SUBMISSION FROM ANGUS COUNCIL

Introduction

1. I have been asked to submit evidence to the European and External Relation Committee of the Scottish Parliament on the Scottish Government’s strategy for engagement with China and to give specific views on:-

• The appropriateness of the objectives set out in the China Plan.

• How the objectives compare to those set by the former Scottish Executive’s China Strategy.

• What I think the impact might be.

• Any other points of reference.

2. This evidence represents my own personal views. My own experience and area of expertise is trade and tourism as outlined in Appendix 1. Therefore, the undernoted views are focussed mainly on objectives 4, 5 and 6 of the China Plan.

General Comments

3. In my view, all of the objectives set out in the China Plan are appropriate and will contribute significantly to the Scottish Government’s Economic Strategy for sustainable economic growth. The plan ties in specifically to three of the Scottish Government’s main objectives of making Wealthier and Fairer, Smarter and Greener. It also fits well with the Government’s three international objectives as set out in paragraph 11 of the plan.

4. In my opinion the targets for objectives 4, 5 and 6 in the China Plan lack specificity and milestones should be set for delivery. Moreover, there is no budget set for delivery of these objectives. There is also a lack of systematic planning and monitoring of the plan with stakeholder groups and there is an apparent lack of wholehearted engagement by Scottish Development International; without which the aspirations of the Scottish Government’s China Plan will not be fully achieved.

5. For these reasons I believe that the proposals made for implementation of the plan have fallen short of expectations. A concerted effort is now required to fulfill a number of proposals set out in paragraph 34 which outlined specific actions on the role of the “Scottish Government and its agencies” and “working with departments, agencies and stakeholders”. In particular, some real progress is required in relation to:-

• Co-ordination with stakeholders groups to agree priority sectors/areas and annual plans to achieve specific objectives; I would urge that sectoral groups be convened as early as possible with the remit of formulating action plans for engagement;

• Creation of sector groups that will bring together stakeholders from across different sectors, and develop cross sector plans and initiatives, where it makes sense to do so. I have recently accepted an invitation to join a tourism group and look forward to this meeting being convened soon;

• Establishing a high level strategic stakeholder group which meets approximately on a six monthly basis to review China activities, to reassess the direction of the Scottish Government’s activity and to facilitate discussion of ideas and to communicate progress; This is essential to monitor progress and make adjustments to the strategic direction if and when required.

• Establishing clear lines of communication with other Government departments, agencies and wider stakeholders to facilitate discussion of ideas and to communicate progress.

6. Notwithstanding the above, the efforts made by the Scottish Government officials in planning and implementing the “China Now” programme in Scotland has been excellent albeit this initiative has justifiably tied up staffing and other resources. Also, the participation by the First Minister and other Scottish Ministers in the “China Now” programme as well as the organisation of several Ministerial Visits to China during 2008 must be applauded. The enthusiasm and active participation by Scottish Government Ministers has been welcomed warmly by the Chinese Consulate. It should be acknowledged that this in turn has contributed significantly to a strengthening of the relationship between the Scottish Government and the Chinese Embassy and it’s Consulate in Edinburgh. The warmth of government-to-government relations is vital to the successful development of business-to-business links.

Relationships with Shandong

7. My own experience with China has taught me that building genuine and lasting relationships is vital to building successful trade and tourism links. Angus Council’s special Sister City relationship with Yantai has helped to develop a real sense of mutual trust and respect – what the Chinese call “Guanxi’”. The fact that Angus Council has a dynamic and thriving relationship with Yantai makes it easier to form relationships elsewhere in China and it is important to highlight that some of our companies’ successes have happened elsewhere in China e.g. Jiaxing and Shanghai – not just in Yantai..

8. For the same reasons I would strongly urge the Scottish Government to do even more to build on the existing links with the Shandong Government and to develop this relationship in a planned and focussed way. This action will bring a number of benefits as follows:-

• In my view, further developing the existing links with Shandong will help to reinforce and promote Scotland’s status elsewhere in China including with the Beijing Government. Having a special link with Shandong, if developed in a planned and focussed way, will demonstrate Scotland’s desire to develop it’s links with China on a long term basis and this will aid cooperation generally.

