Fsa Research Project 2014 China

FSA RESEARCH PROJECT 2014 CHINA

WWW.FSARESEARCHPROJECT.NL ABOUT FSA

The FSA Research Project is one of several recurring projects organized by the Financial Study association Amsterdam (FSA). The FSA is the largest financial study association in the Netherlands with over 3000 members and a project portfolio consisting of thirteen yearly events in the areas Banking, Investments, Consultancy and Accountancy. The board of the FSA consists of students from both the UvA and the VU, allowing it to maintain a wide range of stakeholders. The FSA aspires to perform a “magnet” function; enabling financially orientated students to come in contact with the largest parties in the financial sector and vice versa. Moreover, by participating in one of our projects, whether national or international, we hope to instil a sense of the practical importance of the theoretical concepts learned during a university course in our members and help them identify future employers. The FSA is part of the Financial Association Netherlands (FAN), which aims to improve integration of the financial association and realize the organization of nationwide events.

All activities of the FSA are organized by students from both universities of Amsterdam with an interest in finance. The FSA cooperates with a multitude of companies as well as other financial study associations in Groningen, Maastricht, Rotterdam and Tilburg within the Financial Association Netherlands (FAN).

Our slogan is “The urge to improve is what makes the difference” and we would like to characterize our members as being professional, ambitious and enthusiastic. The combination of motivated students and a well-defined goal has made us what we are today and continues to stimulate us in being innovative in every aspect of our association.

RESEARCH PROJECT 2014 | 2 CONTENT

INTRODUCTION 4

ADVISORY BOARD 6

COMMITTEE OF RECOMMENDATION 8

WHAT WE OFFER 9 HISTORIE DOELGROEP Startjaar: 1996 Studenten met een financiële achtergrond van CLIENT BENEFITS 10de UvA, VU, DSF Sprekers 2013: Jan Peter Balkenende (Partner Ernst & Young), LOCATIE RoderickRESEARCH Munsters EXPERIENCE (CEO Robeco), Pierre Sarrau 11Het Concertgebouw (Managing Director Blackrock), Koos Timmermans (Vice- Chairman ING), Jaqueline Cramer (ex-minister van VRM), PERIODE ABOUT CHINA 12April 2012: Klaas Knot (DNB), Sarah Carlson (Hoofdanalyst Moody’s), Stijn Claessens (IMF), Maarten Verwey MOGELIJKHEDEN TOT DEELNAME (Europese Commissie) Bedrijven Deelname is mogelijk door het afnemen van 2011: Jan Kees de Jager (ex-minister van Financiën), verschillende sponsorpakketten. Het leveren van een Ad Scheepbouwer (CEO KPN), Doug Shaw (COO EMEA gastspreker (presentatie van ong. 30 min.) is eveneens BlackRock), Lex Hoogduin (Directeur DNB), mogelijk, hier is een hoofdsponsorschap aan gekoppeld. Jan Maarten Slagter (Voorzitter VEB), Wim Boonstra In overleg kan gekeken worden naar de specifieke (Chefeconoom Rabobank Nederland), wensen van de bedrijven. Daarnaast is het mogelijk om Jan Marten de Vries (Partner De Brauw Blackstone voor vooraf geselecteerde studenten een lunch of diner Westbroek) te organiseren. COLOPHON 2010: Mark Rutte (fractievoorzitter VVD), Studenten Hans Hoogervorst (voorzitter AFM), Coen Teulings Studenten melden zich aan via www.fsa.nl. Voor (directeurFinancial Study CPB), association Dirk Scheringa Amsterdam (ex-directeur (FSA) DSB), FSAdeelname Research aan Project lunch Committee of diner zenden 2013-2014 de studenten ook KoosPlantage Timmermans Muidergracht (CRO 24 ING), Klaas Knot (Plv. TG en dir. hun CV in. financiëleRoom P 2.02A/2.03A markten Ministerie van Financiën) Jasper Adam (Chairman) 1018 TV Amsterdam Daniel Blokker (Coordinator – FSA Chairman) 2009:The Netherlands Nout Wellink (president DNB), Jan Kalff (oud- Luuk Deen (Secretary) bestuursvoorzitterT: +31 (0)20 525 65 12ABN Amro), Hans Hoogervorst Lune Dunning (Coordinator – FSA treasurer) (voorzitterF: +31 (0)20 525AFM), 59 Dick16 Sluimers (CEO APG), Onno Ruding Rob Tuinte (Treasurer) (exE: [email protected] minister van Financiën) en Andrew Haldane (director Rosanne de Vos (Head Acquisition) BankI: www.fsaresearchproject.nl of Engeland)

