IFC Advisory Services in China

IFC China Advisory Services Results 2000 — 2010

In Partnership with: Focus: Three Key Areas

IFC’s Advisory Services work in China has focused its work on three key areas: 1. Opening up of new markets and opportunities for small and midsize businesses 2. Supporting development in the poorer western and central regions of China 3. Helping to combat climate change by directing financing to renewable energy and energy efficiency projects

Challenges IFC Action Result Highlights

- Focus on SMEs - SMEs lack access to - Facilitated more than $450 billion in finance and biz - Building managem- capital for SMEs development ent skills and comp- opportunities etitiveness - Business promotion - Underdeveloped - Enabling access to reforms helped private sector in finance triple investments China’s central/ in central city of - Investment climate western regions Yinchuan reforms - 57 mln tons of CO2 - China global leader - Climate change mi- avoided annually in CO2 emissions tigation Contents

Executive Summary...... 04

Creating Opportunities for Small and Midsized Enterprises...... 09 The Challenge...... 09 IFC’s Response...... 09 Result Highlights...... 09 Putting the SME Regulatory Framework in Place: Policies and Legal Structures ...... 10 Corporate Governance: Training, Knowledge Management, Awareness Raising...... 11 Oiling the Engines of SME Growth: Reforming Local Banks and Financial Institutions...... 12

Supporting Development in Central & Western Regions...... 15 The Challenge...... 15 IFC’s Response...... 15 Result Highlights...... 16 Linking-Up: Connecting Small Suppliers to Large Producers...... 16 Raising Skills and Standards: Training Small and Midsized Enterprises...... 17 Shifting Inland: Investment Promotion...... 18 Special Initiative: Emergency Response...... 20

Fighting Climate Change...... 22 The Challenge...... 22 IFC’s Response...... 22 Results...... 22 Changing Financing, Changing Policy...... 23

Looking Ahead ...... 24 Climate change...... 24 Balanced urban and rural development...... 24 Global China...... 24

IFC-China – 30 Years of Cooperation...... 25

Executive Summary

China’s economy has been powering ahead at an impressive speed. Production, trade and knowledge transfer have helped to lift millions of out of poverty while racking up growth rates of around 10 percent over the last decade. China has also weathered the recent global economic crisis better than many other countries. And yet, China still experiences development challenges. Much of the country’s progress has been concentrated in the coastal regions, private small and midsized companies face limited financing and development options, and achieving less carbon-intensive economic growth remains a challenge.

IFC has responded to those challenges with concrete actions and measurable results throughout the last decade. In 2002, we opened our office in Chengdu – some 1,500 kilometers inland from Beijing – a year after establishing IFC’s China Advisory Services. The program, run out of Sichuan’s capital, has helped jumpstart investments in some of China’s poorest central and western regions, opening up new markets and business opportunities for small enterprises, and supported China’s fight against climate change through innovative financial guarantees and advice.

Midway through the last decade, IFC affirmed its work on improving businesses’ access to finance as the program’s cornerstone and increased support for financial infrastructure development. Support for individual firms began focusing on supply-chain linkages to raise product quality and help smaller firms provide services and raw materials to larger producers. At the same time, investment climate regulatory work expanded its scope from the Sichuan province and local-sector issues to focus on a national-level priority: helping to increase investment flows to central and western provinces. A national corporate governance program was also initiated. Creating Opportunities for Small and Midsized Enterprises The Challenge At the end of 2006, small businesses contributed 60 percent of China’s GDP, but accounted for only 15 percent of outstanding credit. An IFC survey found that 78 percent of small companies cited lack of access to finance as a major constraint for business development. Small entrepreneurs are also held back by onerous exceptionally high and the training content has been widely business regulations and red tape, making it difficult to attract used investments, grow, and create jobs. t
As of June 2010, IFC is working with five banks that lend to small and midsized entrepreneurs (mostly operating in western IFC’s Response and frontier regions) helping to boost lending by 16,000 loans, IFC has helped Chinese micro, small and midsize enterprises to a total of 40,000 outstanding loans valued at more than $9 obtain financing by improving the policy framework and billion. SME-banking projects that are now closed helped financial infrastructure and strengthening the capacity of local facilitate an additional 40,000 loans outstanding. financial institutions to undertake sustainable lending. Insufficient access to finance has been a significant constraint Supporting Development in Central & for the emergence and growth of micro, small, and rural Western Regions enterprises in China. Changing this will be key to lifting millions more out of poverty. The Challenge Result Highlights 3FHJPOBM
EJTQBSJUZ
JO
FDPOPNJD
HSPXUI
BOE
XFBMUI
JT
POF
PG
the biggest challenges facing China. The massive Sichuan t
IFC helped to encourage new ways to access of finance and earthquake in May 2008 compounded the plight of poorer financial institutions suited to smaller firms, such as leasing, regions in inner China, killing tens of thousands and bringing credit guarantees for small and midsized enterprises, and the private sector to its knees. While small and midsized microfinance enterprises are the heart of the economy in China’s central and t
*'$
IFMQFE
UP
FTUBCMJTI
BO
"DDPVOU
3FDFJWBCMF
3FHJTUSZ
UIBU
western regions, without adequate investments, management facilitated more than 160,000 loans to date. IFC’s work has skills, and quality controls they are often unable to secure large unlocked more than $450 billion in capital for small and contracts to ensure the sustainability of their business and the medium size enterprises ability to create long-term jobs for millions of poor people. t
Through IFC’s assistance, a comprehensive national credit bureau is now operational and provides the world’s single IFC’s Response largest repository of individual credit/financial data. It As the only international agency with an established office in facilitated more than $670 billion worth of financing for Sichuan province at the time of the earthquake, IFC increased about 200 million borrowers. the lending capacity of local financial institutions through a t
The Business Edge Management Training Program trained combination of investments, grants, and advice, helping to 126 local trainers who provided 79 courses to about 5,500 open up business opportunities. IFC’s linkages program works managers of small and midsized enterprises in Sichuan and to improve production processes at small and midsized other Chinese cities. Participant’s satisfaction was companies to facilitate sustainable business relationships with

