capitalisation, 

which has had a positive effect on China’s 

COVER FEATURE 

local financial infrastructure,” says the 

report. 

“The fact that China is building Shanghai 

into a financial centre also attracts 

companies here. You see companies 

relocating from Hong Kong, which 

had previously been considered a more 

important Asian financial hub,” explains 

Bouée. 

The emergence 

of capital in Asia 

drives these trends. 

Suddenly Asia 

is becoming a 

capital force 

“The emergence of capital in Asia drives 

these trends. Suddenly Asia is becoming a 

capital force,” says Eymieu. “Whether it’s 

through M&A or whatever, in financial 

terms, Asia is more interesting, and finance 

is one of the CEOs’ key responsibilities.” 

Why Not? 

But with all these incentives to bring 

board members and executives to China, 

why haven’t more companies taken this 

step yet? 

The soft factors still play an important 

role for many, according to Bouée. “In 

terms of medical care, education and 

infrastructure, China needs to step up if it is 

to compete with Singapore. Other countries 

may also be more attractive in terms of 

individuals’ tax conditions.” 

Certain sectors are likely to be ahead of 

the curve, while others lag behind. The auto 

market’s early entry pressed market leaders 

for decisions ahead of others. “We moved our 

Asia Pacific and Africa regional headquarters 

from Bangkok to Shanghai in 2009 because 

we wanted to be where the future of the 

automobile industry is,” says Joseph Hinrichs, 

who is both president of Ford Asia-Pacific and 

Africa and chairman and CEO of Ford Motor 

(China), Ltd. “As we grow in China, this is 

where we need to be.” 

Van Paasschen sees the hotel industry 

in a similar light. “A hotel company is 


COVER FEATURE 

global in orientation. Our operations 

and associates are widely distributed— 

it’s not like we have one manufacturing 

department in one country, and sales in 

another. Actually, when you think about 

it, few other industries are like us. This 

means that we have to be further along the 

A study conducted 

by CTPartners over 

April to May 2011 

found that only 

4 per cent of Fortune 

500 companies 

have appointed 

directors from the 

Asia Pacific region 

curve when it comes to recognising and 

reacting to market trends.” 

Importing Leaders 

Still, the EUCCC’s study made it 

clear that many organisations do want 

to find a way to be sure that the Asian 

division benefits from the presence of 

their best leaders. But why import these 

leaders from other regions, given the 

disincentives? Can imported leaders really 

bridge this gap better than their local 

counterparts anyway? 

A study conducted by CTPartners over 

April to May 2011 found that only 4 per cent 

of Fortune 500 companies have appointed 

directors from the Asia Pacific region. The 

research revealed that 105 directors of 

Asian descent hold an accumulated total 

of 121 board seats in 104 companies, and 

of these 105 board members, only 22 live 

and work in Asia and hold board seats at 

21 Fortune 500 companies. Only nine of 

them are based in China. 

“We’ve seen mainly expats taking 

on leadership positions because at the 

moment they are a better fit for the job. The 

most significant reason for this is that this 

is still an emerging market, with emerging 

industries, and the levels of local experience 

remain inadequate,” says Eymieu. “The 

government is sometimes ambitious in 

stimulating new markets and industries 

by introducing schemes like the 12th Five- 

Year Plan, new licenses, investment and so 

on. But building a talent pool for the top 

positions requires people to learn over the 

years — this must evolve over time.” 

The pool of high-level candidates can 

grow over time to fill corporate positions 

that open up alongside rapid organisational 

growth. But Eymieu points out that it is not 

only MNCs that are growing and seeking 

the best talent available. 

“We also see a trend for private 

Chinese companies beginning to recruit 

international talent as well as local 

executives,” he explains. 

The east may be a more and more 

attractive option as more high-level, 

China-based positions are made available 

to the world’s best managers, but MNCs 

may have to fight harder to hold on to 

the best.

Richard Arnold has been the 

commercial director of Manchester 

United since November 2007. He is 

responsible for their sponsorship, 

media, merchandising and tours, 

at home and away, helping the club 

become the first Premier League 

team to top GBP100m turnover. 

SBR: How important is Asia - and China 

- for Manchester United? 

RA: The club is much bigger than its local 

fan base - if you brought all our fans 

together, they’d form the third largest 

country in the world, roughly on a par with 

America - so our international supporters 

are vital. 

There are 300 million plus Manchester 

United fans, and over 70 million are in 

China, our second home. The club has 

visited China 12 times since we first came 

in 1974. 

SBR: Are your fans in China very different 

to your fans at home? 

RA: There are differences when it comes 

to merchandise - their requirements for 

colours and sizes are a little different, and 

their preferences for certain shirt numbers 

vary. 

Similarities win through, though. 

Sir Bobby Charleston once told me how 

he watched a game in Hong Kong very 

late local time, with his family asleep on 

the sofa beside him. When United won, he 

wanted to scream and shout, and to avoid 

waking them he ran out onto the balcony 

before letting rip. 

He found the neighbouring balconies filled 

with local fans, all celebrating the win in 

the same style. 

SBR: What are your most profitable 

sources of income in China? 

RA: Globally, we have three key income 

streams, and it’s a pretty even split; we take 

about a third of our profit from each of media, 

match day, and merchandise. We don’t 

actually disclose the exact figures for the 

international breakdown of our business 

interests, but China plays a crucial role, 

and I can say that we’re seeing merchandise 

sales growing rapidly here. 

The Manchester kit is hugely important 

for us (and our JV partner Nike) in this 

market. We call it “the little black dress” 

of sportswear. 

SBR: How are you growing the brand, 

and as you grow, how will you continue 

to tap into that Asian market? 

RA: Creating a strong relationship with 

our fans is a vital part of our commercial 

strategy. We have to draw them closer to 

the club, and they have to feel closer to 

the club. Events and activities around the 

world help to keep this going, and we’re 

also developing our ability to contact the 

fan base and to stay connected using new 

media. The Facebook page of Manchester 

United has been the fastest-growing 

account in the history of Facebook. Our 

webpage is accessible in 326 countries 

in several languages, and is viewed by 

15–20 million visitors each month - most 

of them from outside the UK. We have 

also set up strategic sponsorships in media; 

the club has over 40 mobile and internet 

partnerships around the world. 

Our partners are very important for our 

growth. Local partners help us build local 

DIALOGUE 

The East is Red 

In Conversation with Richard Arnold 

relationships and activities. We pick them 

very carefully, and maintain a certain 

exclusivity within any given sector by 

working with the industry’s top players - for 

instance, in China, partners include Aon 

Hewitt in HR, Audi in auto, Nike in sportswear 

- and we collaborate on marketing 

campaigns in quite a unique way. Rather 

than handing over a bland set of rights 

or a logo, we work with the partners very 

actively to optimise the campaign’s success. 

Successful engagement drives all of this; 

it’s a virtuous circle. The more we can 

engage our fans, the more they will engage 

with us. 

SBR: Premier League clubs are famous 

for investing in talent on the pitch. Can 

you measure the return on your investment 

in a top player in terms of your 

commercial success? 

RA: There’s a lot of attention to the big 

sales in football, but what Manchester is 

really good at is nurturing talent. Many 

of the club’s big names were not famous 

before they came to us. The club turns 

them into stars - we’re not just buying the 

big names. That applies to our team off the 

pitch as well; developing their talent has 

helped us attain rapid growth. 

Even Sir Alex Ferguson would say that the 

club is greater than any one person. 

SBR: But how important is the team’s 

performance on the pitch as a driver for 

commercial success? 

RA: The club has over 130 years of history. 

During this period, there’s been a lot 

of winning, and now we’ve become the 

first of our peers to reach GBP100m commercial 

turnover. 

Still, it would be boring if we won all the 

time; it’s the uncertainty that makes sport 

compelling. 

I don’t think that hurts the brand. The club is 

bigger than one person, it’s bigger than one 

game - it’s even bigger than one season. 


FEATURE 

Human Error 

Research into American M&A failures could offer valuable lessons for maturing Chinese companies 


A 

study conducted by CFO Research 

Services and the world’s largest HR 

consultancy, Aon Hewitt, suggests 

that US companies are jeopardising 

the financial success of M&A deals by failing 

to make the most of human capital after the 

initial deal. 

Although the study focussed on US deals, 

Mark Arian, Aon Hewitt’s executive vice 

president and global corporate transactions 

practice leader, highlighted the study’s 

significance for Chinese M&As during his 

recent trip to Shanghai. He pointed out 

that China’s M&A environment could face 

problems similar to those encountered by 

the mature US market as cited in the study 

as it matures. 

Involving Human Capital 

The research, which involved a survey of 

315 US-based senior finance and human 

resource executives from US companies, 

found that several key aspects of human 

capital make a major impact on the 

financial value of a transaction. Over 70 per 

cent of the survey respondents believed that 

50 

the assessment and selection of leaders, the 

employee engagement of the combined 

workforce, and the presence of highperforming 

employees clearly contribute 

to the financial value of the organisation. 

Differences in company culture, and 

compensation and incentives were also 

highly important, while differences in 

national or regional culture and differences 

in staffing strategy were considered less 

crucial, but still significant. 

In short, HR was not involved in the deal’s 

execution to the extent that it should have 

been, according to the participants. Most 

agreed that greater HR involvement would 

have brought better results during risk control, 

integration and change management, and 

half believed that it would have improved 

results during integration phase. 

“To be valuable, HR must understand 

the investment thesis, and get involved 

in its execution. HR has to understand 

that growth and investment goals should 

be used to create appropriate, actionable 

plans,” says Arian. “But at the moment, 

that doesn’t happen. Even in the mature 

Figure 2. A substantial number of respondents identify room for improvement in their companies’ 

performance of a wide range of human capital related M&A tasks. 

In your opinion, how well did your company perform the following human capital related tasks in the course of its 

M&A activities in the past two years? 

Establishing the desired company culture 

Establishing, Establishing, communicating, and and measuring 

performance stardards standards across the the combined entity 

Pricing Pricin g human h um an capital assets, costs, 

and risks and into risks the into deal the deal 

Developing Developing a human a human capital capital strategy strategy for for the the 

transaction that that aligns with broader deal objectives 

Addressing the global aspects of workforce integration 

Ensuring workforce productivity and performance 

through the transition through the transition 

Communicating with employees (e.g., communications 

on transition timelines and decision-making rationale) 

Designing Designing and and implementing compensation 

and benefits and programs benefits programs 

Identifying and retaining key employees 

A recent study reveals that even in a mature market, a failure to leverage human capital 

could be threatening the success of some American deals. Source: Aon Hewitt 

24% 

23% 

26% 

34% 

33% 

36% 

38% 

38% 

43% 

0% 20% 40% 60% 

Percentage of respondents identifying “ room for improvement” 

US environment, HR is sometimes not 

delivering the goods that others in the 

company expect. It becomes a trip wire, 

threatening the success of the deal. When 

deals don’t work, it’s usually not because 

of the business strategy or the financials, 

but because of the human transactions.” 

An overwhelming majority of the 

surveyed executives felt that despite its 

vital role, human capital management is 

often neglected after a deal. Only 12 per 

cent of survey respondents felt that they 

had seen excellent performance following 

the transaction when it came to developing 

a human-capital strategy that aligns with 

the broader deal objectives, while 36 per 

cent said there was room for improvement. 