Aantal inschrijvingen van studenten 2013:This brochure ong. 320 was compiled to promote the FSA Research Project China project of the Financial Study association 2012:Amsterdam. ong. 350 For more information, please visit www.fsa.nl or www.fsaresearchproject.nl 2011: ong. 350 2010:All rights ong. reserved. 400 2009: ong. 390

Aantal deelnemende studenten Zie aantal inschrijvingen

FSA InformatiebrochureRESEARCH PROJECT | 3 2014 | 3 INTRODUCTION

The FSA Research Project is proud to present its destination for 2014: China. In July and August, a team of eighteen highly talented and motivated students will conduct international research for companies with aspirations towards emerging markets. Extensive training and supervision by knowledgeable experts in the preparatory phase will have the team fully prepared for departure.

The Chinese economy showed remarkable growth over the past decades and is expected to top the U.S. economy in 2016 as the most important economy in the world. Whereas the production industry used to be the foundation on which China’s economic growth was build, a shift has been taking place towards a more Consumption- and service driven economy. The Chinese government has recognized this shift and is acting on it. One of the most important reforms is the opening of a free trade zone in Shanghai to further encourage the development of the service industry. The most promising sectors in China are, amongst others: financial services, IT related services, energy and agriculture.

The FSA Research project is an excellent opportunity to provide answers to your business questions. We deliver tailor made professional consultancy services and research reports for companies with international aspirations. As the FSA operates on a non-profit basis, company specific research can be conducted at a competitive price. The quality is guaranteed by years of experience, the careful selection of the researchers, seminars and language courses from knowledgeable experts, and guidance by the best professors the city of Amsterdam has to offer.

This brochure is intended to inform you about the structure of the FSA Research Project and how we can add value to your business. If you have any further questions, please do not hesitate to contact us. We are more than happy to meet you and to provide additional information.

Kind regards,

Committee FSA Research Project 2014 China

RESEARCH PROJECT 2014 | 4 RESEARCH PROJECT 2014 | 5 ADVISORY BOARD

Prof. Dr. A. Lucas Finance André Lucas is an expert in Financial Risk Management, Asset Pricing, and Financial Econometrics. His research focuses on empirical modelling issues for market and credit risk, in particular at the portfolio level. He has published on this topic in journals such as Journal of Econometrics, Journal of Business and Economic Statistics, Applied Mathematical Finance, and Journal of Banking and Finance.

Prof. Dr. A.W.A. Boot Finance Arnoud Boot is Professor of Corporate Finance and Financial Markets at the University of Amsterdam and director of the Amsterdam Center for Law & Economics (ACLE). He is a member of the Dutch Social Economic Council (SER) and the Bank Council of the Dutch Central Bank (DNB).

He is also advisor to the Riksbank (Central Bank of Sweden), Research Fellow at the Centre for Economic Policy Research (CEPR) in London and at the Davidson Institute of the University of Michigan. Prior to his current positions, he was on the faculty of the J.L. Kellogg Graduate School of Management at Northwestern University in Chicago, and during 2000-2001 he was a partner in the Finance and Strategy Practice at McKinsey & Co.