5 large companies. IFC’s Investment Climate Program has Result Highlights supported policy and regulatory reforms particularly in China’s t
As of June 2010, CHUEE’s participating banks provided central and western provinces. around $1.7 billion in loans, financing 200 energy efficiency Result Highlights and renewable energy projects, such as waste heat recovery t
IFC’s agribusiness linkages projects have directly benefited power generation and the introduction of efficient production about 24,000 farmer households in three provinces systems and renewable energy projects like wind and biogas. (Sichuan, Yunnan and Guangxi), improving the livelihoods t
Energy Efficiency investments led by the CHUEE program of about 72000 rural people. will contribute to a reduction of almost 57 million tons of t
IFC helped to raise an estimated $280 million in financing CO2/year. among Sichuan businesses and to create an additional 9,000 t
According to a recent IEG evaluation, the expected jobs between 2002 to 2006 quantifiable benefits from the guaranteed loans are in excess t
Tripling of investments to city of Yinchuan in the central of $38 million over a 10-year period since program inception. Ningxia province after it partnered with IFC to apply new t
China’s Green Credit Policy has helped to restricted methods of investment promotion lending to high energy consumption and polluting industries. In 2008, with IFC’s assistance and support, Industrial Bank Fighting Climate Change became China’s first bank to adopt the Equator Principles for environmental and social sustainability in project The Challenge financing. China’s soaring demand for electricity from coal-fired power plants and a surge in cement production has made it the world’s largest emitter of carbon dioxide. Recognizing that industry’s inefficient energy use poses a major risk, the Chinese government has made energy efficiency a national priority. IFC’s Response IFC’s China Utility-Based Energy-Efficiency Finance Program (CHUEE) stimulates energy efficiency investments by giving bank guarantees for energy efficiency loans and assisting in the implementation of energy efficiency projects of banks, utilities, equipment vendors, and energy service companies. In addition, IFC helps banks and those companies wanting to operate more energy efficient, to acquire skills in marketing, engineering, due diligence, and financial analysis of energy efficiency projects. In working with the Chinese government, IFC contributed to China’s adoption of its “Green Credit Policy” in July 2007 and was recognized in 2008 and 2009 by the China Environmental Investment Forum for its outstanding contributions in advancing China’s green banking.

6 The Next Decade

IFC plans to continue to support China’s development. It is China development strategy, which prioritizes investment and currently developing a viable model for Advisory Service work development to support pro-climate change initiatives, beginning in 2011 that will both leverage our current balanced rural-urban growth, and sustainable South-South experience with realities of tighter budgets and an evolving investment.

IFC – Local Expert, Global Leader

IFC, a member of the World Bank Group, is the largest global (including mobilization) invested in 193 projects throughout development institution focused on the private sector in 28 provinces as of June 30, 2010. For more information, visit developing countries. We create opportunity for people to www.ifc.org. escape poverty and improve their lives. We do so by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development. In a time of global economic uncertainty, our new investments climbed to a record $18 billion in fiscal 2010. IFC’s work in China consists of advisory services and investment services. Under the advisory pillar, described in this booklet, IFC has been advising 30 projects in China under four business lines: access to finance, corporate advice, investment climate and corporate governance. IFC’s investments through loans, mezzanine financings, and equity stakes aim to help reduce poverty by strengthening individual private sector companies in developing countries. IFC also mobilizes capital through loan syndication, knowledge sharing and advice on global environmental and social standards. In China, IFC focuses on investments that help to address the climate change challenge by supporting renewable energy, energy efficiency, water efficiency, and clean tech projects. We also support balanced rural and urban development by focusing on frontier regions, food safety and financial institutions that support the scaling up of micro, small and medium-sized enterprises. IFC also offers financing and expertise for China’s foreign investments. We work with Chinese firms who invest in other emerging economies, particularly in Africa. China is IFC’s 4th largest portfolio country (after Brazil, India and Russia) with $4.7 billion

7 Funding and Resources

Successful development work requires expert staff and resources. The total funding from 2002 to 2011 stands at $40 million, sourced from IFC earnings and significant contributions from the governments of Australia and Great Britain. Norwegian and Finnish governments have provided $7 million to IFC’s China Utility-Based Energy-Efficiency Finance Program (CHUEE) program. More than 30 dedicated staff, from team assistants to program managers, have worked tirelessly to help improve the livelihoods of Chinese entrepreneurs in some of China’s most disadvantaged regions.

8 Creating Opportunities for Small and Midsized Enterprises

The Challenge growth of micro, small, and rural enterprises in China. Changing this is key to lifting millions more out of poverty. Small and midsized companies are the backbone of the Chinese IFC is in particular working with city commercial banks as well economy, providing jobs, income, food, and other products to as rural and microfinance institutions as they represent a millions of Chinese. Yet, onerous business regulations, red tape significant opportunity to reach the underserved. IFC is helping and difficulties in obtaining loans are holding back small to reduce risks for private-sector investors due to limited entrepreneurs. technical skills, the slow pace of legal reforms, geographical At the end of 2006, small businesses contributed 60 percent to jurisdictions, and decentralized supervision. China’s GDP, but accounted for only 15 percent of While China has recognized weak corporate governance outstanding credit. In 2008, a report by the China Banking standards as a risk and companies are often willing to improve Regulatory Authority noted that 22 percent of China’s standards, insufficient governance services cannot meet the townships had only one financial service point and seven growing demand for training. IFC’s corporate governance percent of townships lacked financial service points altogether. program focuses on satisfying the need for training and No more than 42 percent of the population (aged 15 and knowledge sharing by building and strengthening the capacity above) use formal financial services, compared with 91 percent of local professional institutions to provide corporate in the US and UK. Similarly, an IFC survey found that 78 governance training. percent of small companies cited lack of access to finance as a major constraint for business development, making it difficult to attract investments, grow, and create jobs. Result Highlights In addition, the long-term sustainability of China's growth t
*'$
BEWJTFE
PO
$IJOBT
TFDVSFE
MFOEJOH
SFGPSNT
BOE
IFMQFE
story is threatened by weak corporate governance standards. to establish an account receivable registry that facilitated While Chinese policy-makers have responded energetically to more than 160,000 loans over three years, unlocking more governance problems with detailed regulations on disclosure, than $450 billion in capital for small and medium size shareholder rights and board structures, weak enforcement and enterprises. ineffective implementation undermine reforms. t
IFC helped to encourage new types of finance and financial institutions suited to smaller firms, such as leasing, IFC’s Response microfinance, and credit guarantees for small and midsized IFC helps Chinese micro, small and midsize enterprises obtain enterprises. financing by improving the policy framework and financial t
As of end-June 2010, IFC was assisting five lenders to small infrastructure and strengthening the capacity of local financial and midsized entrepreneurs, helping to boost their lending institutions to undertake sustainable lending. Insufficient access by 16,000 loans to a total of over 38,000 outstanding loans to finance is a significant constraint for the emergence and valued at more than $9 billion. SME-banking projects that

9 are now closed helped facilitate an additional 40,000 loans outstanding. t
IFC was assisting five microfinance institutions at the end of June 2010, helping to boost their lending by 25,000 loans to a total of 80,000. t
Through IFC’s assistance, a comprehensive national credit bureau is now operational and provides the world’s single largest repository of individual credit/financial data. It has facilitated more than $670 billion worth of financing for about 200 million borrowers. t
The Business Edge Management Training Program trained 126 local trainers who provided 79 courses to about 5,500 managers of small and midsized enterprises in Sichuan and other Chinese cities. Participants’ satisfaction was exceptionally high and the training content has been widely used. t
Of those companies that received IFC’s in-depth corporate governance advice, six indicated they had attracted investments worth $131.8 million. Four of them attributed $38.6 million to improved corporate governance practices. Three pilot companies anticipate about $30 million in investments in three to five years as a result of making corporate governance improvements.

