INSIGHTThe Journal of the American Chamber of Commerce in Shanghai - Insight May/June 2017

www.amcham-shanghai.org getting china green business and the environment

Can China navigate its environmental challenges while maintaining strong economic growth? We take a closer look at government policies and business strategies promoting sustainable development and green growth in China.

Features P.08 Policy P.20 Member Focus P.38 PwC looks at developments Barbara Finamore of the NRDC Q&A with Jing Nealis of Shunfeng in green finance on China’s climate change efforts International Clean Energy Limited

Commerce inShanghai.E ditorial contentand may bereproduced withoutwrittenconsent sponsors' announcementsare independent of theChamber. Nopartofthispublication Insight isafree monthlypublication forthe amcham shanghai Veomayoury "Titi"Baccam and donotnecessarilyreflect theviewsof the governors, officers,membersorstaffthe governors, members ofTheAmericanChamber comments onInsight:Pleasecontact [email protected] VP ofAdministration&Finance Communications &Publications Government Relations&CSR Government www.amcham-shanghai.org Shanghai Centre, Suite568 Trade &InvestmentCenter Snap Printing,Inc. Sponsorship (86-21) 6279-7119ext.5668 Gabriele Cordioli 1376 NanjingWest Road Shanghai, 200040China Kenneth Jarrett Senior AssociateEditor fax: (86-21)6279-7643 Story ideas,questionsor tel: (86-21)6279-7119 of thecopyrightholder. DEBORAH TANG Ruoping Chen Ian Driscoll Content Manager (86-21) 6279-7119 Doug Strub Associate Editor LEON TUNG Jessica Wu INSIGHT INSIGHT Helen Ren Committees Doug Strub

Directors President Printing Design

46 45 44 43 41 38 36 34 31 29 27 25 22 20 18 16 13 10 08 The Journal of the AmericanChamberofCommerceThe Journalofthe inShanghai-May/June2017 INSIGHT David Allen andCyrille Jegu, productivity consultants, provide advice Mobike mobilizes themasses Esoterica Notes from thelasttwo months’ meetings Board of Governors Briefing After Mar-a-Lago, now what? President’s Note Introduction to theEthics Committee anditsmembers Overview of AmCham Shanghai’s Ethics Committee Essay by Michael Rosenthal, chair of AmCham Shanghai’s Environmental Committee Committee Chair’s Corner Q&A with Jing Nealis of Shunfeng International CleanEnergy Limited Member Focus Recap of selected events from lasttwo months Event Report Selected photos from thepasttwo months’ AmCham events MEMBER NEWS Objectives, compliance andbusinessrecommendations Understanding China’s Cyber Security Law Can Chinamanageitsresources to ensure water security? Blindsided by China’s March to Clear Waters Putting China’s energy goalsunder themicroscope Why China’s New Renewable Energy Targets Lack Ambition What Chinacandoto avoid therisksassociated with growing debt Dealing with China’s Debt Government efforts to speedthecreation of adynamicEV market inChina Bumps ontheRoad Barbara Finamore &NRDCcolleagues consider China’s climate changeefforts Is ChinatheNext Climate Leader? POLICY PERSPECTIVES How do We Stay Productive inanInformation-overloaded WeChat World? How to incentivize green production Motivating ChineseFactories for Environmental Performance One company’s questto instill aculture of sustainability initsstaff How Interface Localizes itsSustainability Agenda How companies are responding to China’s pollutionproblem Selling Solutionsto Pollution PwC looksat developments ingreen finance The Rise of Green BondsinChina FEATURES Month inPictures Special thankstothe2016-2017 AmCham ShanghaiPresident’s Circle Sponsors

Movers and

Shakers CAREER 3 May/June 2017 China is big. The People’s Republic tion as a luxury they couldn’t afford. They Chairman’s boasts the world’s biggest population and prioritized industry and job creation and will soon have the largest economy. China were reluctant to impose regulations that Letter also consumes the most coal, produces might impede growth. the most carbon gasses and pumps more Today China’s views are changing, and chemicals into the ground and water supply for good reason: Pollution creates costly than any other nation. health care burdens and hampers business China’s cities are highly polluted across activity in any number of ways. China also a number of metrics related to soil, water, wants environmental technologies to be a and air. The New York Times has reported major driver of economic activity and job on cities in China that have reached a level growth. China is positioning itself to be a of 1,000 micrograms of PM2.5 per cubic leader in the fight against climate change meter; the World Health Organization rec- and environmental degradation. ommends exposure of no more than 25 China’s plan looks far into the future. It is micrograms. China’s citizens, normally re- building capacity in clean and sustainable luctant to criticize their country, are angry energy and new energy vehicles. Already it and frustrated. Public protests and sharply is a world leader in solar and wind energy worded blog posts show how bold people and has mandated that 30% of government have become. vehicles should use clean energy. The China’s government, not known for tol- Chinese National Energy Administration erating outspoken criticism, may have got- announced that the country would spend ten the message and has taken aggressive $360 billion on renewable energy, creating steps to put new environmental laws in more than 13 million jobs. place. In 2015, China joined more than 190 These plans are not perfect. We can nations in signing the Paris Agreement on debate the safety of nuclear power plants, Climate Change. Moreover, they committed the efficacy of wind, and the economics of to one of the most aggressive numbers of solar. Electric vehicles may be clean, but in all major countries to reduce the percent- China people still depend on power that is age of carbon emissions by 2030. produced primarily by coal. The challenges Ker Gibbs These words have been backed up by we face to save our planet are many. The di- Chair of the Board of Governors deeds. According to the International Energy rection that China is taking, however, is the Agency China’s coal consumption has been right one. flat or slightly down the last two years. China China will face challenges in this new is adopting new standards and now evalu- role as a leader against the effects of cli- ates officials based on environmental goals, mate change. Global powers are always not just economic growth measures. Some examined and criticized, as they should be. experts say China’s commitment to reduce That’s how power is held in check and the carbon emissions is not only achievable but best solutions are found. Notoriously thin- may even come in ahead of their goal. skinned, China will need to be careful when Are we, as residents in China, satisfied throwing economic weight around. If China with the results so far and content with continues to finance coal-burning power the efforts being made? Of course not, nor plants abroad while moving away from coal should we be. The quality of our air, water, domestically, hackles will rise. Infrastruc- and soil is still horrible. The Chinese peo- ture projects under One Belt One Road ple will continue to push their government should be scrutinized for adherence to high and hold their officials accountable for environmental standards and principles. cleaning up and protecting the environ- The impact of human activity on our envi- ment. There are also issues with the integ- ronment and the sustainability of our planet rity of data reporting, transparency, and could be the most important issue of our the degree to which regulations are im- time. Future generations will rightly hold us plemented consistently across the coun- to account. This issue also binds us together. try. Despite these problems, movement is Some countries will lead while others fail in the right direction. to act, making our common task that much China’s current environmental policies more difficult. China has chosen to lead. As represent a significant shift in thinking. Pre- long as the goal is to preserve the environ- viously, China aligned itself with developing ment on the only planet we have, let’s hope countries that saw environmental protec- others make the right choice to follow. I www.amcham-shanghai.org

4 Movers and Shakers highlights senior-level personnel changes within the Chinese government and at multinational companies in China

Private Sector GOVERNMENT

Yum Avnet Yin Hong was Yum China Holdings, Avnet, a global promoted to deputy Inc. named Joey Wat technology distributor, party secretary of president and chief named Frederick Fu Shanghai. Most recently operating officer of president of Avnet, Asia Yin was a member of Yum China. In addition Pacific. In his new role, the municipal standing to overseeing the KFC Fu will be responsible committee. Before that, brand, Wat will expand her responsibility to for the strategic direction and business he was the vice secretary-general of oversee the company’s Pizza Hut Casual growth in the region. shanghai municipal government. From 1996 Dining and Pizza Hut Home Service brands. He joined Avnet in October 2006 and was to 2008, Yin took leadership positions in Wat joined Yum! Restaurants China in named regional president, China, overseeing various districts of Shanghai, including September 2014 as president of KFC the company's electronic component business Songjiang, Changning and Zhabei. China, and was promoted to chief growth in China. Most recently, he served as executive officer of KFC China in August acting president for Avnet Asia and Japan. 2015. Prior to that, she took various Prior to Avnet, Fu was the chief marketing Xu Liyi was named leadership positions at A S Watson group officer at Surface Mount Technology Ltd, mayor of Hangzhou, since 2004, most recently as the managing responsible for worldwide marketing and the capital city of director of Watsons UK. building a global network for the company. Zhejiang province. Wat received her MBA from Northwestern Before that he spent 14 years with Prior to this, he was University in 2000. STMicroelectronics Taiwan and the party secretary of STMicroelectronics Singapore. Wenzhou, another Fu holds a Master's degree in Industrial major city of Zhejiang province. Xu spent Marriott Engineering from the University of Hong Kong. his whole career in Zhejiang, first in Yuyao Marriott International and Ningbo before moving to Hangzhou in appointed Alethea 2006. He became the vice mayor of Lam vice president, Asian Tigers Hangzhou in March of 2014. communications for Asian Tigers, a leading Asia Pacific. In her new international relocation role, Lam will be company, announced the Zhou Jiangyong was managing and orchestrating the company's appointment of Jason Will appointed party internal and external communications, as the country manager of secretary of Wenzhou, including corporate reputation and crisis Asian Tigers China. a major city of management. In addition, she will also Will joins Asian Tigers China with over 24 years’ Zhejiang province. oversee the holistic brand communications industry experience. He previously worked for Zhou started his strategy for Marriott International's 20+ Crown Relocation Australia in Brisbane and career as a middle distinct Asia-Pacific brands and provide Melbourne in 1991-1998 and for Crown school teacher in 1985. He then joined strategic counsel to Marriott's over 550 Relocations Indonesia in 1999-2001. He then different county and city governments in operating hotels in the Asia Pacific region. joined Santa Fe Relocations in Shanghai in 2001 Zhejiang, most recently working as the Prior to this appointment, Lam was director as division manager of household goods and in mayor and party secretary of Zhou Shan. of corporate communications for Starwood 2003 he relocated to work for Santa Fe Hotels & Resorts Asia Pacific. Before joining Relocation in Singapore as general manager – We apologize for misidentifying Yang the travel industry, Lam worked across sales & marketing. In 2004 he moved to Jakarta, Xiaodu in the March-April edition. industries including fashion and Indonesia to take the role of managing director entertainment. for Santa Fe Relocations Indonesia and remained Lam holds a Bachelor's degree in Chinese in that role until December 2016. Will also holds If your company has executive personnel Literature and Psychology from the Global Mobility Specialist (GMS) certification from changes, please contact Deborah Tang at University of British Columbia. the Worldwide ERC organization. [email protected]. 2017 M ay/June 2017

5 6 www.amcham-shanghai.org D with guests. Med’s GuilinG.O. team alsoperformed anddanced debuted her newly released singleand video. Club by Liu Ting Ting andsingingby Sevi Ettinger who Tom Pang Newgrass Band,agu zheng performance the evening featured live musicfrom Studio 188,the at thelive andsilent auctions. games, dinedonfinefoods andbidonexclusive items sold-out ball,over 350guestsdanced, played casino Ball on April 15at thePudongShangri-LaHotel. At the This year’s theme was “Boulevard of Dreams” and RMB Ball Raises Shanghai AmCham Sponsor Photo Booth Sponsors Table Corporate Sponsor Ball Exclusive organizations at theannual AmCham Shanghai members raised RMB650,000for local charity uring afun-filledevening, AmCham Shanghai 650,000 Sponsors Platinum Sponsorship Networking sponsors for their generous supportto thisevent. PresidentKenneth Jarrett. where they live and work,” said AmCham Shanghai sign of our members’ commitment to thecommunities over 10.5millionRMBfor local organizations, aclear Since 2004,the AmCham Shanghaiball hasraised students inShanghai. scholarships for talented anddisadvantaged college AmCham Shanghai’s Centennial Scholarshipprovides Stones provides training to rural English teachers. provides scholarshipsandsupport, while Stepping help disadvantaged students. ShanghaiSunrise Shanghai’s Centennial Scholarship. All three groups Shanghai Sunrise,Stepping Stones, and AmCham and asilent auction. gourmet meals. This year’s ball alsoincludedabazaar such asbusinessclassairplanetickets, hotel stays and the live auctionasguestsoutbideachother for items AmCham Shanghai would like to thankall of our “We appreciate the generosity of our members. Proceeds from the event will be donated to As in years past,thehighlight of theevening was Supporting Organizations Fund raising Partner Gift ShopSponsor Media Partners I

In-kind Sponsors Movers and Shakers FEATURES 7 May/June 2017 The Rise of Green Bonds in China

By Jennifer Ye

any global companies ac- What are green bonds? What are the knowledge the reality of Green bonds, like any other type standards or Mclimate change and the fact of bond, are fixed-income financial guidelines that that it will impact their business. As cli- investments that companies or state- apply to green bonds? mate change starts to affect access to owned entities can use to raise funds. To regulate the development of raw materials, the reliability and secu- The key difference between a “green” green bonds, domestic and interna- Jennifer Ye rity of global supply chains, and even bond and a regular bond is that the tional financial institutions and regu- Partner, the type of products and services issuer publicly states it is raising cap- lators have issued green bond stan- Sustainability that consumers demand, companies ital to fund green projects, assets or dards and guidelines. Internationally, and Climate are realizing that a more active and business activities. Green project cate- the most widely used standards are Change, Risk diverse approach is needed to ad- gories, as outlined by the Chinese gov- the Green Bond Principles (GBP) from Assurance, dress climate change, and that doing ernment, typically include energy effi- the International Capital Market Asso- PwC China so can also bring new opportunities. ciency, renewable energy, sustainable ciation (ICMA) and the Climate Bonds Green finance incentives, green jobs water management, pollution preven- Standards (CBS) from the Climate In China, PwC provided and green stimulus packages are be- tion and control, sustainable manage- Bonds Initiative (CBI). In China, several pre-issuance coming more common. Policymakers, ment of living natural resources, biodi- guidelines pertaining to green bonds assurance to looking to encourage environmen- versity conservation, sustainable water have been promulgated in the past the first green tally and socially responsible invest- management, climate change adapta- two years (see figure 1). corporate ments, developed green bonds as a tion, eco-efficient products, and pro- While international and domestic bond issued on tool to mobilize the global investment duction technologies and processes. guidelines pertaining to green bonds the Shanghai community and spur green growth Green bonds can be issued by fi- vary slightly, the spirit is similar with the Stock Exchange and development. nancial institutions, listed companies, focus on four main areas: use of pro- in 2016 In 2007, the first green bond was or private companies with eligible ceeds, process for project evaluation issued by the European Investment green projects. Green bonds offer and selection, management of pro- Bank (EIB). While this initial issuance multiple potential benefits to issuers, ceeds, and reporting. was relatively small, the market including but not limited to: 1. Use of proceeds: the issuer must quickly gained momentum; the Cli- 1. Expanding financing channels, declare eligible green projects and mate Bonds Initiative (CBI) estimates especially for foreign investment, to asset categories. There are several that the annual issuance of green aid companies in need of capital dur- categories and sets of criteria defining bonds rose from RMB 21 billion (USD ing periods of rapid development eligible green projects and/or assets 3 billion) in 2012 to RMB 559 billion 2. Reducing financing costs, as green already in existence in the market. (USD 81 billion) in 2016. Much of this bonds have lower interest rates than or- 2. Process for project evaluation growth came from China, which ac- dinary bonds, resulting in a lower total is- and selection: the issuer must estab- counted for 39% of global issuance suance cost compared to ordinary bonds lish, document, and maintain a deci- in 2016. Green bonds are quickly 3. Improving market perception, as sion-making process that it uses to de- becoming an attractive investment issuing green bonds demonstrates re- termine the eligibility of the nominated prospect in China, with demand con- solve to contribute to environmental projects and/or assets. tinuing to grow. protection and sustainable development 3. Management of proceeds: the www.amcham-shanghai.org