• Government-to-government links with Shandong – China’s 2nd most prosperous Province – will open doors for Scottish businesses and other organisations and assist in identifying and encouraging areas of bilateral mutual interest across all sectors. Shandong has a population of 92 million and has an extremely diverse and dynamic industrial and commercial base. The CBBC and the Centre for International Business – University of Leeds, recently published the results of a research study (Opportunities for UK

businesses in China’s regional cities) on behalf of UK Trade and Investment (UKTI). This identified those “regional cities” in China that offer the greatest potential to UK companies as a business location. It is interesting to note that of the 274 municipalities in China with a population of over 1 million, 35 were identified as being “regional” cities on the basis of their economic size and population etc. It is also very interesting to note that a significant cluster of seven “regional” cities can be found in Shandong. The greatest distance between the four cities of Yantai, Quingdao, Weifang and Weihai is 175 miles while Zibo and Dungying are less than 65 miles from Weifang. There are seven cities in total including Jinan – the capital of Shandong. Such a close grouping of “regional” cities has beneficial impacts for businesses because according to the CBBC publication “it means that multiple city-level markets can potentially be served from a single or small number of business locations, thus reducing transportation and communications issues that might otherwise arise from cultural differences across larger geographical territories of China”. This, in my opinion reinforces the fact that Scotland and Angus are well placed in their respective choices of partners in Shandong and Yantai and there is an opportunity to work collaboratively (CBBC/SDI/LAs) both at home and in China to capitalise on the synergy afforded through these and future links in a way that targets these seven most prosperous and dynamic level 1 cities in Shandong.

• Efforts to build an even stronger relationship between the Scottish Government and Shandong Provincial Government would encourage other Scottish Councils to follow the lead of Angus Council in the knowledge that building links with municipal level government will add great value to the efforts of the Scottish Government and its agencies in assisting Scottish businesses and organisations. If, in the future, other Scottish councils are successful in developing similar links with other municipalities in Shandong, an opportunity will exist to work more on a collective basis when planning trade missions and developing cooperation between tourism venues. It will also enable the sharing of internal networks and contacts thus adding value for the benefit of participating businesses and other organisations. This would have a clear benefit in creating awareness of Scotland for the increasing numbers of travellers from Shandong who should be encouraged to look at Scotland as a destination of first choice. The CBBC publication referred to above has identified a number of “regional cities” in Shandong that would serve as suitable prospective partners for Scottish councils interested in working collaboratively.

• Developing dynamic networks within Shandong will provide a platform for links elsewhere in China. For examples, Angus Council’s link between Tiger Beach Golf Course and Carnousitie Golf Links is what led to the extremely successful relationship with Beta Soong the owner of Shanghai Silport, who was acknowledged as a Global Scot in 2005. Through this link, other projects and advances have been made e.g. launch of a range of golfwear under Country brand by a Shanghai company whose owner visited Carnoustie on the Tartan Day Scotland International Golf Challenge in 2006 (arranged by Shanghai Silport).

• Considerable assistance is made available by SDI to help prepare companies for market entry including market research in preparation for organised trade missions. This is much valued by the companies involved. However, there is no in-market assistance available during trade missions other than at formal

briefings. A more concerted effort by SDI to become involved and even accompany trade missions e.g. by Angus Council, while in China would help to optimise and maximise efforts by ensuring that all opportunities that are identified as being of potential benefit to Scotland (e.g. rather than just Angus) can be followed up and developed. In this way the synergy of working together while in-market by sharing networks and relationships can be harnessed better for the benefit of Scotland as a whole.

Size of Company

9. More could and should be done to champion the success of small and medium companies. The interests of large companies e.g. BP, Standard Life, RBS, Clydeblowers should continue to be supported and reinforced by the Scottish Government and UK agencies. However, these companies have considerable expertise in the China market, which should be harnessed even more to support small and medium companies. More emphasis should be given to the promotion (in Scotland) of successes made by relatively small companies. The popular misconception amongst the Scottish business community is that China is only for big companies. Clearly, the Angus experience shows this is not true. More should be done to create awareness of this amongst Scotland’s business community.

Tourism

10. There is a huge potential for tourism in China. From our experience it is clear the number of Chinese travellers is increasing significantly. Our four-pronged strategy could be followed by other tourism venues:

• Building Links - Through our special relationships between Carnoustie and golf resorts at Tiger Beach and Shanghai Siport we are exciting the interest of golfers of high net worth. By arranging exclusive golf tours we are creating an interest in Scotland. In meeting their requirements we are promoting Scotland the Home of Golf and then preparing packages, which include several days itinerary in Angus. More venues should be encouraged to develop similar links.

• Creating awareness - Through these formal links we have been successful in promoting magazine articles about Carnoustie Country which is now the best known Scottish brand in China after St Andrews. Every major golf publication carries at least one story each year about Tiger Beach and Shanghai Silport and each story carries information about Carnoustie and Carnoustie Country. Through this we have developed a number of friendly links with editors. Similarly, the link between castle and the Great Wall of China and with Penglai Pavilion in Yantai will also give us an opportunity to create awareness through joint promotion and point of sale information. This model is a very inexpensive way of creating awareness about what Scottish venues have to offer. Focussing this type of activity in Shandong would create a critical mass of awareness that would help in making Scotland the first choice destination for Shandong travellers.