Translating for China 

These insights come at a time when Chinese 

companies are busy with both domestic and 

overseas deals. Last year, for the first time, 

the number of announced transactions 

topped the 3,500 mark, with a total value 

of over USD220bn, according to data from 

Thomson Financial and the Institute of 

Mergers and Acquisitions Alliance. The 

Zero2IPO Research Center found that 

Chinese companies had completed 622 

M&A cases in 2010, representing y-o-y 

growth of 111.6 per cent. In the same year, 

Chinese companies completed 57 cases of 

overseas M&As, an increase of 50 per cent 

from the previous year. 

But a large number of those deals are 

likely end in disaster – the consultancy 

group, Accenture, estimated that as many 

as half of China’s outbound acquisitions 

could fail, and result in an estimated 

Rmb300m (USD46.41m) of losses. 

Arian suggests that Chinese companies – 

especially State-Owned Enterprises - feel 

acutely aware of the risk, and current 

market trends can be seen as a reaction 

to past failures. Their behaviour seems to 

indicate an awareness of the HR factor, 

especially in terms of problems associated 

with integrating their teams and operations. 

However, rather than tackling the problems 


Announced Mergers & Acquisitions: 

China, 1993-2010 

Number of Transactions 

4.000 

3.500 

3.000 

2.500 

2.000 

1.500 

1.000 

500 

0 

Announced Mergers & Acquisitions: 

China, 1993-2010 

1993 

1994 

Number 

1995 

of Transactions 

4.000 

3.500 

3.000 

2.500 

2.000 

1.500 

(C) 2011 IMAA 

M&A in China is on the rise, and the market is starting to mature. 

head-on, they attempt to sidestep the issue. 

He points out that, at the moment, many 

companies involved in China deals may 

try to survive by dodging the complexities 

associated with full integration, and simplify 

their M&A by minimising the need for 

integration and sticking to simpler “bolt- 

1996 

1.000 

500 

0 

1997 

1993 

1998 

1994 

1999 

2000 

2001 

Year 

2002 

2003 

Number Value 

2004 

2005 

2006 

2007 

Source: Thomson Financial, Institute of Mergers, Acquisitions and Alliances (IMAA) analysis 

1995 

1996 

1997 

1998 

1999 

2000 

2001 

Year 

2002 

2003 

2008 

Number Value 

2004 

2009 

on” acquisitions where integration is not 

(C) 2011 IMAA 

necessary for co-operation. “There have 

been some attempts at integration in the 

past that didn’t go well - companies like TCL 

Thompson had bad experiences, resulting in 

the view that full integration, the effort and 

the risk, doesn’t always seem worth it any 

2005 

2010 

2006 

250 

200 

150 

100 

50 

0 

Vaule Value 

of Transactions 

(in bil. USD) 

2007 

Source: Thomson Financial, Institute of Mergers, Acquisitions and Alliances (IMAA) analysis 

2008 

2009 

2010 

250 

200 

150 

100 

50 

0 

FEATURE 

more. A bolt-on is easier to deal with, and 

requires less attention in dealing with complex 

factors such as human capital,” he explains. 

But despite appearances, this could be a 

step towards a more integrated approach, 

with a corresponding greater effort at 

making the most of human capital: “Over 

time, there would be opportunities to 

integrate, which could make this a stepping 

stone to fuller integration.” 

He points out that post-deal integration - 

leveraging talent, organisation, leadership 

and culture - will likely become more 

favoured as the market develops and 

becomes even more competitive, resulting in 

closer attention being paid to human capital. 

“This market is starting to mature. What 

that means is that while some companies 

have been experiencing rapid growth over a 

sustained period without pursuing M&As or 

really thinking about optimising the results 

of M&As through more careful management 

of human capital, the environment is getting 

tougher. This could mean that optimising 

a deal’s success by developing a real 

understanding of human capital issues will 

be not only desirable, but necessary.” 

Vaule of Transactions 

(in bil. USD)

FEATURE 

iPad Rules - For Now? 

Thanks to Apple Inc’s iPad, the tablet PC has quickly won converts around the globe – and China is no 

exception. But why do the iPad’s competitors stand a better chance of gaining market share in China? 

By Esther Kang 

THE TABLET PC MARKET IN MAINLAND CHINA is 

bursting at the seams. According to ResearchInChina, a 

leading provider of China business intelligence, the market 

size of the tablet PC in China was approximately 1.73 million 

in 2010 and is expected to reach 34 million in 2014. Since the iPad’s 

introduction into China last September, a slew of manufacturers – 

both domestic and foreign – have risen up to the challenge to claim a 

substantial portion of an increasingly potent market. As of February 

2011, more than 220 tablet PCs were available under 83 brands in 

China, and as consumer demand climbs at a vast rate, this number 

continues to grow. 

After all, they may have a better chance against the iPad here than 

anywhere else in the world. In 2010, the global sales volume of 

the Apple iPad exceeded 14 million, claiming over 80 per cent of 

market shares in the entire tablet PC market. In China, however, 

the Cupertino-based computer giant held a relatively weaker 

stranglehold, claiming 70.2 per cent of the tablet PC market share, 

according to Research and Market’s China Tablet PC Market Survey 

Report, 2010-2011. 

In Q1 2011, iPads climbed to 78.3 per cent in China’s market 

share, according to intelligence provider Analysys International. 

The number fell four per cent in the following quarter, other tablet 

PC brands gaining momentum in China. 

What accounts for this wide margin between the iPad’s global and 

China sales? And does it mean that Apple’s counterparts, such as 

Samsung, Motorola and HTC, do stand a better chance in China? 

Taking Tablets 

The rapid rise of the iPad in China has not only proven the Chinese 

consumer’s appetite for tablet computers – it has also provided the 

opportunity for other brands to ride alongside Apple on the wave 

of success. 

Beijing Ereneben Information Technology Co Ltd first launched 

its tablet PC product, Ebeneren (Eben for short), in January 2011, 

several months before Apple’s official US release of the iPad. 

“When our product was new in the market, people didn’t know 

what to call it because tablet computers were such a new concept,” 

says Fang Li Yong, founder and chief operating officer of the 

Beijing-based company. “But three months later, when the iPad 

was launched [in the United States], everyone knew what it was.” 

Not only did the product - priced at Rmb4,980 (USD773) - start 

to gain recognition, Ebeneren also saw its initially modest sales 

go through the roof. 

“The iPad helped speed up the sale of our tablet by ten,” Fang 

52 

says. “Before the launch of the iPad, we sold about 1,000 units a 

month. Two months following the launch, we sold more than 10,000 

a month.” 

And now, after nearly two years in the market and three 

generations of the Eben series under its belt, the company 

sells 30,000 units monthly, he says. According to intelligence 

provider Analysys International, Eben, a leader in business panel 

computers, grasped 4.8 per cent of market share in Q2 2011, the 

largest share after the iPad and iPad 2. 

Carving a Niche 

That’s not to say that Eben’s success in the Chinese market hasn’t 

been earned on its own merit. 

While many companies compete head on with Apple by offering 

media and entertainment panels with similar functions, Ebeneren’s 

tablet PC line targets high-end businessmen and executives primarily 

“for easier note-taking during meetings and email-sending” with 

its handwriting recognition technology, Fang says. Eben is not too 

concerned about Apple domination: “We learn a lot from the iPad, 

but we don’t really think of it as a competitor,” he says. 

Meanwhile, the Motorola XOOM, which was launched in China 

this spring, claims a different kind of edge against its foreign 

counterparts in the Mainland. 

The Motorola XOOM WiFi model released in China ships with 

a number of apps for popular Chinese services, including QQ, 

Sina Weibo and Tudou’s video sharing service. In addition, it 

includes a tablet-optimised version of Motorola’s China app store, 

SHOP4APPS, which offers many more China-specific apps for 

free or paid download, says William Moss, Motorola Mobility’s 

director of communications for North Asia. 

“This is not something we’ve done for just the tablet,” Moss says. 

“Motorola has a long history of releasing devices designed with the 

China market in mind.” 

Trailing just behind the ranks of Eben, Samsung and ASUS, 

Motorola claimed 2.2 per cent of the tablet PC market share in Q2 

2011, an impressive sales rate given that the XOOM was released in 

that same quarter. 

Dell Inc has also jumped on the bandwagon, keen to target the 

Chinese customer. Its newly released Streak 10 Pro, a low-priced 

Android tablet with similar customised Chinese applications, is 

available exclusively in China. 

Patent Battlefield 

Tablet makers like Eben may also be dodging a bullet by carving 


Companies such as Eben target a specific niche in the market. Eben’s 

line of tablets are created for executives. 

their own niche. Treading on Apple’s toes has already proven 

dangerous for others. 

A messy showdown between Apple and Samsung Electronics was 

played out on the world stage in April when Apple sued the Seoulbased 

company for patent infringement regarding the Galaxy line of 

smart phones and tablets, claiming the devices resembled too closely 

Apple’s iPhone and iPad. In response, Samsung countersued Apple 

with its own claims that Apple is infringing on the company’s patents. 

Samsung is not alone in taking heat from Apple. HTC, which 

released its first tablet device, the Flyer, in March, was accused of 

infringing five Apple patents related to software architecture and 

user interfaces, hardware for touch screens and movement sensors, 

all of which claims were denied by the Taipei-based electronic giant. 

The No-Names 

One collective competitor not at the receiving end of Apple’s 

lawsuits - perhaps unsurprisingly - is China’s white-box 

manufacturers. Also known as no-name, emulation or copycat 

products, white-box tablet PC brands flocked into China’s market 

even before the release of the iPad in the country. 

As of February 2011, more than 220 

tablet PCs were available under 83 

brands in China, and as consumer 

demand climbs at a vast rate, this 

number continues to grow 

Their successes so far cannot be denied. Approximately 

1.9 million units of white-box tablets were shipped worldwide 

in Q4 2010, up from 567,000 in the previous quarter. White-box 

tablets, which range from USD75 to USD300, tend to appeal to 

price-sensitive consumers, particularly students. With Chinese 

white-box vendors accounting for 44 per cent of those shipments, 

the Mainland naturally remains their biggest market. 

The future of these clone products still remains unclear. While 

FEATURE 

analysts at Research and Market predict their continued success, 

Ebeneren’s Fang says he is not concerned about their tightening 

hold on the market. 

“During the early stages, white-box brands have a large market 

share, but when the market comes to mature, they will eventually 

disappear,” he says. “Most people care about quality and service, 

and no-name brands tend to fail on those fronts.” 

Tides Turning 

Another indication of Apple’s shaky grip on the market is the 

consumer’s shifting software preferences. According to Analysys 

International, iOS – Apple’s mobile operating system for the 

iPad – accounted for 74.3 per cent in Q2 2011 in China, while 

Google’s open-source Android system claimed 24.6 per cent, a 

modest number that is growing every quarter. 

“In the first quarter, even the Android 3.0 did not have a direct impact 

on the iOS,” said Sun Peilin, an analyst at Analysys International. “But 

in the next phase, the iOS will be further diluted by the trend of the 

Android as its quality and experience becomes enhanced.” 