In addition to his academic activities, professor Boot advises extensively on ownership structure issues, particularly related to the public/private domain. He is frequently involved in legal cases (expert opinions), and is consultant to several financial institutions and corporations. His consultancy activities concern the regulation and strategic positioning of financial institutions, corporate finance, governance and anti-trust issues. For these activities, he has also established the Amsterdam Center for Corporate Finance, a ”think tank” designed to improve the interaction between theory and practice

RESEARCH PROJECT 2014 | 6 Prof. Dr. S.J.G. van Wijnbergen Prof. Dr. T.L.C.M. Groot Economics Management Accounting Sweder van Wijnbergen is Tom Groot is professor professor of economics at Management Accounting at the the Faculty of Economics and Faculty Economic Sciences and Business at the University of Business Administration at the Amsterdam. In 1997 Hans Wijers VU University. He is also head of brought him in to the Ministry the department Accounting and of Economic Affairs, where he director of the research institute worked as secretary until 1999. Amsterdam Research Center in Van Wijnbergen studied physics at Utrecht University and Accounting (ARCA) and honorary Econometrics at the Erasmus University. He obtained his member of the Association of Financial Controllers. He doctorate on economics at MIT in the US. Between 1980 regularly publishes in national and international magazines and 1992 van Wijnbergen was attached to the World about the performance measurement and -judgment, Bank, in the second half of this period as head economist. management control and financial management in His research area is focused on international economics, commercial firms as well as non-profit organizations. finance, balance of payments- and financial crises.

Prof. Dr. Ir. H. Rijken Drs. L.A. van Eerden Corporate Finance Financial Business Administration Herbert Rijken is attached to Leo van Eerden is attached to the VU University as professor the VU University as a professor of corporate finance at the at the finance department of the Faculty of Economic Sciences Faculty of Economic Sciences and Business Administration. He and Business Administration. He studied Applied Physics at the TU studied International Economics Delft and Business Administration at the University of Tilburg and at the University Nyenrode. He at the moment he is working on has obtained his doctorate at the faculty Applied Physics his PhD at the VU University. His current research area is of the TU Eindhoven. Education- and research activities mainly focused on financial crises, regulation, supervision are mainly focused on corporate finance, in particular on banks and system risk management. credit risk and corporate governance.

RESEARCH PROJECT 2014 | 7 COMMITTEE OF RECOMMENDATION

Prof. dr. D.C. van den Boom Rector magnificus Universiteit van Amsterdam

Prof. dr. F.A. van der Duyn Schouten Rector magnificus Vrije Universiteit Amsterdam

Dr. M. van Straalen Chairman SME’s Netherlands

Mr. D.R. Hooft Graafland Member Executive Board / CFO Heineken

Mr. B. Pulles Director NL EVD Internationaal

Mr. E. E. van der Laan Mayor of Amsterdam

Dr. A.H.G. Rinnooy Kan Ex-chairman Social Economic Counsil (SER) and professor at the University of Amsterdam

Prof. Dr. C.N. Teulings Former director Centraal Plan Bureau

Drs. F.W. Weisglas Ex-chairman of “de Tweede Kamer der Staten- Generaal”

Mr. G.T. Vinig Associate professor for Entrepreneurship at the University of Amsterdam

RESEARCH PROJECT 2014 | 8 WHAT WE OFFER

We conduct high quality, company-specific research in Economics and other related disciplines such as Law emerging markets on a non-profit base for companies with and Social Science. We have selected twelve of the most international aspirations. promising students.

What? • Final stage of study (120 ECTS prerequisite) The main objective of the project is to conduct research • Highly motivated and ambitious in China, which can be fully customized to the wishes of • Internationally oriented the company. Research can be conducted in several areas. • Organizational experience Examples of such areas include: • Good academic results • Market Analysis • Team playing skills • Competitor Analysis • Industry entrance analyses Note: Participating companies are able to express their pre- • Sector Analysis ference for participating students • Growth strategy analyses • Feasibility Analysis Desk Research • Identification of possible business partners Desk research covers a period of approximately six months. • Background research and competitive market analyses The first half of this period will be used to learn about the • Distribution and Logistics Research local economy, politics, culture and language. The students • Finance or Investment Opportunities acquire this knowledge through lectures given by guest • Outsourcing and Off Shoring speakers, i.e. people from business practice. During the • Import and Export Analysis second half of the desk research students will start the • Market Expanding Opportunities research for their individual business assignments.