8 issue agreen bond

becoming an continuing to Green bonds Figure 1

investment prospect in China, with are quickly The process to March and April 2016 attractive 22 December 2015 demand 13 January2016 31 August 2016 2016 31 August grow Date issued? and their environmental benefits. development status of green projects should discloseonanannual basisthe undistributed proceeds, theissuer reporting ontheuseof proceeds and payback of green bondproceeds. for receiving, saving, transferring, and issuer mustopenaspecial account verification report issued by a profes a - by issued report verification in periodicreports. An independent benefits environmental and status, ceeds, green project development information regarding theuseof pro- must alsodiscloseregularly updated bond proceeds. Inaddition,theissuer to the useand management of green as explanation and benefits, mental demonstrating potential environ - ments andproject selectioncriteria, to green project category require- bond criteria, including adhering green specific meet prospectusmust bond the that is difference The bond. bond issimilar to that of aregular How are green bonds 4. Reporting: Inadditionto periodic The process of issuingagreen Intermediary service Issue green bond Decision to issue parties selection green bond Commission (NDRC) The National Development andReform The People’s Bankof China(PBoC) Insurance Regulatory Commission(CIRC) curities Regulatory Commission(CSRC), andChina Banking Regulatory Commission(CBRC), ChinaSe- NDRC, Ministry of Environmental Protection, China Jointly released by thePBoC,Ministry of Finance, Exchange Shanghai Stock Exchange &ShenzhenStock R egulator project criteria and selection process Design thegreen Allocation of preparation Information proceeds verified? Post-issuance verification is focused is verification Post-issuance formation disclosure, and reporting. the management of proceeds, in- processes, procedures pertainingto qualifying criteria, project selection namely adherence to green project with related green bondstandards, verification is focused on compliance regulations. Typically,pre-issuance cability of domesticor international needs of theissuer, andthe appli- of which vary dependingonthe issue reports, the nature and scope ate green bond funded projects and evalu- providers service verification External comfort. and confidence tor of conclusions, and increase inves- reliability the enhance to verification a third party to provide independent many issuersof green bondsengage ments are genuinely green. As such, want assurance that green invest is strongly recommended. compliance to green bondstandards sional certification authority assessing How are green bonds Both policymakers andinvestors green bonds Guidance ontheissuance of [No. 39],2015) green bonds(The Announcement Guidance ontheissuance of Green Financial System Guidelines for Establishingthe green bondpilot program Notice onimplementing the Guideline management of proceeds Establish processes and Ongoing montioring controls for useand Get credit rating and reporting - the green bond. both before andafter theissuance of ance provider to assesscompliance in China engage a third-party assur also strongly suggested that issuers line with international practice, itis and report green bondproceeds. In effectivelyto manage, place track, in an ongoing monitoring mechanism should have robust procedures and funded by thegreen bonds,issuers close theprogress of green projects as issuersmustalsoperiodically dis- manage theseprojects. In addition, policies and procedures to effectively struggle to set up the appropriate cisions ingreen projects, andmay teria asthebasisfor investment de- cri- bond green defining properly in China, many issuerslackexperience As green bondsare still quite new in issued inChina,challengesremain. volume and value of green bonds bond fundedprojects. green from arising benefits mental status, anddisclosure of environ- ceeds, green project development on the use and management of pro- rements for bondissuance approval as green projects, andoutlinestherequi- Lists projects that are considered eligible institutions issuinggreen bonds Provides guidance for financial velopment of thegreen financial system Proposes 35measures to pushthede- interbank bondmarket on stock exchanges inadditionto the States that green bondscanbelisted Despite therecent increase inthe Movers Description Select underlying I Post-issuance green project Pre-issuance verification verfication and Shakers FEATURES - 9 May/June 2017 10 www.amcham-shanghai.org By David Hicks By responding to China’s pollutionproblem A lookat companies measuringand to Pollution Selling Solutions W individuals alike. government, private companies, and the numbersmatter to everyone –the performance. The stakes are highand when evaluating government officials’ more weight thaneconomic growth environmental protection would carry first the time inChinesegovernment history, for that, 2017 of dawn the Commission (NDRC) announced at National Development andReform of this battle, aspokesman for the reach national standards by 2020. water and ensure 93%of water sources suppliers to monitor thequality of their quiring local governments and water Council issueda‘Water Ten Plan’, re- to Greenpeace. And in2015theState between 2013and2016,according fell by about 12%in74 of China’s cities health andenvironmental problems, pollute theair andcancauseserious ter of lessthan2.5micrometers that centration of PM2.5,particulate mat ress hasbeenmade. The average con- have beenset, andimpressive prog- and reducing pollution. panies inthebusinessof monitoring com- to benefit commercial brought since thenhave beenembraced and ulations issuedby thegovernment the frontlines. The directives andreg- on fight toprepared werecompanies People’s Congress, it was clear many To underscore theseriousness Lofty pollutionreduction goals tion” at the2014National declared “war onpollu- hen Premier LiKeqiang - and beganmakingthedata public jing installedanair quality monitor 2008, when theUSEmbassy inBei- was not publicly shared inChinauntil discussed. Citywidepollution data officially not were problem pollution until recently, thedetails of China’s might behard to remember that, environmental protection cause,it cent championingof theinternational war onpollutionand Xi Jinping’s re- well’s portfolio of residential products. business, which oversees Honey of HBT Greater China/HGRHome vice president andgeneral manager China, according to Dino Asvaintra, part of their “smart home” strategy in as products purification waterand air cess in marketing consumer-grade national conglomerate, have hadsuc companies like Honeywell, amulti- contaminative factories. Meanwhile, like soil remediation companies and ing organizations, andenterprises research institutions,third-party test environmental monitoring stations, government-affiliated include ment of their pollutionmonitoring equip- in China, told Insight that consumers monitoring air, water andsoil pollution science companies with products company which focuses onserving an American China, Scientific Fisher Gianluca Pettiti, president of Thermo ment comes from a variety of sources. monitoring and abatement equip- Who’s buying buying Who’s Between the 2014 declaration of Accordingly, demandfor pollution - - - ernment had installed over 1,000 on- announced that theShanghaigov Bureau deputy director SuGuodong Municipal Environmental Protection instance, inDecember 2016Shanghai local governments themselves. For sure pollutionoutputhascome from then, muchof theinitiative to mea- ing to Chinesemediareports. Since to exceed USD$326 million, accord- by 2015,aproject that was estimated time monitoring stations in338cities aimed to construct 1,436PM2.5real- istry of Environmental Protection their PM2.5levels. standards,” requiring cities to publish in their “national ambient air quality followed suitandincludedPM2.5 Ministry of Environmental Protection grin. However, in2012,theChinese to theChinesegovernment’s cha- GianlucaPettiti To get thedata, theChineseMin- - than economic than economic environmental environmental in the Chinese in theChinese A spokesman A spokesman government’s announced at announced at growth when growth when for the NDRC for theNDRC performance 2017 that, for 2017 that,for the first time the firsttime more weight more weight government would carry would carry the dawn of the dawnof evaluating evaluating protection protection officials’ officials’ history, on-year growth asof 2015. over year-70% had market purifier air pany, total domesticsales for China’s Beijing-based market research com- according to Daxue Consulting, a growth isnot unusual to Honeywell: category.” impressivepurifier air Such year-on-year growth intheresidential years, we’ve experienced over 80% two last the Over products. rification from our air purification and water pu- in thepastcouple of years hascome tra, Honeywell’s “mostrapid growth homes. Accordingprivateto Asvain - monitoring andabating pollutionin tion hasincreased, sohasinterest in more cost-effective way. customers to combat air pollutionina and PM10monitors together, helping Scientific™ Model 5028i, which combines PM2.5 Thermo innovative the this year, launched Fisher Thermo turing asaresult of new regulation.” lution monitoring capabilitiesare ma- said Pettiti. “Theprivate sector’s pol being designed and implemented,” new [pollution]regulations that are the private sector to align with the sector. “Iseemuchmore urgency in tice greater demandfrom theprivate Fisher’s Pettiti hasalsobegunto no- a local andnational level. But Thermo monitoring equipment sellers,at both been animportant client for pollution dust emissionregulations. local construction sites complied with line monitoring systems to make sure an advanced air samplinginstrument Series Ambient Ion Monitor (AIM)is measure air pollution. The URG9000 which useambient technology to come from products inthiscategory, pollution monitoring equipment sales Fisher’s Thermo of portion significant sition of PM2.5. According to Pettiti, a and can measure the specific compo- of air pollutionmonitoring equipment, itor is Thermo Fisher’s primary piece URG 9000Series Ambient Ion Mon- to helpmanagepollutionlevels. The provided air monitoring equipment the G202016Summit, Thermo Fisher he equipment The As publicawareness of pollu- For abetter solution,inFebruary The Chinesegovernment has When thecity of Hangzhou hosted - more sensitive to thesize, quantity laser-based technology. Lasersare technology hasbeenreplaced by quality hadturnedpoor. turn red, falsely reporting that theair ing pastasensor would causeitto was too great: thesimpleactof walk sitivity and variance of thesesensors (red, bad;green, good).Butthesen- usually intheform of acolor rating a rough estimate of theair quality, interfered with thebeamandprovide registerwhich would particles when device would emitaninfrared beam, red technology. The measurement measurement products to use infra- common for consumer pollution developed. Until recent years, it was sure air pollutionisalready very well mea- effectively to needed nology tion products at thecore. purifica- water and air with products, by developing asuite of ‘smart home’ eywell hassought to meet thisneed than for residential consumers. Hon- trial andresearch-based userather makes themmore suitableto indus- expense of thesestationary systems cases, butthelarge size, weight and racy andreliability is useful inmany of pollutants.” A highlevel of accu- and ableto measure a wide range Monitor – as “highly reliable, accurate Fisher’s URG9000Series Ambient Ion monitoring systems –like Thermo journal Sensorsdescribesstationary precursor gases. and (PM2.5) composition particle fine that simultaneously measures both Water purifierstyle Over thelastfew years, infrared Asvaintra argues that the tech- A research paper intheacademic -

locations. measure the air quality in very specific tachable sensorssoconsumers can next generation of machines with de- company ispreparing to release the organic compounds (TVOCs). The sors that measure PM2.5and volatile products include laser-based sen- purification air Honeywell’s of all that ket],” according to Asvaintra. He notes compete inChina’s [residential mar benchmark technology neededto and have become “theminimum and concentration of air pollutants, marketfor air productspurification has conventional monitoring instruments. the samedata accuracy andquality as portable ambient sensor canachieve Sensors report found that “no low-cost tutions andgovernment bodies. The insti- research of needs specific very and ubiquitous sensorsto meet the there isno way for these convenient Visual Node. Butto date itseemsthat jing-based OriginsLaser Egg and Air Other examples includetheBei- eywell’s consumer-grade products. sensors, similar to that found inHon- and fast response timelaser-based are equipped with low cost, small size, creased from 151in2013to 1,614in2015. in- China in sold being brands fication reported that thenumber of air puri - market. In2016,DaxueConsulting have enthusiastically entered theChina use by many of thecompanies who Becoming the Chinese competitor The dizzyingpace at which the The vast majority of thesebrands That technology has beenputto Movers and FEATURES Shakers - - 11 May/June 2017 12 www.amcham-shanghai.org We are seeing less onwhere a trend where on where the is, andmore the pollution the focusis pollution is generated asthmatics, groups like that.” people who have allergies, hay fever, It’s designedmore for amarket of China. in find you PM2.5 of levels the an air purifier isn’t designed to combat notes Asvaintra. “In the United States, is found inmore developed markets, generally more advanced than what is market China the flooded has that of mindset.” It’s pushedusto develop anew kind forced usto becompetitive inthat way. of that,” hesaid.“Thecompetition has fect, but we improve anditerate ontop in aboutsixmonths. It’s not always per market to stuff get to Honeywell“tries pace with their Chinesecompetitors, as effective in China. In an effort to keep vaintra notes that this approach is not before they release new products, As- the United States strive for perfection While many engineeringcompanies in “Becoming theChineseCompetitor.” been marketed within thecompany as tition from Chinesecompanies has and we needto deal with it.” remains aperennial challengefor us, competitors isreally phenomenal.It Chinese local efficiency of and speed has brought somechallenges:“The competition from local businesses he said.“We have along way to go.” the market penetration isstill very low,” and there are alot of local players. But tic. “Chinaisa very competitive market panies, but Asvaintra remains optimis- expanded might dissuadesomecom- DinoAsvaintra ChinaisHoneywell’s mostimpor technology purification air The Honeywell’s response to compe- At thesametime,henotes that - - veloped andmanufactured inChina.” 3106 COD was “100% designed,de- the water-pollution monitoring Orion equipment isstill managedintheU.S., nology of their pollutionmonitoring within China. Although thecore tech - as many of their products aspossible that Thermo Fisher strives to develop on-year revenue growth. Pettiti says have experienced double-digit year- systems to China.Inrecent years they manufacturing andR&Dfor these ment andhave since moved their to sell pollution monitoring equip- 1970s the in China to came first pany ing their Chinaoperations. The com- vested major resources into develop- China market. the for specifically and China products within purification their designs Honeywell accordingly develops and and he said, industry,” purification air as thecenter of gravity for theglobal cade. “Chinais very quickly emerging within thecountry over thelastde- facturing, designandR&Dcapabilities USD$1 billion to develop their manu- practice hasinvolved investing over China strategy ‘East for East’, which in in their Chinaoperations. They call theirinvest to efforts great made has China alone. Accordingly, Honeywell ket size of aboutUSD$2billionin mar a has equipment purification air a few years ago.He estimates that said Asvaintra, surpassing Germany tant market after theUnited States, and theroot problem can bemore eas- polluting technologies can be identified With theproper monitoring equipment, how that exceedance comes about.” limit. Itactually helpsthemunderstand show when there isexceedance of a monitoring equipment doesnot just “Good notes: firm, consulting mental business at Greenment, anenviron- partner anddirector of international to pollutionoutput. Johnny Browaeys, ents tryingto measure andrespond pollution, rather thanpublicsector cli- seeking to identify thesource of their be 禾火to driven by private sector companies sales equipment abatement ers expect pollutionmonitoring and Looking forward Similarly, Thermo Fisher has in- In thecoming years, industry insid- - runway inChina.” we still see a tremendous amount of about soft or hard economic landings, “Regardless of all the news you see and Honeywell. As Asvaintra putsit: ture for companies like Thermo Fisher imagine dimprospects inthenear fu- lem isnot yet insight, soitishard to water emissions. porting real-time details of their air and sands of factories to beginpublicly re- central government required thou- been developing since 2014, when the stuff.”tivelythis address has trend This in theproduction process, to preemp- be more interest inmonitoring earlier the pipe.Isuspectthat there will soon monitoring happensnear theendof generated,” saidPettiti. and more on where thepollutionis cus islesson where thepollution is, “We are seeing a trend where the fo- comply with thesenew regulations. and abatement equipment inorder to panies to invest inpollutionmonitoring duction targets andencouraged com- which putforward clear pollutionre- derscored by the13th Five Year Plan, ing theroot of theproblem was un- ily addressed. The science behind air quality monitoring Thesciencebehindairquality writer for AmCham Shanghai David Hicks isacontributing The endof China’s pollutionprob- Browaeys agrees: “Right now, most The importance of understand- I By ShannonEllis Agenda Sustainability Localizes its How Interface BioWorld. industry for China’s biotech regularly about She writes company.thing founded aclo- Olympics and Beijing the at Nikeduring brand manager work, wasa development civil society Beijing doing embassies in and British Canadian the worked for previously Shannon Ellis F by folks far away inheadquarters? was designedfor developed markets about asustainability agenda when it to get local teams to bepassionate by extension with customers. How fail to resonate with employees and reality when they leave home:they nor could itlocally beeasily under that pledgecould not beignored, environment by 2020. eliminate any negative impactonthe sion Zero” -a company promise to Interface andcoined theterm “Mis- ambitious sustainability agendafor energy andtoxic materials. He set an to landfill waste and excessive use of the world interms of itscontributions successful, it was not doinggoodfor early on that while his company was derson, thecompany’s founder, saw ability journey inthe1990s.Ray An- manufacturer, started onitssustain- their own terms. a way into thesustainability issue on found employees Chinese firm’s the stood or implemented. That is,until The When Interface came to China Interface, theleadingcarpet tile ability policies hit a cold hard sophisticated global sustain- their firms, American many or Interfaceway - their employer’s commitment to the matterlevels.(PM) staffThe saw how compounds (VOCs) and particulate pollution such as volatile organic to transparently track levels of air with vertical gardens andsensors standards for wellbeing andhealth, RESET to meet designed office tiful later, Interface moved into abeau- came urgent andpersonal inChina. the impacts of climate change be- about concern time first the foraired, first presentation Truth’ ‘Inconvenient Al Gore moment. A decadeafter his rectly to people’s health.It was China’s the impactsof China’s air pollutiondi- tary “Under theDome” which linked of thecontroversial viral documen- release the was first The mindset. in about two years ago.” nese one.Butthat changedfor us about sustainability butnot aChi- you cantalkto a Western company “The conventional thinkinghasbeen terface (now, vice-president global). vice-president Greater Chinafor In- staff,” said Patrick Riley, former senior customers but to fully engage our versation going,not only with our gled to get the sustainability con- Purely by coincidence amonth He credits two events for theshift “Here inChina, we have strug- vent this,thecompany buys energy renewable energy grid. To circum- hai, Taicang lacks direct access to a facturing site. Located near Shang- from thecompany’s Taicang manu- no policy directive ever could. newable energy policiesina way that firm acrosscompany’sfor the the re- to the wind farm, created excitement competition. The coveted prize, atrip ganized asapartof acompany-wide their carbon footprint, the trip was or wind farm. Travelling by train to limit lia with adozen employees to visit a Riley was on his way to Inner Mongo- participate. periences in which employees can relevant -often by encouraging ex locally and tainability efforts tangible tunities to make thecompany’s sus- snowballed, helpedalongby oppor sonal well-being.” point with Chinese people is per impact on your health;thetrigger the environment followed by the West itisall abouttheimpacton ested,” saidRiley. “Whereas inthe where theChinesepublicisinter environment alsobenefited them. But Inner Mongolia isalong way When contacted for thisarticle, has engagement staff then, Since “We hadstumbledinto theplace MoversMovers and and Shakers FEATURES Shakers - - - - - 13 May/June 2017 14 www.amcham-shanghai.org they were supporting. selves therenewable energy source The trip was a way to see for them- it could beadopted inChinaas well. find to surprised pleasantly was and with thisapproach inother countries Mongolia. Interface hashadsuccess and support the wind farm in Inner credits to offset their carbon footprint system, takingbacktheir usedcar company operates aclosedloop carpet tilesare recyclable andthe used to make carpet tiles.Interface be to villages fishing Philippine from old nets reclaims which Effect, Net Among their recycling programs is especially petroleum-based nylon. reduce theuseof virgin materials, Interface. Gloria Niu,sustainability manager at renewable energy policy,” explained a compelling story that explains our that they saw the wind farm andtell pride with say to staff sales for thing Interface offers. of thesustainability proposition that had aneasier timeconvincing clients importantly, thesalesteam have also retention and productivity. Butperhapsmore staff better from benefit environmental engagement, they to shore, they found thebeachlit polystyrene, and when they returned of plasticintheseawater, especially They discovered highconcentrations water samples from the open ocean. land China went onaday tripto take ployees from Hong Kong andmain- local NGO, PlasticFree Seasandem- room’ was organized with thehelpof find out.” know what thismeans.” and skeptical consumer: “I want to severe problem?” asked the designer to beconvincing. “Is ocean plastic a signer client inHong Kong, itfailed de- interior an to nets fishing cycled pitching carpet tilesmadefrom re- pets for recycling.