This marks a window of opportunity for most of the iPad’s 

competitors and white-box tablets, most of which operate on 

Android. Research firm Informa predicts that Apple’s market share 

will fall to 39 per cent in 2015, by when Android market share 

will have grown to 38 per cent. Apple may need to watch its back. 

“From 2013, as cheaper and more advanced Android tablets 

enter the market, we forecast that sales will pick up considerably, 

eventually surpassing iPad sales in 2016,” analyst David McQueen 

said in a statement. 


PROFESSIONAL OPINION 

Playing Anti-Monopoly 

China’s Anti-Monopoly law is not as restrictive as MNCs may have feared 

By Peter Wang 

Earlier this summer, the Ministry of 

Commerce placed restrictions on the 

approval of a merger between two 

Russian potash producers – Silvinit 

and Uralkali – even though the transaction was 

entirely offshore and the two companies do not 

appear to have substantial operations in China. 

Many MNCs involved in M&A activity 

ranging from relatively small onshore 

acquisitions of Chinese entities or assets 

to multi-billion dollar global deals are now 

finding that Chinese merger approval has 

become a formidable and time-consuming 

hurdle to closing. 

The Beginnings 

Earlier this year Unilever was fined Rmb2m 

in connection with public statements about 

impending price increases, albeit under 

the Price Law. All of this provides further 

indication that China is serious about 

applying its anti-monopoly law (AML) to 

analyse any business activities that may have 

an effect on Chinese customers, consumers, 

and industry. 

The AML took 13 years to come to fruition, 

and is the first domestic antitrust/competition 

law. It makes any conduct affecting the 

Chinese market subject to anti-monopoly 

scrutiny – even if that conduct occurs 

entirely outside of China. Among other 

things, it requires that significant companies 

with revenue of Rmb10bn (USD1.55bn) 

worldwide and Rmb400m (USD62.16bn) 

in China must receive government antitrust 

approval before going ahead with most 

M&A, depending upon the China revenues 

of the counterparty. The AML’s goals focus 

on: anticompetitive agreements or cartels; 

abuses by firms with dominant market 

positions; and review of M&A. 

Depth and Breadth 

The AML also covers non-competition 

issues such as the competitiveness of 

SMEs; environmental concerns; energy 

conservation; foreign trade; and national 

economic development, as well as a “national 

54 

security” review of foreign acquisitions 

of Chinese companies in key sectors. The 

law is focussed on the country’s unique 

economy and government structure and 

takes into account the ongoing shift from 

a state-controlled economy to a market 

based economy, with large segments of the 

economy still in the hands of SOEs. The 

law provides that “the State formulates and 

implements competition rules compatible 

with the socialist economy, strengthens and 

perfects macro regulation and control, and 

completes a unified, open, competitive and 

orderly market system.” 

The most visible area of AML enforcement 

has been merger review by the Ministry of 

Commerce, which has reviewed more than 250 

transactions since August 2008. Most of these 

M&A were approved unconditionally, with 

only eight negative decisions: seven mergers 

approved with conditions, and only one 

rejected (Coca-Cola’s attempted acquisition of 

Huiyuan, a Chinese juice maker). Although all 

eight negative decisions – which MOFCOM is 

required to publish – have involved MNCs, a 

good number of the approved cases reportedly 

have involved only domestic firms, apparently 

including transactions between significant 

state-owned enterprises. 

Instead, the primary concern for MNCs 

has been with procedural delays during 

review, which increasingly requires three to 

sixth months to complete, and even longer in 

some complicated or high-profile cases. As 

a result, China already has become the last 

stop on global antitrust review and is holding 

up the closing of many high-visibility global 

transactions. 

In Court 

Contrary to outside expectations, China 

is more open to private antitrust lawsuits 

than any other major country aside from 

the United States. So far most of the 

publicly reported cases have been filed by 

Chinese complainants against large Chinese 

companies. The courts appear to have been 

taking a conservative approach so far, with 

most cases resolved in favour of defendants. 

Although foreign companies complain of 

growing problems doing business in China, it 

can be argued that China actually has shown 

considerable restraint in its application of the 

AML, which could have become a blunt tool 

against foreign firms. Indeed, even the muchnoted 

delays in the MOFCOM merger review 

process often are attributable in significant 

part to companies initially failing to address 

proper attention to the Chinese antitrust 

review process, filing in China only well after 

doing so in other countries and relying on 

one-size-fits-all filings, rather than taking the 

time to carefully analyse and gather data on 

the Chinese market in advance and treat the 

MOFCOM process as a top priority. 

Of course, it is possible to find reasons to 

criticise some of the published MOFCOM or 

court decisions, as well as with the rules and 

regulations issued by enforcement agencies 

under the AML. But China stands in a much 

better position with respect to the AML than 

did jurisdictions such as the United States or 

Europe only three years after their antitrust 

laws first were passed, and indeed many 

of the MOFCOM decisions that outside 

observers have criticised appear to be based on 

antitrust theories also found in decisions from 

those and other more experienced antitrust 

jurisdictions. In any event, the likelihood that 

Chinese antitrust enforcement will continue 

to develop ahead of pace and largely will be 

consistent with still-evolving international 

norms is substantial, and something to look 

forward to. 

About the Author: Peter Wang is a partner 

based in Jones Day’s Shanghai and Beijing 

offices and leads the firm’s China Anti 

Monopoly practice. He and Jones Day’s 

China antitrust team recently co-authored the 

first English-language book to be published 

on the subject of the Anti-Monopoly Law 

in China, and have assisted clients in many 

AML cases in China and the US. 


Water World 

SBR: Severe droughts in China, the 

Three Gorges Dam headlines and the 

prioritisation of water conservation in 

the most recent Five-Year Plan have all 

drawn attention to the importance of water 

conservation in this country. But how 

well do China’s business community and 

government understand these issues? 

EF: The use and conservation of water are 

prominent themes in China’s most recent Five- 

Year Plan, which shows the government’s 

appreciation of their importance. Heavy 

industry companies are also setting relevant 

goals, and seeking support from companies 

such as Nalco. 

But compared with carbon emissions, climate 

change, and other significant environmental 

issues, I’d say that water is still less understood, 

and in fact, there’s still ongoing debate relating 

to the extent and the timescale of problems 

associated with poor conservation. 

Nonetheless, these issues are rapidly 

becoming better understood, because the 

situation is getting worse - it’s indisputable. 

Water tables are declining, there are 

significant water-related health problems, 

industrial facilities are unable to operate 

at full capacity, and the drought is causing 

energy shortages in central China. 

SBR: How can companies manage the 

risks associated with unpredictable water 

shortages? 

EF: Audits and the adoption of best 

practices help companies reduce water 

VIEW FROM THE TOP 

Nalco’s CEO Erik Fyrwald explains why water conservation must be high on China’s agenda 

Erik Fyrwald is CEO of Nalco, a Fortune 500 company specialising in sustainable 

practices and water conservation. As central China faced its worst drought in 50 

years, he came to Shanghai to speak about the future of water conservation in China. 

consumption and manage their resources 

in the event of sudden, unforeseen 

shortages. 

We can also help companies prepare for a 

severe shortage. Even if a company is only 

aiming to make a meaningful difference 

in their day-to-day use of resources, the 

experience will make them better able to 

operate under stressful and exceptional 

circumstances, and also reduces energy 

consumption and lowers costs. 

SBR: Will it be possible to ensure 

that companies in China meet the 

government’s target of cutting water 

consumption per unit of value-added 

industrial output by 30 per cent? How 

ambitious is this goal? 

EF: I don’t see any other goal that 

matches this one. It’s a cutting-edge 

commitment to environmentally sustainable 

water production. This government has 

an exceptional capability to make huge 

decisions like this. 

Now, following up with details and actions 

will prove that these goals are to be taken 

seriously, even though they are ambitious. 

I think more details about the plan’s 

implementation are forthcoming because 

the Chinese government has thought this 

through very well. They will have to make this 

work - it’s necessary for agriculture, industry 

and continued economic development. It’s 

not optional. 

SBR: Does Nalco face much domestic 

competition in China? 

EF: It’s a fairly new area for China, though 

there are a lot of smart people here committed 

to working in the field. In contrast, we have 

over 80 years of experience, and every day 

we work with a team of 400 service engineer 

experts here to refine that experience and make 

it relevant to the China situation. 

SBR: How do international and domestic 

companies compare in terms of their use 

of water? 

EF: Since they have more experience, 

MNCs often use less water per unit of 

production. But the rate of improvement for 

Chinese companies is incredible. Leaders of 

state-owned enterprises (SOE) are already 

speaking about a ‘green GDP’; there is a 

tremendous shift in attitudes, and significant 

investments in technology too. 

One local company, Chem China, even 

announced zero discharge goals to be 

implemented within five years for all their 

sites. I haven’t heard of any other company 

in the world adopting this goal - it really is 

another cutting-edge target. 

SBR: Do you do much work with China’s 

small- and medium-sized enterprises 

(SMEs), as well as the big MNCs and SOEs? 

EF: Not so much at the moment, but we may 

do so in the future. We have some solutions 

that are particularly useful for SMEs, and 

we’re developing new ways of helping them. 

Many of these solutions relate to the kind 

of technology we’re offering. However, while 

sophisticated technologies can be a great help, 

they’re no silver bullet; these SMEs need to 

be trained so that they know and understand 

conservation processes. Providing technology 

with service engineers will make a difference 

in the long run. 

At the moment, we’re building up our 

numbers, hiring more engineers and training 

them to become water specialists. Once we 

have more people, we’ll be in a better position 

to do more work with smaller- and mediumsized 

companies. 


56 

INDUSTRY REPORT ExEcuTIvE EducaTION 

Growing Up 

As the China’s market begins to mature, international MBA, EMBA and executive education 

providers already face tough competition. How will they cope if rumours of an international 

business education bubble are justified? 


INTERNATIONAL MBAS, EMBAS 

and executive education appeal to 

potential students with the promise 

that such an education equips them 

better to succeed in the world of business. 

The lessons learned are supposed to help 

them excel at work, or make them stand out 

in the hunt for a new position in a highly 

competitive market. This promise justifies 

the price tag, and in some cases, time away 

from a salaried position. 

But over the last few months a spate 

of articles questioned whether such a 

promise is enough to fill the growing 

number of classrooms and lecture theatres 

as new business schools open their doors 

and more established schools expand. 

“The business education market has 

matured, and it’s going through a shakeout,” 

says Peter Tufano, who recently 

became dean at the Saïd Business School 

of Oxford University after his time as 

Sylvan C Coleman Professor of Financial 

Management at Harvard Business School. 

The business 

education market 

has matured, and 

it’s going through a 

shake-out 

“There has obviously been a proliferation 

of business schools over the last decade 

and there is some evidence now of failing 

demand for MBAs, which may hit schools 

that heavily depend on MBA courses for 

their income,” says Alex Fraser, chief 

operating officer (COO) of Cass Business 

School. 

Although discussions have generally 

focussed on the more mature American 

and European markets, Asia is by no 

means cut-off from the debate, or at least 

its consequences. A business education 

bubble — whether or not it actually 

materialises — could impact Asian and 

Asia-based schools, and cause them to 

reassess their own unique selling points 

for potential students, and evaluate their 

global position. 