How? Field Research Before going abroad, thorough desk research will be During the Research Project, approximately five weeks of performed to ensure maximum preparation. Researchers field research will be carried out in China. The information are offered intensive training about conducting research, needed for these assignments will be obtained by means of China, and relations with clients. The acquisition period interviews and visits to companies and institutions. The way starts in January and as soon the client has given the final the field research is conducted can be adjusted according assignment desk research will start. During the entire to the specific preferences of the participating companies. process we will be supported by our advisory board. They can be contacted by the committee in case of questions and Reporting will act as our consultants. After our visit to China each participating student will analyze and process the information gathered during the The field research will take place in China and will last for five previous phases of the Research Project. The individual weeks. Once the participants have returned to the Nether- contributions of the participating students to the general lands, the gathered data will be processed and the final re- survey will then be compiled to a customized report port will be written. The company will constantly be kept covering the research question proposed by the client. well-informed and updated about the project’s progress. The students will present their individual research reports The research results will be presented to the contracted to the participating companies. A seminar organized in company and, upon request, the report will be published. December will inform the companies about the results and give them the chance to get acquainted with professors and Student Selection participating students. Each year around 70 students apply for the FSA Research Project. These students are active in the field of Finance, Accountancy, Management Accounting (Controlling), International Financial Economics, Marketing, Fiscal

RESEARCH PROJECT 2014 | 9 CLIENT BENEFITS

For over 20 years, the FSA Research Project has conducted research in a variety of emerging markets. This has resulted in an extensive network and the accumulation of valuable knowledge concerning this field of research. This enables us to continue delivering the required work and to end up with satisfied clients of the FSA Research Project year after year. Each individual research project will be customized to the needs of the participating organization with the objective to completely satisfy the client. This way, we can offer:

High Quality Students conducting the research are selected based on both personal and professional performance. Primarily, these students are in the final stage of their study. Prior to departure, the students carry out extensive desk research and study the sector and industry specific characteristics of the particular research subject. Because of this, the time spent in China can be fully dedicated to field research. The field research in China will last five weeks. In order to guarantee quality of the research, it will be conducted under supervision of university professors of both the Vrije Universiteit Amsterdam and the Universiteit van Amsterdam.

Confidentiality It is possible to manage discrete research. This means the company name and/or the results of the research will not be published or discussed publicly. Clients named in the subsequent section have given their explicit authorization.

Competitive Price Since the FSA is a non-profit organization, we are able to offer specific research at a price of approximately 10 000 EUR (excluding VAT), based on research to be carried out by two students. The costs will rise accordingly in case the assignment requires more students.

Clarification • Expenses are based on the participation of eighteen students for a stay of five weeks in China. • Travel and accommodation expenses include airline tickets, insurance costs and transportation in China. • The organizational expenses consist of correspondence, telephone bills and brochures. • The academic supervision and the final report, which will be presented, are part of the research expenses. • Each participating student will contribute 750 EUR.