Sustainability equals sales Another priority at Interface isto “After that trip,itbecameanatural Interface believes that through It wasn’t long after a ‘sea class- The salespersonreplied: “Let’s go salesperson was a But when - - painting. While the aesthetic gives a brush technique asaChinese ink Nature History, inspired by thesame ically for theChina-market, called developing alineof products specif vice-president, Asia. managing director at Interface and pealing here,” added Lucy Lei, China carpets with zero VOCs are very ap- longer thecaseinChina. That is why ity istaken for granted butthat isno on humanhealth.Overseas, air qual or environmentalism, istheimpact when they talkaboutsustainability most of our customers think about thing first the China, “In chemicals. harmful off-gassing not and sistant contribute to thisby beingmouldre- ing remain top priorities.Carpets can Niu says. people,” to different things different And the value of sustainability means for, sosustainability often comes last. and everything the client is looking the design, warranty, our quality specifications, technical the cover ability with customers. Salesmust squeeze inadiscussionof sustain- shared by everyone. pany places onsustainability isnot a recognition that the value thecom- nects employees globally -there is book-like social platform that con- - helpedalong with aninternal Face- offtaken have company the in tions do this?’” colleague says, ‘Hey, why don’t we nizing them.“Italways starts when a in thecompany incharge of orga- But shesays there isnooneperson lective Responsibility inShanghai. who isdoingafellowship with Col studies graduate borninShanghai bridge University environmental frequently says Niu,a young Cam- and later by extension by humans. fish, by consumed and ocean the in could bebroken into small particles and plasticpackaging before they spent timepickingup water bottles tered with disposableplastics. They he China wayChina The This central insight ledto Interface But inChina,healthand wellbe- “It isnot always thecase we can While sustainability conversa- Such tripsuggestionscome up - - - achieve MissionZero: story ismore important thanever. ing alocally relevant sustainability speaking with thesecustomers, hav these ontheir own terms. And when defining and programsresponsibility merce giants are pursuingcorporate pany Lenovo andChina’s e-com- com- technology Vanke, firm estate now Chinesecompanies suchasreal global sustainability targets inChina, porations lookingto implement their China clients were multinational cor it. Where once many of Interface’s and willing to dosomething about aware of their impactontheplanet Chinese companies are increasingly is more aboutlistening to them.” on sustainability and be convincing. It sell themoneverything we are doing bring to it,” says Niu. “We cannot just ability isanddetermine what we can what thecustomer thinkssustain- customers. “We needto understand sation -listening more deeply to stage inthesustainability conver pletely manufactured inChina. com- VOCs, no with fibers recycled ogy, made with ahighpercentage of also theproduct of moderntechnol subtle nodto Chineseheritage,itis charity • • Recycled packaging materials travel • mum performance use minimal materials for maxi- • mize landfill waste cycles usedcarpet tilesto mini- • comes from renewable sources • • Zero waste from factories Some methods Interface usesto Their timing couldn’t be better. Now they are entering thenext Donate used office computers to “Less ismore” approach: carpets Closed-loop manufacturing: re- Carbon offsetting for company for offsetting Carbon Energy usedinmanufacturing I - - - - AmCham Shanghai is a thriving AmCham Shanghai is truly network of professionals the “Voice of American Business who help one another in China”. It offers unrivaled value grow and prosper. to its members.

- Manoj Mehta - Eric Zheng CEO, President & CEO, naked Group AIG China

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Join Us Now: Jane Wang (86 21) 6279 7119-5682 [email protected] 16 www.amcham-shanghai.org Performance for Environmental Chinese Factories Motivating H managers decided to employ an turned outonly two outof 40factory this option? many of thoseon the course chose energy management system. How Safety (EHS)manager to create an permanent Environment, Health and option in the case study was to hire a vironmental andsafety issues.One plemented and various potential en- im- yet measures efficiency energy a RMB7ma-year energy spend,few study basedonareal factory with store chain.Igave themacase nese suppliersto aUK department vironment training sessionfor Chi- protection? and alsothestate of environmental of beingenvironmentally friendly, be China andEurope companies,fashionretailers, forpharmaceutical houses. firms,supermarketsandpublishing construction sultancy, incorporateresponsibility specializing andsustainability. Tristan hascreated projects andmanagedsustainability in Tristan generalmanagerofCarnstone’s Edmondsonisthe Shanghaioffice. Carnstoneisanindependentmanagementcon- At theendof theexercise, it I recently conducted ashorten- huanbao: inChineseboth theact their Chinesesuppliersto firms sourcing inChinamotivate international do ow factories canadapt: scape isalsochangingfaster than been anafterthought. control andriskmanagement has for incremental andlong-term cost Developing management processes and inexperienced managerial class. dictable legal climate, with a young ous growth at all costs, inanunpre- years hasbeenof almostcontinu- nese businessover thepast30 equipment that are huanbao. mental management processes or and seldom invest enough in environ- fessionals, in-houseor as consultants, ten don’t employ environmental pro- their own facilities. already employed EHSmanagersat agers were alsotheonly onesthat factory. Tellingly, thosetwo man- EHS professional at thecase-study Te omns Pry rightly Party Communist The • Yet China’s environmental land- The history andculture of Chi- Let’s unpack why Chinese firms of - local NGOslike theBeijing-based shame bigcompanies into action,or heard of NGOslike Greenpeace who tained properly. Few factories have main- effluent not is plant treatment gates demanding to know why the tional brands turnupat thefactory and are surprised when interna- from their customer’s perspective, ers alsooften don’t seethe world cal pressure. permanent closures becauseof lo- experienced shutdowns andeven have hadexpansion plansblocked, ronmental pollution,andfactories cause of protests inChinaisenvi- issues asa risk. The singlelargest munity actionover environmental many companies off guard. proving enforcement iscatching of upgrades to regulations andim- as anexistential threat, anda wave views environmental degradation Fcoy wes n manag- and owners Factory • com- recognise factories Few • and alowerrisk are lowercosts helping China’s The benefitsof succeed inthe development next stageof supply chain factories to their environmental performance. materially changetheir approach to will not alone persuade factories to lations, communities andcustomers China. agement of their supply chainsin rank brands’ environmental man- Index (CITI), aproject to assessand InformationCorporate Transparency The produces which (IPE) affairs tal Institute for PublicandEnvironmen- Under theDomeby Chai Jing, afor is theChinesedocumentary called understanding thismindset change primed themfor change. lar to themselves, and you will have of pollutiononpeoplenot dissimi- Show managersthehumanimpact bao inrelation to personal health. managers tend to only view huan- advantage of the fact that factory to take is first the and change, set risk requires amindset change. from reduced costs andreduced challenge for capturing thegains tal performance asamanagement environmen- treating But step. first the be should This efficiency. water basic in staff training or plemented, are im- measures efficiency energy stitutes exist, ensuringthat basic as switch- ing to safer chemicals where sub- such fixed, be should problems with low-cost solutions insist that high visibility, high-risk of that pollution. They might start their factory neighboursisthesource water around them, and which of how much pollutionisintheair and and river basin. Suppliers can see data from factories, by city, province and river basin,as well asemissions in theair and water, by city, province which contains levels of pollutants pliers towards IPE’s pollutionmap, blamed Beijing’s air pollution. tumour inthe womb, for which Chai her unborndaughter developed a film when the made Chai Jing nalist. mer ChinaCentral Television jour he mindset The challenge But theserisksrelating to regu- A great place to startinterms of There are two partsto thismind- Yes, international brands can A way to follow upisto point sup- - - effective environmental manage- environmental effective business relationships andrequire man health,invest inconstructive tween factory pollutionandhu- show factories theconnection be- lower risksupply chain. development are lower costs anda succeed inthenext stageof their to factories China’s helping of efits formance. Itisn’t easy, butthe ben- to ensure goodenvironmental per plans factories should have in place agement processes and investment expectations of the kinds of man- strategy details, as well asdetailed rate purchasing forecasts, business mation to factories, suchasaccu- through givingreal anduseful infor more openandhonestrelationship, and labour management practices. uct quality, as well asto productivity vironmental issues,butalsoto prod- And thisdoesnot justapply to en- to foster long-term improvements. them outof business,istheonly way reduction challengesthat could put support to tacklethecost andrisk viding them with themanagement lationships with factories, andpro- ronment. Creating constructive re- their supplierstowards theenvi- role on the short-term attitudes of term shouldunderstandtheir own change their approach for thelong- want to helptheir factory partners Companies sourcing inChina who change isrooted inhard numbers. their neighbours. thinking abouttheir children, and Green growth If companies that source inChina In practice thismeansfostering a The second partof themindset - - pany management. companyadministrative detention oncom- the RMB200,000, andimposeda15-day fined discharge, uct factory becauseof pollution Metalclosed theHengjin Prod- Environmental Protection Bureau gal chemical discharge. pany management becauseof ille- administrative detention oncom- RMB100,000 andimposeda10-day Mill Fabric Jihua Hanchuang fined vironmental Protection Bureau million. RMB8.5 of a total fined and years, ranging from 20months to nine panies, were sentenced to jail terms cluding theheadsof thethree com- waste into rivers. Ten suspects,in- dumped 26,000tons of hazardous on three chemical companies that yuan million 78 of fines impose to upheld alower court’s decision ried out. impact assessment hadbeencar agement becausenoenvironmental tive detention oncompany man- and imposeda15-day administra- closed theSuizhouQingyuanquarry mental Protection Bureau inHubei enforced: amples of how thelaw hasbeen tively inactive. Below are afew ex while other areas have beenrela- detentions, administrative and fines flurry of a factoryenced shutdowns, patchy. Someregions have experi- mented on January 1,2015 hasbeen ronmental Protection Law, imple- seriously. managers will starttakinghuanbao ment from their suppliers,factory

A patchy enforcement Jnay 05 te Shenzhen the 2015: January • En- Wuhan the 2016: February • Zhejiang in court a 2016: March • Environ- Suizhou the 2016: July • Enforcement of China’s Envi- strong law, Movers and I FEATURES Shakers - -

17 May/June 2017 How do We Stay Productive in an Information-overloaded WeChat World? David Allen and Cyrille Jegu, productivity consultants, provide the following advice

By David Allen, Cyrille Jégu

David Allen is an author, consultant, international lecturer, founder and chairman of the David Allen Company, a productivity training and consulting company that provides services designed to increase performance, capacity and aligned execution.

Cyrille Jegu is a certified GTD Master Trainer and exclusive licensee of the David Allen Company in Greater China. His purpose is to equip and empower individuals and organisations to do more of the right things, in less time, with less stress, more confidence and clarity.

eChat and many mobile-de- 2. Be more Effective – i.e. selectively pro- proach in how we manage this tsunami of vice apps are perceived as ductive: optimizing for results. information can help at work and at home. Wdistracting or unsocial or both. In the first instance, you’ve decided to Information is coming from everywhere: Walking zombies stare at their devices on go out for errands, and you want to take WeChat and other apps, emails, phone busy streets; friends dine together yet are the best routes to complete them all, in the calls, casual conversations, business meet- more present with their phones than their briefest time. In the second, you’re deciding ings, even your thoughts are a mine for po- companions. Even among those of us who whether going out for errands is the most tential information, ideas and distractions. criticize these behaviors, there’s guilt about appropriate thing to do right now, given your The five steps outlined above can help you disappearing down digital rabbit holes of other obligations. Either one is an improve- make sense of it all and remain in control of our own. What impact do these new rules of ment in your productivity. any situation, reducing the sense of being engagement have on our productivity? In both cases, what you need to operate overwhelmed that is prevalent in our world Simply stated, productivity is the act of optimally is clarity – a clear head, a clear set today. producing or creating something. In the of options, and a clear action path. A meth- Whether WeChat is a good or a bad thing broadest sense, we are all productive, all odology I developed in the last 30 years depends on your motivations behind using the time. We are producing whatever in the provides both. it. Using social media for fun is healthier than moment we are experiencing. That could How? By using the following five-step many other things people do for fun. Using it be a physical result, like a cooked soup; or it process: for networking to build your brand and pro- may be the emotions or thoughts we create, 1. Capture everything that has your at- fessional connections can be highly useful. like feeling happy or sad. tention. Write it all down: get a new light Accessing information about your hobbies “Being productive” can also mean bulb, research a new mobile app, hire an and interests can add value to your leisure “achieving a desired result.” Most people assistant, update the resume, launch a new time. Connecting with friends and loved think of productivity as having something to website, decide on the acquisition, etc. ones in a more real-time way can be a great do with business, or busy-ness. However, if 2. Clarify what specifically you’re going expression of your core values. you go on a vacation to relax, but you don’t to do about each of them, if anything The medium is not bad or good, the chal- relax, that’s an unproductive vacation. If you 3. Organize reminders of the actions you lenge is being conscious about how you’re go to a party to have fun, but don’t have fun, need to take in a trusted system using it. The clearer your head is, the less that’s an unproductive experience. 4. Reflect and review your calendar, ac- likely WeChat or other apps will become a Usually when people talk about produc- tions and projects regularly, keeping them distracting addiction. I tivity, they mean being more productive. current and providing a clear overview of There are two ways to do that: your commitments 1. Be more Efficient – i.e. produce with 5. Engage your focus and attention posi- less effort or resources, so you have the re- tively, based on steps 1 through 4. sources to do more and better things oth- Information overload is something we