Blowing Bubbles 

There are several versions of the bubble 

argument. Some simply note that business 

education comes at a high price in terms 

of both time and money, and it may 

seem difficult for a potential student to 

guarantee the return on their investment 

in a commodity that can seem “quite 

intangible,” in the words of Janet de 

Silva, dean at the Richard Ivey School of 

Business, herself a staunch defender of 

the value of a good education. 

“I came from the business side, and I 

didn’t consider a traditional MBA for 

myself because of the opportunity cost. 

The opportunity cost of leaving a good 

job to do a conventional, full time MBA is 

very high today. Companies usually won’t 

pay for it, either,” says Paris de L’Etraz, 

associate dean of Blended Programmes 

at IE. 

Moreover, a sceptic might also question 

whether or not some of the benefits — 

such as the development of a powerful 

business network, or the chance to gain 

practical business experiences — could 

be acquired whilst working, along with 

the other benefits associated with paid 

employment. 

Another point is that there may be a 

danger of qualification inflation. “In the 

US today, a bachelor’s degree no longer 

matters. It seems that to get ahead, you must 

have a master’s degree,” says Ilian Mihov, 

deputy dean for Faculty and Research 

at INSEAD. With higher qualifications 

becoming a standard on a good candidate’s 

CV, an MBA no longer guarantees a plum 

job. 

It takes more for a particular qualification 

to stand out in the market today. “Yes, 

we believe there is an education bubble 

because there are too many schools offering 

too many programmes without clear 

differentiation,” says L’Etraz. 

Some arguments are more pertinent in a 

market like China, where growth is so rapid 

that a year away from work could be an age 

in terms of the development of an industry 

or a business. 

Chinese School 

But there are reasons to think that 

potential students from China might not 

be so affected by these issues. 

There is a growing supply of business 

education options in China. “China is 

growing. Before 2000, there were about 

30 business schools here. Now there are 

236. The education business is booming,” 

says James Chen, PMP, assistant dean at 

the Hult International Business School. 

Others are keen to enter the market; and 

high-profile newcomers such as NYU Stern 

are in the process of setting up. 

There is also a huge demand for talent 

across Asia. “Asia needs trained and skilled 

managers. Right now, demand far exceeds 

supply,” says Mihov. 


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58 


“In our opinion, Asia is the fastest 

growing region in the world. To cater to 

the ever-increasing demand for qualified 

talent in this region, business education 

will remain a key provider. We are noticing 

the same trends in our admissions as well,” 

says Puneet K Narula, deputy director 

at the Nanyang Executive Education 

Centre, part of the Nanyang Technological 

University in Singapore. 

In China, there is a shortage of managerial 

talent, especially in the ranks of middle 

management. In this case, having a 

business education could set someone 

apart among a group of peers and could 

provide an edge when it comes to winning 

a position, and performing the role. 

“According to McKinsey, China needs 

75,000 more professional managers, and 

there’s also strong demand in Hong Kong, 

Singapore and India,” explains Chen. 

“Although we think we see a maturing 

market … at the same time, we think we see 

a demand for globally capable managers 

that far outstrips the supply in the mainland 

and in other economies, a gap that has, for 

at least a decade, been a major headache 

for enterprises here. We believe we’re in 

an unusually promising space,” says John 

Van Fleet, assistant dean and executive 

director of the Global Executive MBA 

(GEMBA) of the University of Southern 

California. 

“The pool of people needing training 

outside China may not be growing; but it 

is here,” says Patrick Moreton, associate 

dean and managing director of the 

WUSTL Fudan EMBA Programme. 

Growing demand in Asia and China is 

likely to impact providers of international 

business education on several levels. 

Schools around the world may be keen to 

target students coming out of China; and 

schools based in or with some facilities or 

activities in China may be able to use that 

connection as a leverage to balance more 

sluggish demand in other regions. 

Many schools outside Asia recognise the 

importance of the China pool of students. 

Professor John Shields, who leads the 

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EMBA Rankings 2010 

Current rank School name Country Salary increase (%) 

1 Kellogg / Hong Kong UST Business School China 69 

2 Columbia/London Business School U.S.A. / U.K. 109 

3 Trium: HEC Paris / LSE / New York University: Stern France / U.K. / U.S.A. 71 

4 Insead France / Singapore / U.A.E. 75 

5 University of Chicago: Booth U.S.A. / U.K. / Singapore 83 

6 London Business School U.K. 90 

7 IE Business School Spain 144 

8 University of Pennsylvania: Wharton U.S.A. 68 

9 Duke University: Fuqua U.S.A. 55 

10 Chinese University of Hong Kong China 64 

10 City University: Cass U.K. 100 

12 IMD Switzerland 71 

13 UC Berkeley / Columbia U.S.A. 63 

14 Kellogg / WHU-Otto Beisheim School Germany 75 

15 Columbia Business School U.S.A. 65 

Source: Financial Times 

Table Note 

Footnote: Although the headline ranking figures show changes in the data year to year, the pattern of clustering among the schools is equally significant. Some 270 

points separate Kellogg / Hong Kong UST Business School at the top, from the school ranked number 100. The first nine business schools, from Kellogg / Hong Kong 

UST Business School to Duke University: Fuqua, form the top group of schools. The second group is headed by the Chinese University of Hong Kong, which would 

need to increase its score by 9 points in order to move up a group. Top of the third group is the Rice University: Jones which is 6 points behind Boston University 

School of Management. Some 45 points separate the top and bottom schools in this third group. The fourth group is more spread out, separated by 70 points. 

Executive Education Rankings 2011 

Rank in 2011 School Country 

1 Duke Corporate Education U.S.A. / South Africa / U.K. / India 

2 HEC Paris France 

3 Fundação Dom Cabral Brazil 

4 Harvard Business School U.S.A. 

5 Esade Business School Spain 

5 IMD Switzerland 

7 Iese Business School Spain 

8 Boston University School of Management U.S.A. 

9 Insead France / Singapore 

10 Center for Creative Leadership U.S.A. / Belgium / Singapore 

11 University of Pennsylvania: Wharton U.S.A. 

12 Cranfield School of Management U.K. 

13 Ipade Mexico 

14 Essec Business School France / Singapore 

15 Babson Executive Education U.S.A. 

Global MBA Rankings 2011 


Current rank School name Country Salary percentage increase 

1 London Business School U.K. 132 

1 University of Pennsylvania: Wharton U.S.A. 123 

3 Harvard Business School U.S.A. 116 

4 Insead France / Singapore 108 

4 Stanford University GSB U.S.A. 115 

6 Hong Kong UST Business School China 142 

7 Columbia Business School U.S.A. 117 

8 IE Business School Spain 136 

9 Iese Business School Spain 138 

9 MIT Sloan School of Management U.S.A. 121 

11 Indian Institute of Management, Ahmedabad (IIMA) India 152 

12 University of Chicago: Booth U.S.A 109 

13 Indian School of Business India 187 

14 IMD Switzerland 89 

15 

Table Note 

New York University: Stern U.S.A. 119 


Although the headline ranking figures show the changes in the survey year to year, the pattern of clustering among the schools is also significant. A total of 210 points separate 

the top school from the school at number 100 in the ranking. The top 10 schools, from the London Business School and University of Pennsylvania: Wharton to Iese Business 

School, form the leading group of world-class business schools. A total of 41 points separate LBS and Wharton from Iese. The second group is headed by the Indian Institute of 

Management, -Ahmedabad, which scored 69 points more than Lancaster University Management School, leader of the third group. The fourth group, which includes schools ranked 

from number 74 to 100, is headed by Purdue University: Krannert and University of Strathclyde Business School. 


60 


have to be in Asia, especially in China, both 

because of its importance as a market for 

coursework students and because of the 

rapidly increasing prospects for high level 

research engagement across the region.” 

Now others are beginning to understand 

this too. 

“Cass is looking to develop its 

international presence – like all business 

schools,” says Fraser. 

“A school’s international strategy is 

vital,” agrees Nigel Banister, chief global 

officer of Manchester School of Business, 

which has seven executive centres in 

Manchester, Shanghai, Dubai, Miami, 

Hong Kong, Singapore and Rio de Janeiro. 

China opportunities become even more 

attractive when other economies are less 

vibrant. A stronger focus on the China 

market can help counter difficulties 

elsewhere. Banister says, “Since we 

operate in many parts of the world, we 

are somewhat cushioned in the event of 

a slowdown in one region — as there has 

been recently in Europe and Dubai. Since 

other countries were less affected, we’re 

less likely to be affected globally.” 

He has noted widespread interest in 

globalising educational institutions — 

industry conferences providing advice 

on the subject are becoming increasingly 

popular, for example. “Schools are very 

keen on globalisation, but their leaders 

might not have the appropriate background 

to drive that move.” 

The Difference 

Within China, mounting interest in 

business schools in the country and the 

subsequent availability of numerous 

options for potential students is driving the 

differentiation of schools and the courses 

on offer. Different institutions are working 

hard to develop new business models, their 

faculty, course structures and content as 

they look to find their own distinct — and 

lucrative — niche in the market. 

“Given China’s important role in today’s 

global economy, Kellogg recognises the 

demand for management education in 

the region and, as such, understands that 

competition is high for attracting the 

best and brightest students to the Kellogg 

community,” says Paul Christensen, 

associate dean and director of global 

programmes at the Kellogg School of 

Management at Northwestern University. 

Recruiting the best faculty is a major 

challenge, and the variety of ways in 

which schools find a solution to this is 

a good illustration of their increasingly 

inventive approaches. 

When it comes to faculty, schools 

have to compete with both institutions 

within China and the lure of academic 

opportunities outside China. Some are still 

concerned that research facilities in China 

fall short of their requirements. Another 

Some are still 

concerned that 

research facilities 

in China fall short of 

their requirements 

issue in the ongoing academic debate in 

China is that there are fewer opportunities 

to participate in conversations with peers 

within a smaller academic community. 

“The core of a good business school is 

a faculty that teaches and does research, 

and students want the best available,” 

says Mihov. “But it’s not easy to achieve 

this — good faculty members want to 

exchange ideas; they want to be present 

where knowledge is created. It is difficult 

to establish an active school when it 

is located very far from the centre of 

research activity.” If a school can gather 

enough momentum to create its own 

community and to attract new staff, it 

may move past this stage, as Mihov feels 

INSEAD has. 

Others might have to look for more 

creative solutions. Professor Howard 

Ward is the president of the new Nordic 

International Management Institution 

(NIMI) in Chengdu, Sichuan. The school 

has worked out specific arrangements to 

attract and retain faculty at what they 

describe as Western China’s very first 

real international business school. The six 

shareholders in the new private institution 

are former colleagues from the China 

European International Business School 

(CEIBS). “They’re old China hands, who 

have already developed a love of China as 

well as an understanding that this is the 

place to be for business,” says Ward. But 

they also make practical arrangements 

to facilitate their teaching at NIMI. The 

school arranged and designed teaching 

blocks such that staff can also hold a 

full time position elsewhere. This allows 

prestigious faculty the time and money 

to choose to teach at a newly established 

school whilst maintaining their positions 

at other academic powerhouses. 

A part-time structure is a tried and 

tested formula that attracts busy students, 

especially many senior executives, who may 

need to maintain full time employment 

during the course of their MBA programme. 

