Eurobiz Issue 4 September / October 2011

Journal of the European Union Chamber of Commerce in China

EURObizwww.europeanchamber.com.cn September/October 2011

ICT in China: Opportunities and Barriers HERA SIU Heralding an Era of IT Best Practices HITTING THE TARGET Marketing Luxury Goods in China GOING MOBILE Electronic Payments Get Moving CHALLENGING OUTSOURCING'S CHAMPION China Prepares to Take on India THE EXECUTIVE INTERVIEW Duncan Clark, BDA China Pekin_EURObiz_Eylul.pdf 1 10.08.2011 10:34

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K Pekin_EURObiz_Eylul.pdf 1 10.08.2011 10:34

YOUR GUIDING PORTAL TO QUALITY ASSURANCE IN CHINA For consumer products, CTI is your domestic leader in testing, inspection, and compliance with global influences. We offer consultancy and regulation training programs for enterprises of all sizes and backgrounds to bridge the gap between China and abroad. When it comes to trading in or with China, CTI have you covered in every step. Our regulation experts with the Chinese market is here to guide you every step of the way. So relax and let us do our jobs and ensure your quality.

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COVER STORY BUSINESS FEATURES 44CITY FOCUS KNOCKING ON EUROPEAN CHAMBER 14CHINA'S DOOR 10LOBBYING REPORT Shenyang: gateway to Northeast China. Amadeus IT Group SA CEO Luis A summary of recent lobbying Maroto talks about being the leading activities. provider of computerised reservation SPECIAL EVENT systems in the global travel industry, 48 but the company is still barred from OUTSOURCING full participation in China. 26 7th European Chamber HR Conference 2011/2012. Chengdu emerges as a hub for IT HERALDING AN and business process outsourcing. 18ERA OF IT BEST SPECIAL EVENT PRACTICES MARKETING 49

SAP China’s top executive discusses 28 European Chamber M&A best practices and her determination How tech giants fall, and how to Conference Beijing. to shatter the glass ceiling. avoid the same fate for your company. THE EXECUTIVE GOING MOBILE: INDUSTRY FOCUS 58INTERVIEW 20ELECTRONIC 30 PAYMENTS MOVE FROM ICT in China, by the numbers. Duncan Clark, Chairman of BDA THE DESKTOP TO THE (China) Limited and Vice-Chairman DEVICE SMEs of the European Chamber's ICT Working Group The mobile industry moves to 32 introduce new payment options. Opportunities in China's ICT sector REGULARS for European SMEs. CHINA PREPARES PRESIDENT’S 24TO CHALLENGE IPR OUTSOURCING'S 09 FOREWORD CHAMPION 36 Protecting online IPR in China - EVENTS CALENDAR Part I. China gears up to take on India as 46 the world's leading destination for IT EVENTS GALLERY outsourcing. 38POSITION PAPER 52 On the cover The European Business in China CHAMBER BOARD Amadeus IT Group Position Paper 2011/12. 54 SA CEO Luis Maroto discusses opportunities and barriers for foreign CONSTRUCTION ADVISORY COUNCIL firms in China's ICT 40 56 market. See pg. 14. Serving China's greying population.

Journal of the European Union Chamber of Commerce in China

EURObizwww.europeanchamber.com.cn

Chief Editor European Chamber Chapters: Steven Schwankert Beijing 8362 7331 Art Director Beijing Lufthansa Center, Fax: +86 (25) 8362 7332 Office C412, nanjing@ Vincent Ding 50 Liangmaqiao Road, europeanchamber.com.cn Beijing, 100125, P.R. China Contributing Writer 北京市朝阳区亮马桥路五十号 Shanghai Tony Brooks 燕莎中心写字楼C-412室 Unit 2204, Shui On Plaza, Tel: +86 (10) 6462 2066 333 Huai Hai Zhong Road, Publications Manager Fax: +86 (10) 6462 2067 Shanghai, 200021, Vicky Dong euccc@europeanchamber. P.R. China com.cn 上海市淮海中路333号 Marketing & 瑞安广场2204室 Chengdu Tel: +86 (21) 6385 2023 Communications Manager 04-A, F16, Tower 1, Central Fax: +86 (21) 6385 2381 Jessica Schroeder Plaza, No.8 ShunCheng shanghai@ Avenue, Jinjiang District, europeanchamber.com.cn For European Chamber Chengdu Membership and 成都市锦江区顺城大街8号中 Shenyang Advertising in 环广场1座16楼04-A Room 20-10. EURObiz: Tel: +86 (28) 6155 7184 Office Tower 1, Shenyang Fax: +86 (28) 6155 7194 Rich Gate Plaza, Member Relations & chengdu@ No. 7-1 Tuanjie Road, europeanchamber.com.cn Shenhe District Sponsorship Manager Shenyang 110001, Fernando Cutanda Guangzhou - P.R. China Tel: +86 (10) 6462 2066 Pearl River Delta (PRD) 辽宁省沈阳市沈河区 ext. 31 Unit 2817, 28/F, Tower A, 团结路7-1号 Fax: +86 (10) 6462 2067 China Shine Plaza, 沈阳华府天地第一座20-10室 fcutanda@ No.9 Linhe Xi Road, Tel: +86 (24) 2334 2428 JOIN THE EUROPEAN europeanchamber.com.cn Tianhe District, Fax: +86 (24) 2334 2428 BUSINESS CONVERSATION Guangzhou, 510613, shenyang@ Advertising & P.R.China europeanchamber.com.cn IN CHINA Sponsorship Coordinator 广州市天河区林和西路9号 Advertise in EURObiz Betty Yin 耀中广场A座2817室 Tianjin Tel: +86 (10) 6462 2066 Tel: +86 (20) 3801 0269 Magnetic Plaza, Building 17, ext. 23 Fax: +86 (20) 3801 0275 Room 15A17, Reach 24,000 senior European byin@europeanchamber. prd@europeanchamber. Junction of Binshui West and Chinese business com.cn com.cn & Shuishang East Road, executives, government Nankai district, Tianjin, Shenzhen - 300381, P.R. China officials and Pearl River Delta (PRD) 天津市南开区宾水西道（宾水 over 1,600 member companies Rm 308, 3/F Chinese 西道与水上东路交口） of the EU Chamber nationwide Overseas Scholars 奥城商业广场17座15A17室 Venture Bld, Tel: +86 (22) 2374 1122 with the only publication South District, Shenzhen Fax: +86 (22) 2374 1122 dedicated to covering Hi-tech Industry Park, tianjin@europeanchamber. European business in China. Shenzhen, 518057, com.cn P.R. China 深圳高新区南区 EURObiz is published bimonthly by To place your ad, 留学生创业大 the European Union Chamber of 厦3楼308室 Commerce in China, and is distrib- please contact: uted free to all Chamber members. Tel: +86 (755) 8632 9042

Fax: +86 (755) 8632 9785 All material is copyright ©2011 by prd@europeanchamber. the European Union Chamber of Fernando Cutanda com.cn Commerce in China. No part of Member Relations & Sponsorship Manager this publication may be reproduced Tel: +86 (10) 6462 2066 ext. 31 Nanjing without the publisher’s prior [email protected] Zhujiang No.1 Building, permission. While every effort has 30/F, E1 been made to ensure accuracy, the publisher is not responsible for any Betty Yin 1 Zhujiang Road, errors. Views expressed are not Advertising and Sponsorship Coordinator Nanjing, 210008, P.R.China necessarily those of the European Tel: +86 (10) 6462 2066 ext. 23 南京市珠江路1号 Union Chamber of Commerce in 珠江1号大厦30楼E1座 China. [email protected] Tel: +86 (25) 8362 7330 /

Back to Business

Dear Members and Friends of the European Chamber:

As summer holidays come to a close, the European Chamber is hitting the ground running.

By the time this issue of EURObiz reaches you, we will have launched our most important publication of the year, the European Business in China Position Paper 2011/12. The Position Paper represents the views of the European Chamber, and is a compilation of the latest as- sessments, concerns and recommendations of European businesses operating in China. We hope that it will continue to promote constructive dialogue and co-operation between Europe and China, at both the political and business levels.

Beginning in mid-September and continuing into October, representatives from the Cham- ber’s Working Groups, along with members of the Executive Committee and staff will travel first to Brussels and then to other major European capitals for our annual European Circuit lobbying trip. This provides the Chamber with a unique opportunity to present the Position Paper to European Commissioners and Members of the European Parliament as Mr. Davide Cucino well as our industrial partners and business associations, along with relevant officials of EU President of The European Union Chamber of Commerce in China member states.

In late October, the Chamber will welcome leaders from both the European Union and China at the 2011 EU-China Summit, to be held 25th October in Tianjin. Once again we will have the opportunity to host top European officials including European Commission President Jose Manuel Barroso and European Commissioner for Trade Karel De Gucht. The event will include both a political and business summit, with the European Chamber serving as one of the Summit’s organisers. We look forward to having the opportunity to raise numerous issues directly with Chinese and European leaders. Once again we will have the occasion to propose a roadmap for moving towards a business environment in China that operates on a level-playing field for all companies, domestic and foreign alike.

In this issue of EURObiz, we place the industry focus on Information and Communcations Technology (ICT), an area where China represents exceptional potential, yet European companies are still not fully engaged, due in part to market barriers, to market maturity, and in some cases to stiff competition from both domestic and other foreign players.

As we all return to work, I wish you great success in business and all your ventures.

September/October 2011 EURObiz 9 EURObiz Lobbying Report

EUROPEAN CHAMBER LOBBYING HIGHLIGHTS

Meeting with the European Commissioner for Trade, Karel De Gucht

On 7th July, members of the European Chamber’s distinguished Advisory Council had dinner with the European Commissioner for Trade, Karel De Gucht, during his visit to China for bilateral meetings with the Chinese Minister for Commerce, Chen Deming under the EU-China Joint Committee mechanism.

During the dinner, 20 senior representatives of Advisory Council member companies were able to freely raise and discuss various issues with Commissioner De Gucht. These topics included the WTO ruling on raw materials, the proposal for a bilateral investment treaty between China and the EU, the EU sovereign debt crisis, concerns about the use of Chinese subsidies, issues regarding re-investments and European Commissioner for Trade Karel De Gucht (center) addresses European Chamber Advisory numerous general Chinese market access Council members, flanked by President of ABB North Asia and China Claudio Facchin (left) and Chief issues. The dinner meeting also provided the Representative of BASF China and former European Chamber President Joerg Wuttke (right). opportunity for Commissioner De Gucht to brief Advisory Council members on the Joint Committee meeting with MOFCOM Minister Chen Deming.

Three Meetings with the Vice Chairman of the Committee of Foreign Affairs of the Chinese People's Political Consultative Conference (CPPCC), Ma Xiuhong

Over the course of less than a month, representatives trade policy in the 12th Five-Year Plan period, European of the European Chamber were able to meet with the Chamber representatives, led by Vice President and Vice Chairman of the Committee of Foreign Affairs of Chairman of the Shanghai Board, Piter De Jong, held an the Chinese People’s Political Consultative Conference active discussion with Madame Ma on issues relating to (CPPCC), Madame Ma Xiuhong, on three occasions. European investments and company operations in China.

Accompanied by officials from MOFCOM as well as Finally, Chamber Vice President Jens Ruebbert met representatives of the China Chamber of Commerce with Vice Chairman Ma at a roundtable meeting on the for Import & Export of Machinery and Electronic development of green low-carbon industries organised Products, the former MOFCOM Vice Minister met with by MOFCOM. At the meeting also attended by officials a delegation of European Chamber representatives led from NDRC, MOST and MEP, Vice President Ruebbert by Vice President Miroslav Kolesar on 20th June. The spoke about the ability of European companies to greatly two sides exchanged views on various issues including the contribute to the 12th Five-Year Plan aims, to move Position Paper and the green development of China. towards more sustainable and green development and also raised issues regarding challenges presented by Chinese Madame Ma also met representatives from 29 member policy that obstruct European industry market access in companies in Shanghai on 1st July. Following Madame green technology areas. Ma’s speech on the new features of China’s foreign

10 EURObiz September/October 2011 Lobbying Report EURObiz

Representatives of the European Chamber meet with Madame Ma Xiuhong, Vice Chairman of the Committee of Foreign Affairs of the Chinese People’s Political Consultative Conference. Meeting with European Commission Director General for Mobility & Transport, Matthias Reute On 17th July, Matthias Reute, Director General for Mo- the development of the transport sector in China. Among bility and Transport of the European Commission and a the issues discussed were developments in the rail sector, delegation of officials from the Directorate General met the inclusion of aviation into the EU Emissions Trading with European Chamber President Davide Cucino and Scheme, China’s future plans regarding maritime trans- representatives of the Logistics, Aerospace, Aviation, Mar- port and general Chinese market access issues concerning itime and Rail Working Groups. The meeting focused on the transport sector. Submission of a Lobby Letter to the State Administration of Foreign Exchange (SAFE) Commissioner, Yi Gang

On 14th July, the European Chamber sent a lobby letter concern about the implications of the SAFE Circular signed by President Davide Cucino to the Commissioner [2011] No. 7 implementation guidelines for re-investment of the State Administration of Foreign Exchange, Mr. Yi by Chinese holding companies. The letter concluded that Gang, with the Minister of Commerce, Chen Deming; the European Chamber believes that this Circular goes the Minister of Finance, Xie Xuren; and the Commis- against the declared intention of the Chinese government sioner of the State Administration of Taxation, Xiao Jie, to encourage investment through foreign-invested holding all in copy. The European Chamber expressed its deep companies in China.