Challenges IFC Action Result Highlights

- 160,000 loans regis- tered against acco- - Improving policy unts receivable framework - Insufficient access over 3 years to credit - Build financial infr- - Lending among 5 astructure - Unfavorable borro- SME lenders boost- wing terms - Supporting microf- ed by 14,000 loans inance to total of over - Financial illiteracy 38,000 loans - Help banks lend - Weak corporate sustainably - $38.6 million inves- governance tments among 4 - Training corporate companies due to governance trainers improved corporate governance

Putting the SME Regulatory Framework in Place: Policies and Legal Structures

Small and midsized firms need capital to grow, create jobs and on potential borrowers from a central depository, hurting thrive. However, many Chinese entrepreneurs have difficulty credit quality and raising the cost of serving customers. IFC accessing credit due to inadequate collateral frameworks. Moreover, has done groundbreaking work in putting policies and legal banks have traditionally been unable to efficiently find information structures in place that allow small borrowers to receive loans.

10 Secured lending. IFC has had a significant impact in the IFC launched a project in 2003 to develop a nation-wide credit policy arena, with China’s new property law paving the way reporting system and by 2006 a consumer registry became for secured lending reforms and the creation of a new accounts operational, allowing micro and small borrowers to accumulate receivable registry. Prior to 2007, China knew almost no a credit history. Today, practically all commercial lenders participate accounts receivable financing – the practice of obtaining loans in the registry, covering more 660 million people in China and secured by yet-to-be-received money owed to a company by a helping lenders to improve credit quality and risk management. customer. This made it difficult for farmers and small It is now one of the largest credit bureaus in the world. businesses to obtain credit as they have few other assets to offer The system has had a significant impact on lending practices. as collateral for loans. In response, IFC supported the In September 2008, a major bank reported that the credit development of a well-functioning secured lending framework reporting database had helped to weed out potential by harmonizing laws, building electronic registries, streamlining customers with a poor credit history, thereby avoiding losses registration processes, and eliminating unnecessary paperwork. of 8.2 billion Yuan ($1.2 billion). In 2007, the same year that secured transactions reforms were Leasing. The development of a vibrant leasing industry in implemented as part of China’s new property law, a modern China is critical as it allows small and midsize firms to improve security interest registry also became operational. As a result, output without having to buy equipment and machinery on China’s lending structure shifted to a more sustainable and bank credit, which are often unavailable to them. SME-friendly regime based on a wider range of assets. Since 2004, IFC has advised on China’s leasing regulations, Secured lending reforms – Results helped to raise market awareness, promoted investment, and t
Over three years, more than 160,000 loans were registered built capacity. In 2009 and 2010, IFC advised China’s against accounts receivable. As of 31 March 2010, the Central Bank on the establishment of a lease registry to protect cumulative registered accounts receivable financing the rights of lessors and lessees – an important step towards amounted to 7.87 trillion Yuan (about $1.2 trillion), of formalizing the leasing industry and allowing small and which registered SME accounts receivable lending was 3.1 midsized companies to tap leasing. trillion Yuan (about $456 billion). Leasing – Results Credit bureaus offer timely, credible, and Credit bureaus. t
As of end-March 2010, the cumulative number of leasing objective information on borrowers, allowing financial registrations was 5,442 and the cumulative inquiry number institutions to reduce loan processing times, cut costs and stood at 1,609. Cumulative registered leasing transactions limit defaults. These savings translate into lower interest rates, amounted to 26 billion Yuan ($3.8 billion), including making credit more affordable to those in need. about 14.5 billion Yuan ($2.1 billion) for leasing to small China has historically lacked a centralized consumer registry and midsized companies. t
One of IFC’s future priorities will be to improve and to facilitate lending to small firms and farms. With more than promote small and midsized leasing, in particular for rural 300 databases in China, it was difficult for financial and agricultural businesses. institutions to easily access and effectively use this information.

Corporate Governance: Training, Knowledge Management, Awareness Raising

Introducing checks and balance and accountability to corporate China is a key component of the Chinese government’s

11 campaign against corruption and for higher transparency. But MBA and Executive MBA students. The curriculum comprises while China has recognized weak corporate governance 11 training models and includes case studies, tests, bibliographies standards as a risk and companies are often willing to improve and break-out sessions. The curriculum will be distributed to practices, insufficient governance services cannot meet the other educational institutions in the second half of 2010. growing demand for training. IFC therefore builds the Publications. IFC published “The Family Business capacity of local professional institutions to provide corporate Governance Handbook” for the Chinese market. It covers governance trainings and raises awareness of corporate statistics of family businesses in China, key characteristics and governance’s importance. unique corporate governance challenges, legal requirements Training for Consulting Firms. Working with its related to family business governance and mini case studies. partner, the Management Consulting Committee of the China 7,400 copies of the handbook have been distributed to target Enterprises Confederation, IFC provided comprehensive audiences in China through the Shenzhen Stock Exchange, training modules based on the well-established IFC corporate the Family Business Network and Family Business Research governance methodology to help local professional Center. institutions provide corporate governance consulting services In parallel, IFC co-developed a “Board Directors’ Handbook” to their client companies in China. with the Shenzhen Stock Exchange. 6,000 copies of the IFC delivered 10 workshops in China with more than 280 handbook will be distributed to the board members of representatives from over 170 professional institutions, Chinese companies in 2010. including management consulting firms, law firms, and Outreach. Twenty five public seminars, workshops and accounting firms participating. Thirty-seven professional training sessions on corporate governance were delivered to institutions which received IFC training incorporated the IFC close to 2,000 individuals from educational institutions, corporate governance methodology into their consulting private companies and professional institutions. An online services to 115 companies, training more than 1,100 corporate governance portal (www.cgchina.org) offers more individuals and reviewing 127 procedures for their clients. than 600 articles, case studies and tools. The website has Training for University Students. IFC developed a attracted more than 10,000 unique visitors and more than corporate governance program with Nankai University for 40,000 page-views.