Other options — besides a full-time 

programme — include alternatively 

structured part-time courses, and “blended” 

courses, combining different approaches 

such as face-to-face learning and online 

classes also have their own particular appeal 

to the professors involved. 

Executive education courses on specific 

topics are another flexible option, but they 

are sometimes considered much more 

challenging for the professors. “There’s very 

high pressure to see tangible learning results 

from these short courses – participants want 

to really feel the value,” explains Moreton. 

“Teaching open-enrolment courses is 

therefore considered the hardest.” 

Revising the Classics 

In addition to cultivating unique selling 

points with these various strategies, many 

schools feel pressure to highlight the more 

established selling points as their industry 

becomes increasingly competitive in China. 

The quality of the entire teaching 

experience, including faculties, facilities 

and content, remains very important 

to students who are considering this 

investment. A strong brand also exerts a 

strong pull, partly because it is associated 

with quality, and because in financially 

uncertain times, the aspects of a quality 

education that endure — the knowledge 

gained from studies, the kudos of a strong 


62 


The challenges facing China’s business 

schools include attracting both top students 

and top faculty. 

Source: Nanyang Technological University 

China’s business community recognises 

Chengdu as a business hotspot. Many of 

the Fortune 500 are active in the city; more 

are on their way, and existing operations are 

growing rapidly. 

However, it is still an emerging business 

hub, and the city is not yet equipped in 

terms of the services and facilities available 

to the business community. 

Six former professors of the China 

European International Business School 

(CEIBS) spotted an opportunity. The rapid 

expansion of business operations in the 

city resulted in an acute need for effective 

managers with business acumen — the 

talent pool won’t necessarily expand at the 

same rate, and it can still be difficult to lure 

talent from elsewhere in China or overseas. 

But there was no one in the city providing 

international business qualifications. 

In March 2011, the Nordic International 

Management Institution (NIMI) opened 

its doors, and the six professors became 

shareholders in what they consider to be 

Chengdu’s first truly international business 

school. 

“Chengdu is where it’s all happening,” 

says Professor Howard Ward, NIMI’s 

brand and a powerful alumni network — 

may become particularly effective selling 

points. 

In terms of both the quality of the 

learning experience and branding, schools 

based in or working with the China market 

are trying hard to outdo one another. 

For example, the battle of the business 

school brands is apparently becoming 

increasingly intense. 

Although the Saïd Business School 

was established relatively recently, “Our 

attachment to a world class university 

is very important,” says Tufano — the 

Oxford name is a link to both a well- 

respected brand and an extensive alumni 

network. 

In China, it’s no different. “An affiliation 

with top tier schools in China brings 

certain benefits,” says Moreton. “In our 

case, the Fudan brand might act as a kind 

of gateway, though we still have to build 

our own brand.” 

Van Fleet identifies this as one of the 

USC GEMBA course’s key strengths. 

“USC has, without a doubt, the strongest 

Asia-wide alumni network of any Western 

academic institution, and our local 

partner, Shanghai Jiaotong University, 

is a top-five academic institution in the 

A Western Education 

As China’s east coast becomes increasingly saturated with top business schools, six entrepreneurial academics go west 

to set up Chengdu’s first international business school 

president. He expects that this could be the 

beginning of a trend for business schools to 

expand further into China’s emerging cities. 

“We want to be the CEIBS of the west, and 

we do expect that others — like CEIBS — 

will also make a similar move soon.” 

NIMI offers EMBA and executive 

education courses, and there are also 

plans to develop a business PhD suitable 

for executives. Some of the teaching will 

be structured in short blocks, allowing the 

school to arrange for prestigious visiting 

faculty to teach despite their full time 

contracts elsewhere. There will be a special 

focus on key sectors such as the auto 

industry, green energy, retail and marketing 

and communications, with dedicated 

“Centres of Excellence” to lead applied 

research programmes. 

Although at this point, the school does 

not have the necessary accreditation to 

award its own degrees, they will work 

closely with local partners to develop an 

international EMBA and have already 

signed an agreement with Nyenrode 

Business School in the Netherlands to 

launch a joint PhD degree programme at 

the end of this year. “CEIBS started out 

in the same way, and later won official 

support,” notes Ward, who remains a great 

admirer of the CEIBS success story. 

As the project gets off the ground, the 

school will have to tackle all the usual 

challenges faced by a new institution, but 

Ward is optimistic. The professors are 

already well known to many in China’s 

business community, thanks to their earlier 

careers — many of China’s multinational 

managers are former students — and they 

hope this will help establish their brand 

and build constructive relationships with 

companies in the area. They are working 

to expand this network by conducting 

for free a series of business lectures in 

Chengdu city. 

The school is also associated with the 

Nordic City of Living and Learning 

project, part of a wider drive to develop 

Chengdu as a garden city. It is hoped that 

the project’s connections with European 

institutions will pull in overseas students 

as well as those who are already settled in 

the region. 

Ward looks forward to getting started 

and making their mark. “We want to be 

recognised as No. 1 in Western China.” 


PRC. The combined strength offers an 

unmatched alumni network. We have one 

of the most diverse cohorts of students in 

any programme in Asia, driven in large part 

by USC’s alumni strength in the economies 

region-wide.” 

All this is a special challenge for the 

many schools that are just entering the 

competitive market. 

“Young schools are very nimble, but they 

do face challenges in establishing their 

name and attracting top-notch faculty. If 

you can get the money you can build the 

buildings, but you need the staff to make 

that work,” says Tufano. 

These factors can also play out in a 

different way for different kinds of courses; 

for example, in the case of executive 

education courses; “A degree provides 

some affiliation with a brand, but a short 

course doesn’t do that,” says Moreton. “So 

people must have other tangible learning 

results to feel the real value. That means 

they may place a higher premium on 

faculty experience. For this reason — the 

exacting learning-outcome demands — 

open enrolment courses are considered the 

most difficult for teachers.” 

But however long a school has been 

established, and whatever kind of courses 

are on offer, the competition and the 

pressure to respond to that competition 

remains a common concern. 

Bursting Bubbles? 

There are many academics who would 

still deny that the business education 

bubble really exists. “Education is a very 

valid form of investment. You invest in 

yourself for a return that only you can 

justify. Does good education guarantee 

good prospects? Not always. But, without 

good education, you’re leaving it even more 

to chance,” says De Silva of the Richard 


Ivey School of Business. This way of seeing 

the investment is likely to persist, bubble 

or no bubble – especially given that the 

FT ranking tables still demonstrates that 

these qualifications bring substantial salary 

increases. 

Others admit that there may be problems, 

but point out that they are not yet critical 

at the regional level; “The ‘business 

education bubble’ may happen at the 

global level, but business education 

in China is still in the early stage of 

development,” says the AEMBA’s Dr 

William Hua Wang, associate professor 

and China area manager of Euromed 

Management École de Marseille. 

But even if this view wins through, and 

the bubble proves to be all hot air, the 

business schools’ increasing focus on 

China is not likely to end – and fear of a 

bubble or even speculation could still be 

enough to drive these trends.

COUNTRY FOCUS 

NETHERLANDS 

Business is Blooming 

Business is looking good for Dutch companies in China, and Chinese FDI into the Netherlands is 

on the increase too 

By Susie Gordon 

EVER SINCE MERCHANTS from the Vereenigde 

Oost-Indische company established trading posts in 

Guangzhou and Taiwan during the 17th and 18th 

centuries, relations between China and the Netherlands 

have been dynamic in terms of both bilateral trade and cultural 

exchange. 

Trade between the two nations has seen significant growth 

in recent years. In 2010, EU imports from China increased at 

a yearly rate of 31.8 per cent while exports to China grew at 

an annual rate of 31.9 per cent. As a European transport hub, 

the Netherlands have benefitted from this trend. Bilateral trade 

between the Netherlands and China was worth EUR36.5bn 

(USD52.52bn) in 2010, of which EUR31bn (USD44.62bn) came 

from imports from China to the Netherlands, and EUR5.5bn 

(USD7.91bn) reciprocally. 

The Netherlands is China’s second largest trading partner 

within the EU. Exports from the Netherlands to China include 

petrochemicals, machinery, transport equipment, high-tech 

products and fossil fuels, while China’s main exports to the 

Netherlands are computer and consumer electronics, toys and 

clothes. 

Gateway to Europe 

As a nation, the Netherlands benefits from its position as 

a transport and logistics hub, with Schiphol Airport and 

Rotterdam port among the busiest in the world. According to 

the Netherlands Foreign Investment Agency (NFIA), over 40 

per cent of Chinese exports enter Europe via the Netherlands. 

Dutch companies have always been keen to maximise the 

potential of this positioning. Michael Drake, regional managing 

director of TNT Asia Pacific says: “TNT has helped facilitate 

the growing trade relationship between China and Europe 

by establishing ourselves as the number one express delivery 

provider for routes between Europe and China. Currently, we 

have already connected more than 500 Chinese cities to over 400 

cities in Europe. We’ve also dedicated Boeing 747 freighters to 

operating seven flights per week between Shanghai and Europe 

and five flights per week between Hong Kong and Europe.” 

KLM, partnering with Air France, also contributes to strong 

links between China and the Netherlands, operating over 80 

weekly flights between Schiphol and Greater China. Last year, 

a new route was added to connect Hangzhou with cities around 

Europe via a direct flight to Schiphol. 

64 

The Netherlands is a gateway to and from Europe; Dutch company 

TNT connects more than 500 Chinese cities to over 400 European 

cities, says Michael Drake, regional managing director of TNT 

Asia Pacific. 

Both KLM and TNT are also helping to drive the trend towards 

the development of business and infrastructure in the west of 

China. KLM has well established connections between Europe and 

Western China’s Sichuanese business hub, Chengdu. Meanwhile, 

TNT launched the industry’s first dedicated freight flights between 

Chongqing and Europe last October, and Drake says that “As 

more and more manufacturing companies start relocating their 

manufacturing facilities from the coastal region to Central and 

Western China, demand will increase for the combined service 

of international express and domestic road delivery.” 


Randstad 50 Years ambition 

shaping the World of Work 

randstad looks back over half a century leading the global human resources industry 

Start-up and Opportunity 

In the summer of 1960, young economics graduate 

Frits Goldschmeding was chatting to a friend 

about his thesis on temporary employment. 

“There’s nothing like that in the Netherlands,” 

Goldschmeding said. “Maybe we should set 

something up.” It proved to be a fateful moment. 

From that single idea grew the second largest HR 

service organisation in the world. 

Frits was convinced that the value of people is 

the driving force of social development. A perfect 

match between a person and a job helps present 

the true personal value. So Frits focussed his 

company’s efforts on making the best possible 

match between employers and candidates. 

Concentrating on temporary staffing services, 

Frits had opened street shops all over the major 

cities in the Netherlands – including Rotterdam, 

Amsterdam and The Hague - within six years. 

In 1964, he worked with the famous design 

agency Total Design and decided to rename the 

company ‘Randstad’, which means ‘ring of cities’, 

describing a very densely populated region in the 

western Netherlands encompassing Amsterdam, 

Utrecht, Rotterdam and The Hague. 