Other Lobby Highlights in Brief

Since mid-June, during the usually quiet two months of organise a study visit for CBRC officials to Europe; and July and August, the European Chamber held almost 30 following the submission of a report on consumer finance meetings with the Chinese government at various levels to SCLAO in July, the European Chamber’s Consumer and with differing Chinese ministry-level administrations Finance and Non-Banking Financial Institutions Working and organisations. The Chamber also submitted six com- Group, led by Chamber Vice President Miroslav Kole- ments on draft Chinese regulations, as well as 10 lobby let- sar, met with Dr. Zhang Jiandi, the Division Director of ters to the Chinese government. During the same period, SCLAO’s Department of Financial Affairs to discuss the the European Chamber met on 14 occasions with officials development of the consumer finance industry in China from European Union and Member State governments. and to offer assistance to the formulation of new regulations in this field. Most of these meetings were held at the working level and arranged through the Chamber’s various Working Groups. On 30th June, the European Chamber’s Lighting Working At the Chinese side, financial services-related working Group met with Deputy Director of the Ministry of In- groups for banking and consumer finance worked respec- dustry and Information Technology (MIIT), Ding Wenwu, tively with the Chinese Banking Regulatory Commission to understand recent policy and standards developments in (CBRC) and the State Council Legislative Affairs Office the LED sector and to raise concerns to Deputy Director (SCLAO). The European Chamber’s Banking Working Ding. On 14th July, the Healthcare Equipment Working Group cooperated with the EU-China Trade Project to Group met with the Pricing Department of the National

September/October 2011 EURObiz 11 EURObiz Lobbying Report

Development and Reform Commission’s Medicine Pricing Fischer, Director of Social Affairs and Inclusion of the Division to discuss the Pricing Management Measures for Directorate General for Employment on 7th July to brief Implantable (Interventional) Medical Devices and to of- Mr. Fischer on the current situation, developments and is- fer suggestions on the direction of medical devices pricing sues in relation to HR and CSR in China. On 24th June, policy in China. At the local level, the Healthcare Equip- European Chamber representatives from the Aviation and ment Working Group, again led by co-Chair Camon Sin, Carbon Market Working Groups met with the Adviser met with the Beijing Healthcare Bureau to discuss tender- of International and Climate Strategy of the Directorate ing related issues. General for Climate Action, Juergen Lefevere, to discuss the EU Emissions Trading Scheme; and on 23rd June, the Other meetings at the local level with Chinese officials European Chamber received a delegation from DG Trade included a meeting with the Jiangsu Foreign Affairs Office and DG ENTR led by Mr. Peter Klein, the Head of Unit (FAO) by representatives of the Nanjing Chapter. Helmut for Industrial Sectors of DG Trade. Chairs and Vice Guesten, Chairman of Nanjing Board of the European Chairs of the ICT, Energy, Renewable Energy, Smart Chamber led the meeting with Deputy Director-General Grid and PCR Working Groups attended the meeting of the Jiangsu FAO, Zhang Lirong, to present the Cham- where Mr. Klein debriefed the Chamber on his meetings ber’s Business Confidence Survey. The fruitful dialogue with Chinese counterparts over the course of his visit to with Mr. Zhang focused on topics including the Social China on industrial policies for rare earths, raw materials, Insurance Law and power shortages in the province. In semiconductors and steel. Chamber representatives shared Guangzhou, the Chairman of the PRD Board of the information with Mr. Klein on recent market develop- European Chamber, Holger Kunz, led a delegation of ments and expressed their various concerns about market members to a meeting with the Deputy Director General access issues within their sectors in China. of the Exit-Entry Inspection & Quarantine Bureau of Guangdong Province (GDCIQ) to propose the establish- The European Chamber welcomes the Polish Presidency ment of several working groups between European Cham- of the Council of the European Union. Within the space ber member companies and relevant divisions at GDCIQ of a few days before the accession of the Republic of Po- on topics of product safety, product quality and consumer land to the Presidency on 1st July, the European Chamber safety, and environment management. In Shanghai, vari- was honoured to be invited by the Consul-General of Po- ous members of the Shanghai Board and Advisory Coun- land in Guangzhou, Mr. Krzysztof Ciebien to lunch and cil members met with the Shanghai Municipal Commis- dinner meetings. At the meetings on 27th and 28th July, sion of Commerce (SCOFCOM) on 10th June; and on representatives of the Chamber met with both the Am- 8th August, members of the Cosmetics Working Group bassador of the Polish Embassy, H.E. Tadeusz Chomicki met with Xie Minqiang, Deputy Director General of the and the Ambassador of the EU Delegation, H.E. Markus Shanghai Municipal Food and Drug Administration to Ederer. On 29th June, the Chamber was delighted to re- discuss the proposed Cosmetics Leger Pilot Scheme. ceive Mr. Grzegorz Gawin, Director of the Department of Economic Diplomacy of Poland’s Ministry of Foreign At the European level, the Chamber had many meetings Affairs where issues concerning the Chinese market and of note during the months of June, July and early August market access barriers for European companies were with European Commission authorities. Representatives raised. of the Chamber’s CSR and HR Forums met with George Media Highlights in Brief Although the European Chamber did not stage any press that the Chamber issued on welcoming the Ministry of conferences, nor release any publications since mid June, Finance’s repeal of three indigenous innovation related the Chamber still received high levels of media exposure. policies, as well as through comments provided to the Wall Since June, the Chamber has been referenced in over 70 Street Journal on the WTO’s ruling on China’s export news pieces from international first-tier printing media quota for raw materials, to the bi-weekly magazine of the outlets including the Financial Times, Bild, Forbes, the 21st Century Business Herald on China’s new social insur- Daily Telegraph and the Wall Street Journal and in vari- ance law and to the Wall Street Journal on the moves to ous newswires, including Reuters, the Associated Press lower import taxes on luxury goods. and Agence France-Presse. The Chamber was also referenced in various Chinese media outlets, including the 21st Century Business Herald, Xinhua, the People’s Daily and Caijing.

The media exposure was led in part by a press release

12 EURObiz September/October 2011 EURObiz SMEs EURObiz Cover Story Knocking on China’s Door

A dominant player in the global travel industry, Amadeus IT Group SA had just under €2.5 billion in revenues for 2010. Despite being the leading provider of computerised reservation systems (CRS) in the global travel industry, regulation still bars the company’s full participation in China. EURObiz’s Steven Schwankert spoke with Amadeus CEO Luis Maroto about the company’s approach to the China market and its barriers.

EURObiz (Eb): Please tell us fastest growing travel market and repre- ment of the travel industry in China. about Amadeus’ core business sents a huge opportunity for the travel Any airline, travel agency or travel sup- areas. industry. plier should have the freedom to choose its preferred GDS or technology pro- Luis Maroto (LM): Amadeus is a vider. This isn’t the case in China today. leading technology provider and transaction processor to the global travel and Market restric- Over the past few years, we have been tourism industry. Essentially, we have tions in China do working with the European Chamber two main businesses: Distribution and and the European Commission (EC) IT Solutions. not allow interna- to bring this issue to the attention of the Chinese government and the Civil Aviation Administration of China On the distribution side of the busi- tional Global Dis- (CAAC), the Chinese aviation regulator. ness, we operate a business-to-business tribution System The CAAC is now considering easing electronic marketplace bringing travel restrictions which currently bar foreign agents and travel management compa- (GDS) providers GDSs from participating in China, by nies together with airlines, hotels, train introducing draft CRS regulations that operators, cruise lines, car rental com- to operate their would potentially liberalise the highly panies, ferry operators, travel insurance regulated travel distribution system companies and tour operators. We are distribution sys- environment in China, which in turn the largest global transaction processor tems in Chinese could lead to profound changes in the in the travel industry. travel agencies or travel distribution landscape in China. We are also the world’s leading provider This is a small move in the right di- of IT solutions for the travel industry issue tickets. rection by China. However, even if for customers such as airlines, hotels, the draft regulations are finalised and travel agencies and more. The local Computer Reservation Sys- promulgated into Chinese law, it does not give foreign GDSs what they need Amadeus has around 10,000 staff with tem (CRS) in China, TravelSky, is state in terms of market access in accord- a corporate headquarters in Madrid owned and the sole reservation system ance with China’s World Trade Or- and regional offices in Miami, Buenos allowed to issue tickets in China. ganisation’s (WTO) commitments, and Aires, Bangkok and Dubai. At a market a lot more progress will be needed to level, Amadeus maintains customer This effectively eliminates any compe- truly open the market. operations through 73 local Amadeus tition and leaves TravelSky with a de Commercial Organisations, covering facto monopoly carrying almost 99% Eb: What made the company 195 countries. market share. Because TravelSky operates as a monopoly in China, both do- choose Bangkok as its Asia re- mestic and international airlines must gional headquarters? Eb: What specific challenges use this system for the distribution of We have a long-term commit- does Amadeus face in China? almost all of their products. This situ- LM: How do you address those chal- ation is detrimental to the interests of ment in Asia Pacific, and will continue lenges? both foreign and Chinese airlines, as to solidify and build on our market LM: China is the world’s largest and well as travel agencies operating in the leadership position. We established our market and limits the natural develop- regional Asia Pacific headquarters in

14 EURObiz September/October 2011 Amadeus IT Group SA CEO Luis Maroto.

September/October 2011 EURObiz 15 EURObiz Cover Story

Bangkok in 1995 and now have the international flight reservations. The (181 million domestic and 33 million largest geographic reach of any travel opening of the market would potential- international passengers). These figures technology provider in Asia Pacific, ly mean we can explore domestic and demonstrate that the size of the market with over 1,600 trained personnel look- inbound flight reservations both from is big enough for more than one global ing at 39 markets across the region, travel agencies and via the web. distribution provider. servicing travel agencies, corporations, airlines and other areas of the travel in- We hope that the draft CRS regulations dustry. Indeed, in 2010 Amadeus pro- We hope that the will be released by the CAAC which cessed close to 58 million travel agency will lead to the true opening of the air bookings; that is close to 14% of our draft CRS regu- GDS market in China. Since China’s global travel agency air bookings. accession to the WTO in 2001, China lations will be has already replaced Japan as Asia Pa- cific’s largest aviation market. When we were considering a location released by the for our regional Asia Pacific office, it China is the only remaining market was common at that time for many CAAC which will (with the exception of North Korea) global organisations to set up their lead to the true where foreign GDSs do not operate. regional hubs in countries other than A recent Phocuswright study, “GDS Thailand. Taking into account our opening of the Deregulation and the State of Travel close partnership with Thai Airways, Agency Technology in China” details our strategy was to look beyond the GDS market in the technology gap as well as the busi- present and recognise the growth po- ness practices gap between the sole tential in Thailand. China. Since Chi- Chinese CRS and other foreign GDS na’s accession to providers. Eb: What does Amadeus bring to the China market and how does the WTO in 2001, We hope that the Chinese government this relate to China’s 12th Five- will realise that providing equal market Year Plan? China has already access and a level playing field for for- replaced Japan eign GDS players will be good not only LM: China’s leadership has often stated for the Chinese consumer, airline and its desire to transition from growth as Asia Pacific’s travel industry, but will also help China based primarily on exports to a more largest aviation enhance travel as a service sector, in- sustainable model, based on the con- crease domestic consumption and ulti- cepts of balanced growth, innovation market. China is mately help China achieve the needed and a harmonious society. One of the transition to a more balanced economic broad aims of China’s 12th Five-Year the only remain- growth model. Plan is to boost domestic consumption ing market (with by increasing the service sector’s con- Eb: What role can Amadeus play tribution to GDP by four percentage the exception in the opening up of China’s Com- points, rising from 43% to 47%. puterised Reservation System of North Korea) industry? We can clearly see the Chinese govern- where foreign With the potential regulatory ment’s commitment to the growth of LM: travel and tourism, coupled with the GDSs do not op- changes in the GDS market and sub- sequent steps in the right direction to desire to increase consumer demand. This has led to the rapid development erate. provide foreign GDS true market ac- of world class airports, roads, a high- cess and a level playing field, Amadeus speed rail network and a rapidly ex- hopes to contribute to the technology panding supply of hotels. Apart from Eb: What kind of opportunity do infrastructure that will empower travel expanding physical infrastructure to you believe the draft CRS regula- agencies to use new generation technol- support the growth of the Chinese in- tions may provide to Amadeus? ogy to make bookings on airlines and dustry, China also needs to enhance the other travel providers in China. As a technology infrastructure that permits LM: The global airline industry expects result of China’s high internet growth travel agencies to make travel searches China to be the biggest contributor of with China’s 485 million internet users, and bookings on airlines and other new air travellers by 2014. Of the 800 travel providers. consumers are increasingly going on- million new travellers expected in 2014, line to explore their travel options. 360 million (45%) will travel on Asia Currently, we power the international websites of all four major Chinese car- Pacific routes and within those 214 During the first half of 2011, Chinese riers to enable booking functions for million will be associated with China national carrier Air China announced