www.amcham-shanghai.org erwise must contend with. Having a systematic ap-

18

20 www.amcham-shanghai.org By Barbara Finamore, Climate Leader? Is ChinatheNext with potentially climate leader, ceding itsrole co-founder andhostofEnvironment shares China,apodcastthat storiesofChina’s the environmental innovators. and clean-energy research policy andadvocacy. Noahreceived from aB.A.inBiologyandEastAsianStudies Noahisalsothe AmherstCollege. NaturalResources atthe isaPrinceton-in-Asiafellow DefenseCouncil’sNoah Lerner BeijingOffice, helpingtosupportChina-focusedclimate andlaws.HehasaB.A.frompolicies Yale University, M.Phil.from ChineseUniversityofHongKong,andJ.D.from the NYUSchoolofLaw. andcleanenergyclimate efforts including policies, tocleanenergy, andtransition tocapcoalconsumption andstrengthening airpollution andEnergyAlvin LinisChinaClimate director Policy NRDC’s inthe Beijingoffice, advocacyaround focusingonanalysisandpolicy China’s Harvard LawSchool. experience inenvironmental lawandenergy policy, andfoundedNRDC’s ChinaProgram in1996.SheholdsaJ.D.degree honorsfrom with Barbara Finamore andAsiadirector isaseniorattorney NaturalResources atthe DefenseCouncil(NRDC).Finamore hashadover35yearsof devastating as aglobal The U.S. is worldwide impacts A us into adeeper reliance oncoal, gains, anapproach meant to dig sounded theretreat from these helped. ButPresident Trump has millions more. jobs, with thepotential for many created three milliongood-paying ployment enginethat hasalready planet. Oneresult: apowerful em- our future without imperilingthe with cleaner, smarter ways to power terprise have beenmoving ahead terms. American innovation anden- its economy hasgrown 17%, inreal the lowest level since 1992,even as bon footprint 14% since 2005, to progress. The U.S. hascutitscar transition to acleanenergy future. mate changecould accelerate the how cooperation onaddressing cli- played acrucial role inshowing Paris Agreement, thetwo countries the solution.Inleadupto the and Chineseactionsare critical to climate change worldwide, U.S. Sound national policy has Together, they have madereal bon pollutionthat’s driving ters of thedangerous car s the world’s largest emit Alvin Lin,N oah Lerner - - - tecting itfrom thedestructive im- vehicles and efficiency, andpro- dustries like renewables, electric ment by creating jobsinnew in- its long-term economic develop- tioning to cleanenergy will ensure ing processes. hicles, materials, andmanufactur ve- buildings, homes, efficient ergy technologies for cleaner, more en- and countries are investing innew Celsius target. Smartcompanies low the Paris Agreement’s 2 degree through 2040to hold warming be- trillion isneededincleanenergy ity. They forecast that atotal $13.1 in all power generating capac 2040, two-thirds of theinvestment in renewables between 2016and trillion will beinvested globally (BNEF) estimates that someUS$7.8 the transition to cleanenergy. market opportunity of thecentury: stands to loseoutonthebiggest impacts worldwide. The U.S. also leader, with potentially devastating ceding itsrole asaglobal climate oil andgas. As aresult, theU.S. is China recognizes that transi- Bloomberg New Energy Finance - - tovoltaic power, nearly doublingits installing themostnew solar pho- China smashedthe world record for 2016, for thesecond year inarow, has beeneven more spectacular. In eration. China’s solar energy growth wind capacity and wind power gen- status asthe world leader inboth capacity astheU.S., cementing its three timesasmuch wind energy 13 millioncleanenergy jobs. 2020 that will helpto generate over lion inrenewables projects through ning to invest anadditional $361 bil billion intheU.S. And Chinaisplan- in renewables, compared to $58.8 2016, Chinainvested $88.2billion other renewable energy sources. In largest investor in wind, solar, and that Chinacontinues to bethe doubt no There’s leader? climate pollution. intensifying China’s relentless air shows that climate change may be take strong action:new research infrastructure. Another reason to security, humanhealth,cities,and pacts of climate changeonitsfood In 2016,Chinaaddedmore than So isChinaemerging asthenext - that inthenext solar andwind has forecasted growth willbe developed by financed and One analysis companies global new five years, percent of nearly 40 Chinese to have five million total electric ve- government subsidies,China aims scandals andplannedreductions in year. And despite manufacturing electric vehicles onthestreets this aiming to putanadditional 800,000 tric vehicle salesin2016,Chinais the world with over 500,000elec air travel. Inaddition, after leading the carbonfootprint of equivalent trips every day, at a small fraction of take four millionhigh-speedrail Chinese travelers and commuters the new tracks for high-speed rail. by 2020, with 11,000kilometers of kilometers of new railroad tracks than $500billionto build30,000 port sector. China will invest more carbon emissionsfrom thetrans- capacity. cut backoncoal power plant over “stranded coal assets” if itdoesnot $1 trillionineconomic lossesfrom alone, itcould face $500billionto down oncoal; in its power sector China hasevery reason to clamp by 2020, down from 62% in2016. energy consumption to 58%or less target to reduce theshare of coal in amandatory time, first the for set, Energy Development Planhasalso several years. China’s 13thFive Year to 800milliontons over thenext ity, and will increase that number tons of excess coal miningcapac declining. ago andhassince beensteadily began to level off about three years ous rate. Chinesecoal consumption it hasbeendecarbonizingat afuri- more coal thanany other country, fuels. Though Chinastill consumes simultaneous phasingoutof dirty and solar. It will alsorequire the more than just investing in wind clean-energy economy will take Chi- nese companies. by developed and financed new solar and wind growth will be next five years, nearly 40% of global analysis hasforecast that inthe are thelargest inthe world. One and total solar energy production Like wind, China’s solar capacity solar energy generation capacity. China isalso working to reduce Last year Chinacut290million But buildingthe world’s leading - - - percent by 2020by increasing dis- energy curtailment down to five has set goals to bring renewable 90 millionChineseresidents. China residential electricity useof almost tailed, enoughto power theannual of China’s wind power was cur wind andsolar energy. In2016, 17% the highrates of curtailment for for greening thepower sector is forport workers. lion for jobretraining andother sup- has pledgedto set aside$15.8bil workforce of theseindustries.China 1.8 million workers, upto 15%of the capacity is expected to lay off some down on excess steel and mining painless. The government’s crack bon economy is neither easy nor capping carbonemissions. and pricing toward step significant ton), thenational market will bea around RMB30(roughly $4.5per tries. With aninitial carbonprice of cover eight carbon-intensive indus- will bethe world’s largest, and will $350 million.China’s carbonmarket lion tons of carbon, worth roughly already traded acumulative 94mil ing pilots, which by June 2016had China’s existing seven carbontrad - market will beanexpansion of bon market this year. This national unveil amuch-awaited national car sition to clean energy, China will bon emissions and speed the tran- hicles ontheroad by 2020. A wind and solar power station inDafengPort,Jiangsuprovince Awindandsolarpowerstation Another enormous challenge China’s transition to alow car Finally, in an effort to reduce car ------preferences for coal generation. designed to overcome thebuilt-in initiating power sector reforms closer to demandcenters, and veloping large-scale renewables tributed energy generation, de- way to theclean-energy future. bon emissions–isalsoleadingthe in both coal consumption andcar China – while still leadingthe world There cannow benoquestionthat newables have beenremarkable. reliance oncoal, andinvest inre- years to cutemissions, reduce its it hastaken over thepastseveral gets. Butthedramatic measures to reach itsambitiousclimate tar nologies abroad. opportunities to export their tech - coal companies are alsopursuing tic opportunitiesshrink,Chinese $1 billioneach. Yet astheir domes- investment deals worth more than billion, including11new overseas overseas by 60%to arecord $32 vestments in renewable energy Last year, Chinaincreased itsin- domestically andinternationally.” lution andcarbonemissionboth pol high with projects into flowing “strictly control publicinvestment make good onits 2015 pledgeto mate leader, Chinaalsoneedsto In order to become aglobal cli- China still hasalong way to go Movers and POLICY PERSPECTIVES Shakers I - - - 21 May/June 2017 22 www.amcham-shanghai.org of adynamicEV market inChina to speedthecreation Government efforts the Road Bumps on consulting rolesconsulting inChina,across forclients the USA. AsiaPacificandin KPMG’s U.S.-ChinaCorridor. Hehasspentnearly20years inindustryand David Frey isapartnerforMarketsStrategyat KPMGinChina,andleads

O some early-stage growing pains. gets inthesegment inrecognition of to moderate the volume growth tar hicle development, while appearing the commitment to new energy ve- issued April 25,2017, re-emphasizes velopment Planfor the Auto Industry, ernment’s Mid-andLong-Term De- sent ashiver through sales. The gov this andclampeddown hard, which the manufacturer. Beijinggot wise to subsidy andthenreturned thecar to lated parties, who kept the purchase called outfor bookingsales to re- some local manufacturers were tern of abuse of subsidies, where ers attributed muchof thisto apat drop inEV purchases. Market watch- 2017 saw asuddenandprecipitous Early road. the on bumps significant market beganto experience some appeared to behaving aneffect. by 2020 EVsthe road million on offive in reaching thegovernment’s lofty goal The levers that were designedto assist ing license plate registration schemes. sumer subsidies,andfree, quota-bust duction investment incentives, con- market the through acombination of local pro- seed to efforts ment’s were takingroot from thegovern- 300% riseinEVs ontheroad inChina. the backof 2015data that showed a China in2016. This growth cameon bined global total of EV salesoutside equates to more carsthanthecom - two percent market share inChina,it While this volume represents only rising by some50%to 330,000cars. China in2016grew at ahealthy clip, supporting electric vehicles (EVs). evident isingovernment actions One area where this is particularly mentally sustainablemarket choices. termined fashion toward environ- the government to transition inde- the early path to development of a PRCgovernment As 2016cameto aclose,the So itappeared that green shoots The number of EVs on the road in “market maker” acting asasustainable Despite thesetwistsandturns on today isthecommitment of pects of commerce inChina ne of themoststrikingas- - - - - and supply-side “market making” “market making” number ofboth market, China demand-side put inmotion powers, and this nascent measures its unique enacted a growth of stimulate To help bumps that inevitably linetheroad. important factor inovercoming the EV market inChinaisthesingle-most mitment to development of a vibrant EV market. The government’s com- has a high chance to realize a robust imentation, scaleandinnovation that will produce acombination of exper and national andlocal governments eign OEMs, domestic JV partners, tion of Chinesemanufacturers, for vestment. – shapingthedirection of foreign in- owned fleet buyers, and – importantly ing regulations, incentivizing state- include mobilizing capital, structur celerate market growth. These steps to taking“market maker” steps to ac ernment remains uniquely committed vibrant EV market inChina,thegov areas of manufacturing, theoppor strong drive to move into advanced These factors includethecountry’s in China. EVs of volume significant ward themanufacture andsaleof a of factors that favored ashiftto - confluence the recognized viously potential buyers of new energy vehi- subsidies. InShanghaifor example, also targeted with incentives and to purchase the vehicles. operators fleet vehicle government tics andtransport companies, and taxi companies, state-owned logis- municipal of owners fleet centivizing ly-stage, local EV prototypes by in- to stimulate EV purchases of ear mand side,thegovernment moved supply-side measures. Onthede- acted anumber of demand-side and “market making” powers, anden- market, Chinaapplied its unique the batteries. component of theEV value chain– tunity for Chinato dominate thecore of charging stations), andtheoppor – powering coal-fired not – energy EV adoption (assumingrenewable from automobile tailpipesthrough tunity to reduce carbonemissions Factors drivingChina’s EV commitment to the As aresult, thedynamicinterac Policy makers inChinahadpre- Further, China’s consumers were To helpstimulate growth of this market ------produce a minimum of eight per requiring thesemanufacturers to energy vehicle production inChina, ers to increase their share of new ate its push on foreign manufactur tures inChina. erating under therequired JV struc for foreign auto manufacturers op- requirements that would berequired ments aboutthetechnology transfer made someboldbut vague state - the foreign OEMs. Initially, regulators ket maker” role, thistime targeting Beijing beganto actagaininits“mar the domestic manufacturing to date, relatively low basequality of muchof consumer perception impactof the favor of EVs. that would certainly weigh heavily in This represented adramatic choice dures accorded to purchasers of EVs. track, nominal fee, licensing proce- fast- the of beneficiary the become operating thecar ontheroad. Or, cess inthehopesof oneday legally lengthy andexpensive lottery pro- engine automobile andendure the a traditional, internal combustion cles were given anoption. Purchase developing new energy Quality improvements to date, eachcompany smooth or predictable foreign manufacturers strategies –therole for and innovative growth Later, Beijingbeganto acceler Additionally, concerned by the advanced automobile China government to commitment of the the policy path nor behavior hasbeen consumer market recognizes the manufacturing While neither unwavering - - - - - stages, we canexpect theChina gov the consumer side,particularly inearly distortions onboth theproduction and and flaws market create may tation shown, even where policy experimen - the events of thelastfew months have as First, future? near the in expect we simply too high. and perhapsglobally asaresult –are being left onthesidelinesin China– experimentation now, as therisksof China EV market require entry and the opportunities that will arise inthe tion strategy for themarket. Inshort, electrifica- an create to need the of have convinced company executives maker” power of Chinaappearsto cle strategy. Ultimately the“market tric power initsnew energy vehi- hydrogen fuel-cell power over elec has been well known for backing special mention, asthecompany technology andcar range. line with improvements inbattery that products can be introduced in regard to government policy, such need for ongoingcollaboration with companies have alsoexpressed a reduction strategy. That said,many ponent of anational carbonfootprint turing, anddoingsoasacore com- ergy advanced automobile manufac government to developing new en- wavering commitment of theChina each company recognizes theun- been smooth or predictable to date, nor consumer market behavior has market. While neither thepolicy path of new energy vehicles for theChina launch announcements inthearea Honda, all making significant product including VW, GM,Ford, Toyota and announcements from manufacturers perhaps significantly more. years to 25-30% of production, and to rise progressively in the coming cate thiscontent share isexpected auto company leadersinChinaindi- beginning in2018.Discussions with as hybrid-electric or electriccars cent of their total production volume

The riskof being market development sidelined inChina So what bendsinthe road might The caseof Toyota inChinabears hs e t a eis f ai fire rapid of series a to led This Movers and POLICY PERSPECTIVES Shakers - - - 23 May/June 2017 24 www.amcham-shanghai.org But answers to future state busi- to take account of these trends. need certainly will influence maker” industry globally. China’s “market ity asaservice that issweeping the of autonomous drivingandmobil within therevolutionary environment – answers. models will have local –not national and even bike-sharing transport from airports,high-speedrail, metros, transport that seamlessly transitions EV charging stations into multi-modal across citiesandregions. Integrating EV will berobust, and vary greatly els required to support expansion of infrastructure andbusinessmod- city-based experimentation with the the background. of the central government pushing in lined up in this direction, with the hand foreign andlocal investment are now market inChina.Billionsof dollarsof at theenddestination of arobust EV ernment to remain focused onarriving Lastly, EV inChinasitssquarely Secondly, we canexpect that - ing integrated more deeply into the ary high-tech companies that are be- manufacturers working with vision- tion, driven by themostinnovative city-oriented market experimenta- bottom-up, through consumer- and come will They offices. bureaucrat from planshatched ingovernment ness model questions will not come Thegreen stampofapproval story unfold. fasten our seatbelts to watch the the government inChina. We should the crucial artof “market making” for that foster – not limit – innovation is works with capital commitments and convenience. automobile as a platform for services Balancing broad policy frame- I ByPaul Armstrong- Dealing withChina’s Debt H government. the policy options opento theChinese illuminates thesetopics anddiscusses there ismuchconfusion. This article economic growth, topics about which of risingdebt anditsinteraction with quires understandingboth thecauses economy. Addressing thisthreat re- nese stability butalsoto theglobal Morgan Stanley. intheChineseFinancialSystem. ofDebtandDistortion:RisksReforms author Paulisthe Chineseeconomy.strategy andthe HehasaPhDinEconomicsfrom Harvard, andhaspreviously workedatMonitorGroup and P to cover the increased debt. Such bor sufficiently than more income creases debt ratios because the investment in- borrowing for investment canreduce exceed interest rates, highlevels of clining investment returns. increased borrowing butrather by de- debt-to-GDP hasnot been driven by in increase the fact, In 1). figure in line not increased (seethered dashed from thebrief post-crisis stimulus, borrowing relative to GDP has, aside However,financial crisis. a to maylead cerns that borrowing isexcessive and 1). This sharpincrease hasraised con- figure in line green solid the (see creased sharply to over 200%of GDP rate andhouseholddebt hassince in- of GDP prior to 2008,Chinesecorpo- the basis for growth for both firms and and forgrowthfirms basis for both the rowing issustainable,andit can form aul Armstrong-T Causeof risingdebt As longasinvestment returns After beingstableat around 120% T aylor as adanger not only to Chi- levels are increasingly seen igh andrisingChinesedebt a ylor isProfessor Hopkins-NanjingCenterwhere ofEconomicsatthe heteachesclassesonfinance, - stability growth andfinancial crease. If, instead, thegoal isto stabilize debt, theratio of debt-to-GDP will in- growth. If thisinvestment is funded by investment isrequired to maintain to GDP ratio. which hasledto asharply risingdebt ing andinvestment hasremained high, Despite theselower returns, borrow stocks and,particularly, real estate. debt for speculative investment on tries (e.g. steel) andincreasing useof excess capacity inseveral key indus- rail linesin increasingly remote places), investment (e.g. buildinghigh-speed declined dueto decreasing returns to returns onChineseinvestment have not increase. Since 2009,however, the levels so the debt-to-GDP ratio did come levels increased asfast asdebt investment earnedhighreturns, in- funded investment, butbecausethis was driven by highlevels of debt- a financial crisis. an economy, it will eventually leadto will eventually leadto bankruptcy; in tainable. At acompany, suchapolicy ing to rising debt ratios. This is not sus- debt to grow faster thanincome, lead- cause will investment debt-financed turns are lower thantheinterest rate, economies. However, if investment re-