Development - and Challenges 

In the late 1960s, Randstad sped up its development 

and established branches all over the Netherlands, 

Belgium, Germany, Luxemburg, and the UK. 

Thanks to the European Common Market, 

Randstad was able to further expand its business 

through the implementation of its core values: to 

know, to serve, to trust. The annual revenue of 

Randstad surpassed EUR250m in 1980. 

Meanwhile, Frits also developed Randstad’s strategy 

of combining organic growth together with 

M&A. Frits insisted on ‘copy-pasting’ successful 

experiences when entering emerging markets, 

while acquiring in mature markets. 

In 1983, Randstad completed its first acquisition, 

picking up a local competitor, the staffing agency 

Tempo Team. In 1990, Randstad shares were listed 

on the Amsterdam Stock Exchange. In 1993, 

Randstad began operations in the US. In 1996, 

Randstad deployed 16,000 staffing employees 

at the Olympic Games in Atlanta. In 1998, the 

company’s international network doubled through 

acquisitions in the US, Germany and Spain 

In 2008, the acquisition of Vedior marked another 

milestone for Randstad: After the successful 

acquisition, Randstad became a Fortune 500 

Company in the year 2009. 

By now Randstad has expanded into more than 

40 countries. Today over 25,680 employees work 

at 4,195 branches employing almost 521,300 

workers on a daily basis. 

New Concepts - and the Future 

In March 2003 Ben Noteboom was appointed 

chairman of the Executive Board and CEO of 

Randstad. Meanwhile, economic conditions were 

starting to get tougher. The new era would create 

strategic challenges for Randstad. The company 

needed to breathe new life into its core values 

and guiding principles. To make the most of new 

opportunities in the market, Randstad developed 

vital foundations, concentrating on a strong 

concept, the best people, excellent execution and 

strong brands. These four building blocks are the 

key reason for Randstad’s fast development in the 

first decade of the new millennium. 

For example, Randstad offers professional 

medical care to medical organisations in the 

UK. Randstad provides in-house shift management 

for high-end manufacture enterprises 

like Siemens and BMW. Meanwhile, Randstad 

has also established a call centre in Poland for 

outsourcing business for major clients in Europe. 

With the economic downturn in 2008, many 

companies have learned the importance of 

labour flexibility. A flexible workforce increases 

productivity and improves competitiveness for 

companies. Again Randstad grabbed the chance. 

The 2010 annual revenue increases by 14 per 

cent to EUR14.2bn. 

CO-PUBLISHED FEATURE 

Randstad’s mission is “Shaping the world of work”. 

In the work that we do everyday in the world of human 

resources, we contribute to the communities 

in which we live and work. We help people to find 

the right jobs, and this has a positive impact on 

their lives. For our clients, we focus on providing 

best talent, allowing them to achieve business 

objectives by focussing on core activities. “Best 

Match” is still the key to the mission. 

Managing Director of Randstad China, George Wang 

The China market has long been an important 

focus for Randstad. Randstad entered China 

in May 2006. By now, Randstad has set up offices 

in major cities such as Beijing, Shanghai, 

Guangzhou, Suzhou, Shenzhen, and elsewhere. 

Now, Randstad China Managing Director is Mr. 

George Wang. Randstad arranges over 2,000 senior 

operation and management level positions on 

a yearly basis. Meanwhile, it also manages over 

40,000 employees working across the country. 

Today, technology is having an increasing effect 

on the world of work. The rise of social networks 

is enabling a multitude of individual interactions 

that could be much more relevant for the work 

environment. For Randstad, the dream on which 

Frits began working 50 years ago continues 

to inspire all of Randstad’s people today; and it 

remains just as exciting to be shaping the world of 

work for the future. 


Randstad 

Hotline: 400 601 9191 

Website: www.randstad.cn 

Email: info@randstad.cn

COUNTRY FOCUS 

NETHERLANDS 

66 

Trading Up 

SBR talks to Huub Buise, Deputy Consul General of 

the Netherlands in Shanghai 

SBR: What is the current status of 

bilateral trade between the Netherlands 

and China? 

HB: Trade is good, and the figures are 

very positive. Bilateral trade is growing 

steadily y-o-y. There was a small dip 

during the global economic crisis, but 

this was negligible in the greater scheme 

of things. Sino-Dutch bilateral trade 

stood at EUR36.5bn (USD52.51bn) in 

2010, with EUR31bn (USD44.62bn) 

coming from imports from China to the 

Netherlands, and EUR5.5bn (USD7.91. 

bn) coming the other way. We are currently 

China’s second largest trading 

partner within the European Union. 

Exports grew 31 per cent in the first 

quarter of 2011 compared to the same 

period last year, so we are confident 

that this year’s trade figures will exceed 

those of 2010. 

SBR: What kinds of goods are traded 

between the Netherlands and China? 

HB: The main export products that the 

Netherlands sends to China are chemical 

products, machinery, and agro-foods 

such as additives and seeds. When it 

comes to Chinese exports to the Netherlands, 

it’s easier to enumerate the 

products we do not receive instead of 

those that we do. There has been a definite 

shift from the traditional exports, 

such as textiles, to more industrial and 

technologically advanced products, like 

machinery, electronics, telecommunications 

and banking. 

SBR: In which sectors are Dutch investments 

most prominent in China, and in 

which areas of the country? 

HB: Traditionally, Dutch business in 

China has been focussed in the in south 

with manufacturing companies setting 

up and investing in the Pearl River Delta. 

Now, the Dutch presence has spread to 

the coastal provinces in the east, as well 

as the Bohai region in the north. Following 

the trend towards the interior, Dutch 

investments are growing more numerous 

in Chongqing and Chengdu. 

SBR: Which major Dutch companies 

have a presence in China? 

HB: There are over 2000 companies from 

the Netherlands currently operating in 

China. All the major multinationals are 

here, like Philips, DSM, AkzoNobel, 

and Unilever, as well as many of the 

big banks. Dutch companies conduct 

major R&D in China, and one third of 

our global investment is into the Chinese 

market. 

HB: What is the status of Chinese 

foreign direct investment into the 

Netherlands? 

SBR: Over the past ten years, more and 

more Chinese companies have begun to 

look outwards, and the Netherlands is 

a natural choice thanks to our position 

as a gateway to Europe with Schiphol 

Airport and the port of Rotterdam. 

Currently there are around 320 Chinese 

companies investing in Netherlands, a 

figure that grows by about 25 each year. 

The big players are Cosco, China Shipping, 

Huawei, XEMC, Bank of China 

and ICBC. Air China uses Schiphol 

Airport as a logistics hub. We believe 

that Chinese investment in Europe is a 

good thing and not a threat, as long as it 

falls within approved guidelines. As the 

investment climate improves in China 

for foreign companies, reciprocity will 

fuel even more investments and joint 

ventures. 

SBR: What is the status of diplomatic 

and cultural relations between China 

and the Netherlands? 

HB: After the success of last year’s Expo 

during which many Dutch delegations 

visited Shanghai, relations are strong. 

Next year on 18 May we celebrate 40 

years of diplomatic ties. It will be an 

opportunity to look back as well as 

look forward, facing future challenges 

together with the firm friendship that 

has developed over the years. 


Dutch Courage 

According to Geert Potjewijd, a partner at De Brauw Blackstone 

Westbroek, a Dutch legal firm with an office in Beijing, and expert 

on Dutch investment into China: “Most of the big name Dutch 

companies present in China today have been here for decades, 

and investment and M&A have always been strong. However, 

we are seeing a trend towards businesses relocating their upper 

management to China instead of the traditional Asian centres 

of Hong Kong and Singapore. Within the next few years, we 

expect to witness more and more Dutch companies moving their 

Asia Pacific base to Shanghai or Beijing. Early adopters include 

Phillips, which relocated the global management layer of its 

domestic appliances unit from Amsterdam to Shanghai.” 

Other companies, such as Rabobank, are also strengthening 

their presence in China on the back of recent success, including 

a partnership with the Agricultural Bank of China. “Rabobank 

Group achieved strong results in 2010 as a whole, achieving a 

26 per cent net result increase. Thanks to the continuous growth 

of China’s economy and the food and agriculture market, 

compared to last year, our China operation registered a 25 

per cent increase in revenue during the first half of this year, 

and in May this year, we received the approval from CBRC to 

prepare for upgrading our Beijing office to branch. We expect 

our Beijing branch to start operation in January 2012,” says 

Johnson Fu, country manager, China, Rabobank. 

Randstad is another example of a prominent Dutch company 

placing an increasingly strong emphasis on China. Business 

is brisk for the HR company which entered China in 2006, 

establishing a JV with a local partner, Talent Shanghai. 

With its regional headquarters already set up in Shanghai, 

Randstad subsequently set up operating centres in Beijing 

and Guangzhou, as well as offices nationwide. It seems that 

opportunities in China are still growing, albeit along with the 

competition; Marketing Director Haining Sun reports that 

“Randstad has experienced a high demand for recruitment 

services lately. It is getting difficult to fully satisfy the hiring 

demand of our clients. However, China’s HR industry is not 

completely open to foreign players, and government policies 

have considerable impacts on the business. While the local 

market is quite fragmented, the competition is also fierce.” 

In the coming years, Randstad will continue its expansion to 

meet clients’ demand nationwide. 

Another company to hit the headlines with its development 

and expansion into China this year was AkzoNobel. The 

chemicals company is in the process of acquiring Shandongbased 

Boxing Oleochemicals, Asia’s leading supplier of nitrile 

amines and derivatives. “This is an excellent opportunity which 

couples our strategic ambition to accelerate growth in Asia with 

our commitment to locate production closer to our customers,” 

said Rob Frohn, AkzoNobel’s Executive Committee member 

responsible for Specialty Chemicals. “Boxing’s leading market 

position in amines will complement AkzoNobel’s growing 

specialty surfactant business in Asia. The acquisition will also 

provide a strong local manufacturing operation in the region.” 

Give and Take 

The status of foreign direct investment from China into the 

Netherlands is strong, with over 300 companies now present. 

Sources say: 

“Superb quality 

legal advice” 

De Brauw is a premium full-service international law firm. 

At the heart of our firm is the powerful combination of a 

strong corporate and finance practice, a centre of 

excellence for litigation and arbitration, and an in-depth 

understanding of compliance. 

Contact (联系人) 

Geert Potjewijd (普志平) 

T (电话) +86 10 5965 0501 

E (邮箱) geert.potjewijd@debrauw.com 

Amsterdam | Beijing | Brussels | London | New York 

SHANGHAI BUSINESS REVIEW AUG/SEP 2011 www.sbr.net.cn 67 

Offices 

Chambers Global 2010

COUNTRY FOCUS 

NETHERLANDS 

Huawei is an example of a Chinese company that has already 

made a significant investment in the Netherlands. 

Air Force 

KLM sees business taking off 

as economic recovery 

stimulates the global travel 

industry, says Commercial 

Director Laurent Fesselier 

How is business travel 

between China and the 

Netherlands this year? 

LF: This has definitely been a 

year of recovery, and the 

China market has led that 

recovery. 

Business traffic from China 

to the Netherlands and 

Europe was one of the 

fastest recovery stories. We immediately saw and felt 

that on our more business-oriented routes to first tier 

cities in China. This is really good news. 