RESEARCH PROJECT 2014 | 10 RESEARCH EXPERIENCE

Over the last twenty years the Financial Study association and agriculture in particular. To highlight the reciprocal Amsterdam has gained considerable experience in organizing investment possibilities, also a blueprint was made of both foreign Research Projects. The destinations of the previous these sectors in the Dutch market. editions are displayed in the ‘FSA Research Project – world map’ at the end of this brochure. In each of these projects, research Synclair Packaging B.V. (Argentina, 2009) - The research assignments have played an important role. As mentioned included a market-scan of the flexible food packaging before, the research can be conducted in a variety of fields. industry in Argentina, specifying the meat industry, and the Examples of participating companies in the past have been: identification of possible distributors. This was done in order to give recommendations about entering the Argentinean food ABN AMRO, Royal Philips, ABP, P&O Nedloyd, Corus, Rabobank, packaging market. De Nederlandsche Bank, Stork, DHL, TPG, Grontmij, TNO, ING Group, Unilever Strawberindo Lestari (Indonesia, 2008) - This research re- presents a study on the logistical process of PT Strawberindo This list shows a number of companies active in different Lestari’s export activities to Singapore and Malaysia. The goal industries. Due to confidentiality issues, we can only mention of this project was to find a more cost efficient method of a limited number of companies, which have given their explicit transportation, while preserving the quality of the products. permission. Some examples of research assignments are provided below. Noteworthy is that only large companies are NEC Philips (South Africa, 2007) - This particular research was named here, numerous researches have been done for several about finding appropriate business partners for the joint-venture small and medium enterprises. NEC Philips in Mozambique, Tanzania, and Kenya to distribute one of their products. In order to realize this they had to plan Payvision (Singapore, 2013) and arrange a large variety of business meetings with potential The objective of the research commissioned by Payvision was to distributors in each of these countries. The outcome of this research the cross-border e-commerce market in Singapore and research assignment was an advisory report concerning which Malaysia. Over 25 industry experts were interviewed in these distributors were best suited for the job. NEC Philips actually two countries. Furthermore industry trends and opportunities used their advice to select one of the potential partners. were discussed with local representatives of multinationals like PayPal, eBay, but also with executives of local companies which Dutch Trade Board (India, 2006) - The research in India was have a major foothold in the local e-commerce industry. All performed for the Dutch Trade Board (DTB), which is an agency the obtained material is processed into a paper that is used by related to the Dutch ministry of foreign affairs. This research was Payvision for marketing purposes. focused on the trade relations between Dutch and Indian SME’s in the biotech, medical, automotive, ICT and agricultural sector. FMCG Supply Chain (South Africa, 2011) - The goal of this The final report is now used by the EVD in providing information research was to find out who the most important players were about India to Dutch companies. in the FMCG Supply Chain from producer through packager to retailers. The mission was to find out how technologically DHL (Brazil, 2005) - The scope of this research assignment advanced each industry link was, where decision power and was the Brazilian express-market and the interaction with autonomy lies, how the market is evolving and which industry the Benelux express-market in particular. Furthermore they and consumer trends in South Africa are noticeable. Shortly put, explored the possibility of expanding their business. the interviews, that took the researchers from Johannesburg through Durban to wonderful Cape Town, were designed to help Rabobank (Russia, 2004) - The FSA conducted research within the a Dutch player gain foothold if they were to start conducting any agricultural business and provided Rabobank with a qualitative type of operations in the country. industry entrance analysis of the Russian agricultural market.

Green Technology (China, 2010) - This research was to identify ING group (India, 2003) - The FSA provided ING Vysya Life the opportunities in the Chinese market. The focus was on Insurance with a quantitative analysis of their investment Shanghai, Beijing and the province of Shandong. The research portfolio in India. A decreasing interest rate was the reason consisted of two parts. On one hand, the aim was to find out to assess whether, next to bonds, investments should be possibilities for doing business in China (including the legal expanded to stocks. ING used the report to rebalance its aspects). On the other hand, it was focused on sustainability investment portfolio.

RESEARCH PROJECT 2014 | 11 ABOUT CHINA

In October 1949 Mao Zedong established the People’s Republic of China after winning the Chinese Civil War. Since the establishment of the People’s Republic of China, the country went from a solely agri-based economy where no foreign investments were allowed to the number one foreign investment destination in the world surpassing the U.S.

Economy China has a planned economy where the government holds a significant control over the Chinese economy. Last year, the Communist Party announced economic reforms to further develop their economy by reducing the role of the government. The Chinese economy has shown a remarkable growth over the past decade with GDP growth rates varying from 7.6% to 14.%. One of the main drivers of this economic growth is the international trade boosted by China’s WTO accession in 2001. Economists of the Organisation for Economic Co-operation and Development (OECD) expect the Chinese economy will top the U.S. economy as the most important economy of the world by 2016.