16 EURObiz September/October 2011 Cover Story EURObiz a three year contract extension for Our current global market share of globally and we hope it will play an im- the Amadeus e-Retail Internet Book- travel agency air bookings has grown portant part in our future. ing Engine. Currently Air China uses from 29% in 2004 to around 37% the solution to cover 28 international in the first half of 2011. Our airline If China opens CRS regulations and markets across Asia, Europe and North IT platform, Amadeus Altéa suite removes all regulatory obstacles to al- America. for airline reservation, inventory and low foreign players like Amadeus to departure control systems has grown operate in China, it will be the start of Keeping databases up-to-date and from 0% to 28% market share since we a long journey. accurate is an extremely technically launched with Qantas and British Air- demanding activity. We often hear that ways in 2001. Today we have over 110 China first claimed to liberalise the when users in China obtain informa- airline customers contracted to Altéa. Chinese CRS sector during its acces- tion about air ticket availability, it isn’t sion to the WTO in 2001. However, there when they try to book it. This let’s not forget that Chinese airlines are suggests that there are issues with the still not allowed to benefit, like foreign reliability of the website information. If China opens airlines, from the most advanced tech- The Amadeus data centre is the world’s CRS regulations nology provider for their travel distribu- number one processor of travel trans- tion in China. actions and can process over one billion and removes all transactions per day, resulting in over I hope that once the market really un- three million net bookings. regulatory ob- derstands how advanced technology stacles to allow can truly drive the development of We hope the eventual opening of the such an important service sector as the China CRS market will allow Amadeus foreign players airline and travel industry, that Chinese to play a key role in developing both airlines will also want equal access to the online and indirect travel market like Amadeus to the same advanced technology and dis- in China, as we have done in India – a tribution option as the foreign airlines booming market for online travel. This operate in China, serving China. is where India, despite its poor physi- it will be the start cal infrastructure for travel, through a Since Deng Xiaoping’s oft-cited in- much more liberalised policy regard- of a long journey. struction that China’s progress of re- ing foreign GDSs, has achieved a truly form and opening to the world should vibrant and booming travel market. be “like crossing the river, feeling one According to Phocuswright, over 90% stone at a time,” gradualism has been of bookings processed by the leading Eb: How is the company perform- the model of Chinese governance. Indian online travel agency Make My ing overall in these challenging While gradualism towards market Trip are made completely online, com- times? liberalisation has proved highly effec- pared to Chinese online market leader tive in the early stages of China’s post- CTrip, where 80% of bookings are still LM: We just announced out financial 1978 marketisation, clinging to a strict manual and made through a call cen- results for the first half of 2011 (six gradual approach will be a serious hin- tre. months ended 30 June, 2011) and it drance to the natural development of has been a positive and active first half the travel and tourism industry. Today, Eb: Please tell us about Ama- of the year. At an operational level, foreign and Chinese airlines alike can deus’ evolution from a GDS to an benefit from the travel distribution of- both our Distribution and IT Solutions airline IT service provider. ferings of Amadeus in more than 195 businesses continued to grow and in countries outside of China. We hope LM: In the year 2000, Amadeus took particular had significant successes in to be able to offer local travel agencies the decision to move from being solely the Asia Pacific region, adding further the same technology that their interna- a distribution system into a transac- visibility to our future growth. tional peers have been enjoying for over tion based technology provider for the 20 years. whole travel industry. Amadeus Asia Pacific also won the prestigious 2011 Airline IT Solutions Let’s hope that we can “cross the river” Whilst the GDS part of the business Provider of the Year Award from Frost at a much faster pace to ensure that the gives us global reach and massive ef- & Sullivan, which recognises innovative Chinese travel and tourism industry ficiency, our IT Solutions arm gives best practices in the aerospace and de- truly realises its potential, through the us additional synergies where we can fence industry. advanced technology that companies leverage our travel industry knowledge. like Amadeus can offer China. Combined together, the businesses are Eb: In your role as CEO, how do greater than the sum of their parts, you feel Amadeus’ situation in which improves our offering and China is proceeding? strengthens our position. LM: China is a key growth market

September/October 2011 EURObiz 17 EURObiz Cover Story

SAP China President Hera Siu. Heralding an Era of IT Best Practices

Solutions developer SAP is one of the few global software players to have emerged from Europe. As the company prepares to hold its biggest global customer event in Beijing in November, EURObiz’s Steven Schwankert talks with SAP China’s President Hera Siu about best practices and determination to shatter the glass ceiling.

EURObiz (Eb): What kind of com- believe in innovative business solu- removing language as road blocks to panies is SAP targeting in China? tions. They understand and trust that uninterrupted customer support. only a mature, stable and scalable IT Hera Siu (HS): In China, we are infrastructure and environment can Helping customers become best-run committed to helping all Chinese make business “challenge ready” and businesses is already working at SAP companies become best-run busi- “change ready”. SAP’s solutions are China. This year, SAP China has nesses. Hence we always target those fully localized – which means they are achieved its highest-ever sales revenue companies that are inspired to be- either developed locally in China, or for two consecutive quarters and its best-ever half-year result. come better, grow stronger and those modified based on Chinese custom- that are determined to reach their ers’ business needs. We now provide Eb: What products are finding business goals. All the companies a 24x7, Mandarin Chinese service greatest traction here? that choose to work with SAP also hotline to our customers, completely

18 EURObiz September/October 2011 Cover Story EURObiz

HS: Aside from SAP’s top-selling and sustainably, both in China and nels and partners ecosystem. There Business Analytics and Business Pro- globally. are also few industries we believe to cess products, our Mobility solutions possess enormous growth potential and HANA (In-Memory Technology) Eb: Are products like customer in China, such as healthcare and fi- have definitely earned enormous trac- relationship management and nancial services. We have a team of tion in China and all over the world enterprise resource manage- experts with industry insights that can since last year. After we acquired Syb- ment still as foreign a concept as best assist customers in these emerg- ase in 2010, along with our partners they were when SAP first estab- ing industries. Last but not least, our lished itself in China? in the ecosystem, SAP now offers a specialty solutions such as CRM, full array of mobile applications and HS: Not anymore. Most Chinese HCM, SRM Business Analytics and underlying infrastructure, with un- companies already view these as the Technology. matched integration to SAP systems, basics or “must-have” for a compa- for secure access to business processes ny’s operation. They now are looking Eb: What can we expect from SAP during the remainder of 2011, anytime, anywhere and on any de- into innovations that can help them and early 2012? vice. excel and succeed in their areas of business, such as SAP HANA and China has the largest number of mo- HS: Have I mentioned China Sap- Mobility solutions, or sometimes even bile users in the world. Mobile devices phire Now? One of the Board’s becoming handy tools for real-time co-innovations for those solutions that commitments and SAP China’s key critical tasks and decision making has can best meet their specific business milestones, the company will bring become unavoidable. needs. its most prominent customer event “Sapphire Now” to China later this SAP HANA appliance software realizes Eb: Is there a particular advan- year. This will be the first time in its the power of real-time analytics and tage to being a European soft- 22-year history that Sapphire Now ware company in China? real-time applications, which can will be held in a location outside the analyze massive amounts of data up U.S. or Europe. China Sapphire Now to 3600 times faster than traditional HS: SAP has grown to become a databases. This next-generation inno- multinational company with high is being tailored and specifically de- vation can drive business opportunities level of localization in each market. signed for China and will be conduct- enterprises once considered impossible. Here, we do not regard ourselves as ed primarily in Mandarin Chinese. In China, many of our customers have “SAP in China” or “a European soft- A total of 25,000 online and on-site expressed their interest in HANA; some ware company in China”. Instead, we participants are expected to attend have already started implementation. are SAP China with the advantage of the two-day event in Beijing on 15th being able to bring its best practices and 16th November, 2011. Eb: How are the requirements from all over the world to its Chinese of Chinese companies different customers. This mentality helps us Eb: Hera, how much more chal- from the multinational corpora- lenging is it to be a woman head- fully localize our business operation, tions you are supporting here? ing a large company in China solutions and services. Our employees instead of a man? HS: In time, we see less and less are mostly Chinese which also help us difference between Chinese and gain deeper insights to the market. HS: I’m often asked about glass ceil- multinational corporations when it ing for female business executives. comes to employee numbers, business Eb: What do you see as new Actually there are quite a few female models and revenue sizes. However, sources of growth in China? business leaders in China. In my as many Chinese companies are ex- opinion and from my personal ex- HS: Earlier this year, SAP China panding their business into global perience, the “ceiling” is not about announced to drive the company’s markets, level of business complexity gender, but about your choice and de- growth in four different directions: increases with time. This is because termination. Women in general have large enterprises, small and medium these companies often have to com- higher endurance and more patience enterprises, emerging strategic indus- ply with different government poli- and are willing to learn from others. tries and specialty solutions. Large cies, modify their products/services In other words we have almost all the enterprises have always been one of for different market characteristics, elements for success. It is a matter of the revenue sources for us in China. and face various risks associated with priority. international business operations. We have now grown substantially in the SME segment with the introduc- SAP’s job is to stand by our Chinese Thus once I made the decision to focus customers, act as their trusted advisor tion of B1, industry-based packaged on my career, everything else became and provide them with the business solutions and Business ByDesign. We easy. solutions they need to grow securely have further strengthened our chan-

September/October 2011 EURObiz 19 EURObiz Cover Story

Going Mobile: Electronic Payments Move from the Desktop to the Device

Mobile payments were one of the early promises of the Internet age, one that only recently began to be fulfilled. The idea of requiring just a mobile device to complete transactions – without a wallet, credit cards or purse – appealed to most consumers, but only now is becoming a reality. EURObiz’s Steven Schwankert looked into the increasingly portable world of electronic payments.

A mobile payment device has already since the earliest days of the Internet, Since then, among other factors, been used for centuries. It’s called a with limited success. In 2001 and devices have improved remarkably, wallet. However, despite the durabil- 2002 in Hong Kong, Nokia rolled out with smartphones becoming as much ity of the idea, the ubiquitousness a mobile phone cover for one of its the rule as the exception, and the of mobile phone use, especially in models that incorporated a miniature deployment of technology such as China, has made the appeal of car- version of the local Octopus payment 3G and Wi-Fi reaching near ubiquity. rying not one but two devices less ap- card. However, the limited run gained With Internet access now regularly pealing, and led to a growing desire little traction; while the idea was available and devices adapted to take for one single device that can perform theoretically sound, producing only a advantage of it, specialized banking both functions. single, robin’s-egg-blue color cover for and mobile payment applications can a sole phone model prevented large- be developed, incorporating critical Mobile device manufacturers have scale adoption. elements such as security to build played with this concept for years, user confidence and drive customer

20 EURObiz September/October 2011 Cover Story EURObiz adoption. receiving and storing coupons and other use cases in addition to pay- loyalty perks), permanent presence of ments.” The environment has finally begun all payment methods and finally, not to improve for mobile payments, with having to carry a heavy physical wal- “NFC is an open standard to facili- technology finally intersecting with let. tate payments in a globally standard- consumer demand. “Technology ised and secure way. NFC technology research firm Gartner evaluated that “Financial institutions and merchants relies on a so-called Secure Element 33.9 billion Euros had been trans- will also see value in mobile pay- (it can be a MicroSD card or a SIM acted on mobile devices in 2010. As ments. Financial institutions will ben- card, which is a secure microcom- people buy more smartphones and efit from consumers using electronic puter which is embedded either in tablets and use them increasingly payments versus cash because they the mobile phone or even in a plastic even when at home, this number is make a cut of every transaction. The card, like a credit or debit card. The expected to grow rapidly. Gartner interactivity is also welcome by both technology allows the user to pay predicted that 295 billion Euros will financial institutions and merchants locally at a given point of sales by be transacted in 2015”, said Thomas who can keep an ongoing relationship presenting the device, say an enabled Lebecque, strategy head of Nokia in between them and their consumers. mobile phone. The payment is quick China. Recommending other purchases and – less than a second, effortless, multi- services, updating on what’s new and functional and secure – thus bringing “Consumers in China are already coming when the user is engaged in convenience to a transaction all of us making mobile payments through the payment experience will lead to do many times every day, in shops, in their phones using technology as increased sales and more loyal con- the bus or subway, in restaurants or simple as SMS, accessing authorised sumers”, said Lebecque. even on the Web. The phone display bank accounts anytime, anywhere,” allows the user to immediately check said Dr. Roland Savoy of Giesecke & The ubiquitous presence of mobile the transaction balance adn even to Devriant. phones today also offers another ave- top up the purse over the air”, said nue for payment providers to broaden Savoy. Like a Wallet, their consumer reach, either through Without the Big Pocket easy access (SMS, GPRS, 3G) to mo- “The core of the security concept bile phones, or through wide coverage of the NFC Mobile Payment is the Mobile payment can complement of mobile phones regions otherwise secure element – it is a special micro- two primary experiences: online pay- difficult to reach. In China, for ex- computer which holds the relevant ments made from a computer and ample, the number of mobile phone information, be it monetary value, payments made by physical credit subscribers has surpassed 900 million, loyalty points or personal informa- cards, cash or prepaid cards such as while electronic payment penetration tion. This information is protected transportation or canteen, carried in is far less. Where once it was thought by an interplay of technologies on wallets or purses. Chinese consumers would never several levels in the phone and the adopt e-commerce because they did secure element. Based on predefined “Mobile payment incorporates the not use nor had no access to credit policies, information is only shared functions of cash and a purse into a cards, as banks and telecom operators with duly authorised third parties to mobile device, making people’s lives prepare to push mobile payment that the extent necessary to complete the easier and more independent. Mobile concern also seems set to fall by the transaction,” Savoy said. payment is faster and more conveni- wayside. ent than a non-mobile device, includ- For Now, Only Big Players ing a wallet, which is also a mobile “In the case where a mobile device device, but not as easy to use”, said emulates the experience of physical The readiness of infrastructure and Savoy. credit or debit cards, hardware fea- business models to provision a device tures need to be present on the device with a consumer’s credentials to emu- The benefits from the first one are (Near Field Communcation, NFC, late a physical card remains a bot- clearer: enabling online shopping and Secure Elements) in addition to tleneck. In the physical world, banks and payment of bills online, sending the associated software which allows take a leading role in providing the money to friends remotely while away third-party applications and websites card to the user and have a tight con- from a connected, fixed computer. to integrate with them”, said Leb- trol on the information available in The second complement – physical ecque. “It is important to note that the card. In the mobile world, a user payments with a mobile device – is none of these hardware features are buys a device in one place and would something for which there is not yet specific to mobile payments. NFC is need to either bring the device to a a lot of consumer feedback, since it a short distance radio protocol that bank – which then needs to have the is just emerging, but for which con- can be used also for pairing and shar- infrastructure to provision the device sumer benefits can be projected: in- ing content. The secure element is a – or authorise a financial institution teractivity (after each transaction, see- dedicated hardware that stores user to top up the device over-the-air. In- ing the account balance, integration credentials, and can be used for iden- terestingly, in some markets, including with the phonebook, automatically tification, memberships and many China, we see banks considering be-