Oiling the Engines of SME Growth: Reforming Local Banks and Financial Institutions

City commercial banks, rural banks, and microfinance internal procedures and organizational commitment to institutions are the driving force behind lending to micro, expanding financing for SMEs, ensuring farmers, small and midsized firms and rural enterprises in China. And manufacturers, and shop owners can obtain the financing they yet, these banks have been seen by many as challenging, often need to grow and create jobs. saddled with ballooning non-performing loans, poor capital City Commercial Banks. IFC helped strengthen the capacity adequacy ratios, and insufficient management systems. of the China Banking Association and established a certification IFC has been addressing these shortcomings by partnering program for banking competencies, including financial planning with associations and individual institutions to improve and risk management. The program’s five certifications have

12 received industry-wide acceptance and are now established as Case Study: Chengdu Small Enterprises Credit the primary certification for Chinese bankers. From 2006 to Guarantee Company 2009 nearly 2 million professionals took the exams, with Chengdu Small Enterprises Credit Guarantee Company was 460,000 awarded certifications and representing 15 percent of created with funding from a UK-funded State Owned all staff in China’s banking sector. Among individual banks, Chengdu City Commercial Bank Enterprise Reform project and the Chengdu Municipal obtained international funding after IFC technical assistance Corporation. Since 2002, IFC has provided technical support helped to improve its operations. Leshan City Commercial to train staff, establish, and update internal procedures, Bank improved from a bankrupt credit rating to an above improve credit management systems, establish an internal average rating as a result of IFC’s assistance. And the Chengdu audit function, develop new products, access best practices, Small Enterprises Credit Guarantee Company has emerged as a and search for strategic international investors. CGC is now a key supporter of SME lending. major player in the Chengdu financial market and is a source of good practice to over 100 credit guarantee companies in Case Study: Leshan City Commercial Bank China. IFC also invested in CGC around 100 million Yuan Leshan City Commercial Bank (LCCB) was established in ($14.7 million) equity and set up a 100 million Yuan ($14.7 1996 by combining a number of urban credit cooperatives. million) risk sharing facility in October 2008. This Repeated losses eroded most of its capital between 1998 and collaboration was the first project under IFC’s Sichuan 2002. Since 2004, LCCB has received three rounds of support Earthquake Reconstruction Program. from IFC, beginning with a diagnostic review in which a 12 From a humble beginning of 11 operations with an amount of member bank team worked with external experts to revamp 4.5 million Yuan in 2001, CGC has expanded significantly credit analysis and approval processes in the bank. and guaranteed 2,156 loans for small and midsized companies LCCB implemented most IFC recommendations, including amounting to 4.8 billion Yuan ($706 million) as of December the separation of credit assessment, approval, and audit functions, 2009. The value of outstanding guarantees reached 4.8 billion establishment of a risk rating system, and finalization of a credit Yuan by the end of the same year. CGC has helped to create manual. IFC’s continued technical support over an extended over 140,000 new jobs since it commenced operations eight period has provided an opportunity for LCCB to test, refine, years ago. and institutionalize its SME lending products and take on more difficult reforms in human resource management. The technical assistance has revolutionized the bank’s credit Rural- and Micro-Finance. IFC has supported policy procedures and resulted in an expanded and better quality development and awareness–raising for commercial microfinance portfolio. The default rate fell from 45 percent in 2003 to one since 2004, which at that point was nonexistent in China. The percent in 2009. By 2004, LCCB had 250 SME loans Chinese government has now authorized two pilot outstanding, which had increased to 3,507 loans outstanding micro/rural finance delivery methods. The Micro Credit by the end of 2009. Company, initiated by the China’s central bank, was launched In August 2009, IFC co-invested with LCCB in Renshou in the second half of 2005 and the Village and Township Fumin Village and Township Bank for a 10 percent stake of 5 Bank, lead by CBRC, was launched at the end of 2006, both million Yuan ($736,000). It is also IFC’s first investment in a with IFC’s help. There are now more than 1,000 MCCs and Chinese village and township bank. VTBs operating nationwide.

13 Case Studies – Rural- and Micro-Finance

Zhong An Credit Zhong An Credit provides small, mostly unsecured loans, to salaried workers and private business owners, typically market vendors, restaurant owners, and other small cash generating business owners, all of whom are currently underserved by traditional financial service providers. The network consists of 20 branches across Shenzhen and one branch in Hebei. IFC provides technical assistance to Zhong An Credit to improve efficiency of loan disbursement while enhancing credit quality, strengthening overall credit risk controls, setting up a talent development and management system, and improving IT infrastructure. Together with the technical assistance, IFC provided a convertible loan of 17 million Yuan ($2.5 million) in January 2008. The bank now has 11,538 active clients.

Microcred Nanchong The objective of the Microcred Nanchong project was to support the development and capacity building of a new microfinance institution, thereby helping to improve the availability of financial services to micro and small businesses as well as rural people in the Nanchong prefecture of Sichuan. Initial investors in the new company included IFC, French Microcred SA, and German development bank KfW. IFC has introduced international best practice in microfinance operations to this company to achieve financial sustainability and profitability as well as improve financial service outreach and depth. IFC first invested 7.1 million Yuan ($1.04 million) in 2008, and an additional 22.8 million Yuan ($3.35 million) through a participating rights issue in 2010. As of June 2010, Microcred Nanchong had cumulatively supported more than 9,300 borrowers with over 225 million Yuan ($28 million) of credit, with an average loan size of 24,000 Yuan ($3,000).

Binhai Rural Commercial Bank IFC invested approximately 350 million Yuan ($51.47 million) in Binhai Rural Commercial Bank, located in Tianjin, and helped to improve credit management, strengthen the skills of bank managers and tighten internal controls. IFC hosted 11 workshops for 530 participants on issues such as credit analysis, financial statement reconstruction, sustainable energy finance, microfinance, stress testing of real estate loans, corporate governance and collateral management. Outstanding loans to micro, small and midsized enterprises soared from 10.7 billion Yuan ($1.6 billion) in mid-2009 to 11.8 billion Yuan ($1.7 billion) at the end of 2009.

United Rural Cooperative Bank of Hangzhou United Rural Cooperative Bank of Hangzhou also received technical assistance from IFC and Dutch Rabobank as part of a joint investment, the first one by foreign investors in a Chinese rural cooperative bank. Rabobank, under supervision from IFC, introduced international best practices in increasing the bank’s efficiency and diversifying its products. The bank has seen results in the areas of credit risk management, organizational restructuring, and branch management. Outstanding loans to micro, small and midsized enterprises increased from 12 billion Yuan ($1.8 billion) at the end of 2005 to 32 billion Yuan ($4.7 billion) at the end of 2009, representing in excess of 20 percent annual growth.