The economy still relies heavily on export, but a shift is taking place towards a more consumption-and service driven economy. Whereas the industry sector of China currently accounts as the largest sector by composing 45.3% of the GDP compared to 44.6% for the service sector, the services sector is expected to take over the spot as China’s most important sector. The recently disclosed plans for economic reforms by the Republic of China is expected to further encourage the shift towards a consumption driven economy by loosening controls over among other, the financial and energy sector.

Economic indicators 2013* GDP US$ 12.61 trillion GDP per capita US$ 9,300 GDP real growth rate 7.8% Inflation rate 2.6% Unemployment rate 6.5% Labor force 798.5 million

Foreign trade China is the largest trading nation in the world, with traded goods amounting for US$3.87 trillion in 2012. China is EU’s 2nd trading partner, while the EU is China’s largest trading partner. The EU has a negative trading balance in goods and services

*Source: CIA World Factbook

RESEARCH PROJECT 2014 | 12 with China amounting for more than €145,000 million. largest producer of electricity. Despite the size of the China is the Netherlands 2nd largest trading partner outside energy sector the shortage of energy supply remains the EU and the Netherlands was China’s most important in China. trading partner in the EU after Germany accounting for 15% of the trade. Furthermore, the Dutch exports to China • Financial services. The Chinese government is rose significantly over the past years, making China the loosening her grip on the financial sector and making number one non-Western destination of Dutch exports. The it more accessible for foreign investors. The recent Netherlands has a trade deficit with China of €23.8 billion, opening of the free trade zone in Shanghai displays but for 3 years Dutch exports have been growing faster than the intention of the Chinese government to reform the imports from China. financial sector.

Foreign direct investments • Water Management. China is facing challenges China surpassed the United States as the number one regarding water management. Currently the demand destination of foreign direct investments. The Netherlands for water exceeds the supply, and the Northern part was the 2nd largest investor in China and Hong Kong of the of China in particular faces serious water shortages. EU countries and 8th largest investor of the world in 2012, Furthermore the quality standards for water are being with investments accounting for more than €12 billion. raised in China, which offers opportunities for Dutch During the past 5 years the Dutch direct investments in China companies to provide their expertise. more than doubled. The China was the 9th largest investor outside the EU with investments over €2,500 million. • Life sciences and health. The aging of the Chinese population combined with increasing incomes make Promising sectors healthcare a promising sector for the future. Healthcare • Agriculture and food. China is the world’s largest spending in China is expected to grow from $357 billion producer and consumer of agricultural products. in 2011 to $1 trillion in 2020. Leading medical-device Furthermore, it’s the world’s largest producer of and – equipment companies such as Philips and GE cotton, rice and pork. Attracting foreign investors in Healthcare are present in China. the agricultural sector is a top priority for the Chinese government. China has to feed more people per square Geography meter of land than any other country in the world. China is located in the eastern part of Asia bordering 14 Furthermore, due to an ongoing urbanization, the different countries and two seas. It’s the fourth largest amount of people working in agriculture is decreasing. country in the world when it comes to her surface, covering All this makes it hard for China to match demand and almost 9,600,000 square km. As a consequence of the size supply, offering opportunities to Dutch firms to export of China, one cannot assign a particular climate to China. products and services related to agriculture. Of all The extreme northern part is subartic and temperature Dutch sectors the agro-food sector is most represented can drop as much as -30 degrees. The southern part on the in China. other hand, has a tropical climate, with a high degree of humidity. Mandarin is the most spoken language followed • Electronics. The electronics sector grew rapidly after by Cantonese spoken by the southern part of China. the liberalization of the economy. The electronic industry is both export-oriented and foreign capital-led. Culture Foreign investments in local management centers and China has a multi-ethnic, multicultural, and multilingual R&D bases are increasing. The main areas of China’s society. The country contains 56 etnicities of which the Han electronic information industry are computer-related people make up most of the population. Mandarin is the goods, such as software, communication equipment most spoken language followed by Cantonese spoken by and entertainment equipment. the southern part of China.The main religions in China are Confucianism, Taoism and Buddhism. • Energy. China is world’s second largest consumer of energy. To meet this demand China developed itself as the world’s largest producer of coal and the second

RESEARCH PROJECT 2014 | 13

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