September/October 2011 EURObiz 21 EURObiz Cover Story coming device retailers to facilitate that add value to the consumer the phone, creating a ‘trusted en- the first use. Over-the-air use would experience, including payment ex- vironment’. This is more secure mostly happen through the telcos’ periences. Nokia is fully committed than what you see on PC and Mac networks and banks and financial to driving the technology forward today”, Lebecque said. institutions must therefore make by creating an open ecosystem and partnerships with telcos to make it fully interoperable environment A second bottleneck is the relative fly. between developers, software and lack of NFC-enabled, Point-Of- service providers and device manu- Sales terminals in shops and res- In China, online payment players facturers.” taurants. While there are 3.3 mil- such as Alipay, Tenpay and 99Bill lion of them in China, that is still a are active on mobile. Mobile pay- The Weakest Link relatively small number for such a ment, still at an early stage, pre- large consumer base. sents a tremendous opportunity for For online payments, the biggest online and traditional players to bottleneck to adoption is consumer Also, a phone that stores the user reach new consumers, retain exist- ease of use and trust in security of payment credentials can be lost or ing ones and increase usage overall. payments and the fact that many forgotten more easily than a com- goods need to be seen, touched and puter. While true, in comparison Device manufacturers also have a felt before being bought such as with physical wallets and plastic role to play. Nokia is very active in cars, clothes, electronic items. cards, in the case of mobile phone offering the technology enablers for loss, mobile payment can actually NFC-based mobile payments and For physical payments, there are provide higher protection. Payment enhancing payment ease of use. multiple issues that need to be tack- applications can easily be built to led before mass adoption. require a password or other au- “A large number of Nokia devices thentication credentials in addition will be shipped with NFC going Because payment credentials are to a pin code for each transaction. forward, and let’s not forget that physically stored on the phone, Nokia was an NFC pioneer with there are security concerns from Finally, some concerns arise if con- the first NFC device in 2005”, Leb- consumers and financial institu- sumers use their mobile payments ecque said. “As for secure elements, tions, especially on smartphones as frequently as with plastic cards an increasing number of Nokia that are open and thus allow many or cash. “While security risks would devices with secure elements will applications, some of which are be similar, the aggregate amounts come to the market. As for improv- malicious, to be installed. There would be higher. But again, when ing ease of use, Nokia’s strategy is are many solutions to tackle these comparing with plastic cards, this to continue to provide market lead- concerns and industry players, for should be equivalent level of risks, ing NFC devices and experiences example implementations isolat- for which nearly all financial insti- that allow the NFC ecosystem to ing the software used for each tutions have coverage offers today”, evolve and develop NFC services transaction from the software of Lebecque said.

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For 30 years, India was synonymous with information technology (IT) outsourcing. But China has begun to emerge as a potent rival to the world’s other most populous nation. EURObiz’s Steven Schwankert talks to author Cyrill Eltschinger about knocking the reigning champion off its perch.

No one will get fired this year for facturing overseas: lower labour and India is China’s main rival, having outsourcing IT processes to a firm in operating costs outside of Europe and established itself as the world’s tech- India. But what about next year? North America, along with a pool nology workshop since the 1980s. But of skilled engineers, project manag- rising costs and other factors have That’s the contention of Beijing- ers and computer-science graduates, jeopardised its lock on that title. based Swiss native Cyrill Eltschinger, can make project development away an entrepreneur, consultant and from a company’s home country cost- “While India has had outsourcing author of Source Code China: The New effective. growth for some time, they have ne- Global Hub of IT Outsourcing, published glected the infrastructure required first in English in 2007, with the “It’s following the talent,” Eltsch- to support it: stable power supplies; Chinese edition becoming available inger said. “We’re just not produc- technology parks and roads to reach earlier this year. ing enough trained technical people them; nationwide broadband In- [in Europe and North America] to ternet. Even literacy: only 61% of China’s prominence in global busi- handle the amount of work that’s out India is literate, compared to 92% in ness and trade, its large base of skilled there, certainly not at a price level China. How can you support value- labour, particularly computer-science that makes it effective for most com- added technology services when graduates, and cost advantages being panies to engage”. almost 40% of your population is il- provided by second, third and fourth- literate, in 2011”, he said. tier cities keen on attracting foreign In Source Code China, he points to the investment all make the country a BRIC (Brazil, Russia, India and Chi- Eltschinger also points to other in- competitive choice for business pro- na) countries as having the advantage dicators, such as the size of China’s cess outsourcing (BPO) and informa- in outsourcing due to a combination trade relationship with the European tion technology outsourcing (ITO). of factors: size and scale of popula- Union and with the United States, tion, developing economies that are China’s world-leading population of “I agree with the [technology research creating both skilled populations and Internet and mobile phone users and firm] Gartner maxim of ‘country medium to long-term price advan- to its 2008 hosting of the Olympic before company’. In other words, tages. While he notes the popularity Games as proof that China is in the choose the country where you are al- and progress made by countries like driver’s seat for the future when it ready established and doing business, Poland and Vietnam to establish out- comes to the ability to provide IT rather than pick a place where you sourcing hubs, both are limited by a outsourcing services. Perhaps most otherwise have little or no economic simple factor. “They just don’t have importantly, he says the proof is in interest”, Eltschinger said. “For many the population. It’s not about the India’s own pudding. multinational corporations, China quality of the work, or the price, but is their number one market outside there just isn’t the scale there for out- “Where are top Indian outsourcers their home country. The same can’t sourcing to be sustainable in the long sending their work to, when they run be said about traditional outsourcing run”. out of capacity and as costs become hubs like India or the Philippines”. too high? China,” he said. Indian Outsourcing is somewhat like manu- Among the other BRIC countries, outsourcing titans including Tata

24 EURObiz September/October 2011 Cover Story EURObiz

Consultancy Services and Satyam those with the requisite patience, the Information Services have both had Local governments also have greater experience, and the relationship, can China-based ventures since as early flexibility and are more willing to use bear long-term fruit. as 2005, with contract relationships resources at their disposal in order to dating back into the 1990s. attract investment. “Chinese companies have been handling Western outsourcing projects Inland Revenue “Although they usually cannot offer for at least 15 years now. We have the same benefits as larger cities, such Chinese outsourcing companies that For companies looking for opportuni- as quality of life and proximity to in- are listed on European and North ties in China, both for outsourcers ternational airports, third and fourth- American stock markets now. Out- and those potentially wanting to pro- tier locations can provide significant sourcing isn’t new to China. What’s vide outsourcing services, Eltschinger tax breaks, years of free rent and different is that while India has had suggests they go west – or north, or assistance with permitting processes NASSCOM (National Association south, just a direction that doesn’t in order to secure long-term invest- of Software and Service Companies) point to a major city. ment”, Eltschinger said. marketing for it for decades, Chinese companies are selling themselves as “Ten years ago, you would have He sounded a word of caution about individuals. It makes it more difficult, picked a major city that had a large such destinations. “Choosing such a but the quality, and the advantages, university population, somewhere like location as a first stop in China may are beginning to show.” Beijing, Chengdu (see our Chengdu not be for the faint of heart, or at focus on pg. 26) or Dalian. Now, top- least not for companies new to doing tier cities in China are too expensive, business here. The negotiations can Source Code China’s English edition salaries cannot keep pace with the be a bit long and intricate, and often, is available through Amazon.com. cost of living. Young people feel like you have foreign executives not used The Chinese edition is available at they will never be able to afford a to dealing with Chinese officials, and local bookstores and from www.dan- home there. But a career opportunity Chinese officials who have little expe- gdang.com. in a technology park near their home- rience addressing the expectations of town, or at least in the same province, foreigners.” that is starting to be more attractive and makes more sense,” he said. However, Eltschinger believes that for

September/October 2011 EURObiz 25 cv2011SG_June_pr005_2.indd 1 20/06/2011 10:54:47 EURObiz Outsourcing Chengdu Becomes an Outsourcing Hub

When first-tier cities in China lose their cost advantages, what new footholds can the global outsourcing industry choose? Move inland, Tammy Zhou says. Second-tier cities can provide the talent and the right price for companies with enough courage to try them.

Located in southwest China’s Sichuan of companies to setup R&D, IT and from Chengdu. These have laid a good province, Chengdu was named one back-office operation, including Nokia- foundation for the development of the of “the world’s fastest growing cities in Siemens, SAP, DHL, Maersk and Er- service outsourcing industry. About the next decade” by Forbes Magazine in icsson. On June 20, 2011, Philips was 200,000 people are employed in the October 2010, has gained fast develop- the latest company to sign an agree- software industry, of which 80 percent ment in recent years, especially after ment with the Chengdu Hi-tech Zone hold a bachelor’s degree or above. It the financial crisis. Service outsourcing government, to establish its first R&D is estimated that the software industry industry revenue in Chengdu reached center in western China. will provide jobs for more than 220,000 180 million Euros in 2010, an increase people by the end of 2011. of 158% year-on-year. Total software “Currently, three of top ten global ser- and information technology services vice outsourcing companies, IBM, Ac- The GDI report specifically mentions industry revenue exceeded 10.9 billion centure and Wipro, have opened sub- that with their advantages in infrastruc- Euros, maintaining 35% annual growth branches in Chengdu, and 11 of the ture, human resources and local gov- for eight years, according to statistics world’s 20 largest software enterprises ernment support, emerging outsourcing from the Chengdu Bureau of Com- have settled in the city”, Tang Jiqiang, cities in China such as Chengdu have merce. the director of the development plan- become powerful competitors in the ning bureau of the Chengdu High-tech global delivery market. “Chengdu has become one of the most Industrial Zone said. important global destinations of IT Aside from the aforementioned advan- outsourcing companies”, Christine Du, The Global Delivery Index (GDI) re- tages, the strong outsourcing demand in President of Chengdu Tianfu Software port compiled by International Data Chengdu is another important reason Park, one of China’s largest technology Corp. compares 35 cities in the Asia- that the service outsourcing enterprises parks, said. “A large number of global Pacific region as potential offshore establish themselves there. In 2010, IT and outsourcing giants have set up delivery centers, based on a compre- Chengdu signed cooperation agree- companies in our park, of particular hensive set of criteria such as cost of ments with local and foreign service note is that some centers in our park labour, cost of rent, language skills and outsourcing companies valued at 233.7 have developed into the largest IT out- turnover rate. In its March 2011 edi- million Euros, a 99% year-on-year sourcing centers of their groups, such tion, the report highlights Chengdu’s increase. As one of China’s sample cit- as Tieto, a leading IT service company advantages in talent, cost and environ- ies for the service outsourcing industry, headquartered in Finland providing ment. With 51 universities and over Chengdu topped the western China IT and product engineering services. 150 research institutions, Chengdu has region. For the past five years, Chengdu has a rich talent pool. In addition, there is successfully attracted a large number also a relatively low rate of brain drain

26 EURObiz September/October 2011

EURObiz Marketing How Tech Giants Fall (and How to Avoid The Same Fate for Your Company) In what has to be one of the best almost-postmortems of an Internet company ever read, Bloomberg BusinessWeek’s Felix Gillette’s June article on “The Rise and Inglorious Fall of Myspace” offers a set of insights that apply far beyond the doors of the benighted (and recently sold at a 94% write-off) social network pioneer. David Wolf extracts three lessons from it that are particularly germane for companies in China that are either in the Internet business, or who are relying increasingly on the Internet for their marketing and communications.