However the crisis has changed things - it’s not exactly 

the same as before. Our business and corporate 

customers adjusted to the crisis, adapting their demands, 

and their booking and travel patterns. As an airline, KLM 

has to embrace customer changes and new expectations. 

Our corporate offerings have been re-designed and 

simplified, our SME programme, BlueBiz, has been 

enhanced, our baggage policy was adjusted, our in-flight 

products completed and our e-service ranges developed 

(all aspects of our booking can be managed on-line, with 

information follow-ups sent to customers via mobile). 

What about leisure and tourism? 

LF: Leisure travel is also booming, but it’s very different 

from business. For example, a huge part of leisure traffic 

from China to Europe is group travel, which requires 

specific processes for visa delivery, booking 

management and so on. 

To embrace the expansion of the leisure traffic and cope 

with the Chinese market development, KLM has been 

pioneering a new approach together with airlines in 

China. We now give a high priority to Tier 2 cities. After 

establishing exclusive connections between Chengdu 

and Europe, we decided to roll-out new flights for our 

network: Hangzhou-Amsterdam was opened in May 

2010 and Xiamen-Amsterdam in March 2011. The 

encouraging results we had after the first year of 

operations of our Hangzhou flight confirm that we’ve 

made the right choices. 

What will be the key challenges and opportunities 

for KLM in the coming 12 months? 

LF: Our target is to keep on welcoming an increasing 

number of Chinese customers. The key to achieving this 

Thanks to its strategic location, the Netherlands is a popular 

destination for Chinese companies’ European distribution 

centres. Recent arrivals in the Netherlands include Midea, 

Liugong and Mindray. 

Potjewijd observes that the Netherlands are particularly 

attractive to Chinese companies seeking high tech solutions. 

“Chinese outbound investment is dominated by energy and 

natural resources, favouring mineral-rich nations like Canada, 

Australia and Kazakhstan. However, the Netherlands are popular 

because of the country’s expertise in high technology. This was 

proven last year when Chinese company Xinmao expressed 

interest in a EUR1bn acquisition of the Dutch cable firm Draka.” 

However, Potjewijd notes that, “Many Chinese companies 

actually have no intention of expanding their sales in Europe; 

the main purpose of acquiring Dutch companies is to strengthen 

their own position in the domestic market by acquiring foreign 

high technology and brand names, especially in the automotive 

industry. In the future, we expect to see this trend broadening 

into other industries such as food.” 

Maxime Verhagen, vice prime minister and minister of 

economic affairs, agriculture and innovation of the Netherlands 

visited China in May to meet with senior executives from around 

goal will be our commitment to meeting the customer’s 

expectations with constant quality. 

We’ll also keep working on our connections. The 

domestic networks and its key partners in China - China 

Southern and China Eastern - connect with the 13 daily 

flights Air France KLM Group offers. 

To what extent do you consider the Netherlands a 

‘gateway’ into Europe? 

LF: With around 79 European destinations, KLM 

provides the means to make this an international 

gateway with smooth and reliable connections to our hub 

in Amsterdam Schiphol. 

But you know, Amsterdam shouldn’t only be a gateway to 

Europe – the Netherlands are really worth a visit, too! 


KLM Royal Dutch Airlines 

www.klm.com.cn 

4008 808 222

70 


COUNTRY FOCUS 

NETHERLANDS 

According to the NFIA’s Executive Director for China, Guy 

Wittich, “There are now 300 Chinese companies operating in the 

Netherlands – and there is a ten per cent increase from last year.” 

20 Chinese SMEs and state-owned companies, to discuss 

further investment into the Netherlands. Representatives from 

pharmaceutical, chemical, logistics, bio-tech and telecoms 

companies expressed a strong interest in future investment 

possibilities. 

Despite China’s strong interest in acquisitions to support 

operations in the domestic market, there are already some standout 

success stories for Chinese investors setting up shop in the 

Netherlands. Huawei, the second largest telecom equipment 

manufacturer in the world, has grown its Netherlands operations 

from five staff members in 2005 to over 260 in 2011, and plans to 

expand even further across their operations in The Netherlands 

with a software R&D centre. The Netherlands is already their 

Benelux headquarters, and also hosts their European Supply 

Chain Centre, European Enterprise Business division, European 

Spare Parts Centre, European Software Centre, and European 

Account Service Centre. 

Guy Wittich, executive director for China of the NFIA, 

says: “There are now 300 Chinese companies operating in the 

Netherlands – and there is a ten per cent increase from last 

year. The growth is largely down to the fact that most goods 

coming in and out of Europe go through Rotterdam – Europe’s 

largest sea port – so it is logical for Chinese firms to open offices 

Strategy | Communication | Design

Business Diary 

Upcoming business events in Shanghai 

Monday 29 Aug-Sunday 4 Sep 

31 

Wed 

3 

Sat 

Inside China Series: 

‘Business 

opportunities to 

serve China’s 

elderly population 

Sofitel Shanghai Hyland 

Organised by: AustCham 

Shanghai 

Tel: 86-21-6248-8301 

CEIBS First China 

FMCG 

Forum 2011 

CEIBS Shanghai 

Petrochemical Auditorium 

Organised by: CEIBS 

Tel: 86-21-2890-5047 

Monday 5 Sep-Sunday 11 Sep 

6 

Tue 

7-8 

Wed-Thu 

8 

Thu 

‘Adapting to RMB 

Internationalisation’ 

Sofitel Shanghai Hyland 

Hotel 

Organised by: BritCham 

Shanghai 

Tel: 86-21-6218-5022x24 

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Tel: 86-21-2972-1543 

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economy 

and market outlook’ 

Grand Hyatt Shanghai 

Organised by: German 

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in Shanghai 

Tel: 86-21-5081-2266 


13 

Tue 

The 3rd Innovation 

Platform: ‘What can 

we learn from 

Chinese companies?’ 

CEIBS 

Organised by: BenCham 

Shanghai 

Tel: 86-21-6149-8312 

Key: RED: Chamber Event 

BLACK: Exhibition 

BLUE: Conference/Forum 

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Thu 

16-18 

Fri-Sun 

17 

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17 

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SEC 

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Tel: 86-21-5196-1180 

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Intercontinental Shenzhen 

Organiser: CEIBS and 

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Tel: +86-21-2890-5489 

Great Southern 

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AustCham Ball 

Kerry Hotel, Pudong 

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Tel: 86-21-6248-8301 


20-21 

Tue-Wed 

23-24 

Fri-Sat 

Advanced China 

Summit on Mergers 

and Acquisitions 

Le Royal Méridien 

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Conference Institute 

Tel: 1-212-352-3220 

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Job Fair Shanghai 

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Tel: 86-21-5081-2266x1609 

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LAW & TAX 

Regulatory Update 

New legal and tax developments affecting foreign invested enterprises in Shanghai 

Provided by CCH China 

Legal News 

Administrative Enforcement Law 

released 

On 30 June 2011, the Administrative 

Enforcement Law of the People’s Republic 

of China (Administrative Enforcement 

Law) was released. The Administrative 

Enforcement Law, which will become effective 

on 1 January 2012, regulates the types of 

administrative enforcement, implementation 

procedures of administrative enforcement 

measures, and enforcement procedures by 

administrative authorities. It also stipulates 

that administrative authorities shall not carry 

out administrative enforcement actions at 

night or on public holidays and bans them 

from forcing the parties involved to fulfill the 

relevant administrative decisions by cutting 

off their water supply, power supply, heat 

supply, gas supply, and so on. 

Beijing legislates employment 

assistance for the first time 

On 20 July 2011, the 26th Conference of 

the Standing Committee of the 13th Beijing 

People’s Congress deliberated Provisions 

for Employment Assistance in Beijing 

(Draft), marking the first time that Beijing 

has legislated employment assistance aimed 

at solving the unemployment problems of 

employment disadvantaged groups. The Draft 

defines employment disadvantaged groups 

as jobless registered Beijing permanent 

residents who have the ability to work, 

employment aspirations and are within the 

legal working age in Beijing. The groups are 

divided into six categories, namely groups 

with disabilities assessed by disability rating 

agencies; women over age 40 and men 

over age 50; enjoying minimum subsistence 

allowances for urban and rural residents; 

members of zero-employment families; 

unemployed for more than one consecutive 

74 

year; and other circumstances stipulated by 

the municipal government. 

Tax & Finance News 

Withdrawal of funds from 

Termination of Investments to pay 

20 per cent IIT 

On 25 July 2011, the State Administration 

of Taxation (SAT) released Announcement 

on Issues Concerning IIT Levied on Funds 

Withdrawn from Termination of Investments 

(Announcement), which took effect on the 

date of issuance. 

According to the Announcement, if an 

individual terminates an investment, JV and 

business cooperation for various reasons, 

the income from share transfers, liquidated 

damages, compensation, indemnity, and 

funds recovered with other items gained 

from invested enterprises, cooperation 

projects, other investors of the invested 

enterprises and business partners of the 

cooperation projects are all classified as 

taxable income for individual income tax 

(IIT) and IIT should be calculated and paid 

according to the applicable provisions for 

“income from the transfer of property”. 

SAT issues regulations for Tax 

Services and Management of Large 

Enterprises 

On 13 July 2011, the State Administration 

of Taxation (SAT) released Regulations for 

Tax Services and Management of Large 

Enterprises (Trial) (Regulations). The 

Regulations provides specific provisions 

for tax services and management of large 

enterprises in four aspects: guidance, 

control, response and protection of tax 

compliance. The Regulations is applicable 

to the tax services and management of SAT 

appointed contact enterprises. Tax services 

and management of contact enterprises 

appointed by provincial tax authorities may be 

carried out with reference to the Regulations. 

SAFE regulates foreign exchange 

capital settlement of foreign-invested 

enterprises 

Recently, the State Administration of Foreign 

Exchange (SAFE) released Supplementary 

Circular on Related Issues Regarding 

Business Operations for Improving Foreign 

Exchange Capital Settlement Management 

of Foreign-Invested Enterprises (Circular), 

which became effective on 1 August 2011. 

The Circular further clarifies management 

responsibilities for foreign exchange capital 

settlement of foreign-invested enterprises 

and strengthens the authenticity audit 

requirements for capital settlement. It points 

out that banks should carefully examine the 

compliance, authenticity and consistency of 

the use of RMB funds achieved from enterprise 

foreign exchange capital settlement according 

to the materials provided by foreign-invested 

enterprises; if various materials cannot 

be verified or contradict one another, the 

banks should not handle the related foreign 

exchange business for the enterprises. 

CICPA releases information on 

2011 Top 100 accounting firms in 

comprehensive evaluation 

On 25 July 2011, the China Institute of 

Certified Public Accountants (CICPA) released 

2011 Top 100 Accounting Firms Information 

in Comprehensive Evaluation (Information). 

The Information shows that, except for 

Chinese-foreign cooperative accounting 

firms, single accounting firm’s revenues 

crossed the Rmb1bn threshold for the first 

time. Moreover, this round of evaluations no 

longer uses revenue as the only measure but 

pays close attention to the comprehensive 

evaluation of accounting firms’ level of 

scientific development. 


This article was first published in the China Law Express (www. 

chinalawexpress.com), and is reprinted with the kind permission of CCH 

China, a leading provider of tax and accounting, legal and HR information. 