14 Supporting Development in Central & Western Regions

The Challenge the massive Sichuan earthquake in May 2008 killed tens of Regional disparity in economic growth and wealth is one of thousands and made rebuilding the private sector a priority to the biggest challenges facing China and decreasing the gap help provide food and services to millions in inner China’s between developed and underdeveloped and narrowing the poorer regions. urban-rural divide are core government objectives under the 11th Five-year Plan (2006-2010). IFC’s Response While small and midsized enterprises are the heart of the With the encouragement and invaluable support of the economy in China’s central and western regions, without Ministry of Finance and the Sichuan provincial government, adequate management skills and quality controls, they often IFC opened its office in Chengdu – some 1,500 kilometers cannot secure large contracts to ensure the sustainability of inland from Beijing – in 2002, a year after establishing IFC’s their companies and are unable to create long-term jobs for Advisory Services in China. The program, run out of Sichuan’s millions of poor people. In addition, unfavorable business capital, has helped jumpstart investments in some of China’s conditions and insufficient promotion efforts in the country’s poorest central and western regions and open up new markets central and western regions make it difficult to attract and business opportunities for small enterprises. investments. IFC’s linkages program works to improve production Compounding insufficient capacity and low investments is processes at small and midsized companies to facilitate the dearth of a consulting industry in Sichuan and other sustainable business relationships with large companies, provinces that could provide much needed service. Moreover, helping to bridge the gap between China’s advanced coastal regions and the lagging West. Agribusiness projects promote development of responsible supply chains with an emphasis on contractor development and quality management systems to ensure food quality. These projects raise farming skills and pesticide management, and boost farmers’ incomes. IFC’s training programs develop the knowledge and skills of local trainers, consultants, and government officials, who then transfer those skills to the management of small firms. IFC’s Investment Climate Program supports policy and regulatory reforms particularly in China’s central and western provinces and early results show a positive spike in investment in the project’s pilot city of Yinchuan. Moreover, as the only international agency with an established office in Sichuan province at the time of the earthquake, IFC

15 was uniquely positioned to help restore basic services to improvement in their strategic planning, project management, thousands of victims by supporting the private sector. IFC human resources, finance and access to new markets, all increased the lending capacity of local financial institutions cornerstones for sustainable businesses. through a combination of investments, grants, and advice, t
IFC’s programs also encouraged firms to pay fees for training helping to rebuild business opportunities. and business support services, helping to build a strong and commercially viable training and consulting market in Result Highlights Sichuan. IFC’s work of introducing international best t
IFC helped to raise an estimated $280 million in financing practices to local training- and consulting firms has been among Sichuan businesses and create 9,000 jobs between praised by companies and business service providers. 2002 and 2006.
t
5SJQMJOH
PG
JOWFTUNFOUT
UP
DJUZ
PG
:JODIVBO
JO
UIF
DFOUSBM
t IFC’s agribusiness linkages projects have directly benefited Ningxia province – one of the poorest minority autonomous about 24,000 farmer households in three provinces (Sichuan, regions in China – after it partnered with IFC to apply new Yunnan and Guangxi), improving the livelihoods of about methods of investment promotion: from 191 investments in 72,000 rural people. 2008 valued at 9.1 billion Yuan ($1.3 billion) to 269
t
As a result of IFC’s skills and management training events, investments worth 38.5 billion RMB ($5.5 billion) in small and midsized companies showed significant 2009.

Challenges IFC Action Result Highlights

- Linking small firms - Livelihoods of 76,800 to large producers - Inadequate manag- people improved ement skills - Sustainable supply - Improved manage- chain management - Insufficient quality ment skills controls - Trainings for firms - Higher farmer inco- and trainers/consu- - Lack of consulting/ mes ltants training providers - Hundreds of local - New investment - Unfavorable invest- trainers trained promotion strategy ment conditions for pilot city of - Tripling of investm- Yinchuan ents in Yinchuan

Linking-Up: Connecting Small Suppliers to Large Producers Small and midsize makers of products such as food, clothes, delivery and quality of those products is of international and machinery thrive only if they sell their products to larger standards. IFC helps to reach those standards by providing producers of finished products. And they can only do so if training and improving marketing to support SMEs and

16 farmers develop sustainable business relationships with big Case Study: New Hope Dairy Linkages Project companies. Such training improved SME business performance IFC assists local milk farmers in improving quality and and attracted foreign and local investors and buyers. In a QSPEVDUJWJUZ
PG
NJML
TVQQMZ
UP
UIF
/FX
)PQF
EBJSZ
QSPEVDUJPO second step, IFC now helps to improve performances of entire facilities and the Jule Dairy company in Yunnan and Sichuan sectors by partnering with major corporate players. so that dairy farmers can generate more sustainable revenues. IFC also addresses food quality issues in China. Only if suppliers In a region with more than 26,000 local dairy farmer households, can provide safe food, will they be attractive to producers that IFC trained local trainers who in turn provided coaching to export to health-conscious markets overseas. These initiatives dairy farmers and as well as model farm demonstrations. The have included the improvement of apple farming, dairy production, project trained 412 trainers. More than 20,000 dairy farmers grape disease control, and farm management techniques. were reached by handbook dissemination and technical training. The project helped the average milk yield to increase by 626kg Case Study: North Andre Apple Traceability Project or 15.5 percent annually. This is equivalent to an increase of IFC helped North Andre Apple, an IFC investee that exports $85.6 per cow in net income annually, representing an 95 percent of its produce, to build an internal Quality increase in farm household income of 15 percent or around Management System. This enabled the company to better $160 per year on average. control the quality and safety of its food supply chain and

North Andre became the first apple juice concentrate To increase reach, IFC now also works to improve the producer in China to integrate small holder farmers into competitiveness of the large companies by implementing group certification of Global GAP, the world-wide voluntary international best practices in their quality management standard for certification of Good Agricultural Practice. system. Doing so generates a multiplier effect, raising the skills The certification greatly strengthened the company’s image and revenues of farmers that join the large companies’ supply in the international market. At the same time, the project chains. IFC’s emphasis is on improvement of farmers’ trained and coached around 2,000 farmers in seven villages livelihoods, good community relations, and adhering to high that supplied raw apples to North Andre. environmental, health, and social standards.

Raising Skills and Standards: Training Small and Midsized Enterprises Many small and midsized companies often do not grow and t
4LJMMCBTFE
DMBTTSPPN
USBJOJOH
PO
NBSLFUJOH
cannot support enough people because of inadequate t
)3
BOE
QFSTPOBM
QSPEVDUJWJUZ
TLJMMT
GPS
FOUFSQSJTF
NBOBHFST
management skills, insufficient business support services, and t
4FMGTUVEZ
NBOBHFNFOU
USBJOJOH
XPSLCPPLT
poor environmental, health and social practices. By training t
126 local trainers trained who provided 79 courses to about trainers and consultants, IFC supports the emergence of a 5,500 managers of small and midsized enterprises in Sichuan commercial service sector specifically serving the needs of and other Chinese cities. small and midsized companies. Business Performance Improvement Program Business Edge Management Training Program t
)FMQFE
MPDBM
DPOTVMUBOUT
QSPWJEF
CVTJOFTT
TVQQPSU
TFSWJDFT
t
Leadership forum aimed at leaders of small and midsized to small and midsized enterprises enterprises t
Program worked with five partner consultancy firms (30 local t
5SBJOUIFUSBJOFS
QSPHSBN
UP
CVJME
DBQBDJUZ
PG
MPDBM
USBJOFST consultants in all) in Sichuan to provide turnkey consultancy

17 solutions t
By project-close, 28 small and midsized enterprises were served by the supported consulting firms that earned $700,000 for their services.