Perception is Reality believes that alarmist press ended up more things to worry about. And how crippling the company. “The news is Mahalo doing these days, Jason? Despite the huge numbers racked up coverage of teenage engagement on by Weibo and QQ, social networks are Myspace quickly turned to, ‘Oh my If It Does Not Look Broken, You sufficiently new that they are still a little gosh, there are all these bad teenagers Aren’t Looking Hard Enough scary to the average consumer: less so doing bad things and this is crazy!’” than space tourism, perhaps, but more said Boyd. “Quickly, it turned into a big The old expression that “a rising tide so than a trip to the grocery store. Fears narrative about how this was a danger- raises all boats” has an unwritten corol- about privacy, identity theft, stalkers, ous, dangerous place.” lary that applies to fast-growing busi- pedophiles and a host of unseen and nesses: “a rising tide covers all rocks”. unimagined dangers lurk in the subcon- This situation brings to mind an edito- High growth can mask a huge range scious of even the most adventurous rial that serial entrepreneur and Maha- of fundamental problems, and smart user. As willing as they are to flock to lo.com CEO Jason Calacanis wrote in companies like Amazon.com go and something new, they will take flight like 2008, suggesting that Internet startups dig them out even when they aren’t real spooked ducks if their sense of security didn’t need PR people, and that the problems. They understand that failure is credibly threatened, leaving a once- CEO can and should be the PR guy for to do so will only mean problems later, hot network floundering. As Gillette a company. Calacanis pointed out that when the growth slows, the tide goes notes: the CEO is the chief spokesman for a out and the rocks start sticking holes in company with media, bloggers, analysts the boat. One of the reasons social networks are and the general public, presuming of so combustible is that they have proven course that the CEO is not a reclusive Myspace did not. As Shawn Gold, for- to be particularly sensitive to public per- nebbish who gets flop-sweat in front mer head of the company’s marketing ception. In February 2006, Connecticut of reporters, or worse, has a tendency and content efforts, told Gillette, “when Attorney General Richard Blumenthal to run off at the mouth (and there are you’re growing at 300,000 users per announced that he was launching an plenty of both kinds here in China, day it’s hard to imagine that you’re do- investigation into minors’ exposure to among multinationals and state-owned ing anything wrong.” pornography on Myspace. The subse- enterprises alike). quent media frenzy helped establish the In retrospect, that sounds almost de- site’s reputation as a vortex of perver- What the Myspace case suggests, how- lusional, but you have to be in one sion. “If you have a teenager at home, ever, is that somebody on staff or on of these organisations to realize how odds are they’ve visited the blog site retainer needs to be spending his or easy it is to overlook or ignore critical myspace.com”, Hannah Storm warned her days anticipating and addressing problems. Hubris is as easy to catch CBS News viewers in 2006. “And there potential scares and other reputation as a cold when things are really good are fears that this popular social net- busters, because waiting for such things and you are being lionised by media working website and others like it, have to happen and then responding is al- and users alike, and even those im- become places where sexual predators ready too late. As quickly as Myspace mune to the hauteur virus are likely to easily prey on children.” reacted, reaction was not enough and be so wrapped up in just keeping the in a world with five-minute news cycles, wheels on such a fast growing organiza- Researcher Danah Boyd of Microsoft it never will be. Besides, a CEO has far tion that they set “important but non-

28 EURObiz September/October 2011 Marketing EURObiz urgent” problems aside. to comment. in China: anyone charged with your marketing or communications needs to The problem is even more pervasive This might be so much positioning, or be reading, watching, or using the me- in China because so many industries even a bowl of sour grapes given the dia that are important to the company. are enjoying breakneck growth. How rough handling News Corp. dealt to That includes all company executives easy is it to believe that you are doing the MySpace founders when they were who serve as spokespeople. It is not something wrong when yours is the shown the door. Let’s resist the tempta- enough for the company to be on Wei- only geography in the company where tion to get all ad homenim for a mo- bo or Renren: you need to be as well. revenues are growing this quickly…or ment and look at his point. at all? Don’t Go There The owner or executive of a media The solution is for companies to build company has to be in the audience, The history of social media and the organisational debugging into their and for social media he or she has to be Internet is sufficiently short that we culture and allow time and resources to a participant. There is simply no other should be squeezing as many lessons address those issues. Myspace, by the way to understand or manage the busi- as we can out of every case. We will be admission of both Gold and its found- ness. The idea of a newspaper execu- analyzing the Myspace story for years, ers, were more seat-of-the-pants and tive who cannot read or a movie mogul but Gillette gives us an excellent start- they paid for it. who won’t watch films is ludicrous. It ing point. This is a superb article that is the same for online companies and should be mandatory reading for any- Leaders Must Be Users especially social media. one putting their money into an online company, particularly in China, where MySpace co-founder Chris DeWolfe This is particularly relevant for foreign we enjoy a surfeit of engineering talent made a point he felt was critical to the companies setting up online businesses and suffer from a dearth of capable company’s long, slow slide to the mid- in China. Avoid putting someone in managers. dle of the social network pack: charge who is not a user, or, worse, who because of a language or cultural David Wolf is President and CEO of Wolf “After we left, the guys that took over barrier is unable to be a user. The ex- Group Asia, a Beijing-based corporate were never Myspace users”, says De- perience for these companies, not the strategic communications and market- Wolfe, who now runs a startup called content, is everything and if you cannot ing firm, where he advises Chinese, MindJolt. “They didn’t have it in their evaluate the experience you have no American, and European companies in DNA.” According to a source familiar business being in charge. the media, entertainment, internet, and with the sale, DeWolfe is also a finalist telecommunications industries. www. to buy the company. DeWolfe declined But there is a lesson for all businesses siliconhutong.com EURObiz Industry Focus

ICTMerry Zhao, Industry Research Department, ACMRin China China's 12th Five-Year Plan further supports the development of the country's Information and Communications Technology (ICT) Industry. For the first time in almost 20 years, China is experiencing a slowdown in growth in some technology areas, such as total number of users for Internet and mobile devices and in revenue for both fixed-line and mobile communications. Still, the numbers are superlative and China's lead as the world's largest market for many telecom services is unchallenged.

Billion Euro Total Business Volume of Telecommunica- tions Industry, 2006-2010

From 2006 to 2010, the total business volume of telecommunications industry increased at an annualised growth rate of 22.5% to €344.8 billion (see right). Meanwhile, the comprehensive price level of telecommunications kept decreasing, down by 11.7% from 2009.

Data Source: Ministry of Industry and Information Technology, ACMR

Telecommunications Market Breakdown in 2010 Fixed Communications 30.1% With services increasing and prices declining, the primary revenue of the telecommunications industry increased at a much slower rate, to €100.1 billion in 2010. Also the share of mobile communications Mobile Communications use over fixed-line use continues to increase (see left). 69.9%

Data Source: Ministry of Industry and Information Technology, ACMR

Telecommunications User Growth, 2006-2010 1200 1153.4 200 1061.0 981.6 In 2010, the number of telecommunications users in- 912.7 creased to 1.153 billion (see right). Compared with fixed- 900 828.8 165 line growth, the share of mobile phone users remained on the rise, up from 55.6% in 2006 to 74.5% in 2010, which 600 130 is expected to increase further in the future.

300 92.4 95 85.0 83.9 79.3 68.7 0 60 Data Source: Ministry of Industry and Information Technology, ACMR 2006 2007 2008 2009 2010

30 EURObiz September/October 2011 Industry Focus EURObiz

Revenue of Communications Equipment manufacturing in China, 2006-2010 In 2010, the communications equipment manufacturing in Chi- na achieved revenue of €103.0 billion (see left), accounting for 14.9% of the total electronic information industry. Output of China’s mobile phone surpassed 1 billion units, accounting for almost 60% of global output. China has become the main pro- duction power of mobile communication terminal in the world.

Data Source: National Bureau of Statistics, ACMR

Number of Chinese Netizens, 2006-2010 In 2010, the number of Chi- nese Internet users increased by 19% to 457 million (see right), with broadband Internet users accounting for 98.3% of total users, despite a different defintion for broadband speed. 66.2% of Internet users ac- cessed services using a mobile device, with 27.3% of total In- ternet users hailing from rural regions.

Data Source: Ministry of Industry and Information Technology, ACMR

E-commerce Turnover, 2006-2010 E-commerce turnover has experienced dynamic expansion in China (see below). In 2010, online shopping turnover reached €55.7 billion, up 105% from 2009. Online shoppers totaled 161 million, with a utilisation ratio of 35.1% in 2010. As another significant contributor, the market size of mobile payment is also expected to increase substantially to €316.9 million in 2010, with over 150 million users.

All China Marketing Re- search Co. Ltd. (ACMR) is a leading provider of business information and market research, focusing on collecting, study- ing and analyzing data and information on the macro economy, industrial sectors, enterprises and business markets in China. www.acmr.com.cn

Data Source: Ministry of Commerce, ACMR

September/October 2011 EURObiz 31 EURObiz SMEs Opportunities in China’s ICT sector for European SMEs

By Chris Cheung, Market Access Advisor – Business Development, EU SME Centre

A strong base for opportunity all accounts there is room for much business. According to recent statistics more growth. Internet and mobile (2010) from the Ministry of Industry The growth and progress that China’s phone usage penetration rates are at and Information Technology (MIIT) ICT infrastructure has experienced about 30% which is much lower than the Chinese ICT market was valued in recent years is evident from the in Europe where mobile phone pen- at CNY 10.7 trillion (EUR 1.17 tril- great number of internet and mobile etration is now over 100%. lion) while the European Information phone users. Nowhere on the planet Technology Observatory (EITO) are there more internet (457 million) With such a large and growing base reported the comparative European or mobile phone (859 million) users. of users, the Chinese ICT market market as being valued at EUR 704 More impressive though is that by presents a promising prospect for any billion.

Internet Users Mobile Phone Users

500 457 859 900 750 384 633 375 675 298 530 440 450 250 210

137 225 125 0 2006 2007 2008 2009 2010 0 2006 2007 2008 2009 2010 Millions of users

Millions of users Source: MIIT, EU SME Centre Source: MIIT, EU SME Centre

Growth drivers

The ICT sector is a focus area for includes under its wide umbrella At the same time other socio- the Chinese government and has next generation telecommunica- economic factors will combine been highlighted in the 10th, 11th tion networks, next generation with the government’s zest for this and 12th Five-Year Plans as being internet technologies, Internet of industry ensuring the growth in a key enabler to China’s ongoing Things, triple network convergence this sector; these factors include economic progress. (telecom, computer and cable TV a largely untapped rural market, networks), cloud computing, inte- government spending, increased The 12th Five-Year Plan high- grated circuits, new generation dis- adoption of e-commerce and con- lights new-generation informa- plays, high-end software, high end tinuing modernisation in sectors tion technology as the next stage servers and information services. such as education, healthcare and in the evolutionary process and manufacturing.

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K EURObiz SMEs

Highlighted opportunities: soft- websites in China, the most accessible count the following: ware and IT services web development opportunities for European SMEs at first will be with The labour crunch Although, telecoms and hardware the growing number of foreign com- take up the lion’s share of the ICT panies and organisations who have IT staff (e.g. IT engineers and web market, software and IT services recently entered the Chinese market. developers) are becoming increas- are showing the greatest growth and Competition in the web development ingly expensive to hire and difficult to show particular promise for Europe- and design market is getting tougher retain. Job hopping is currently a fact an SMEs. According to the Chinese though and service providers increas- of life in the ICT industry, with some research organisation ACMR, IT ingly have to show strong capabili- industry insiders reporting turnovers training services, support and main- ties in terms of systems integration, of 50% of staff per annum. tenance services, and system integra- database development and design. tion services are already relatively Chinese websites are, in the main, Many IT staff will also have a prefer- mature. In contrast, IT consulting underdeveloped and it will take time ence for working with large multi- services and IT outsourcing services for European SMEs to secure them national corporations, so SMEs will are still in their growth stages. as regular clients. have to underline growth opportunities and corporate values to staff, in “IT and software services should Applications development order to increase their chance of re- be a key target area for European taining them. SMEs in China. Manufacturers have Mobile internet users in China now to be realistic about their chances to exceed 250 million. iPhones and “Hiring staff in China should not be compete here. The tech and software Android phones are flying off the seen as being ‘cheap’. Especially after service areas are generally open but shelves in China’s major cities like the you have factored in the time it takes there are challenges that need to be proverbial hot cakes and hardware to recruit and retain.” Stefano Ron- overcome including language, culture, manufacturers such as Toshiba, Sam- cari, Managing Director, Eggsist (IT IPR protection and the hiring and sung and Great Wall Computer are Consulting, Web and Mobile software retaining of qualified staff.” Duncan pushing tablet PCs after Apple’s iPad. engineering). Clark, Vice Chair of the ICT Work- This has led to great potential in the ing Group of the European Chamber market for applications. Although Developing market of Commerce in China. the current market for applications is small, Chinese consumers who are Although growing quickly, the ICT IT consultancy and outsourcing already used to paying for ringtones market is still in the process of de- sector and for online gaming are likely to be veloping. On the one hand many a good target market. Chinese organisations (public and Foreign companies are bringing with private) are not yet developed enough them more efficient business prac- Enterprise software to take on the latest ICT solutions tices driven by IT systems that are and on the other hand intangible integrated with their operational pro- Between 2009 and 2013, the fastest- products such as IT consultancy and cesses. These processes are also being growing segment will be data integra- software are not viewed as being as implemented in China and this has tion and data quality tools, with a value adding as in the West. Time is brought about the need for service CAGR of 32%, although it is grow- therefore needed to convince Chinese providers that can develop and inte- ing from a small base. According to buyers of the benefits of many ICT grate databases and IT systems (e.g. the IT research and advisory com- services and software products and to ERP and CRM systems). pany Gartner, Chinese enterprises overcome price sensitivity in the mar- are catching up in terms of adoption The banking and health sectors are ket. seeing particular drives to upgrade of these tools, resulting in the fast their systems and are therefore a growth of this market. IPR good potential source of opportunity. Opportunities may also be more eas- The market access challenge China’s IPR environment is still a ily accessible in China’s second and challenge for any business operating third tier cities where quality service Of course, there will be a number of in the market. EU SMEs in the ICT providers are hard to find. challenges that European SMEs will industry looking to sell or export ICT need to consider when approaching products to China should be wary of Web development the market. On top of the language the high risk of IPR infringement in and cultural issues that will have to be China and the difficulty in enforcing Although there are about 1.9 million overcome, SMEs should take into ac- these rights.