Tradeoff As investment returns decline, more China’s rapid growth prior to 2009 between - must eventually beaddressed. tradeoffthe between growth debt and the return oninvestment remains low, in thisarea hasbeenslow. Assuming est returns. Unfortunately, progress investment to projects with the high- to channel sector financial the ering alization could also help by empow scale. Financial and economic liber significant a on happen to unlikely is is ideologically problematic, sothis turns are higher. However, privatization returns, to theprivate sector, where re- state sector, where ittends to earnlow solution is to shiftinvestment from the creased return oninvestment. One debt startsto grow again. slows theseconstraints are relaxed and straints on lending, but when growth Concern aboutdebt leadsto con- willing to let growth slow below 6-7%. GDP ratio, butthegovernment isun- to around 3-4% to stabilize thedebt-to- lations suggestthat growth must slow is neededto address it. Rough calcu - to accept the slowdown in growth that debt, thegovernment seemsunwilling Although itrealizes theriskof rising changes of theChinesegovernment. GDP ratios mustincrease. off: either growth slow must or debt-to- ing investment returns create a trade - leads to slower growth. Inshort,declin - and investment mustdecrease, which the debt-to-GDP ratio, thenborrowing Easing this tradeoff requires an in- an requires tradeoff this Easing We can see this tradeoff in the policy Movers and POLICY PERSPECTIVES Shakers - - 25 May/June 2017 26 www.amcham-shanghai.org stability but also stability butalso High and rising High andrising only to Chinese only toChinese Chinese debt Chinese debt to the global to theglobal increasingly danger not danger not levels are seen as a seen asa economy Figure 1:

100% 120% 140% 160% 180% 200% 220% in thepast,it’s unlikely to work today. try thesametrickthey usedsuccessfully While policy makers may betempted to growth andliberalized interest rates. is thecaseinChinanow, with itsslower GDP ratio will spiral outof control. This road isnot sustainable–thedebt-to- income, thenkickingthecandown the debt ishigher thanthegrowth rate of GDP ratio will shrinkover time. can work becausethebaddebt to rates, kickingthecandown theroad growing economy with low interest they are now relatively small.Inafast lower thanthegrowth intheeconomy, interest rate onthebondshasbeen yet taken thelosses,butbecause the candown theroad. Nobody has by bondissues–aform of kicking management companies andfunded Those losses were absorbedby asset lated by itsbanksduringthe1990s. to deal with thebaddebts accumu- can easetheproblem. and, under certain circumstances, it tive because it minimizes current pain their oldloans. This ispolitically attrac repay cannot they when even firms to the baddebt problem. can beused in some way to deal with losses and when. Five mainoptions revolve around who pays for those involves losses. The policy options ger problem inthefuture. Baddebt such assteel, but will become abig- is already happeninginindustries some debts will not berepaid. This slowing growth, itisinevitable that

Options for dealing with baddebt However, if theinterest rate onthe China usedthispolicy successfully Losses canbedelayed by lending 1. Kickthecandown theroad Given thescaleof thedebt and 2002 2003 2004 Debt/GDP (leftaxis) 2005

2006 2007 2008 - 2009 from aneconomic perspective would toward consumption. hinder therebalancing of theeconomy would This to. afford can that sector likely pay for this bailout as the only ineffi- ciency. Moreover, promote households would may decisions bad of consequences the from firms ing shadow of baddebt. However, shield- and economy to recover without the system financial the allows that way dressing theissueinaquickanddirect approach hastheadvantage of ad- prime lendingcrisisof 2007-2008. This bailed out banks or firms after the sub- spending. Many Western countries by raising taxes or cuttinggovernment firms indebted the out bail directly to bad debt would befor thegovernment is alsoslowing. households when their income growth politically harder to take money from investment returns. Itmay alsobe lower further could that inefficiency hold consumption, andpromotes the economy andpromote house- government’s attempts to liberalize (mostly firmsandgovernment). ers (mostly households)to borrowers – which transferred money from sav inflation below – often low artificially early 2000s,interest rates were kept bad debt. For example, duringthe (mainly households)to those with transfer fundsfrom healthy sectors out. This involves distorting prices to deal with baddebt isthestealth bail government hashistorically usedto Borrowing/GDP (rightaxis) Perhaps themostattractive option 4. Bailoutfundedby asset sales The mostdirect way to address 3. Bailoutfundedby taxes Distorting prices underminesthe The other strategy that theChinese 2. S 2010 tealth bailout 2011 2012 2013 2014 2015 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% - - problem will betaken soonafter. decisive actionto address thedebt ship transition inthefall, buthopefully leader the before significantly slow likely that growth will beallowed to omy over the last few years. It is un - This hasresulted ina‘stop-go’ econ - laxed when they startto slow growth. growth are introduced, but then re- As a result, policies to reduce credit essary to bringdebt under control. ing to accept theslower growth nec nizes theproblem, butseemsunwill would likely leadto afinancial crisis. tinuing to kickthecandown theroad more sustainablegrowth model.Con- incentives or promote atransition to a short-term pain,butdolittleto improve options. Suchoptions would avoid tilt probabilities toward theother three and thepath of leastpolitical resistance able short-term pain.Past precedent interests and would involve consider problematic,unpopular withvested However, these would beideologically best for theeconomy inthelongrun. bankruptcies (5) would probably be funded by asset sales(4)andsome on themix. A combination of bailouts proaches and the results will depend to pursue a combination of different ap- governmentavoid. wouldto want also leadto political instability which the peat. A severe economic shockcould is not something anyone wants to re- nomic disruption. The Great Depression toextremelead can it financial eco- and that is more efficient. However, in excess, invest ment, which shouldleadto investment of profits, the only not losses, the accept to firms and investors force would This losses. take to firms in those and investors bankrupt go to firms government to allow overly indebted make thispolitically difficult. ests andideological opposition would private sector. However, vested inter ciency by shiftingmore activity into the problem, but it would also improve effi - only would thissolve thebaddebt funds to cover baddebt losses.Not sufficient raise could alone enterprises ment assets. Privatizing state-owned be abailoutfundedby salesof govern- The government certainly recog- In practice, thegovernment islikely the be for would option final The bankruptcies5. Allowing I ------By Huw Slater -ChinaCarbonForum Lack Ambition Energy Targets New Renewable Why China’s Given the rapid the NEAcould ambitious ifit have afforded recent years, to bemore capacity in rollout of installed chose to I range for growth inpower consump- The CEC suggested amore modest 2020 power sector forecast in 2016. sectoral association that released its the ChinaElectricity Council (CEC), a 2020. This ishigher thanpredicted by tricity demand between 2016and 4.8% average annual growth inelec competing interests. NEA isbalancingarange of powerful a comparison alsoreveals that the of other government agencies.Such NEA’s predictions equate with those deed, itisuseful to compare how the further progress canbemade.In- of theplanasabaselinefrom which gets, itmay bemore useful to think achieves with itsrenewables tar (GW) of coal power capacity by 2020. creating anadditional 200Gigawatts expected, while theplanallows for out for renewables were lower than widely anticipated. Butthoseset and coal power capacity hadbeen The targets set for renewable energy ment of the power sector to 2020. included forecasts for thedevelop- Energy Administration (NEA)and plan was announced by theNational change adaptation policy,change adaptation University research National anAustralian andwith teamreporting ChangeandFiscalPolicy. onClimate development ofcarbonpricing.Huwpreviously forEnvironment ChineseNGOInstitute workedwith andDevelopment on climate arange ofpapersandreportsbon Forum.Hehaspublished strandedassetsinChina’s onissuesincluding coalpowersectorandthe Huw Slaterisanenergy andenvironmental professional policy basedinBeijing,andiscurrently research the manageratChinaCar power sector (2016–2020). The its 13 n November 2016,Chinareleased The planexpects arange of 3.6– Given that Chinausually over- th Five Year Plan(FYP) for the - - mal power utilisation rate dropped to particularly incoal power. The ther overcapacity inthepower sector, existing significant of top on is FYP power capacity allowed for inthe fossil fuelsand renewables. predictions tend to be high for both of electricity consumption, andits terested inpromoting higher levels for 2020.State Gridhasa vested in- State GridCorporation’s estimates power are about the same as the contrast, theNEA targets for thermal higher thantheCEC estimates. By coal and gas capacity are much why theNEA targets for additional disappear. comingeffectmonths,this likely is to to cool the property market over erty sector. As thegovernment aims a government stimulusto theprop- increased industrial outputto supply to according Greenpeace this was largely dueto but percent, five up only 0.5–1%. In 2016, demand was in 2015electricity demandgrew by the 11thFYP period(2006–2010), 14% average growth per year during tricity demand.Down from ahighof cant slowdown inthegrowth of elec tion of 3.3–4%. The 200GW of additional net coal This assumeddemandexplains signifi- a seen have years Recent - - suggested that only 150 GW capacity Bloomberg New Energy Finance has the plan’s target to still betoo high. forts. Even so,mostanalysts consider whether itrepresented additional ef measures covered this amount, or clearIt wasn’t whetherthe January close 50GW of capacity during2017. mier LiKeqiang announced plansto People’s Congress inMarch, Pre- At theannual sessionof theNational construction capacity in January 2017. tion of 120GW of plannedor under- and madeastart with thecancella- coal power capacity inthepipeline, need to cutbackonthe350GW of will drop even further to 43–47%. level of utilisation, thermal power use ables together) maintain their current (China groups nuclear andrenew if so-called‘new energy’ sources and additional installedcapacity, the FYP’s forecast for power demand and increased competition. Taking going to be hit hard by lower demand of coal, many smaller companies are 2016. spate of new projects approved a in had and profits generate to able low, coal power companies were still cade earlier. While coal prices were 47.5% in 2016, down from 66% a de- The NEA has acknowledged the But with arecent spike intheprice Movers and POLICY PERSPECTIVES Shakers - - - 27 May/June 2017 28 www.amcham-shanghai.org coal regions and governments in coal companies coal companies There isalready both from local pushback over pushback over plant closures, of coal power of coalpower the economic the economic implications implications profitability about their about their concerned significant significant who are as stated intheoverall national Five- of primary energy supply by 2020, goal for renewables to provide 15% sector to play itspartinmeeting the power the for sufficient weretargets Firstly, it was calculated that these slowdown seemshighly unlikely. was achieved during2016.Sucha resent lessthanaquarter of what years, while for solar it would rep - than duringeachof thelastthree would represent aslower build-out only 8GW for solar. For wind, this ditions of about15GW for wind and would require annual capacity ad- be started inorder to meet thetarget. further construction would needto end of 2015,thisalsomeansthat no already under construction at the cies. Given that 87GW of wind was for wind by other government agen- and even more optimistic predictions GW for wind and 150 GW for solar, with State Grid’s prediction of 240 in 2015respectively. This compares by 2020,upfrom 130GW and48GW wind capacity and110GW for solar gets of 210GW for grid-connected renewable energy. The plansets tar low with regard to expectations for relation to thermal power, they are is likely to persistfor sometime yet. rein in coal power, but over-capacity tions demonstrate adetermination to will beadded. The NEA’s recent ac Gigawatts h i te ln o cautious? so plan the is Why The FYP’s renewable targets While theFYP targets are highin 10 15 20 25 30 35 40 0 5 2011 REQUIRED NEWINSTALLATI ON TMEET13 2012 2013 - - making indriving down thecost of mendous advances that Chinais this attitude underplays the tre- able for theforeseeable future. But which consider coal to beirreplace- state-owned enterprises (SOEs), the energy sector, especially within is also a conservative mindset in plants. breaks thecamel’s backfor some renewables may bethestraw that ity. Even greater competition from profitabil their about concerned are regions andcoal companies who both from local governments incoal cations of coal power plant closures, pushback over theeconomic impli- significant already is there that fact go together”. nological progress of solar PV should larger thebetter; thescaleandtech- opment, itisnot simply a caseof the Zhipeng saidthat “for solar PV devel uty Director of New Energy Liang of thesolar PV industry. NEA Dep- concerned about“blindexpansion” the targets, theNEA stated that itis stallation.announcing Third,while contributing to a reduced rate of in- PV power were announced in2016, solar and wind for tariffs feed-in the if itchoseto. Second, reductions to ambitious more be to afforded have ity inrecent years, theNEA could the rapid rollout of installedcapac Year Plan. At thesametime,given 2014 As inmany other countries, there Just asimportant, however, isthe 2015 2016 2017 TH FYPTARGETS - - - 2018 coordinating supply anddemand. renewables online and seamlessly connected electricity grid,bringing outlined agrand planfor aglobally- with abookpublishedin2015 which chairman LiuZhenya made waves ble challenge,butformer State Grid tion of renewables is still aformida- major demand centers. Gridintegra- newable resources accessible to the which could helpto make distant re- as major advances in grid technology nology suchassolar thermal,as well veloping promising early-stage tech - nologies suchas wind andsolar, de- established renewable energy tech- undergoing transition. actively supportregions which are back its ambition, but rather to more is not a reason for China to scale power plant closures. However, this coal by affected be will areas some progress rapidly. Communitiesin development should continue to energy renewable effectively, with power sector, andif theseare dealt regulatory andpricingreforms inthe rently pushingforward long-awaited The Chinese government is cur 2019 2020 I SOLAR WIND - MoversPOLICY andPERSPECTIVES Shakers Blindsided by China’s March to Clear Waters

By Debra Tan - Director, China Water Risk

China Water Risk (CWR) is dedicated to addressing business & environmental risks arising from China’s limited water resources. CWR aims to foster efficient and responsible use of China’s water resources by engaging the global business and investment communities. At a micro-level CWR works toward embedding water risks into the financial valuation of companies thereby influencing capital flow to responsible users, and on a macro-level by wedding provincial/national water resource management to economic planning.

ew would drink water out of a tap in China’s key lakes and reservoirs. At China Water Risk, we look at how water China without first filtering or boiling it. The march toward Premier Li Keqiang’s vi- risks impact different industries. To quantify F And mistrust of tap water has led to a sion of “a Beautiful China where the sky is blue, water risk, we obtained feedback from insti- booming market in water filtration systems the land is green and the water runs clear” is tutional investors and asset owners on various and a rise in bottled water consumption. Yet overdue. But it’s not just pollution woes that valuation methodologies applied to a variety most health conscious urbanites still fret are worrying; there are concerns over water of listed energy stocks in China. Our survey of about the water they are buying. Statistics availability and management. A third of China’s over 70 investors last year showed that 43% about fake bottled and/or carboy water in arable land lies in water-scarce regions, as do were taking the survey because they were China are worrying: in 2015, a food safety in- over half of China’s coal reserves. But agricul- worried about water risks, yet less than five spection by China’s National Food & Drug Ad- ture and coal mining use sizeable amounts percent were using tools available to assess ministration revealed that 400 of the 407 bev- of the nation’s water: agriculture accounts for water risk. erage samples that failed to meet standards 63%, and coal and power generation account Some of these tools show that the five were bottled or carboy water. for over half the nation’s industrial water use. listed major power producers in China would The state of China’s water resources is Can China manage its resources to ensure wa- face a negative impact on EBITDA margins of grim. The last State of Environment report ter, food and energy security? -3 to -24% if water was priced properly (See showed that except for a few pockets, China’s Naturally, the government is concerned figure 1). More worrying is that almost 100% of overall environment quality worsened in 2015. and has issued a host of policies on the man- the share of coal output from China’s five coal The share of ‘excellent’ and ‘good’ groundwa- agement of water resources, from national majors were extracted from either arid or high ter has deteriorated, shrinking 6.2% over the and provincial water quotas, water allocation and extremely high water stress regions (see past five years. As for China’s key rivers, there and efficiency targets for different sectors, -pol figure 2). was mixed news. The flagship Water Pollution lution prevention and control, and water use Eighty-five percent of investors surveyed Prevention & Control Action Plan (also known and wastewater discharge permits. A tougher said they were concerned about water risk as the ‘Water Ten’ plan) set a 2020 target for Environmental Protection Law has also been and almost half reported that they would 70% of the water in seven key river basins to introduced, favoring harsher penalties and use existing tools to assess exposure. With meet Grade I-III water quality. Five of the key punitive fines. These policies have boosted government action, investors are starting to rivers in the North are still far from this: Yel- investment opportunities ranging from wa- recognize regulatory risks as more immedi- low (61.2%), Songhua (65.1%), Huai (54.3%), Hai ter recycling, rainwater harvesting, irrigation ate as well as material. We believe Chinese (42.2%) and Liao (40%). In fact, the overall water and sponge cities to wastewater and sludge banks are leading the global charge: ICBC has quality of the Songhua, Huai, Hai & Liao Riv- treatment. However, these policies may also started stress testing their lending portfolio ers deteriorated in 2015. The only bright spot have the effect of blindsiding businesses and for changes in environmental pollution regu- is the improvement in Grade I-III water for investors in China and beyond. lations for various sectors. May/June 2017