China Law Express is a daily bilingual legal news service, featuring 

briefs and commentary on legal developments and court case reports. 

New from CCH China: 

China Company Law Guide- Corporate Governance, Chinese, LLS/ 

online, A highly practical and reliable guide for professionals to solve 

common corporate governance affairs as well as the specific governance 

issues in listed companies, foreign invested companies, state-owned 

enterprises and commercial banks; 

China Company Law Guide-Bankruptcy and Liquidation, Chinese, LLS/ 

online, A guide offers valuable advice together with best practices on how 

to ensure the smooth progress of bankruptcy and liquidation procedures 

as well as tips and a how-to guide on protecting the interests of creditors; 

China Essential HR Solutions-Letters, Forms & Policies, Bilingual, 

Web, A wide collection of ready-to-use letters, forms and policy 

statements that you can use in your daily HR work. 

China Foreign Exchange Control, Chinese, LLS and online, A very 

practical and informative guide to cross-border capital flows involved in 

their international trade and investment in China; 

China Tax Planning Guide, Chinese, LLS and online, A highly practical 

and unique guidance on the tax implications of common business 

transactions for professionals in tax and business; 

China Company Law Guide Series II - Foreign Corporation 

Registration and Deregistration, Chinese, LLS and online, A highly 

practical and reliable guide for professionals in the area of Foreign 

Corporation Registration and Deregistration; 

US Master GAAP Guide (Second Edition), Chinese, Bond Book, 

It provides explanations, applications, and/or summaries for the 

pronouncements above, in accordance to accounting procedure and 

practice; 

China Company Law Guide –Company Registration and Dissolution, 

Chinese, LLS and online, It provides a comprehensive, practical and 

reliable guide for professionals in the area of company registration and 

dissolution; 

China Anti-Monopoly Law Guide, Chinese, LLS and online, The first 

practical guide for operators’ conducts under China Anti-Monopoly Law; 

China Tax Planning Guide, English, LLS and online, A highly practical 

and unique guidance on the tax implications of common business 

transactions for professionals in tax and business; 

China Tax Compliance Guide – Tax Review, Chinese, LLS & Online, A 

systematic, comprehensive, detailed, practical and reliable tax review 

guide for both in-house tax specialists and tax auditors from accounting 

firms in China; 

China Labour Contract Law Guide, bilingual, bound Book, a practical 

and reliable guide for Labour Contract Law issues in China 

A Practical Guide to China Construction Engineering Project Tendering 

and Bidding Law, Chinese, web and print loose-leaf subscription, 

commentary on Construction Engineering Project Tendering and Bidding 

Law; 

China Intellectual Property Enforcement Manual, Chinese, web and 

print loose-leaf subscription, commentary on China Intellectual Property 

Enforcement Manual; 

Beijing Employment & Labor Law Guide, English, web and print looseleaf 

subscription, commentary on labour law; 

Shanghai Employment & Labor Law Guide, English, web and print looseleaf 

subscription, commentary on labour law; 

LAW & TAX 

Jiangsu Employment & Labor Law Guide, Chinese, web and print 

loose-leaf subscription, commentary on labour law; 

Tansfer Pricing – A Pratical Guide, Bilingual, print 

loose-leaf book, commentary on transfer pricing 

China Tax Compliance Guide – Turnover Tax, Chinese, web and print 

loose-leaf subscription, commentary on Turnover Tax 

U.S. Master GAAP Guide, Chinese, print 

Bound book, commentary on U.S. GAAP 

Sarbanes Oxley Act: Planning and Compliance, bilingual loose-leaf 

book with law commentary and legislation; 

China Accounting Preparation Series I, II & III, Chinese, commentary 

& practical worked examples on new accounting standards, web or 

loose-leaf subscription; 

Guide to the Acquisition of Companies Listed in China, Bilingual, 

loose-leaf book, with commentary and legislation; 

Tax Planning for Expatriates in China, Chinese, bound book, 

commentary; 

Investment in China Special Economic Zones, Chinese, loose-leaf 

book; 

CCH Executive Events 

Shanghai 9 April 

Risk Control of Tax Audit Seminar -- Tax audit is the general term for 

inspection and processing undertaken by tax authorities on taxpayers 

and withholding agents to fulfill tax obligations, withholding tax obligations 

according to law. The inspected companies are often required to pay 

taxes, late payment surcharges and penalties with high tax costs. It is 

really a big challenge for enterprises to deal with audit tax authorities 

and reduce tax-related risks. Thus, it is obviously crucial to understand 

the tax audit so as to prevent and control tax risk in daily operation. 

Shanghai April 19 Beijing 22 April 

2011 Seminar on the Practice of Foreign Exchange Management --With 

regard to the latest policies and trends of national macro-control, this 

seminar on the practice of foreign exchange management of enterprises 

will invite professionals with over 4 years of work experience with the 

State Administration of Foreign Exchange to answer questions and offer 

the most practical experience on prevention of foreign exchange risks 

and cut relevant costs.3 

Shanghai 22 April Beijing 19 April 

Payroll Master -- This course will be given by the director of human 

capital research from Key Performance Consulting, a domestic firm with 

an insight into local HR market. Being the first of its kind in China as a 

practical HR course aimed at the overall sorting, analysis and application 

of compensation accounting rules, standards and management, the 

course has been recognized as a reference for training courses for labor 

law judges in Shanghai. Based on the science of HR management and 

cases of Key Performance Consulting, this course will make a systematic 

collection and study of compensation-related policies in China’s labor and 

social security laws, and is intended to given an all-round management 

and performance guidance to the accounting, payment and adjustment 

of compensations of China-based enterprises. 

For more details, please visit www.cchchina.com.cn, call +86 21 

58368999 or email support@cchchina.com.cn 


VIEW OFFSHORE 

The View Offshore 

New overseas tax developments 

Provided by Sovereign Trust (Hong Kong) Ltd 

US Treasury postpones FATCA 

implementation 

The US Treasury announced, by Notice 2011-53 of 

14 July 2010, that implementation of the Foreign 

Account Tax Compliance Act (FATCA), which 

targets non-compliance by US taxpayers through 

foreign accounts, would be deferred by one year. 

Under FACTA, enacted on 18 March 2010 as part 

of the Hiring Incentives to Restore Employment 

(HIRE) Act, foreign financial institutions (FFIs) 

with US customers and foreign non-financial 

entities with substantial US owners must disclose 

information regarding US taxpayers directly to 

the Internal Revenue Service (IRS). Failure to 

disclose information will result in a requirement 

on non-US financial intermediaries to withhold a 

30 per cent tax on US-source income. The FATCA 

reporting obligations were scheduled to come into 

force in January 2013. But the US government has 

come under pressure from foreign governments to 

dilute its provisions due to the compliance burden 

they would place on financial institutions. 

The reporting requirements will begin in 2014. 

Withholding tax on dividends and interest will also 

be delayed until January 2014, while withholding 

tax on gross proceeds of asset disposals will 

be postponed until January 2015. But FATCA’s 

special due diligence requirements – which 

require banks to identify certain “high-risk” US 

accounts worth more than USD500,000 – will take 

effect in 2013. Foreign banks will have to notify the 

IRS by June 2013 whether they intend to comply 

with the FATCA regime. Any who do not will be 

assumed to be non-compliant and will be subject 

to the withholding tax. 

Hong Kong clarifies withholding rate 

for Chinese dividends 

The Hong Kong Financial Services and the Treasury 

Bureau announced, on 4 July 2011, that the Hong 

Kong Special Administrative Region government 

had received a response from China’s State 

Administration of Taxation to clarify the tax payable 

to the mainland for dividends paid by mainland 

companies to individual investors in Hong Kong. 

A Bureau spokesman said: “The reply of the State 

Administration of Taxation notes that when non- 

76 

foreign investment companies of the Mainland 

which are listed in Hong Kong distribute dividends 

to their shareholders, the individual shareholders 

in general will be subject to a withholding tax rate 

of 10 per cent with reference to the arrangement 

for the avoidance of double taxation signed 

between Mainland China and Hong Kong. 

They do not have to make any applications for 

entitlement to the above-mentioned tax rate. 

“For shareholders who are residents of other 

countries and whose home countries have 

reached an agreement with China on an 

applicable withholding tax rate higher or lower 

than 10 per cent, they have to follow the bilateral 

tax agreement in paying tax in connection with 

dividends paid by Mainland companies listed in 

Hong Kong.” 

EU to begin talks on expanding 

savings tax directive 

Ecofin, the EU Economic and Financial Affairs 

Council, approved, on 12 July 2011, proposals 

from the European Commission to begin 

negotiating changes to agreements signed in 

2004 by Switzerland, Liechtenstein, Monaco, 

Andorra and San Marino on the taxation of 

savings income received by European Union 

(EU) residents under the Savings Tax Directive. 

The proposed changes would amend the 

equivalent procedures in these third-party 

countries to close current loopholes, to expand 

the application of the withholding tax, or 

automatic exchange of information, on a wider 

range of savings instruments such as pensions 

and life insurance products. 

The revisions cover a number of areas, including 

taxation of interest payments channeled through 

intermediate structures, expansion of “interest 

payment” to include income from financial 

products substantially similar to debt claims and 

level treatment of investment funds irrespective 

of their legal forms. 

Swiss Court holds that UBS foreign 

disclosure is lawful 

The Swiss Federal Supreme Court ruled, on 

15 July 2011, that the disclosure of UBS customer 

data by the Financial Market Supervisory Authority 

(FINMA) to the US Department of Justice was 

lawful. The decision reverses the decision of the 

Swiss Federal Administrative Court and upholds 

FINMA’s order. 

In February 2009, FINMA ordered that the data 

of 255 UBS customers be disclosed to the US 

Department of Justice as a protective measure 

under articles 25 and 26 of the Banking Act. 

It proceeded on the basis that, if this data 

had not been disclosed, the US Department 

of Justice would have filed an indictment 

against UBS that could have caused the bank 

to collapse and had serious repercussions for 

the Swiss economy. 

UBS customers filed a claim in the Swiss Federal 

Administrative Court, which in January 2010 

declared FINMA’s decision to be unlawful. FINMA 

appealed to the Swiss Federal Supreme Court. 

The Swiss Federal Supreme Court confirmed the 

legal opinion of the Swiss Federal Administrative 

Court that articles 25 and 26 of the Swiss Banking 

Act do not provide sufficient legal grounds for 

encroaching on banking secrecy, but said that 

government authorities may, in the absence of a 

specific legal foundation, act on the basis of the 

“general police powers clause” to avert serious 

imminent risks to fundamental legally protected 

interests. The Court held that this applied to 

FINMA, as far as it acted in agreement and with 

the consent of the Swiss Federal Council. 

For further information on how Sovereign can 

help your international tax planning, please 

contact: 

Jacques Scherman, Managing Director 

Sovereign Trust (Hong Kong) Ltd. 

+852 2542 1177 

email: jscherman@sovereigngroup.com 

Frederik van Schalkwyk, Liaison Officer 

Sovereign Trust (China) Ltd. 

+8621 6103 7089 

Email: fvanschalkwyk@sovereigngroup. 

com

CHaINA '11 Live: The Global Supply Chain Event for Asia

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