34 EURObiz September/October 2011 SMEs EURObiz

China ICT Market 2010 The best plan of attack - be spe- European customers. Consequently, cific, go local we work closely with each customer to fully understand their individual IT Services The Chinese market should be on needs. Where appropriate, we can Software 4% the radar of any European ICT then tailor systems specifically for the 8% SME looking to internationalise. To Chinese market – rather than relying increase chances of success, products on a generic solution.” John Davies, should be developed to fulfil a very Managing Director – TDSI (Access specific market need; for example, control specialists), in the UKTI re- accounting software for the finance port - Software Industries in China. industry, patient records systems for Hardware Hardware Telecom hospitals or specialised software for The EU SME Centre 50% 50% 37% data entry. European SMEs should Telcom also gauge the potential in regional The newly established EU SME Cen- 37% cities, where larger players have yet to tre in Beijing provides a comprehen- engage, and which also offer signifi- sive range of free-of-charge hands- cant markets by any standards. on support services to European Small and Medium-sized Enterprises Total Revenue in USD: 1.6 trillion It goes without saying that you have (SMEs), assisting them to establish, Exchange rate used: USD 1 : RMB 6.6 to be here to provide these services develop and maintain commercial and, apart from the rare case where activities in the Chinese market. Source: MIIT, EU SME Centre an off-the-shelf solution will apply straight away, localisation and tailor- ing of the product should also be The EU SME Centre has recently factored in. Selling to foreign clients published an ICT sector report which at the beginning is the path of least includes information on market size, resistance but the greater prospects key growth drivers, market structure, for long term growth are with the de- distribution channels, opportunities veloping Chinese firms and organisa- and challenges. The report and actions. companying case studies are freely downloadable from the Centre’s “Clearly it’s dangerous to assume that website following registration: www. Chinese clients would want to use our eusmecentre.org.cn. software in exactly the same way as EURObiz IPR Protecting Online IPR in China – Part I Internet usage is booming in China. With more than 420 million netizens, China connects more people to the Internet than any other country. Although the Internet acts as a gateway for European SMEs, it is also an ideal platform for copyright infringers to sell counterfeit products and commit fraud. The Internet provides a low-cost method of reaching consumers around the world without revealing identity or origin of operation, meaning that infringers can operate anonymously.

hy is domain name pro- name registrations, and is seeking to • .cn domain names are very cheap tection so important? sell the domain name to its rightful compared to other top-level domain owner at a high price. While cyber- (TLD) names. Prior to December Companies operating squatting continues to be a frequent 2009, .cn domain names were also Win China face an increasing number occurrence, this is no longer the main relatively easy to register. of online threats such as fraud, coun- motivation for infringers who register terfeit sales, false affiliation, phishing, domain names infringing on third • .cn is divided into 34 regional TLDs slamming and traffic diversion. parties. such as bj.cn for Beijing and sh.cn for Shanghai and uses both Latin and These threats may at best lead to con- In recent years, monetisation of Chinese Characters. sumer confusion or lost web traffic, domain names has become more but could also result in lost E-mails, common. Typically, this is register- • The Internet is booming in China lost business, and in some cases, law- ing domain names with misspellings, – spending on online advertising is suits from consumers against (genu- or typographical errors of famous increasing annually. ine) IPR holders. In general, various brands or company names. The reg- online criminal activities may lead istrant or the domainer benefits from In addition to the threat of “typos- to brand dilution, increased risks, the traffic generated when people quatting”, domainers also use fraudu- loss of business and an eventual loss mistype a Uniform Resource Loca- lent, counterfeit websites that may be of reputation (and ultimately profit). tor (URL, or web address) into a using .cn domain names, as well as The omnipresent nature of the Inter- browser. If an Internet user mistypes websites and E-mail addresses con- net means that even European Union the URL, e.g., www.euroap.eu instead taining someone else’s brand name (EU) SMEs operating exclusively in of www.europa.eu, the user reaches or variations of it. These registrations their home markets cannot ignore the a website where the domainer can of infringing domain names occur in risks these activities may pose to their place a number of sponsored links. If many forms: they may be correctly business, even if these activities origi- the Internet user then clicks on one spelled under a regional suffix, mis- nate in China. of those exposed links, the registrant spelled, and/or registered in Chinese of the domain name receives a por- characters. These factors also make Risks of domain name infringe- tion of the advertising revenue paid it somewhat more complicated for ment by the advertiser. This practice of IPR owners to protect themselves registering domain names with either online in China, compared to other The classic form of domain name legitimate attractive generic domains countries and other top level domain infringement is known as “cyber- or infringing misspellings of brand names. squatting”, which is when a person names has increased to enormous or entity with no legal rights to a proportions, and is a key factor in the Protecting IP assets online to particular domain name consciously massive growth of domain name reg- mitigate the risks (in bad faith) registers a domain istrations globally and in China. name identical or similar to a third- Domain name disputes and other party company name, product name Several factors used to make it easy IPR lawsuits in China can be a costly, or trademark. The cybersquatter and attractive for domainers to reg- time-consuming and complicated is taking advantage of the first-to- ister domain names, both legitimate process. Therefore, it is strongly rec- file principle that applies to domain and illegal, in China: ommended that companies proac-

36 EURObiz September/October 2011 IPR EURObiz tively formulate a defensive domain • The following documents are now domain names on their behalf. You name strategy to prevent problems required: may contact IPR Helpdesk, if inter- from arising in the first place. ested in exploring this possibility. • Application form with business seal When creating and implementing of applicant company As of now, CNNIC has not given any an IPR protection strategy in China, indication that it will require existing online brand protection is just as • Copy of business certificate in Chi- .cn domain name registrants from important as protecting trademarks, na (plus a ‘Certificate of Organisation Europe or other foreign countries to patents and copyrights. It is essential Code’) retroactively submit required valida- to protect company names, prod- tion documents. However, foreign uct names, services and trademarks • Copy of identification of registrant companies are strongly recommended through domain name registrations contact person in China (must be to ask their current registrar to moni- under the Chinese top-level domain PRC national) tor any .cn regulation developments .cn. In addition, from the summer as CNNIC may require a transfer of 2010, China began to offer a new All the documents must be submitted of domain name ownership from a Chinese top level domain name “.中 within five days of the electronic ap- foreign company to a Chinese com- 国”, which means “.china”. plication; otherwise the application pany in the future. During 2010 CN- will automatically be void and the NIC has requested all registrants, via Prior to December 2009, the .cn entire process must be restarted. Sub- email, to confirm that their registrant domain name had a fully automated mitting originals is not required, nor (WHOIS) data are correct. registration process that barely re- are copies of trademark certificates quired any validation of registration to prove a prior right to the requested Despite the fact that CNNIC now data. The Chinese domain name domain name. only allows Chinese entities to regis- registry, China Internet Network ter .cn domain names, domain names Information Centre (CNNIC) recog- Unlike trademark registrations where registered to foreign entities prior to nised the resulting issues and in an ef- there is a period of three months December 2009 have not yet been de- fort to curb the number of bad faith when third parties may object to the leted. It is important that the registrar registrations, set stricter requirements application of a certain trademark, closely monitors for any policy up- for registering .cn domain names in .cn domain names are registered dates from CNNIC in this regard. To order to ensure the authenticity, ac- within a few weeks without any oppo- be certain not to lose a .cn domain, curacy and integrity of the domain sition period. it can be recommended to transfer name registration information. It the ownership of.cn domain names to also introduced a number of control It is currently uncertain if and when daughter companies in China. mechanisms for the .cn domain name CNNIC will allow foreign-owned en- space. It is now possible to file a com- terprises without a Chinese subsidiary Thus in an attempt to make the .cn plaint against an infringing domain to register .cn domain names again. It name space clean from fake regis- name registrant by contacting CN- has stopped accepting domain name trants, and websites containing ille- NIC via online form (or by fax or a applications from foreign companies gitimate content, specifically porno- 24-hour hotline). These complaints since mid-January 2010 and has graphic content, CNNIC´s increased can be against domain names that explained it is looking for a way to controls and stricter requirements are older than two years, which is the validate foreign company certificates have resulted in the deletion and non- time limit for filing a domain name and the identity of a foreign contact renewal of as many as 9 million .cn dispute at one of the two appointed person. domain names. Whereas CNNIC domain name arbitration centres reported 14 million active .cn domain (Beijing and Hong Kong). These new restrictions are both good names in the autumn of 2009, in Jan- news and bad news for European uary 2011 this number has decreased Restricted Domain Name Re- SMEs. On one hand, the new re- to 4.6 million active domain names. quirements quirements now make cybersquatting more difficult. Unfortunately, the Part two of this article will appear in As of 14 December 2009, domain registration and operation of a .cn the November issue of EURObiz. name registrations require the follow- domain name is now a much more ing: troublesome and expensive process for European SMEs. However, it is If you have further questions about for- • Only Chinese companies may regis- still possible to register .cn domain mulating a tailored IP protection strat- ter .cn domain names. Foreign com- name using a European registrar, as egy for your business or creative work, panies may register for a .cn domain long as the Chinese subsidiary is the please direct to enquiries@china-iprhe- lpdesk.eu. Your enquiry will be treated name only if they have majority own- registrant. Where there is no Chinese with the strictest confidence and will be ership of a Chinese subsidiary. How- subsidiary, foreign companies may answered within seven working days by ever, the Chinese subsidiary must be want to consider using a trustee or one of our China IP experts. the registrant and the contact person “local presence” service such as a must be a Chinese national. Chinese law firm to register Chinese

September/October 2011 EURObiz 37 EURObiz Position Paper The European Business in China Position Paper 2011/2012

On 8th September, the European Chamber launched the 12th edition of the European Business in China Position Paper 2011/2012. This annual publication has grown in importance and stature to become a vital contribution from private business to the development of China and EU-China relations. Tony Robinson and Alexandra Quie explain its significance.

The Position Paper is the product of six However, despite some encouraging The Travel Working Group has recom- months’ consultation through the Euro- statements and developments, Eu- mended for eight years that foreign tour pean Chamber’s Working Group net- ropean companies continue to face operators should be allowed to operate work. This involves hundreds of com- challenges to both enter and operate outbound travel services from within panies and individuals from European in China’s market due to unequal im- China and in 2011 the China National businesses operating all over China, plementation of the law, and the laws Tourism Administration issued licences with the result being over 600 recom- themselves. As China becomes increas- to three foreign joint venture (JV) mendations to various levels of the ingly globally integrated, the European tour operators to do this under a pilot Chinese Government that are intended Chamber strongly encourages both scheme. to serve as a source of constructive and Europe and China to resist any forms valuable input for China’s future devel- of race-to-the-bottom protectionism However, despite progress, it is clear opment. and to contribute to open markets in that numerous barriers remain. In early the spirit of mutual benefit. 2011 the European Chamber’s mem- European Business Can Con- bers gave their opinions on the current tribute Towards the Goals of the Progress Made, Barriers Remain business environment for foreign enter- 12th Five-Year Plan prises in China in the Business Confidence Included in the Executive Summary Survey. The results showed that 43% As China looks to rebalance its of the Position Paper is a table of 10 ex- of members felt that over the past two economy, new drivers of growth are amples of positive developments that years government policies have become needed to replace older ones, and in occurred in areas such as transparency, more discriminatory, and 46% feel that this regard further market opening and IPR, tax, environment, legislation, this trend will continue over the next the development of the private sector standards and industry specific market two years. These figures are actually an present a formidable opportunity. The access. All of these examples came increase from 2010. stated goals of the 12th Five-Year Plan about in the past 12 months and cor- include industrial upgrades, develop- respond to recommendations made in Recommendations to Chinese ing services, encouraging innovation previous editions of the Position Paper, Policy Makers and green development. These targets for example: match the strengths and practical ex- The Position Paper includes 33 Work- perience of European companies in It was announced as part of the 12th ing Group papers that are industry or management know-how, service provi- Five-Year Plan that Business Tax issue-specific and seven city papers for sion and green and advanced technol- would be replaced with a Service Value areas where the European Chamber ogy. As long as there is a level playing Added Tax by 2013. This had been has established chapters. Many of the field for enterprises both domestic and recommended by the Finance & Taxa- recommendations in these papers can foreign, state-owned and private alike, tion Working Group of the European be grouped into the several main cat- European companies can and would Chamber in the previous two years and egories below: want to continue to play an important is a welcome development. role in China’s development plans. • Increase Market Access