29 EBITDA/Revenue 50%

44% 15% High 83% 39% Shenhua POWER 40% COAL 36% -3% OUTPUT 31% -9% China Coal Extremely high 90% 30% -5% -10% -8% Current -4% Baseline 20% Extremely high 87% 13% EBIDTA/Revenue 20% Water Stress Yanzhou -11% Tool#2WRM Low (<10%) -4% Tool#1CBWCRT Low to medium (10-20%) 10% Yitai High 100 % -24% Medium to high (20-40%) Potential loss of -12% High (40-80%) profitability due to 0% Extremely high (>80%) Extremely high 100% water risks Huaneng Datang Huadian Guodian CPI Arid & low water use Datong

Source: China Water Risk based on companies’ annual reports, own water use estimations Source: China Water Risk based on companies’ annual reports and WRI China Baseline Water Stress map Valuation tools are the Water Risk Monetizer (WRM) and the Corporate Bond Water Risk Tool (CBWCRT)

Earlier this year, the China Green Finance serve their aquifers, are C-suite executives of In our rare earth report published last year, we Committee invited us along with ICBC to brands doing enough to protect shareholder estimated that China may not have enough to present on water risk valuation at the People’s interest? supply itself as early as 2020, as it develops Bank of China in a half-day workshop aimed Another hidden risk comes from rare its advanced manufacturing, renewables, en- at quantifying environmental risk, raising the earths. Not long ago, there was global con- ergy savings and electric vehicle industries. possibility that water risk may be embedded cern over the supply of rare earths, which We live in a resource-constrained world. sooner rather than later in financial valuations are overwhelmingly sourced from China, In Asia, the limiting resource is water. In China, and lending rates. when it cut its export quotas, citing environ- we expect the government to continue to Sometimes the risks are not so obvious. mental concerns. Complaints were brought drive action in 2017 with holistic resource For example, the textiles and clothing industry to the WTO, which ruled against China, and management and economic policy making at is among the top three largest industrial users today these fears have subsided. But China the river basin level. We call this “water-nom- and polluters of water in China. Many people still supplies 85% of global rare earths cru- ics,” and strategies for the Yangtze River Eco- are unaware that textile manufacturing dis- cial to most electronics, smart tech and de- nomic Belt, which carry 42% of China’s GDP, charges more waste water than China’s entire fense industries. Even more concerning is that are laid out in a brief we co-authored with coal industry. Not surprisingly, it is the most some heavy rare earth elements are still 100% the Foreign Economic Cooperation Office of targeted industry in the Water Ten plan. We sourced from China. the Ministry of Environmental Protection. estimate that almost 90% of factories could Today, the environmental cost of mining Limited water will dictate industrial and crop face shutdown if they fail to meet the more rare earths remains hefty with water pollution mix – the new mantra is more GDP-per-drop, stringent standards. and soil remediation. Moreover, clean-up ef- more crop-per-drop, more jobs-per-drop. Here again, it is not just pollution. Global forts are hampered by the existence of illegal Upstream actions affect those downstream; brands which believe they have side-stepped mining and a global black market. The elec- which industries are located where matters. this problem by moving their sewing and/ tronics industry has yet to form a responsible The bottom line is: decisions today matter for or dyeing and finishing outside of China may sourcing platform for these elements. Repu- water tomorrow. But decisions that are good have to think again. The fashion industry tational risk aside, the question of whether the for China may be black swans for others. It’s sources large quantities of raw materials from pursuit of a Beautiful China will impact future best in this changing landscape to know your China, including cotton, hides, chemical fibers, rare earth supplies should be addressed. water risk. I wool and silk. New research has surfaced in- What about China’s rising domestic demand? dicating that the cotton trade has caused the over-extraction of groundwater in Pakistan, India and the United States. In China, a quar- ter of cotton is grown in the parched North CHINA’S SHARE 100% China Plain, and another 63% in arid Xinjiang. GLOBAL RESOURCES VS. GLOBAL PRODUCTION As China responds to this by removing cot- 65% ton subsidies from the over-abstracted North 48% 50% China Plain, it is not clear if global brands have formulated a true mitigation strategy for wa- 27% 27% ter risks in upstream fashion raw materials 19% sourcing. Common sense would dictate that 7% 8% if regulations fostering the growth of fast fash-

ion changed, the business model would also Water Arable land Population Cotton Paper Coal Steel Chemicals Rare earths change. Since it is also unreasonable to think that other governments will not act to pre- Source: China Water Risk based on FAO, SYNTAC, NBSC, BP ©China Water Risk, 2017 www.amcham-shanghai.org

30 Objectives, compliance andbusinessrecommendations Cyber SecurityLaw: Understanding China’s equals national equals national encompassing encompassing cyber security cyber security security is all security isall China’s view because to because to of cyber security China, China, regulatory andcross-border andinternalinvestigations, past20years. U.S.forthe D4hasbeenanindustryleaderinthe litigation. China’s dealwith asthey logy runningonserverslocatedinChina.D4supportslawfirmsandcorporations cybersecurityregulations, Tom Groom is anAmChammemberandmanagingdirector ofD4Shanghaiwhoprovides search edgeinformation leading - techno I security Law ing China’s cyber sovereignty is goingonestep further by establish- rity Acts. Now it is China’s turn, which and the U.S. to establish Cyber Secu - awareness, prompting theEU, Japan revelation spawned global cyber information ontheir citizens. That is set to go into effect on June 1, 2017. borders. China’s Cyber Security Law cising total control over data within its Another challengeisthat thenature control. and define to hard are space is that political boundariesincyber the servers. China’s primary challenge stored, transmitted by, or created on the servers as well asthe data that is tecting critical servers, China protects security asprimarily focused onpro- rity. While mostcountries view cyber cyber security equalsnational secu- all encompassing becauseto China, ments were actively collecting vealed to the world that govern- n June 2013,Edward Snowden re- China’s Cyber China’s view of cyber security is – exer - - security Law China’s cyber security law include: operations to comply. companies will needto modify their outlining how foreign anddomestic implementation policies and rules the next several months publishing of a framework andChina will spend process. The law was created asmore how thegovernment will managethe to address theseissues,andoutlines China’s cyber security law attempts of data ishard to predict andcontain. Key components of China’s Cyber score theimportance of securing “Cyber” Security Review to under curity Review was changedto (The original nameNational Se- and protocols Security Review methodologies Cyber implement and Define 2. Infrastructure (CII) deemed asCritical Information ments for organizations that are require- establish and Define 1. The primary components of

- organizations infrastructure information infrastructures within Chinafor: amples of CIIorganizations as: ex provided draft first The (CII). ture to beCritical Information Infrastruc which organizations are considered define to how concerns framework Defining critical 4. Military and government agen- vices; healthcare andsocial security ser supply of electricity, water, gas, 3. Publicservices, suchasthe and finance; transportation, waterresources 2. Key industries,suchasenergy, media broadcasting; 1. Publictelecommunications and Companies that provide network The mostcontentious item of the 4. Encourage data localization regulators China’s security agenciesand 3. Provide technical supportto China’s cyberspace.) Movers and Shakers - - - 31 May/June 2017 32 www.amcham-shanghai.org governance and China’s internet world toaccept President Xi’s vision forthe This strategy and respect sovereignty is partof cyber

fully conduct businessinChina. ability of theorganization to success- the government could impedethe local executives or, at the very least, cense inmainlandChina,jail timefor include thelossof their business li- curity Review. Consequences could data are unlikely to pass aCyber Se- ganizations that donot localize their or CII and first, localization data for cyber security approach will look ify asaCIIshouldnote that China’s whether or not they needto comply. panies face uncertainty regarding com- multinational CII, define to ity Until the State Council provides clar China’s highest governmental body. further definition to the State Council, draft alsodelegates responsibility for they could be “endangered.” The final well asunder what circumstances livelihood, or thepublicinterest,” as curity, country’s economy, people’s se- of “national definitions specific public interest. well aspeople’s livelihood andthe curity andthecountry’s economy, as to leaks might endanger national se- destroyed, degraded or vulnerable cal information infrastructure that if tronic governance andother criti- elec service, public traffic, finance, water, power, services, formation fines CIIs as: de- draft final The scope. the ened broad- that definition general more placed concrete CIIexamples with a especially if thedata contains per nies to keep Chinadata in-country, Still, China“encourages” allcompa- aren’t likely to beconsidered asCII. lion users or customers, they initially -Chinese company hasover onemil priorities. For example, unlessanon identify which companies are CII Will non-Chinese Will considered CII? companies ever be Organizations that might qual Missing from the final draft are the Public communication andin- re- draft final law’s the However, “very large” number of users. 5. Network services usedby a cies above themunicipal level; and The government isstartingto ------

place to mitigate thefollowing: termine what theorganization hasin ucts andservices. The intent isto de- an organization protects their prod- spect how “secure and controllable” Cyber Security Review will beto in- ganizations. telecommunications, and energy or ply. The second tier includesfinance, Chinese government needto com- nizations doing business with the curity Review. Inother words, orga- who have not passedtheCyberse- and/or services from CIIoperators mitted to acquire network products sector organizations that are not per munist Party organizations, andkey cludes government agencies,Com- in- tier first The regulations. security tions needto comply with thecyber proach to prioritize which organiza- The CAC proposed atwo-tier ap- Cyber Security Review will require. provided their guidelinesof what a space Administration of China(CAC) impacts thepublicinterest. because ithasalarge user-base and a greater likelihood to fall under CII ple isn’t stated in the law. WeChat has pand theCIIscope thisfar, that princi- tors have stated they would not ex and LinkedIn. Though Chinaregula- to includeapplications like Salesforce of thelaw does allow for theCIIscope the presenters said that the language based solutions will betreated, oneof state secrets. Regarding how cloud- sonal information, sensitive data or China’s cyber security review component goesbeyond guard- China’s “secure andcontrollable” utilize users’ data illegally collect, store, process, or • The means for an organization to tices or otherwise harmconsumers engage inunfair competitive prac • User reliance risks as a means to another organization interfered with, or interrupted by ciated with asso- risks services or Products • and technical support involving re search anddevelopment, delivery, risks Personnel • One of thekey components inthe On February 4,2017, The Cyber unlawfully controlled, ------recommendations information anymore. It isn’t just about intrusion detection needs to besomeoneintheC-suite. ber security at your company. This ber sovereignty. China’s internet governance andcy for the world to accept andrespect strategy ispartof President Xi’s vision their respective cyber borders. This countries to useasthey develop partly to provide amodel for other tablish itscyber security protocols, where. ber security review inChinaor else- your organization issubjectto acy holistic, you’ll beprepared for when tries you must consider. If your plan is nance. Chinaisonly oneof thecoun- global planfor Information Gover China; it’s aboutimplementing a Cyber security Implement holistic in China for businesses governance policies border litigation dispute. investigation, as well as any cross volved inaregulatory or internal support shouldthat data bein- would be wise to consider local rently on or created on CII and it iscur that data protect to fight 3. Secure local support.China will Security Review. audited aspartof aChinaCyber pare for when your organization is 2. Self monitor, evaluate and pre- all employees, not justIT. around cyber security involving 1. Develop acorporate culture Determine who isincharge of cy China ismoving quickly to es- Cyber security isn’t justabout sides inthe world. data, regardless of where itre- protecting consumers andtheir interference, andencompasses ture againstintrusion, hacking,or ing the servers and infrastruc I ------2017 AmCham Shanghai Future of Food Conference AmCham Shanghai’s 2017 Food Industry Conference will focus on what the impact of new food production and product innovation, traceability and technology, food safety and fraud concerns, consumer marketing and new business models will mean for the future of China’s food, agricultural, and beverage industry, as well as the average Chinese consumer.

May 24th, 2017 08:00 - 17:00

Four Seasons Hotel Shanghai 500 Wei Hai Road, Jing An District Shanghai China

For sponsorship information, please email [email protected] For event information, please email [email protected] Members question the outlook and challenges ahead for the Chinese economy

AmCham Shanghai

Preprandial persiflage

AmCham Shanghai hosts 2nd annual HeforSHe conference Secretary William Cohen discusses key factors driving Trump’s Asia policy in support of the UN’s campaign to end gender inequality The annual Barnett-Oksenberg lecture this year highlighted U.S.-North Korea relations

A briefing on Taiwanese identity and its role Harry Harding and Shirley Lin discuss the precarious side in U.S.-China relations of cross-strait dilemmas AmCham Shanghai Month in Pictures

Articulating the Chinese view on the recent Xi-Trump meeting

A panel discussion on the critical role the sports industry plays in China’s development

AmCham Shanghai takes a closer look at accelerators in China 36 www.amcham-shanghai.org Former U delivers annual offered some counterpoints to Mr. Perry’s speech, saying that saying speech, Perry’s Mr. to counterpoints some offered also Japan. United States would bedevastating for all parties,andpossibly hand andblunderinginto a war with SouthKorea and/or the ever, he said that the danger of North Korea overplaying its positing that there islogicbehindPyongyang’s policies.How belief that North Korea isasuicidal andreckless state, instead of thethird. program offered two but allowedachievetofirst hope it the no improving itseconomy. Perry argued that thecountry’s nuclear ing theKimdynasty, (2)gaininginternational respect, and(3) were nolonger valid. and disincentives that U.S negotiators triedto use16 years ago negotiations. He alsoemphasized that theparade of incentives a failure to understand North Korea’s goalshadledto fruitless give upitsnuclear weapons. should not baseitsdiplomacy ontheideathat North Korea will wish itto be,” urged Mr. Perry. He alsosaidthat theUnited States quired achangeinnegotiating strategy. bargaining tableshouldcontinue, buthestressed that thisre- theNorth Korea efforts bring to Chinese) to (and that American lem of North Korea anditsgrowing nuclear capability. Asia Pacific Region, focused on the seemingly intractable prob- tions. Mr. Perry’s talk,broadly titledPossible Flashpoints inthe the annual Barnett-Oksenberg lecture onSino-American rela- fense and now Professor Emeritus at Stanford University, gave FormerU.S.DefenseSecretary Perry William Major General Yao Yunzhu of the People’s Liberation Army Mr. Perry disabusedtheaudience of thecommonly held sustain- (1) as: Korea’sMr.North Perry currentgoals defined A veteran of earlier talks with North Korea, Mr. Perry said that “We mustdeal with North Korea as itis,andnot as we should Speaking to anaudience of over 300people,Mr. Perry said On March 21 Event Report .S Defensee st , William J. Perry, former U.S. Secretary of De- Barnett-Oksenberg le cretar y William J. Perr c ture y

- in China. these issuesandtheir implications for the businesscommunity The session closed with a spirited Q&A that dug deeper into meeting beingheldinFloridarather thanat the White House. the of – any if – significance the and meeting the covered dia and recent U.S. actionsinSyria to how thetwo countries’ me- and covered topics ranging from trade relations, North Korea the recent meeting between President Trump andPresident Xi, AmCham ShanghaiPresident Ken Jarrett. The maintheme was then joinedhimonstagefor apanel discussion moderated by marks ontheU.S.-China bilateral relationship. The other guests Shanghai Institutes for International Studies (SIIS). rector of theInstitute of Taiwan, Hong Kong and Macao Studies, Di- Assistant and Studies Asia-Pacific for Center the at fellow Risks Greater ChinaandNorth Asia, andZhexin Zhang, research U.S. Consulate in Shanghai, Kent Kedl, Senior Partner at Control tured guestspeakers Hanscom Smith,Consul General at the Tuesday, April 11th, at theFour SeasonsHotel. The event fea- lateral April curity assurance to theNorth Koreans. NorthKorea, herwith proposedU.S. a offerincluding mix of se- ing ablendof incentives anddisincentives innegotiating with action.” istration’s patience with North Korea asa“kindof strategic in- Korea butalsoregime change.ShelabeledtheObamaadmin- the U.S. hadmistakenly pursued not justadenuclearized North Fourwisemen The event opened with Consul General Smithproviding re- on briefing member monthly its held Shanghai AmCham The major general agreed with Dr. Perry’s proposal for us-