• Various films have been made about Angus by Chinese TV stations, including four 8-minute promotional films by Pheonix TV. Cultivating special relationships with such TV stations would provide dividends, especially if like Angus Council, broadcast quality footage is provided for them to edit. Again

this is a relatively inexpensive way of promoting key messages to a mass audience.

• Assisting tourism venues in Scotland to become ready for Chinese travellers is vital. This could be done by developing an easy to access toolkit giving guidelines on what to do in terms of providing information in mandarin (e.g. on websites and in hotel receptions and bedrooms), arranging in-room facilities (e.g. noodles and green tea) and tuning into a Chinese satellite TV channel. Such things are simple and a tool kit for businesses, especially in the accommodation sector, would be of great assistance.

Available resources

11. I believe that a full review should be made of the resources available to support greater internationalisation and trade promotion between Scotland and China.

12. China with a population of 1.3 billion is almost three times the size of Europe. Focus on European trade partners identifies markets on a country-by-country basis with each having very different characteristics e.g. trading in Italy is very different from Germany etc. China is mistakenly seen by many as a single entity whereas in reality each Province has different cultural characteristics. SDI resources invested in Europe in terms of the number of trade missions, exhibitions and staff operatives are vastly greater than for China. Clearly the China market is very different and a tailored approach is required. Nonetheless, I feel that a review should be undertaken to investigate whether more resources should be made available. The recent CBBC study undertaken for UKTI (referred to above) will provide some useful background that will assist in setting priorities for geographical targeting. Notwithstanding this, it is clear that while businesses will generally experience greater risks in lesser-known cities, there are sometimes greater potential returns given the relative lack of competition and therefore any operational plan should continue to address how businesses can identify opportunities in any of the regional cities identified in the CBBC study.

13. CBBC already provides an excellent service to Scottish companies seeking assistance, market research & information and in-market support. Having established a Scotland office in 1994, the CBBC operated the UKTI launchpad service from 1994-2004 and together with SDI have carried out trade missions, visits, seminars and other activities in China and in Scotland. The CBBC now have 11 offices and over 70 staff in China to service the whole of the UK. Clearly the CBBC is in the best position to provide services for SDI although I understand the direct resources available from SDI for dedicated support through existing contracts with CBBC is in the region of only £25,000. Given CBBC’s lead position, I feel that more resources should be made available for SDI to work even more closely with CBBC to run sector based seminars both here in Scotland and in China. Continued ministerial visits that are targeted on key locations and sectors will also help to raise the profile of Scottish companies and organisations.

APPENDIX 1 CASE STUDY – ANGUS COUNCIL’S “ANGUS IN CHINA INITIATIVE”

Arising from its work with the Tayside Racial Equality Council in 1996, Angus Council was encouraged to consider twinning with a counterpart in China. This move was supported by the Confederation of Chinese Associations in Scotland and by the Chinese Consulate in Edinburgh. Since then Angus Council have developed close

working relationships with both organisations and has, over the last ten years, worked consistently in building trade, tourism and education links.

Angus companies already doing business with China emphasised that Angus Council could accelerate progress for companies and “open doors” for business by developing direct government to government links. China was recognised as an emerging market where Angus Council could add value to the support already available through the national agencies. It was decided that commerce should be the driver for any twinning relationship, with the overall aim of strengthening the Angus economy.

With help from the Chinese Consulate, the Council decided to link with Yantai Municipal Government (population 6.5 million). in Shandong Province (population 92 million). The first trade mission organised by Angus Council visited Yantai in 1998 and in January 1999 a 'Sister City Link Agreement' was signed. Both parties have been fully committed to the relationship and strong political ties have been developed between Yantai and Angus Council which have been fundamental to the success achieved.

So far Angus Council has led six trade missions to China, the most recent of which visited Yantai, Beijing and Shanghai in March 2008. In return, the Council has hosted five missions from Yantai. There have been many other visits both ways by key individuals and company representatives to explore trade, tourism and educational initiatives. Not only has the Yantai connection given over 50 Angus and Tayside companies an introduction to the challenging Chinese market but most of those who have visited China on trade missions have achieved sales, sourced products and materials or established some form of business alliance.