38 EURObiz September/October 2011 Position Paper EURObiz

Long-standing market access barriers Transparency and predictability in rule- problems arose merely because of a persist for foreign companies wishing making is essential for a stable business lack of coordination on the timing of to operate in China. Such barriers can environment in a modern economy. the releases. come in many forms, such as licens- Consultations with affected players ing, standardisation, claims of national and reasonable grace periods to adjust • Encourage Innovation through security, unequal access to subsidies, ahead of significant changes enable IPR Protection straightforward ownership restrictions companies to plan their business devel- and wholly protected sectors. opment. A defined target of the 12th Five-Year Plan is to reach 3.3 patents for every Given that Chinese companies are in- Of the 67 Chinese government calls 10,000 people and it is predicted that creasingly acquiring foreign companies for comment on draft legislation that the annual number of patent registra- abroad, it seems anachronistic that the European Chamber responded to tions in China should reach two million foreign companies can still not even op- in 2010 and the first half of 2011, the by 2015. This would make China, on erate in some sectors in China let alone average length of time given for com- paper, the most innovative country in acquire another company. For example, ment was just 21 days, with the longest the world. foreign firms are de facto obstructed being 91 days and the shortest just eight from operating in the basic telecoms days. In contrast, within the European In order to support this goal, the service sector; and in many financial Commission the best practice is to al- government has taken a number of services sectors foreign companies can low eight weeks for the collection of re- measures including subsidies and tax only enter the Chinese market by being sponses to written public consultations. breaks for companies, and benefits for part of a JV with a domestic partner. While the number of consultations in individuals, for the filing of patents. China has improved in the past five However, this innovation-by-numbers More worryingly, additional barriers years the length of time allowed seem- approach has led to a race for quantity have been included in the recently ingly has not. of registered rights rather than an im- released revised draft Catalogue of provement of the quality of inventions. Industries for Guiding Foreign Invest- An example raised in the Position Paper ment. For example, it indicates that for- that illustrates this is the new Social IPR protection in China remains an eign investors will now be limited to a Insurance Law. This came into effect ongoing concern of European Cham- maximum 50% stake in JVs producing on 1st July 2011 with significant con- ber member companies. Innovation components for new-energy vehicles. fusion about the inclusion of foreign cannot thrive without the protection of individuals working in China in the the IP created in the process. Market access is also limited in terms scheme. The Ministry of Human Re- of foreign companies being able to sources and Social Security initiated a The Presentation of the Position obtain licences. For example, in order consultation on the relevant guidelines Paper to obtain a licence to carry out design but began this only two weeks before services in the construction sector, it the start date of the law with only eight Once the Position Paper has been pub- is necessary to provide a portfolio of days allowed for comments. Even in lished it needs to be read and utilised by projects undertaken in China, but it is the months after the 1st July start date, the right people in the right places. Last impossible to develop a portfolio with- no clarification had been forthcoming year the Position Paper was presented out a licence. To obtain a licence for from the relevant authorities. hundreds of times to Chinese and Eu- construction services, contractors are ropean officials. At the highest level, subject to high capital requirements • Improve Regulatory Efficiency this includes the most senior figures and foreign-invested construction com- in bodies such as the China Banking panies are restricted to foreign-invested European Chamber members report Regulatory Commission and the State projects or special projects. that the lack of coordination between Intellectual Property Office, as well as different regulators is a significant ob- the President of the European Council In April 2011, the European Chamber stacle to doing business in China. This and the majority of EU Commission- released its Public Procurement in China is an issue that impacts the operations ers. Study, which examined how a market of both foreign and domestic enter- that can be estimated to represent as prises in China alike. All members of the European Cham- much as 20% of China’s economy is ber will receive a hard copy of the Posi- de facto out of bounds for foreign com- For example, in the first half of 2010, tion Paper by post, and it will be available panies. In contrast, Chinese companies European banks reported substan- to download for free by all from our are generally free to bid in EU procure- tial operational problems due to two website (www.europeanchamber.com. ment markets -- which are globally the regulatory instructions from different cn) as of 8th September. most open -- and are increasingly doing authorities: the People’s Bank of China so. relating to loan-growth quotas; and the For additional copies in English or China Banking Regulatory Commis- Chinese, please contact Vicky Dong, • Enhance Transparency & Pre- sion on Entrustment Payments require- [email protected], or dictability in Legislation ments. Both bodies were operating with (010) 6462 2066 ext. 37. the same goal (curbing inflation) but

September/October 2011 EURObiz 39 EURObiz Construction

Serving China’s Greying Population

China’s senior population will reach 248 million by 2020, with more than 30 million above the age of 80. In China, elderly care services are supplied by both public and private/NGO nursing homes, community elderly services and general household vendors, with premium elderly homes emerging as a new service segment. Serving China’s growth in elderly population promises to be a very attractive proposition in the coming years, write Michel Brekelmans and Helen Chen.

China’s rapidly growing elderly over age 60 reached 167 million, rep- on average, which means the senior population, increasing healthcare resenting one-fifth of the total senior population will reach 248 million by standards and increasing wealth of its population in the world. In some 2020. This number is equivalent to households provide business opportu- urban areas of medium to large Chi- the current total population of Ger- nities for elderly services from the pri- nese cities, the percentage of senior many, France and the United King- vate sector. In this article we explore citizens among the total population dom combined. Moreover, the popu- the commercial opportunities ema- has already exceeded 20%. The main lation of senior people above age 80 nating from these trends. Is China drivers of the greying population will reach 30 million, representing ready to adopt Western-style elderly are the longevity of Chinese people around 12% of the total senior popu- care services? What are the business (with average life expectancies of well lation. models that will be successful? over 70 years) and the continued im- provement of the healthcare system, Meanwhile, urbanisation continues Socioeconomics Drive the Grey- coupled with decreasing birth rates to be a key focus of the government’s ing of the Population as a result of the one-child policy and 12th Five-Year Plan, recently rati- changing lifestyles of the younger fied in March 2011 and the urban Chinese society has been aging swiftly generations who marry later. population is expected to surpass the since 1999 and is one of the earliest rural population for the first time in nations among developing countries During the coming decade, this speed 2013. In addition, we are seeing a to face such a social challenge. By the of population aging will accelerate, steady growth of household income end of 2009, the number of seniors adding 8 million seniors each year in China. In 2005, only 10% of all

40 EURObiz September/October 2011 A EURObiz Special Issue: The EU-China Business Summit 2011 “Cooperation on a New Level: Innovation, Industry and Investment” 25th October, 2011 Tianjin Held annually and alternating in Europe and China, this year's EU-China Summit will be hosted in Tianjin. To highlight this top-level event, EURObiz will be presenting a special issue dedicated to the Summit, its key speakers, themes and host city. Topics include: The EU-China Summit: A History Special Focus: Industrial Upgrading Tianjin City Spotlight Special Focus: Investment in Tianjin Conference Agenda, Logistics and Speaker Profiles Special Focus: SMEs and Institutional Support

A limited number of advertising opportunities for this special issue, along with sponsorship for the Summit, is available for top- level European and Chinese companies. For more information, please contact: Fernando Cutanda Betty Yin Member & Relationship Sponsorship Manager Advertising and Sponsorship Coordinator Tel: +86 (10) 6462 2066 ext. 31 Tel: +86 (10) 6462 2066 ext. 23 [email protected] [email protected] EURObiz Construction households had an annual income of • Nursing homes include those for above 10,000 Euros, while in 2009 seniors living in external elderly nurs- Elderly educational service: An- the percentage has reached 18% and ing homes operated by government other example is in the area of train- is expected to reach 50% by 2020. or private companies. China Welfare ing and education. As people enter- Furthermore, older people are typi- Institute Rest Home in Shanghai ing the senior ranks with increasing cally more responsible financially and is an example. They usually only levels of education and wealth, they many are without debt. It is not un- provide basic nursing services, and want to remain connected and active common for them to own residences the price is not high (approximately by learning new skills and getting to in downtown urban areas, which 1,000 yuan or per month) even by know other people with similar inter- have enjoyed significant appreciation Chinese income standards. There ests. The demand for elderly training in value, particularly for those in first- were around 40,000 nursing homes services is potentially huge although and second-tier cities. in 2007. Nursing homes operated by there are very few dedicated elderly the government have a significant training courses at present in a way This aging of the population is plac- advantage because land, the largest that we see in Western countries and ing enormous pressure on the govern- cost item in this low- to mid-end seg- other Asian markets. For example, ment in terms of enhancing the so- ment, is not an issue. The market for there are elderly training gardens in cial security system and adjusting the nursing homes operated by private Japan that are used to teach elderly industry structure and consumption companies is fragmented and most people how to cultivate plants while structure to be more focused on proof them are currently believed not to they relax in the gardens. viding care for elderly people. In the profitable. 12th five-year plan, the government • Wheelchairs: Taking a very dif- makes an explicit point to respond to • Premium elderly homes include ferent angle, in addition to providing the aging population by encouraging for the homes of seniors who pur- services there are also new markets the development of an elderly care chased or rent elderly apartments, liv- opening up for companies providing industry around nursing homes and ing in communities and being taken specialist products targeted at the other elderly-focused service provid- care by service vendors. An example elderly population. There are an es- ers. Furthermore, the plan also urges is Sun City in Beijing. Most of the timated 60 million disabled people in for the expansion of basic pension premium elderly homes provide high- China, most of whom are seniors. As coverage by 100 million people by standard-of-living facilities with high- they realize the convenience of high- 2015. quality medical and nursing services, end electric wheelchairs, the demand entertainment and sport facilities, and is increasing rapidly. Existing and Emerging Service tourism plans. Some even offer resi- Models dence swap programs between cities. • Elderly apparel: Research has shown that the total demand of elder- In Western markets, various busi- BEYOND THE NURSING HOME ly apparel will exceed 1 billion suits ness models exist to serve the needs Besides elderly care services, there are per year in the coming years. Howev- of elderly citizens. The spectrum of several other products and services er, less than 10% of retail shelf space accommodation for care models for that are geared towards the seniors in department stores is dedicated for older people is wide and driven by and that could be attractive business elderly people while more than 70% their health, lifestyle and economic opportunities. These opportunities is for young people. status. are wide and varied as the examples below show: Serving China’s growth in elderly In China, elderly care services are population promises to be a very at- supplied by both public and private/ • Elderly tourism service: Ac- tractive proposition in the coming non-governmental organisation nurs- cording to research conducted by years. Many products and services are ing homes, community elderly ser- the China Elderly Committee, the still in the early stages of adoption, vices and general household vendors, percentage of elderly tourists among and now is the time for companies with premium elderly homes emerg- all tourists in China exceeded 20% with a long-term vision to establish ing as a new service segment. in 2009. By contrast, in developed their brands and build their foothold. countries, more than 60% of all • Community elderly service tourists are elderly tourists. Statistics includes services for seniors living in also showed that 70% of the elderly Michel Brekelmans (m.brekelmans@ their own homes, but using commu- people wish to travel and 17% of lek.com) and Helen Chen (h.chen@ nity resources, such as dining rooms, them are wealthy people. Demand for lek.com) are both directors and part- and who are partly taken care of by elderly tourism is typically counter- ners based in Shanghai for L.E.K. their communities. An example is seasonal because elderly people’s time Consulting Ltd., a global strategy Haishu community in Ningbo, Zhe- is more flexible this makes them an jiang province. There are around attractive proposition to the tour- consulting firm serving financial in- 8,000 community service centers of ism industry that often faces a severe vestors and leading aged-care and this type in China. utilisation trough outside the holiday geriatrics providers in Europe, the periods. United States and Asia Pacific.

42 EURObiz September/October 2011

EURObiz City Focus Shenyang: Gateway to China’s Northeast In the second of our series on cities and regions where the European Chamber serves its members, we look at business opportunities in Shenyang. EURObiz's Tony Brooks reports on a manufacturing base that has traditionally seen itself as the gateway to northeast China.

During the Maoist era, Shenyang because of the frank admission that Shenyang has increasingly focused on was one of the most developed cities “northeast China was falling behind its core strength: heavy manufactur- in the People’s Republic of China, coastal and western areas in its pur- ing. thanks to assistance from the Soviet suit of a moderately well-off society Union in the form of engineers, (xiaokang shehui)”. The crux of the plan Heavy Industry Rules advisors and factory blueprints. was to breathe new life into Shenyang Unfortunately, after the Sino-Soviet and other northeast cities through re- According to the 2010 Shenyang split in 1960, the Russians withdrew form of the state sector, which as late Yearbook, over the past decade the en masse, taking their plans with as 2003 accounted for over half of size of the service sector (as a propor- them. As a result, Shenyang became Shenyang’s GDP. tion of the city’s economy) dropped something of an industrial backwa- from 54% to 45%. This decline was ter, such that after 1978 (the start of This project to reinvigorate the offset by an almost equal rise in the the reform era) foreign investment northeast was highly ambitious, fund- size of the manufacturing sector, a generally headed for China’s coastal ing over 320 projects between 2003 whopping 73% of which was classed regions instead. and 2007 across a wide range of in- as “heavy industrial.” In other words, dustries, ranging from petrochemicals despite the best efforts of the local Plans to Rejuvenate Shenyang and shipping, to agricultural products government, tertiary industry has and mining. In 2008 the National De- been eclipsed by State-Owned Enter- In October 2003 the Chinese Com- velopment and Reform Commission prises (SOEs) and private companies munist Party (CCP) Central Com- (NDRC) took over responsibility for focusing on heavy manufacturing. mittee issued a planning document developing the “greater northeast” entitled “Some suggestions concern- (now to include Inner Mongolia), Some of the biggest SOEs in the ing the implementation of strategic with funding last year of 36 billion country are now found in Shenyang, measures to rejuvenate northeast yuan on 343 projects. It is precisely covering industries ranging from ma- China and other old heavy industrial because of these central government chinery (tools), transport (airplanes, areas.” The initiative was needed initiatives that over the past decade automobiles) and electrical equipment