Monthly Relationship I

Member Briefing on the U .S.-China Bi- Shanghai’s 2 RecordSetting Attendanceat AmCham Network Committee (WEN),proudly hosted the2 sol More than 230leadersc feel they cannot have both asuccessful career andhomelife. lose talent because women feel pressured to stay at home, or boards andinother senior advisory roles. Companiesoften on, includinggivingmore women theopportunity to serve on also important to identify theright female raw talent early decisions. senior leadersfrom both gendersmakingstrategic business pay for equal work, andhaving anequitabledistributionof components of equality canbetracked. These includeequal clients. Using metrics for measuringandachieving success, are ableto excel andbetter understandtheir customers and bringing their authentic selves to work, companies andbrands der alone,andthat when menand women feel comfortable gineering, andmath) industries. traditionally male-dominated STEM (science, technology, en- mote women intheprofessional services sector, as well asin culture, andhow to jumpstartprograms andpoliciesthat pro- how to make greater gender equality goalspartof company ing how to increase the number of women leaders in China, Fargo Bankare doingto create change. Thornton, EY, General Motors, DLA Piper, Bayer and Wells including Gap,P&G,GE,Baidu, Johnson & Johnson, EF, Grant ference and welcomed 230leadersto learn what companies ence was focused oncorporate responses makingareal dif - Solutionsfor Advancing Gender Diversity”, this year’s confer der inequality. With thethemeof “Paving the Way to the Top Carlton Hotel insupportof theUN’s campaignto endgen- forShe Conference onMarch 28 Sharinginsightsonadvancingwomen AmCham Shanghai,supported by their Women’s Executive To reach greater gender parity at theexecutive level itis Panelists agreed that diversity isaboutmore thangen- Attendees heard from leadersona variety of topics, includ- utions f or ad vancing enderiversity ome together todiscuss th , 2017, at thePortman Ritz- nd HeForShe Conference nd annual He- - - risks, they are set to truly succeed inbusiness. and are willing to harnesstheir passioninto takingmore career mentors for success at thesenior level, believe inthemselves, STEM to more senior levels. challenge ismore inadvancing thelarge number of women in ber of girlsstudyingSTEM at university level, for China,the male leadershippipelineisalsoimportant. affinity groups to cultivate female leaders andensure afe- authentic self to theoffice, andsetting uptalent councils and and flexibility to take care of their family, bringingtheir full and at anearly ageinChina.Givingmenand women thefreedom women andmothers, as well asthepressure to get married results andnot merely office based work hours. even part-time justafew days a week; as well asfocusing on where they choose, whether homeor elsewhere, including Potential solutionsincludegivingmothers theability to work Norbert Ehlert talks about the P&Gway aboutthe NorbertEhlerttalks Apackedhouse Speakers agreed that when women have role modelsand While intheU.S. thechallengeliesmore inincreasing num- Childcare is also one of the biggest challenges for working Movers and MEMBER NEWS I Shakers 37 May/June 2017 38 www.amcham-shanghai.org a consultant. flexibility asmore much haveyou but CFO, a poweras making day management of acompany. You have muchmore decision different projects and are not necessarily focused on the day to a CEO andtheboard. Inconsulting, you are always takingon most strikingdifferences between thetwo? young sector (environmental technology). What are the (accounting) butare now aCFO in what isstill arelatively You previously worked inanestablishedindustry everything, from financial planning to taxes. and they decidedto manufacture locally. We helpedthem with plant in Texas. It was billions of dollars in green field investment, with Tianjin Pipe,buildingtheir seamlesspipemanufacturing involved in a lot of those.Oneof my big projects at Deloitte was mergers andacquisitions inthelastseven years andIhave been companies have beengoingglobal. There have beenmany out to betheright decision. The market hasbeengrowing fast, would helpmegrow personally andprofessionally. Itturned the U.S. andChina,helpingChinesecompanies goglobal for many years. Ithought Icould serve asabridgebetween help Chinesecompanies to gooverseas. back to helpDeloitte capture thosebusiness opportunities,and owned enterprises andtheChineseprivate sector. I was sent were many green field investments in the U.S. by Chinese state- Thereoff. take to started had investment outbound China and what prompted theswitch? You lived intheU.S. for some timebefore returning to China, Working asacorporate CFO involves beinganadvisor to I amfrom Chinabutlived and was educated intheStates I camebackto Chinain2009.I was with Deloitte, intheStates, Chicago, ShanghaiandHong Kong. multinational corporations at theDeloitte offices in outside of China.Prior to joiningSFCE, Nealis served major subsidiariesandinvestments SFCE holds She isamember of theBoard of Directors for all Clean Energy Limited (SFCE) listed inHong Kong. the International Divisionat Shunfeng International Jing Nealis isthemanagingdirector andCFO of Nealis Q&AJing with Member Focus the solar industry. For example, we acquired meteocontrol in or technology to provide services or solutions,particularly in acquisitions overseas to buy companies with theexpertise solar products to acleanenergy service provider. We are making propelling thoseacquisitions? acquired anumber of overseas assets. What are theforces Shunfeng International CleanEnergy Ltd. hasrecently From amanagement perspective, that canbeachallenge. front office management cannot go as fast as the market. done properly. But when you grow fast, some of thebackor growth; from process, financing,to makingsure thingsare is rapid, and you face lots of challenges when managingthat country for new solar installations inthe world. The growth business for solar inChinaisnew. process of doingthings,especially becausethedownstream there are challengessuchasmanagingexpectations andthe that in2013. We are intheright place at theright time,but pioneers of moving toward low carbon,butChinajuststarted subsidies, asitisstill more expensive thancoal. power, becausesolar isanindustry that requires government etc. There was not muchdomesticconsumption of solar we exported 90%of our products to theU.S., Europe, Japan, It really didn’t have theseincentives until 2013;before that, supportive. They are coming up with different incentives. right place at theright time. The Chinese government is super environmentally focused industry inaplace like China? What are thegreatest challengesto managinginan Since 2014, we’ve beentransitioning from amanufacturer of In the past three years, China has become the largest The U.S., Germany, Spain,andFrance; they are obviously It ishard to say, becausefor cleanenergy we are inthe 16 gigawatts of installation, the second highest in the world. highest installation rate since inception. The U.S. market had compared to last year. Last year was agreat year; it was the one knows right now. cut theITC (Solar Investment Tax Credit), that’s something no grid parity with coal very soon. Idon’t know whether he will cheaper and we are reaching thepoint where we will beat the whole supply chain/value chain,andsolar isbecoming be agigantic impact.Solar isanestablishedindustry, with I thinkfrom thesolar industry perspective, there might not his energy plan,itisclear that heisabouttraditional energy. and thought thingsthrough, andnow that hehaspublished for cleanenergy. But now that peoplehave calmeddown Shunfeng’s strategy at all? leadership concerning environmental protection changed Has the Trump Administration’s apparent rejection of global perspective. liquidity, treasury, andreporting compliance andcontrol strategies andplan.For me,it’s aboutmanagingfrom a directors to runtheir business within thescope of theagreed But we allow the local general managers and managing control from abudgeting andfinancial analysis perspective. practices within different subsidiaries,sothat they are under perspective, my role isto set upareliable process andbest to managetheGermans,for example. From afinance management teams. We don’t sendgeneral managers such asinGermany, Australia or Japan, we engagelocal international reach? handle thedemandsof leadinginacompany with suchan a presence inEurope andtheUnited States. How do you Shunfeng hasrecently expanded itsfootprint to include strategy. capabilities, thesolutions,and the knowhow to match our revolve around acquiring companies with theengineering manufacturer into aservice provider. Our acquisitions all for SOEs thanitisfor us.Soour strategy isto grow from a that require alot of capital. The cost of financingisdifferent probably have anadvantage over us when owning assets into aservice provider becausethestate-owned enterprises listed ontheHong Kong exchange - we are transitioning very important. For acompany like ours-aprivate company internet of solutionmanagement-related things isbecoming solar assets management monitoring of this solar power, the with more andmore solar farms beinginstalled,and with the German solar market. company inthe world. Founded inthe1970s, they grew with the Germany. They are thelargest independent solar monitoring The U.S. market for installation probably will drop, When Trump becamePresident, this was not goodnews Our strategy is: when we have bought acompany overseas, This issomething China will needinthefuture, because traditional coal energy. is generated from coal. Itisasupplemental energy provider to electricity from thesunshinerather thantakingelectricity that whoever owns their roof to have arooftop solar unitgenerating Now itmakes more sensefor people who are manufacturers or very goodrooftop-distributed generation subsidies as well. and inEurope, butChina,startingfrom last year, begangiving rather, on somebody’s roof. This is well developed in the U.S. distributed power. Itisnot abigpower plant ontheground, but investment. to invest their money into solar projects asalongterm and pairingit with subsidies,soasto give investors incentives first, thegovernment issetting agoal for solar installation, June there were already more than20gigawatts installed.So it iscoming down. Incontrast, inChina,last year, Ithinkby U.S. market last year for installation was 16gigawatts, and five years thegoal isto add100gigawatts, which ishuge. The gigawatts per year, and Xi Jinping recently saidthat inthenext up onsolar installation. paying asubsidy. That’s how Germany andother places pick payment would bemore, since thegovernment isactually makes more senseto invest insolar, becausetheelectricity on top of thestandard electricity price. For investors, then,it incentives to promote installation of solar. Itispaying asubsidy operations? regarding climate change,how doesthisaffect Shunfeng’s Xi Jinping’s Davos speech seemed to call for greater action value. solar industry which employs lots of peopleandcreates centric. Having saidthis,theU.S. hasquite anestablished doesn’t impactusthat muchbecause we are not very U.S.- This year, it will mostlikely come down. Onahighlevel, it Shunfengsolar-powered SanFranciscoairport Rooftop solar is getting popular as well, which we call The government’s goal for annual installation isaround 20 Since 2013,thegovernment hasbeenputtingoutdifferent Movers and MEMBER NEWS Shakers 39 May/June 2017 40 www.amcham-shanghai.org leasing company through which they can finance greenfinancial projects a up set to able wereprovince Anhui from company at today’s event (at AmCham Shanghai),representatives of a Further, financing. green different provinces have for set up green responsible energy funds. For instance, departments has or bank nonbank, are very actively involved. Ithinkalmostevery whether bank institutions, financing also, projects; green businesses suchas yours? How doesthegovernment’s pushfor green financingaffect Googlesolarroof The government ishopingmore private capital will gointo guaranteed supply. to turnitbackon.Sothey are kept oninorder to have a coal plant, because once you do, it becomes very expensive issues that persist.For instance, itis very hard to shutoff a gives themmuchmore incentive to doso.However there are Indicators) are linked to environmental issues,itcertainly power infrastructure mix? over economic growth. Do you foresee thischangingthe officials that emphasizes commitment to environmentalism China recently announced a new standard for promotion of green projects. manyaretherefinance ways toSo structure. leasing a through Now that government officials’ KPIs (Key Performance I other human activities, have resulted in serious variations to by theburningof fossil fuels,landclearing, agriculture, and umes of carbondioxide andother greenhouse gases released for our bodies.Most scientists agree that theincreased vol time onour mobilephonesto see whether theair isunhealthy skyeffects,tothe see air the and quality monitored be can real sequences for theenvironment. All oneneeddoislookto the negatively affected theair, soil and water, creating serious con- industrialization, and poor maintenance of our planet, have has become all too evident how manmade pollutants due to and consumer demandfor products andservices increased. It background. Inthemeantime, mankindcontinued to globalize overhauling theenergy regime intheU.S. slowly faded into the result was aloss of willpower to take action. The promise of mental technologies didnot mature asfast ashoped,andthe gies. However, the price of fuel eventually fell, new environ problems with conservation of resources andrenewable ener out the world, would do whatever was required to solve our a cost you canafford.” mit you to buildconservation into your homesand your lives at per will effort This battle. energyour in averageAmerican ery vation program to involve every state, county, andcity andev gas, from thesun,” andthat he was “proposing aboldconser shale, from plant products for gasohol, from unconventional America’s own alternative sources of fuel -from coal, from oil ment of fundsandresources inour nation’s history to develop security, Iamaskingfor themostmassive peacetime commit dependence onforeign oil.Inparthesaid:“To give usenergy stated how thecountry would create clear goalsto reduce its dress to the nation on energy and national goals in which he fuel stations for hours,or even days, to get motor fuel. watch television news reports showing cars waiting inlinesat this periodknown asthe“Energy Crisis” it was common to vated fuel prices, with the worst years in1973 and1979. During petroleum shortages,resulting instagnant growth andele- turmoil when themajor industrial countries of the world faced bright andcleanfuture. But within afew years there was great dent on April 22,1970, andthesenseof excitement abouta Itseemedthat theU.S., along with other countries through- ad - his gave Carter JimmyPresident U。.S. 1979, 15, July On stu a as Day Earth first the celebratingremember vividly I Chairman, Amcham ShanghaiEnvironmental Committee Founder, U.S. Green Solutions An Essay by Michael J. Rosenthal Committee Chair’s Corner ------Forum, while at the same time “tremendous advances that tinue to progress rapidly,” says Huw Slater of theChinaCarbon con- should development energy effectively, renewable with and pricingreforms in the power sector, andif these are dealt ernment is currently pushing forward long-awaited regulatory are advantageous for theChinaeconomy. “TheChinese gov only protects theenvironment butprovides opportunitiesthat Carnstone’s Shanghaioffice. guard,” says Tristan Edmondson, general manager of offcompanies many catching areenforcement improving and as anexistential threat, anda wave of upgrades to regulations “The CommunistParty rightly views environmental degradation the U.S. isceding itsrole astheglobal climate leader to China. solving our environmental problems, although it now appears the NRDC, both countries have been making progress toward bon pollution. As noted by Barbara Finamore and Alvin Linof the U.S. andChina,together the world’s largest emitters of car articles aboutbusinessandtheenvironment, andinparticular port for thenU.S. President Lyndon Johnson. rized the risks associated with rising carbon pollution in a re quite sometime.InNovember 1965climate scientists summa- for planet our on effects serious potentially the ofaware been to thehealthof theplanet anditsinhabitants. Scientists have threat imminent and significant a are and weather,earth’s the 1971 Earth Day – activism before Day–activism 1971Earth internet the As one would expect, Chinese environmental leadership not This issueof AmCham’s Insightmagazine hasa variety of Movers and MEMBER NEWS Shakers - - - 41 May/June 2017 42 www.amcham-shanghai.org drive these changes. Consumers and China’s increasingly in KPMG’s David Frey. It won’t justbegovernment directives that retool their thinkingtoward anelectric-based future, writes pushing both domestic and foreign manufacturers to seriously thanks to government “market making” policies, which are China isbecoming aleader intheelectric vehicle (EV)market automobile market. And while there are still challengesahead, 2050. Especially in China, which is already the world’s largest 11% if 14%of travel inthe world’s cities were to beby bike in significant impact on carbon emissions, which could drop by ing startups, already operate within China. These could have a and DidiDaChe.Mobike, as well asroughly 30other bike shar shared economy asnever before, asproven by theriseof Uber turing process, shipping, andend-of-life recycling. intelligent product design,choice of raw materials, manufac carbon footprint product inthecarpet tileindustry through its them more environmental. Interface claimsto have thelowest nesses are focusing ontaking traditional products andmaking fication products for their smarthomestrategy.” Other busi- are successfully marketing consumer-grade air and water puri- that “companies like Honeywell, amultinational conglomerate, monitoring andabating pollutioninprivate homes.” He notes awareness of pollutionhasincreased, sotoo hasinterest in monitoring air, water andsoil. According to Hicks:“As public for products providing successfully been has China, Scientific Fisher Thermo and monitoring, is process the in step first The and impressive progress hasbeenmade,says David Hicks. ment.” investment community andspur green growth anddevelop- ment, developed green bondsasatool to mobilize theglobal encourage environmentally and socially responsible invest mand centers.” make distant renewable resources accessible to the major de- well asmajor advances ingridtechnology which could helpto promising early-stage technology such as solar thermal, as able energy technologies suchas wind andsolar, developing China ismakingindrivingdown thecost of establishedrenew Rosenthal at the recent atthe Rosenthal Dayevent AmChamShanghaiEarth Additionally, technology is now allowing us to utilize the Elsewhere, lofty pollutionreduction goalshave beenset, Jennifer Ye of PwCof writes that “Policymakers, lookingto - - - - - hope aboutthefuture for our world. exciting time of innovation and change that can give us all is truly feeling thestrain of humanity’s activities,itisalsoan nesses, andeconomics will drive that change. While our planet that solve theproblems which have beencausedby busi- ing us toward a cleaner future. In the end, it will be businesses celebrates thosecompanies, andorganizations, that are lead- dent that businessesare the way forward. Our Earth Day Fair considering businessesto bepartof theproblem, itisnow evi- of Instead 1970. in experienced first I which that from different Day that we celebrate these days at Amcham Shanghai is far ism, andholdsanEarth Day Fair every year. However, theEarth eco-tour to finance green from events of variety wide a held nies operating in China. The Environmental Committee has moting ahealthy business environment for American compa pro- of mission Chamber’s the to intrinsic are committees cific formation andresources. AmCham Shanghai’s 18industry-spe- China commercial tiesandproviding high-quality businessin- healthy business environment inChina,strengthening U.S.- is to supportthesuccess of itsmembersby promoting a leading international business association inChina.Itsmission as the“Voice of American Business” inChina,strives to bethe solution. with government incentives make solar anextremely viable creased competition amidgrowing demand, which combined systems have plummeted due to mass production and in small fraction of thepower. Inrecent years, prices for solar they could useLEDlights which lastlonger andusejusta company even thinkof installingtraditional light bulbs, when and simply make businesssense.For example, why would any ment support.Many environmental solutions are cost saving with new innovations andtechnologies with or without govern- able environmental solutions.Companiesare forging ahead afford- and accessible ofrenaissance incredible an witnessing work-live-play environment, andacloseproximity to nature. alternative energies, publictransportation, car-free, walkability, to energy, sustainablebuildingpractices, solar, wind andother green design,rooftop or community gardens, recycling, waste There is hope that one day we will all live in eco cities with run on100%renewable electricity, andothers soonfollowed. and cool roofs. Burlington, Vermont, was thefirstU.S. city to ing, tougher buildingcodes, electric vehicle charging stations are moving ahead with energy-saving steps, suchasbike-shar able power. IntheU.S., notwithstanding national politics,cities renew by met needs energy their of percentage significant a future. Citieslike Reykjavik, Vancouver andCopenhagenhave throughout the world are making progress toward a cleaner transition. novative technology companies will play amajor role inthis Since its founding in 1915, AmCham Shanghai, now known Now, closeto half acentury since theenergy crisis, we are Of course itisnot justaboutChinaandtheU.S. Countries I - - - - - take suchaction,protecting theanonymity of both thesource behavior or theChamber’s core values, theCommittee shall receipt of information that allegesconduct contrary to ethical the Committee may approach any oneof itsmembers.Upon individuals involved. be honored, soasto protect thepositionsandreputations of mised ethics or core values. Requests for confidentiality shall report a situation involving AmCham and potentially compro- confidential channel for any member of AmCham or itsstaff to chairman of theEthics Committee. cess andanacceptance of differentiation,” saidPierre Cohade, fulfillment; itbuildsour businessreputation andfuelssuc values andethics. Itinspires our talent andcreates prideand can businessesaround the world. It is at the core of American sound moral principles. imbuing both their working practices andemployees with can businessesshouldsucceed commercially butonly while can bringconcerns to theCommittee’s attention. of itspurpose,members,andtheprocedure by which you we have dedicated thispageto giving you abrief explanation enhances themembershipexperience for all. standard not only protects theChamber’s reputation butalso bers or staff. Holding our members and staff to a high ethical have aboutthebehavior or integrity of either Chamber mem- channel via which they can communicate any concerns they hai hasanEthics Committee to ensure that membershave a Chairman (2016-2017) Pierre Cohade Procedure: An individual who wishes to raise amatter with Purpose: The Committee shall provide anindependent, “Doing theright thingtheright way isahallmarkof Ameri- Underpinning theEthics Committee isabelief that Ameri- Not all membersare aware of theCommittee’s existence, so Like many institutionsandbusinesses, AmCham Shang- Ethics Committee the Ethics Committee at the AmCham Shanghaioffice. Verbal reports are not considered valid until they are formally made via email or written statement. You may fileareport to theEthics Committee by [email protected] or by mailinga written statement addressed to (2016-2017) Arthur Dicker Members of theEthics Committee (2017-2018) Cecilia Ho - tential conflict of interest concerns by the membership. (NEC) or theBoard of Governors to minimize andreduce po- ticipate oneither theNominations andElectionCommittee with staggered turnover. Members shall not concurrently par Cham ShanghaiBoard of Governors to serve atwo-year term, ate, for final action. gation shall bereported to theOfficers or Board, asappropri- ber’s Articles of Association, butsuchcomplaints after investi- staff or membersat large that are allegedto violate theCham- Board of Governors, Committee Chairs/Vice Chairs, AmCham will entertain complaints related to actionsby theOfficers, rassment andabuseof authority. Inaddition,theCommittee including butnot limited to fraud, theft, corruption, sexual ha- unethical behavior or breaches of the Chamber’s core values, and employees as well asinvestigate allegations relating to risks to theChamber from unethical behavior of members management. render suchassistance asmay berequested by theChamber’s tion andany establishedfacts. The Committee shall thereafter shall notify theOfficers or Board of theexistence of theallega- tion is worthy of further investigation or action, the Committee appropriate, of theChamber. Ondetermining that theallega- complaint shouldbepresented to theOfficers or Board, as and other individualsconcerned, to determine whether the (2016-2017) Norm Page Members of theEthics Committee are appointed by the Am- Areas of Principal Concern: The Committee shall identify (2016-2017) T om Ward Movers and MEMBER NEWS (2017-2018) Christine Yan Shakers I - 43 May/June 2017 President Donald Trump and President months of relative calm. The chief risk PRESIDENT’S Xi Jinping had an early opportunity to size with this study is a potential disconnect in each other up when they met in Florida what each government hopes to achieve. NOTE April 6-7, at what many pundits call the The U.S. government likely seeks systemic “citrus summit.” Given the frequency with change, such as meaningful market ac- After Mar-a-Lago, which China featured in Trump’s cam- cess improvements, while China probably Now What? paign rhetoric, and usually not in flattering thinks that a few specific and modest con- terms, the Florida meeting was anxiously cessions will placate the United States. awaited around the world. Our members Surprisingly, little was said publicly about were no exception. What do the meeting North Korea, but this remains a topic of outcomes tell us about President Trump’s ongoing discussion. The two leaders have China strategy and the future direction of already had two phone calls about North U.S.-China relations? Korea since the citrus summit. Both governments worked hard to Lastly, the two governments reconfig- downplay expectations from the summit, ured the structure of high-level dialogue, and for good reason. The summit occurred converting the existing Strategic & Eco- at an early point in the Trump administra- nomic Dialogue into four separate tracks: tion, even before it has articulated a China diplomatic/security; economic/trade;law policy. For this reason, some American for- enforcement/cybersecurity; and social/ eign policy experts argued that the meet- cultural. This tinkering is no different from ing was premature as the United States what President Bush and President Obama seemed unprepared. In my view, that risk did in the past. If there is any significance was outweighed by the value in having to the new structure it is the elevation of the two leaders meet face-to-face. In fact, cyberscurity as a theme and the fact that both governments defined the principal Treasury and Commerce will co-lead the goal of the summit as establishing per- economic/trade track when previously sonal rapport. A second goal was to set Treasury alone had the lead. the future work agenda – North Korea and With this first high-level meeting now Kenneth Jarrett the U.S.-China commercial relationship behind us, what can we conclude about President of The American Chamber of were prominent on that list. the Trump administration’s China policy? Commerce in Shanghai Did the summit achieve its objectives? To date, most of the President’s tough On the first point, outside observers can- talk about China has failed to materialize not really judge if any special chemistry – 45% tariffs, declaring China a currency now exists between the two presidents. manipulator or abandoning the one-China They have such different personalities, policy. For American business in China, and come from such different political tra- that is good news. But we are not out of ditions, that it is difficult to believe that one the woods yet. In addition to the 100-day visit alone could forge a special bond. But bilateral study, the Administration is en- President Trump was a gracious host and gaged in some studies of its own: a 90- the protocol aspects of the trip, a consid- day study on bilateral trade deficits, a look eration of high importance to China, were at how currency manipulation should be well handled. That certainly helps. The defined, and a 270-day review of whether timing of the U.S. missile attack on Syria steel imports harm U.S. national security. may have been awkward for Xi Jinping, but In other words, points of contention still that did not diminish his ability to say the abound. Thus, while a trade war is un- trip was a success and proof of his skill at likely, trade skirmishes remain a distinct managing U.S.-China relations and Presi- possibility. That also means your Cham- dent Trump in particular. With the 19th ber has plenty of work to do as we seek Party Congress around the corner, that’s to advance the interests of U.S. business what mattered most for Xi. in China. I As for more substantive outcomes, these were limited, but that also was con- sistent with what senior officials said in advance. The two governments launched a 100-day study of how to reduce bilat- eral trade tensions. Neither side has said much publicly about the purpose of this