Shifting Inland: Investment Promotion Raising the competiveness and attracting investments to an “aftercare” program where teams solicit feedback China’s less developed regions requires investment planning on their work experience in Yinchuan. This data, and promotion strategies tailored to the regions’ specific local reflecting the quality of the local business needs. Incentives must help shift industry investments from environment, is presented to government with coastal to central and western regions, encouraging both recommendations for reform and serves as valuable domestic and foreign investment. information in efforts to attract future investors. In cooperation with China’s Ministry of Commerce and the Some of the results of the program include: Chinese Academy for International Trade and Economic t
IFC helped contribute to a tripling in new investment Cooperation, IFC developed and implemented a bottom-up approvals in Yinchuan between 2008 and 2009 ($1.3 investment promotion strategy for the city of Yinchuan in the billion to $5.5 billion). province of Ningxia, one of the poorest minority autonomous t
The team’s “aftercare” program led to the establishment regions in China. This pilot is a first of its kind in China. of a standing committee comprised of the city’s IFC has helped Yinchuan’s leadership develop a new approach Deputy Mayors to address broader investment to Investment Promotion. Rather than depend on one office climate issues that impact on investment to cheerlead for investment, the city restructured its approach t
IFC introduced twelve private equity investors to and created a fully dedicated, multi-institutional team to Yinchuan that has resulted in five investment leads manage investment development. for its investment promotion team. The multi-departmental team, lead by Kong Lingjie, the Party Secretary-General of Yinchuan, no longer simply touts the merits of Yinchuan, but instead is taking a more sophisticated approach to investment promotion. It identifies its comparative advantages to investment and then targets those investors working in these specific sectors. As part of the exercise, it mapped all current Yinchuan investors and began

Ningxia province within China (red), and Yinchuan prefecture (yellow)

18 Interview with Zhengrong HE, Deputy Mayor of Yinchuan and Head of the Pilot Yinchuan Investment Promotion Team

In what way is your investment promotion work different changed the mindset and work style of the Investment today compared to two years ago? Promotion staff and the city leadership. The positive impact Through the pilot project with IFC, our team and the city to Yinchuan, a lesser-developed city in the west, is leadership have understood that investment promotion work unimaginable. I hope the World Bank and IFC will be able to is a task that should be planned and undertaken professionally. commit even more resources to disadvantaged areas in China. The investment promotion work should match the city’s development strategy. Investment promotion is a team effort among multiple governmental departments and agencies, rather than a task solely undertaken by investment promotion authorities. More importantly, we understand that a good investment climate is crucial to attracting investments. The work with IFC has helped to change the mindset within the government and the philosophy of investment promotion work in Yinchuan.

What changes have you found to be most effective? I am proud that the work has directly resulted in positive changes to Yinchuan’s investment climate as well as increased investment.

What role has IFC played in supporting your work? The IFC team has brought modern knowledge as well as practical and useful techniques for more effective of Investment Promotion work. This has tremendous meaning to the investment promotion staff in a Western location such as Yinchuan. I am sure our work with IFC has helped Yinchuan to secure more investment this year. It also has

19 Special Initiative: Sichuan Emergency Response

Earthquake Reconstruction in Sichuan opportunities in post-earthquake Sichuan in December 2008 In May 2008 the world watched in horror as a massive connected banks, local business communities and government earthquake shook Sichuan province in central China, killing officials, introducing investment and business opportunities, tens of thousands and flatting homes and businesses. Money and accelerating the economic recovery. The workshop also for emergency response poured in from across China and reviewed global experiences of post-disaster investment abroad and the province witnessed a massive wave of support promotion techniques, as well as the role of the private sector for public works and infrastructure. Yet private enterprises in and investment generation in the implementation of an the region, brought to its knees by the disaster, remained in earthquake recovery plan. desperate need of assistance even though they accounted for close to half of GDP in the province. Case Study: Mianyang CCB and Beichuan VTB As the only international agency with an established office in Mianyang City Commercial Bank is located in the most Sichuan province, IFC launched an instant needs heavily-affected region and incurred serious human, assessment, showing that the restoration of livelihoods property, and credit losses as a result of the earthquake. To through support for local small and medium enterprises rebuild, IFC helped to train staff, improve organizational would be critical given that more than 95 percent of private structure, and develop a risk-rating tool. A year after the firms in the region were smaller firms. quake, MCCB had financed 388 incorporated small and Reviving the Financial Sector midsized firms and 97 unincorporated small businesses In response to the earthquake’s crippling impact on the local affected by the disaster. These 783 loans represent 4.1 billion private sector, IFC increased the lending capacity of local Yuan. financial institutions through a combination of investments, The Beichuan Village and Township Bank was set up in 2007 grant supports, and advice to enable them to provide mainly to serve the rural population. When Beichuan county assistance to disaster- affected small and midsized enterprises. was flattened by the earthquake, the VTB was also completely The first project under IFC’s Sichuan Earthquake destroyed and a significant share of its more than 3 million Reconstruction Program, was a 100 million Yuan ($15 Yuan ($400,000) in outstanding loans were not recoverable million) equity investment in the Chengdu Small Enterprise given that many clients had died, become disabled, or lost Credit Guarantee Company, one of the leading guarantee their businesses. The VTB was rebuilt in 2009 and IFC has providers for lending to small and midsize enterprises in helped to secure its future by assisting in the development of Sichuan. The investment enabled Chengdu CGC to support a business plan that allows potential investors to understand up to 1 billion Yuan ($147 million) in new loans to firms in the risks and rewards of investing in the VTB. In September earthquake-stricken areas. In parallel to financial support, 2010, IFC itself made an equity investment of 11 million IFC helped to expand the company’s capacity in risk Yuan ($ 1.62 million) in Beichuan VTB in order to provide management and internal control, employee training, and support to the earthquake-affected population. To facilitate product development. The advisory support was funded by this process, IFC organized a training session on aspecial IFC $1 million earthquake recovery program. microfinance best practice to ensure VTB employees fully IFC held working sessions with local officials to help identify understand the concept of microfinance. possible areas for private sector focus. A workshop on business