A survey of Angus companies was undertaken in 2007. From the respondents, some 25 were doing business with China. At the time of the survey annual sales of £5.2m and procurement of £5.3m were reported. Projected sales for the next twelve months were estimated at £13m as against procurement of £9.8m. Notable successes include: an Angus company winning the contract to design and project-manage the construction of four oil/gas support vessels at the Yantai Raffles Shipbuilding Yard: Wm R Stewarts Hacklemakers () a Yarn machinery manufacturer who have established a Joint Venture manufacturing plant; J D Wilkie (Kirriemuir) who have established a textile fabric manufacturing plant as a wholly owned subsidiary in Jiaxing producing fabrics for filtration; David Ritchie Implements, who manufacture a range of engineered products whose procurement has led to the establishment of a supply factory and who have created jobs in as a result of being more competitive in the European marketplace; Angus and Dundee Distillers who having been introduced to the China market have established a base in Shanghai and who have recently been granted planning consent for the development of a seven acre site in to service an expansion of their Glencadam distillery and creating additional jobs in the town. There are other companies who now have manufacturing operations in China.

In 2002, a co-operation agreement was signed between Carnoustie Championship Golf Links (owned by Angus Council) and Tiger Beach Golf Links - a Scottish Links style course in Haiyang (Yantai) - and the two courses are now involved in a wide range of joint promotions. This was widened through a programme of cooperation with Shanghai Silport Golf Course which has been host to the Volvo China Open seven times. These efforts are already bearing fruit with the arrival of 36 golfers from Shanghai in April 2006 to participate in the first Tartan Day International Golf

Challenge played over St Andrews, Gleneagles, Carnoustie and Montrose. As owner of seven golf courses including Carnoustie the council has established the Carnoustie Country brand which through the extensive golf tourism networks now established is arguably the best known brand in China after St Andrews. Angus Council is currently working with the China Golf Channel to promote a Scottish Homecoming Golf Package in 2009 bringing high net worth golfers to Scotland on an exclusive ten day package which through the promotion will attract greater interest from this lucrative market. A Shanghai golfwaer company has been authorised to launch a new “Carnoustie Country” product range and a Scottish Company who have recently signed an agreement with a manufacturing plant in Yantai to produce a unique golf mat will also be marketing their product in China under the “Carnosutie Country” brand. Each product will bear the brand logo and website with additional information about what carnoustie Country has to offer.

Various promotional films have now been produced and broadcast on various Chinese TV channels. Four 8 minute films have been produced by Pheonix TV which broadcasts to 150 million homes in China and possibly another 75million homes worldwide (satellite Channel 785). The films broadcast several times on on Phoenix’s “Images of Europe” travelogue programme have been made on Angus Tourism, , Carnoustie Country Golf and “Scotlands Tartan Day”.

Through this initiative Glamis castle is now twinned with The Great Wall of China and with Penglai Pavilion in Yantai, the latter receives 2 million visitors annually

On the educational front there are now active links between Yantai Vocational College and Angus College. Following a recent agreement between the education departments of Angus and Yantai, links have been established between two primary and two secondary schools, educational exchanges are now being planned and the teaching of Mandarin in Angus schools is being explored.

On the cultural front, the 6th of April 2006 marked a momentous occasion that recognised the strong links Angus has with China. At the 'Tartan Day' dinner, a new, officially recognised, 'Chinese Scottish Tartan' was launched (pictured above). Angus Council, working with the Chinese Consul General in Edinburgh and with the Chinese community in Scotland, played a significant role in creating China's own tartan that was designed by Strathmore Woollen Company, a local Angus company. Much has been achieved by Angus Council and its local companies over the 10 year journey but this is only the beginning of the journey.

APPENDIX 2 PERSONAL PROFILE OF DAVID VALENTINE Dip TP., MRTPI., MIED

Originally from Ramsbottom, Lancashire, David graduated from Duncan of Jordanstone College of Art, Dundee with a Diploma in Town Planning, before joining Angus District Council as a Chartered Town Planner in 1975. In June 1995 he became Economic Development Manager with the new Angus Council and in 2006 was made Head of Economic Development. He is a member of the Royal Town Planning Institute; the Institution of Economic Development and the Society of Local Authority Chief Executives. His current remit covers Tourism, International Trade Development, Business Support, Marketing Angus as a destination for investment, external funding, Rural Development and Education/Business links.

Since 1996 he has been responsible for leading Angus Council’s “Angus in China Initiative” and developing Sister Area links with Yantai in China’s Shandong Province.

Since then he has visited China around sixteen times and has developed an extensive network of Chinese contacts in a variety of sectors in China as well as in Scotland. As well as having a close working relationship with the Chinese Consulate in Edinburgh, he is the only non-Chinese member of the Scottish Confederation of Chinese Associations and a member of the Scottish Parliament Cross Party Group on China. He is also a member of China Britain Business Council’s national Steering Group for Scotland. As a member of the Angus and Dundee Tourism partnership he has also been appointed its China Ambassador. In March 2008 he was made an honorary citizen of Yantai in Shandong Province.

David Valentine Dip TP; MRTPI Head of Economic Development Angus Council 24/11/2008