www.amcham-shanghai.org study, but it should buy us another three

44 Coca-Cola Coca-Cola Glen Walter the Ethics Committee. The President announced that Cecilia Ho and Christine Yan will join Ethics Committee survey at the April board meeting. the of results full the provide will staff The year. last from 4% of tion survey. Membership satisfaction improved to 82%,anincrease The President provided highlights from themembershipsatisfac Membership can define what emailsthey receive by adjustingtheir profiles. members will soondecrease from three to two aday. Members received positive feedback. The President reported that emailsto the new website. The project has come in under budget and has Communications director Ian Driscoll reported onthelaunchof New cooperation andcoordination between thetwo chambers. from eachBoard to theother to joinmeetings inorder to increase Eric Schmidt.He joinedthemeeting aspartof anopeninvitation AmCham Chair Ker Gibbsintroduced AmCham China governor Cooperation With O Highlights from theM Board Chair Vice Ren, Titi Baccam, Ian Driscoll, Patsy Li,Ian Driscoll Attendees: Regrets: Cameron Werker, Helen Yang, Vincent Yang (by phone), Eric Zheng Tim Huang,Sarah Köchling, Nancy Leou, Glen Walter (by phone), Governors: MEETING ATTENDANCE Board of Governors Briefing Website Mike Crotty Ker Gibbs, Robert Abbanat, David Basmajian, Helen Hu, S Eric Schmidt(Am Governors Chairman oftheBoard of ChinaBio Ker Gibbs atisf a c arch 16,2017, meeting tion Survey ther Cambers AIG Insurance Eric Zheng Board Chair Vice The AmCham Shanghai The AmCham Cham China),Ken Jarrett, Helen Merrill LynchMerrill Bank ofAmerica Timothy Huang Paper International Helen u Treasurer - 2017 Board of Governors are usedto helpadvocate with both theU.S. andChinesegovernments. ident encouraged governors to fill out the survey, the results from which The Chamber sent outtheChinaBusinessSurvey inmid-April. The Pres- Annual approach to trade andU.S.-China relations. of theatmosphere in Washington andthe Trump administration’s AmCham China Doorknock in early May. This will provide a sense Chamber President Kenneth Jarrett reported that he will jointhe AmCham Cina Doorknock with members. magazine. The President saidsurvey results will beshared es butlessinterest incommunications issuesincludingthe There was anincrease insatisfaction with AmCham servic The President noted the increase in overall satisfaction. Member S work. Board hard member participation helpedincrease attendance. their for Li, Patsy particularly staff, Chamber of money – RMB650,000raised at theball andcongratulated Board Chair Ker Gibbsexpressed hispleasure abouttheamount AmCham Ball Highlights from the Consulting Co. Consulting Shanghai Blossom Sarah Köchling ILE Robert Abbanat Attendees: Yang, Eric Zheng Glen Walter,Leou, Cameron Werker, Helen Yang, Vincent Mike Crotty, Helen Hu, Tim Huang,Sarah Köchling, Nancy Governors: MEETING ATTENDANCE PatsyJessicaLi, Wu Business Climate Survey atisf Gentry Sayad, Ken Jarrett, Helen Ren, Titi Baccam, Ker Gibbs,Robert Abbanat, David Basmajian,

a c tion Survey April 18,2017, meeting DuPont Helen Ching-sienYang Baxter International David A.Basmajian

Movers MEMBER NEWS and Shakers MKT &Associates ILE Vincent Yang Michael Crott y - 45 May/June 2017 MEMBER NEWS

Esoterica

Mobike Mobilizes the Masses

By Jillian Smith

oused in the bottom of an out-of- “We are a green company,” he says. Riding use sports stadium, millennial work- bikes reduces car usage, which cuts down It burns calories too Hers type furiously away at laptops. on air pollution and carbon waste. Mobike, Sporting bright sneakers and tinkering with which was intentionally founded on Earth patented technologies, they are armed with Day last year, says it will continue to keep been engaged in a funding battle that some a vision of a greener future. But this is no Sil- costs low for bike ridership in an effort to compare to the one last year between shar- icon Valley software company. It’s Mobike, incentivize riders to adopt and maintain a ing economy heavyweights Uber and Didi. the world’s largest bike-share operator, and lower carbon lifestyle. In fact, Didi has become an investor in Ofo, a nascent player in the effort to lower China’s Mobike’s ease-of-use business model and Tim Cook, Apple’s CEO visited the Bei- carbon footprint. and low prices has indeed driven a new de- jing-based company on March 21, though Recently, AmCham Shanghai toured the mand for bike riding; within six months, the apparently no investment or collaboration company’s founding location with its general company had expanded from one city to was discussed. Foxconn, the company manager, Lynn Xing. Less than a year old, 39, which attracted the government’s atten- which assembles Apple’s iPhones, and iron- Mobike has been fast at work. Its Shanghai tion. Late last year, company representatives ically, is a longtime Didi backer, has picked office workforce is already over 300, and on met with Premier Li Keqiang. Given Beijing’s Mobike as the favorite in the cash burning the day of our visit the company announced most recent Five Year Plan, which calls for race. While this hypercompetitive bleeding that it had opened its first international office, unprecedented carbon output cuts, officials of billions has become relatively standard in Singapore. are interested in companies that do so via a in China’s internet economy, the drama Mobike, Xing explains, solves the prob- simple user experience. unfolding between Mobike, founded by lem of the “last mile.” The issue with most Perhaps of greater interest to the govern- 34-year-old former journalist Hu Weiwei, bike-sharing services is that one must return ment, however, is the little square chip that and Ofo, founded by Dai Wei, a 25 year-old a bike to a ‘station’ after a ride is complete. each Mobike holds. These SIM cards, pow- PhD dropout, may be the most high profile, Often, however, such stations are not con- ered by the bike’s self-powered generator, and most interesting. veniently located, and riders must alter their hold hundreds of data points that record Regardless of who manages to capture course, adding unnecessary time to their trip rider behavior. This information can help city the most market share, the trend seems to in order to return a bicycle. governments plan more energy-efficient be a promising one for a nation that is literally Mobike is different. Users of their service transport networks, thereby further reducing choking on the smog created, in part, from are able to ride their bike to any public lo- carbon emissions and other forms of waste. automobiles. China is already the world’s larg- cation and then leave their bike legitimately This data has enabled Mobike to main- est automobile market, with 28 million cars where they end up, eliminating the need for tain its unique business model. In January, sold in the country in the past year. Emissions stations, locks, or racks. the company secured a total of US$300 from cars have become so problematic that Riders install the Mobike app on their million in Series 4 funding. Investors, such as in some cities new regulations allow cars to phone, which they use to scan the unique technology company Tencent, are similarly drive only on certain days, based on license QR code on the back of the bike, unlocking interested in the data that can be mined for plate number. According to a 2015 study its wheels. The smart technology, in addition valuable rider habit information. Xing admits from the Institute for Transportation and De- to components such as its internal push-pow- that the company is not yet profitable, but he velopment Policy, if 14 percent of travel in ered generator, airless wheels, and unique estimates that once Mobike’s data is more the world’s cities were to be by bike in 2050, five-spoke radial system, means the bicycles widely utilized, the best of both worlds can carbon emissions from urban transportation are costly. Xing estimates that each bike costs be achieved: a sustainable business model would be reduced by 11 percent. I about US$400. Yet amazingly, a 30-minute for a sustainable planet. ride on a Mobike only costs 0.5-1.0 yuan. Mobike is not alone in this endeavor. Jillian Smith is an intern in AmCham When asked why the rides are so inex- Roughly 30 other bike sharing startups al- Shanghai’s publications pensive, Xing suggests there is an altruistic ready operate within China, with Ofo serving and communications department element to the company’s pricing model. as Mobike’s main competitor. The two have www.amcham-shanghai.org

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