20 Rebuilding Agriculture investor conference in Chengdu in collaboration with the Estimates put the earthquake’s damage to Sichuan’s Sichuan authorities. More than 150 domestic and foreign agriculture at $6 billion as more than 30 million people in investors and government officials attended the event rural communities lost most of their belongings, thousands designed to promote the investment opportunities in the of hectares of farmland were destroyed, and millions of farm reconstruction of Sichuan. animals died. The UN Food and Agriculture Organization Seven month after the quake, IFC held a workshop on the predicts that that it may take up to five years to rebuild the role of the private sector and investment generation in sector. implementing the earthquake recovery plan. About 200 Given the critical importance of farming to the livelihoods of local officials and experts from earthquake affected areas millions of rural people in the earthquake affected areas, IFC attended. International experts from the World Bank Group, partnered with leading local firms to develop two projects to other disaster affected areas (such as Turkey) and business help rebuild the agricultural sector. The projects in the kiwi leaders and local officials, made presentations at the fruit and pig farming sectors helped to build more effective workshop and led the roundtable discussions. quality management systems in line with Chinese and In reaction to the first workshop, IFC was asked to help international best practice and streamline the whole supply chain. provide strategic planning advice specifically focused on the three counties in Sichuan – Beichuan, Wenchuan and Promoting Investment Qingchuan – which were most heavily destroyed by the In partnership with the Sichuan Investment Promotion disaster. This work included a substantial analysis of the Bureau, IFC launched the Sichuan Recovery Investment economic situation of the three counties before and after the Promotion project, sharing best practice knowledge and earthquake and identification of possible areas for private techniques with local governments to support the sector focus. Two rounds of seminars with local officials mobilization of private sector investments. helped the counties plan their longer term strategies for Less than two months after the earthquake, IFC arranged an private sector growth and job creation.

Challenges IFC Action Result Highlights

- Banks rebuilt and - $1 million earthquake - Massive destruction repositioned to attract recovery program investors - Banking infrastructure - Rebuilt livelihoods by - Rebuilding & training disrupted linking farmers to big banks food producers - farms destroyed, livel- - Improving farming - MCCB financing volu- ihoods threatened me of 4.1 billion Yuan techniques one year after quake - Dearth of private sec- - Investment promotion - Better informed inve- tor investments stment promotion seminars strategies

21 Fighting Climate Change

The Challenge efficiency projects, thereby multiplying IFC’s impact. China’s soaring demand for electricity from coal-fired power IFC contributed to China’s adoption of its “Green Credit plants underpinning its meteoric economic growth and a Policy” in July 2007 and was recognized in 2008 and 2009 by surge in cement production has made the country the world’s the China Environmental Investment Forum for its largest emitter of carbon dioxide (CO2). Inadequate financial outstanding contributions in advancing China’s green banking. resources for energy-saving projects among private sector companies and a lack of policy guidelines directing credit to Results cleaner projects were among the key challenges in curbing Appetite for the CHUEE program is huge. As of June 2010, China’s CO2 emissions. Banks’ limited expertise and appetite the program’s participating banks provided $1.7 billion in to finance what are often considered untested energy loans, financing improvements such as heat and gas-recovery efficiency projects hold back the use of technology that can power generation and efficient production systems. The loans significantly curb power wastage at makers of energy-intensive have financed 200 energy efficiency and renewable energy products such as steel and cement. However, recognizing that projects, such as waste heat recovery power generation and the industry’s inefficient energy use poses a major risk, the Chinese introduction of efficient production systems and renewable government has declared energy efficiency a national priority. energy projects like wind and biogas. Steel, chemical, and cement industries are the largest beneficiaries. IFC’s Response These investments reduce greenhouse gas emissions by almost IFC’s China Utility-Based Energy-Efficiency Finance Program 57 million CO2 tons per year, exceeding initial targets and (CHUEE) stimulates energy efficiency investments by surpassing annual emissions of a country like Hungary. IFC’s extending bank guarantees for energy efficiency loans and goal is now to reduce 100 million tons of CO2 over the demonstrates that financing of energy efficiency projects can coming three years by supporting projects in energy efficiency, be a lucrative business proposition. In addition, the program is renewable energy, and cleaner production. assisting in the implementation of energy efficiency projects at China’s Green Credit Policy has helped to restricted lending banks, utilities, equipment vendors, and energy service to high energy consumption and polluting industries. In companies. 2008, with IFC’s assistance and support, Industrial Bank IFC helps banks and those companies wanting to operate became China’s first bank to adopt the Equator Principles for more energy efficient acquire skills in marketing, engineering, environmental and social sustainability in project financing. due diligence, and financial analysis of energy efficiency Industrial Bank subsequently won the 2009 Financial projects. By demonstrating commercial and technical viability Times/IFC Asian Sustainable Bank of the Year Award on the of energy efficiency financing, CHUEE is expected to entice strength of its pioneering work and achievements in commercial banks to follow suit and also invest in energy sustainable banking.

Challenges IFC Action Result Highlights

- China world’s largest CO2 emitter - Support for EE investments thru - $1.2 billion in EE loans - Inefficient and costly use of energy bank guarantees (CHUEE) - 155 projects financed - 57 million tons of CO2 avoided annually - Pollution threatening development - Financial analyses of EE projects - Quick utilization of guarantee facility - Lack of financing for energy - Building technical EE expertise - Some lending directed away from efficiency projects - Support for Green Credit Policy polluting industries

22 Changing Financing, Changing Policy Changing Financing. In 2006, Industrial Bank, an IFC Recognizing the local and global threat posed by climate investment client, became the initial CHUEE partner bank, change, China adopted its path-breaking “Green Credit Policy” adopting new environmental and social standards in project in 2007, designed to direct financing toward renewable energy finance. The bank’s success in demonstrating that ‘green and energy efficiency projects. IFC played a central role in its finance’ is not only good for the environment, but can be formulation and implementation, advising China’s Ministry lucrative financially as well, has drawn much attention and of Environmental Protection, the China Banking Regulatory the desire among many others to follow suit. Bank of Beijing Commission, and other government agencies by sharing IFC’s and Shanghai Pudong Development Bank joined CHUEE global expertise in environmental and social Performance in 2007 and 2008 respectively. Six more local commercial Standards, Equator Principles, and Environmental, Health banks have approached IFC. Non-banking financial and Safety Guidelines. IFC also conducts policy and sector institutions like South Leasing and Shanghai Far East studies on energy saving and emission reduction to guide International Leasing are now also in conversation with IFC legislators enacting regulations and firms implementing as they are planning to enter the energy-saving sector. energy efficiency projects. Moreover, CHUEE has helped its three bank partners Results: Independent Evaluation of CHUEE establish sustainable energy finance in-house capacity. The Independent Evaluation Group (IEG) of the World Starting from organization and staffing, CHUEE has helped Bank Group found that, compared with other energy each bank set up dedicated teams in headquarters as well as efficiency programs in China and elsewhere, the CHUEE branch offices. An operations manual has been designed for program stands out for the quick utilization of its guarantee each bank and six sub-products of sustainable energy finance facility and for exceeding its greenhouse gas emission reduction have been adopted by more than 100 branches among the target. IEG concluded that CHUEE has significantly raised energy efficiency finance among banks, energy-management three bank partners. companies (companies providing technical services to clients Changing Industry Behavior. The CHUEE program’s to reduce energy usage), and small businesses that typically success with energy efficiency project financing has led many have difficulties obtaining loans due to collateral requirements. iron and steel companies to conduct energy audits and adopt In fact, companies that participated in the program had a 31 new energy efficiency measures. They are also promoting similar percent higher chance of securing bank loans than those that projects to their subsidiaries. Many Energy Service Companies did not participate. According to IEG, the expected working with CHUEE banks have expanded their business quantifiable benefits from the guaranteed loans are in excess of $38 million over a 10-year period since program inception. and have been able to attract additional strategic investors. The evaluation was carried out during the second half of 2009. Changing Policy. IFC’s energy efficiency financing achievements have been recognized by China’s central government. At the government’s request, IFC provided four specific trainings for officials at China’s Banking Regulatory Commission and other Chinese bankers. IFC was also invited to speak at meetings and forums organized by National Development & Reform Commission, Ministry of Finance and Ministry of Environmental Protection to introduce energy efficiency finance.

23 Looking Ahead

Facing a dynamic and rapidly evolving operating environment Balanced urban and rural development in China, IFC continuously updates and refines its strategy in China’s income inequality is growing d with an urban/rural China. Going forward, IFC envisages continued integration income gap of 3:1. More than half of China’s 1.3 billion between Investment and Advisory Services, greater synergies people live in rural areas (750 million) and of those, 200 with the World Bank, and an even more targeted use of IFC’s million are rural migrant workers. IFC’s programs will continue expertise and global knowledge to support China’s to support integration of the rural economy in China. development. In its efforts to support micro, small, and rural business growth Strategic priority areas are: and entrepreneurialism, IFC will continue its high-impact t
Climate change: Focusing on reducing C0s emissions work on improving the regulatory environment for micro and associated with economic growth small business lending, including the development of a personal t
Balanced growth: Ensuring development in both rural and insolvency framework, the reforming of laws regarding rural urban areas collateral, and the expansion of agricultural leasing. The team t
South-South: Assisting China in its role as a global development will sharpen its focus on financial inclusion by developing and partner by supporting sustainable South-South investment. scaling-up small and rural financial service providers. The proposed mobile banking initiative represents a significant Climate change opportunity to provide banking and remittance services to the China is facing increasing international pressure to address growing rural migrant population. carbon emissions, pollution, and environmental management. Via its China Utility-Based Energy-Efficiency Finance (CHUEE) Global China program, IFC can contribute to reforming energy-intensive With Chinese outward investment growing exponentially every sectors, particularly heavy industry and construction. IFC has year, IFC hopes to leverage this activity into a strong South–South developed a number of targeted initiatives for the next development opportunity. A China-Africa Collaboration program CHUEE investment cycle, including a product focusing on will share Chinese experiences in economic development with water efficiency, progress toward an emission-reduction African business communities. The program will create an active measurement, reporting, and verification protocol, and the platform to promote corporate social responsibility objectives, development and application of green technology. support sustainable Chinese investment in Africa, and assist in IFC will also focus on environmental issues through projects the development of the financial services sector in Africa. like Green Security, which identifies and leverages opportunities IFC is highly regarded for its responsiveness and for the for green finance policies to create environmentally sustainable quality and neutrality of its advice. As such, it is well placed to companies. The aim is to develop a framework for implementing provide further useful inputs to policy makers and the new disclosure requirements for social and environmental business community. This dialogue is crucial to deepening performance and raise awareness and understanding of the and consolidating initial success in promoting a sustainable regulations. Additionally, the development and application of private sector. This is especially so as policymakers look for green building codes will be examined for its potential high strategic direction as China and the world are emerging from carbon mitigation effect in China’s growing cities. a global economic crisis.

24 IFC-China – 30 Years of Cooperation

1980 –––– China assumes representation in IFC.

1985 –––– First investment in China with Guangzhou Peugeot Automobile. In the early years, IFC primarily worked with foreign companies investing primarily in coastal regions.

1992 –––– IFC’s Residential Mission in Beijing opens. Increased focus on partnerships with local clients. Today, about 80 percent of our clients in China are domestic clients.

1999 –––– First bank investment with “Bank of Shanghai.” Started to support several city and rural commercial banks over the coming decade, including Beijing, Tianjin, Nanjing, Hangzhou, Xi’an.

2002 –––– IFC office in Chengdu opens. Focus on advisory services along with investment to support development of China’s central and western regions by sharing global knowledge, introduce international best practice, develop innovative products and address corporate governance.

Mid-2000 – Development of innovative products such as the Yuan-denominated Panda Bond and China Utility-based Energy Efficiency Program (CHUEE) to deepen local capital markets and support China’s financial system.

2007 –––– Work with CBRC on “Green Credit Policy” to raise financing for environmentally friendly projects.

2008 –––– Starting to shift focus to rural areas serving small and midsized firms and farmers. IFC one of the largest microfinance investors in China.

2008 –––– President Hu Jintao announces at the London G20 meeting China’s $1.5 billion private placement through IFC in support of trade finance in emerging markets.

2010 –––– First loan in support of a Chinese company’s investment in Africa to support Africa’s development while helping to adopt international environmental and social standards among Chinese companies.

Today –––– IFC’s relationship with China is evolves into a new era with a focus on addressing climate change challenges, promoting equitable rural-urban growth – especially in the western regions of China – and supporting China’s investments in other developing countries. These pillars are in line with China’s development priorities as announced by Premier Wen Jiabao during the 2010 National Peoples’ Congress. For more information, please contact

Hyun-Chan Cho Access to Finance Country Manager Jinchang Lai Beijing, China Head of Chengdu Office/Program Manager Tel: +86 (10) 5860 3200 E-mail: [email protected] Chengdu, China Tel: +86 (28) 6552 2805 Investment Climate E-mail: [email protected] Hans Shrader Cunfeng Dai Program Manager Project Team Leader, CHUEE

Beijing, China Beijing, China Tel: +86 (10) 5860 3154 Tel: +86 (10) 5860 3260 E-mail: [email protected] E-mail: [email protected] Corporate Governance Sustainable Business Advisory Sergii Tryputen Ziqiang Cheng (Charlie) Program Manager Program Manager

Ulaanbaatar, Mongolia Chengdu, China Tel: +976 (11) 312 694 Tel: +86 (28) 6552 2803 E-mail: [email protected] E-mail: [email protected] Media Inquiries: Jing Yu

Beijing, China Tel: +86 (10) 5860 3098 E-mail: [email protected] Beijing 15th Floor, China World Tower 2 No.1 Jian Guo Men Wai Ave., Chaoyang Dist., Beijing 100004, P. R. China Tel: +86 (10) 5860 3000 Fax: +86 (10) 5860 3100 Website: www.ifc.org

Chengdu 10th Floor, Hongda International Plaza No.2 Xianan Road, Chengdu 610041, P.R. China Tel: +86 (28) 6552 2800 Fax: +86 (28) 8676 7362 Website: www.ifc.org

2010