44 EURObiz September/October 2011 City Focus EURObiz

(power grids), to smelting/pressing home around 1,500 RMB per month. (steel) and agricultural food process- Many economists think of northeast The winters in Shenyang are long ing. Cash injections from central gov- China as a natural, self-contained and cold with temperatures dropping ernment have ensured that currently market. The Han majority across as low as -30C, which drives up the only around 10% of these heavy the region have their own distinctive cost of doing business because of the manufacturing SOEs lose money. Put cuisine, customs, accent and char- need to heat factories and workshops. differently, while Shenyang may not acter. The area’s homogeneity has However, many local residents (and be attracting large numbers of knowl- meant that local companies who best northern Europeans) think that Shen- edge economy start-ups, it is now an understand northeast culture (and yang’s climate is much more bearable industrial powerhouse producing 20 the demands of the consumers there) than the tropical south, because of its times the amount of Shenyang beer, have thrived in its three provinces four distinct seasons. 18 times the number of tyres and 600 of Liaoning, Jilin and Heilongjiang, times the number of cars that it did whereas those that don’t have strug- The city is becoming an increasingly in 1978. gled to gain a foothold at all. attractive place to live, not just because of the outstanding restaurants Foreign Enterprises Infrastructure and quality international schools, but also because municipal officials As a city which styles itself as the As befits a regional gateway, Shen- are making concerted efforts to clean “homeland of machinery,” it is not yang is well-connected to the rest of up the environment. For example, surprising that many of the Foreign- the country. The city has northeast in 2009 over 20 of the heaviest pol- Invested Enterprises (FIEs) in Shen- China’s largest airport, and there are luting factories were ordered to shut yang are manufacturers, including currently 36 trains per day to Beijing down and “drastic” environmental Michelin, BASF, Leitz, Braun and and 45 per day to Harbin. As part measures were taken at further 36 Bayerische Motoren Werke AG. De- of central government plans to turn companies. All over the city sewerage spite the growing number of FIEs in Shenyang into a logistics hub, a new treatment plants are now being built, the city, utilised foreign investment rail link to Beijing via Inner Mongolia as are large numbers of low-sulphur has fluctuated wildly over the past 15 is under construction, and the Har- emission central heating plants. years, perhaps because small numbers bin to Dalian (via Shenyang) bullet of very large projects have tended to train line will be virtually complete, Conclusion distort the overall upward trend in cutting journey times by two-thirds. investment. In recent years, foreign Less reported but just as important In terms of GDP growth and other companies established in Shenyang is the port of Yingkou to the south development indicators, Shenyang have been broadly satisfied with the of Shenyang, which is being rapidly lags behind many east coast and west- way they are treated by local officials, expanded to cope with an anticipated ern cities. As a result, some Chinese although some have found that prom- growth in trade. One of Yingkou’s jokingly refer to the city as the capital ised benefits fail to materialise, or that main attractions is that it is an ice-free of China’s “rust belt” full of bloated dealing with the municipal govern- port, situated just far enough south to SOEs making products no one wants. ment is overly bureaucratic. be kept operational throughout the Yet this picture is grossly unfair, winter without the use of icebreakers. because the government has been Shenyang’s Place in the Region working hard to recapitalise loss- Putting a Face to the Statistics making enterprises, reduce industrial In terms of commerce and trade, it unrest, attract foreign investment and makes sense to think of Shenyang Many Chinese cities look very simi- build a first-class infrastructure, while as a “gateway” to northeast China, lar to one another, which makes it cleaning up the environment to boot. a largely untapped region with great hard to get a sense of what a place Shenyang has focused on its core business potential. However, both is like just from visiting a few gleam- strength – manufacturing – and as a domestic giants and Multi-National ing new industrial parks. In terms of result it has built up a critical mass of Corporations (MNCs) have found it raw statistics Shenyang has a large both domestic and foreign expertise difficult to break into this market, not but slightly shrinking population of in this area. The city certainly has only because of local protectionism, 7.1m, with (in 2009) a net outflow of much potential, and is one to watch but also because they have continu- about 100 people per day. A decade over the coming decade. ally overestimated demand and un- ago Shenyang ranked as China’s sixth derestimated competition. Shenyang, largest urban area, but according like other big northeast cities, is still to the 2010 census the city has now Tony Brooks is currently a PhD dominated by heavy industry and slipped to 12th place, behind rapidly candidate at the University of has been slow to reform both the growing coastal cities such as Dong- Cambridge. For more informa- economy and SOEs. As a result, the guan and Tianjin. Shenyang has the tion on Chinese government relations or investing in China please people there are still struggling with nation’s 17th largest economy, placing contact Tony at [email protected]. remnants of the command economy it ahead of over 500 other Chinese www.ames.cam.ac.uk/deas/graduates/ and have been slow to reap the ben- cities. Wages are extremely competi- tony-brooks.html efits of reform. tive, with the average worker taking

September/October 2011 EURObiz 45 Event information is subject to change. For full details, EURObiz Events please visit our website: www.europeanchamber.com.cn/view/events September Study: 1000 Chinese Leaders (Characteristics, SOEs vs. MNCs, and Tue th European Business in China 2011/2012 vs. other countries), Shanghai 8 Position Paper Launch Kempinski Hotel, Beijing AsiaMould 2011 Guangzhou Int’l Mould & Die Exhibition European Business in China 2011/2012 Poly World Trade Center Expo (Pazhou) Position Paper Launch Guangzhou Westin Bund Centre, Shanghai Thu nd All-Chamber Networking, Beijing Fri th Chinadialogue 22 9 Business and Environmental Risk Hilton Hotel, Beijing Full Day Nordic Park/Geely Site Visit Shanghai

Aerospace Networking Afternoon GM Briefing: Doing safe business in China European Chamber Shanghai Office Tianjin Renaissance Lakeview Hotel

Tue th European Business in China Position 13 Paper 2011/2012 Launch The 8th China International SME Fair The Garden Hotel, Guangzhou 2011 (CISMEF 2011) Area A, China Import and Export Fair Complex,No.382 Yuejiangzhong Road Guangzhou European Business in China Position Paper 2011/2012 Launch Shenzhen Sat th Beach Cleaning Day 24 Dameisha Beach, Shenzhen Thu th Healthcare & Pharmaceutical 15 Conference Shanghai Tue 27th Insight China, Beijing Suzhou InterChamber Mixer Intercontinental Hotel, Suzhou Fri th “The Internet of Things” 28 The Capital Club, Beijing European Business in China Position Paper 2011/2012 Launch October Harbor View Hotel, Zhuhai Thu 13th Risks Inherent in the Chinese Thu th China-Europe People-to-People Economy, Shanghai -Sat 15 | Dialogue on Friendship and Cooperation across Space and Time Fri th th Renaissance Lakeview Tianjin European Food & Beverage 17 14 Celebration Evening The St. Regis, Tianjin Fri th European Wine Dinner Series VII 16 Goga on the Hai, Shanghai Tue th EU-China Summit 2011 25 Tianjin Fri th Young Professional Networking 17 Tianjin World Finance Center, Tianjin Ongoing 2011 Photo Contest Tianjin Tue th Social Insurance Progress Report 20 Shanghai

Wed st European Chamber M&A Conference 21 Beijing

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19260 BB Anz. Image China-Because Every Deal en 154x108.indd 1 08.04.11 15:41 EURObiz Special Event 7th European Chamber HR Conference 2011/2012 – Beating Limitations

Building on the successful HR Confer- Directors alongside the premier Euro- ences of 2005-2010, the European pean expertise for which the conference Union Chamber of Commerce in has become renowned. China’s Shanghai Chapter is delighted to be holding its annual 7th HR Con- During the conference attendees will ference on 25th November, 2011 at have the opportunity to learn more The Longemont, Shanghai. This full- about the many services offered by our day conference provides attendees with sponsors. This event has a reputation an unparalleled opportunity to obtain for receiving a large turn out of HR insights on the main HR challenges for directors, HR managers and industry companies doing business in China for professionals at the full day event. this year and beyond.

The European Chamber HR Confer- Tickets are now on sale for just 1000 ence has evolved into one of the pre- RMB (Member Price) and 1500 RMB mier gatherings of industry decision- (Non-Member Price). makers and HR professionals. This has given the HR Conference an unrivalled For ticketing sales, sponsorship opportunities or more information please scope of both high-level insight and contact Lawrence Fu at lfu@european- practical application. chamber.com.cn / 021 6385 2023 +111. Carrying the title “Beating Limita- tions”, this year’s conference will carry an enhanced format drawing input from leading Chinese CEOs and HR

48 EURObiz September/October 2011 Special Event EURObiz European Chamber M&A Conference – Beijing

Following the success of a similar tivities have to consider a variety of in China and at home. event in Shanghai in June, the Euro- aspects including not only environ- pean Chamber is delighted to host a mental incentives, legal frameworks Confirmed speakers include Hans- half-day conference on Wednesday, and deal-structuring, but also due Rolf Huppert, SVP, Mergers & Ac- 21st September from 8:00 am to diligence, human capital and cultural quisitions, Siemens; Warren Hua, 12:00 pm in Beijing, where a diverse integration. Partner, Gide Loyrette Nouel; and range of experts, including Chinese Olaf Schick, Head of Mergers & Ac- and European industry decision- Especially important are new devel- qusitions Asia, Daimler AG. makers, will provide a comprehen- opments such as a Supreme People’s sive, practical perspective in the field Court’s draft concerning the Anti- of Mergers and Acquisitions (M&As) Monopoly Law, the recent National For ticketing sales, sponsorship op- in China. Security Review, and the booming portunities or more information please number of Chinese companies’ ac- contact Penny Zhang at pzhang@euro- Companies engaging with M&A acquisitions of foreign companies both peanchamber.com.cn / 010 6462 2066 ext. 59.

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• Beijing: +86 (10) 6462 2066 • Chengdu: +86 (28) 8529 3447 • Guangzhou: +86 (20) 3801 0269 • • Nanjing: +86 (25) 8362 7330 • Shanghai: +86 (21) 6385 2023 • Shenyang: +86 (24) 2334 2428 • • Shenzhen: +86 (755) 8632 9042 • Tianjin: +86 (22) 2374 1122 •

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September/October 2011 EURObiz 51 EURObiz Events Gallery

EUROPEAN CHAMBER EVENTS GALLERY

BEIJING

1 2 3

1.Members of the European Cham- Vice President Jens Ruebbert, 14th 4. Former European Chamber ber’s Advisory Council join Euro- July. President Jacques de Boisséson pean Commissioner for Trade Karel (left) shakes hands with European De Gucht (fourth from right) for a 3. European Commissioner for Commissioner for Trade Karel De dinner in Beijing during the Com- Trade Karel De Gucht (center) Gucht during the Commissioner’s missioner’s visit to China, 14th July. shares a lighter moment with visit to Beijing, 14th July. Claudio Facchin, president of ABB 2. European Commissioner for North Asia and China (left) and Jo- Trade Karel De Gucht (right) con- erg Wuttke, Chief Representative of verses with European Chamber BASF China and former President of the European Chamber.

4 NANJING

1 2 1. On 7th July, 2011, the European Chamber delegation met with Deputy Director-General of Jiangsu Foreign Affairs 2. On 1st July, 2011, Automotive Workshop was held with Office Mr. Zhang Lirong to present the Business Confidence Survey 2011. Among the main topics discussed during the the topics on New Energy Vehicle. More than 20 member meeting were the new Social Insurance Law and power shortages in Jiangsu province. companies participated in the event.

PEARL RIVER DELTA

1 2 3

1. Guangzhou, 21st July, 2011, Madam Ma, former Vice 2. Guangzhou, 27th July, 2011, the Head of the Delegation 3. Guangzhou, 8th August. The European Chamber del- Minister of MOFCOM hosted China Investment Climate of the European Union to China, Mr. Markus Ederer and the egation led by PRD Chairman, Mr. Holger Kunz, met with Roundtable Meeting in Ritz Calrton Guangzhou. The pur- Ambassador of Poland to China, Mr. Tadeusz Chomicki, vis- China Entry-Exit Inspection and Quarantine Bureau of pose of the meeting was to exchange views on the invest- ited Guangzhou and met with the European Chamber, PRD Guangdong Province. ment climate and policies of China. Chapter board members.

52 EURObiz September/October 2011 Events Gallery EURObiz

4 5

4. On 13th July, in Foshan, the PRD Chapter organised an 5. On 11th August in Foshan, the chapter organised a Speed Meeting for Business Professionals, where people can di- Asytec Factory Tour for European SME members. rectly connect with new friends and business professionals quickly in an entertaining and fun environment.

SHANGHAI

1 3

1, 2. Half-day Outbound Conference on 7th July. Speakers included Mr. Fu’An Kong from 4. European Chamber Wine Dinner “The Sunshine of France” on 8th July, which took SCOFCOM as well as experts from European companies alongside Chinese companies place at the fine dining restaurant Maison Pourcel. Fosun, Huawei and Junyao.

3. HR for R&D seminar on 5th July, part of the HR Luncheon Series. Featured speakers included Dr. Piet Derks from Philips Lighting, Naihu Li from Alstom Grid China Technol- ogy and Dr. Xiao Chaodong from Akzo Nobel.

TIANJIN

1 2 3 1. ICE Exhibition at the Tianjin Astor 3. GM Briefing: Latest Trend of Em- and solutions in regards to labor Hotel. ployment Market in Tianjin on 13th relations on June 17th: July: 2. ICE Exhibition in Wellington Inter- More than 80 HR leaders from national School: Monthly networking for GMs and top member companies participated Exhibition “ICE, Journey to the Land executives on policy updating and this one whole day training program of Icebergs”- roadshow in various experience sharing. supported by AXA-Minmetals Assur- member companies from May until ance. September. 4. HR Training: Risk management 4

September/October 2011 EURObiz 53 EURObiz Chamber Board

EXECUTIVE COMMITTEE OF THE EUROPEAN CHAMBER

President Vice-President Vice-President Vice-President Vice-President Treasurer Co-opted Davide Cucino Mei-Wei Cheng Piter de Jong Miroslav Kolesar Jens Ruebbert Andreas Feege Board Member Ansaldo STS Siemens Ltd., China ING Bank Czech PPF Deutsche Bank KPMG Jacques de Boisséson Beijing Ltd. Total China

States States States Observer Representative Representative Representative Marianne Gumælius Jens Eskelund François Issard Eduardo Morcillo EU Delegation in Maersk China Total China Investment InterChina China E&P Ventures CHENGDU BOARD

Chairman Vice-Chairman Jan Scheidgen Wayne Tan Dieter Changmin Wang Paul Sives Adam McWhirter FAW-Volkswagen KPMG Vanonckelen Siemens Ltd., Proton Maxxelli Maxxelli Real China Chongqing Estate

NANJING BOARD

Chairman Carlo D’Andrea Li Dongjie Gerhard Roeck Wilhelm Helmut Guesten Picozzi & Morigi Lufthansa BSH Hummerjohann EMZ BASF-YPC

PEARL RIVER DELTA BOARD

Chairman Vice Chairman Benoit Stos Jeremy Sargent Nong Ke Qiang Romain Lochen Susanne Zhang Holger Kunz Alberto Vettoretti Mazars JSA Guangzhou Siemens Ltd., Viaplast Pongratz TÜV Rheinland Dezan Shira & Office China Raiffeisen Zentralbank Group Associates Osterreich AG Zhuhai Representative Office

54 EURObiz September/October 2011 Chamber Board EURObiz

SHANGHAI BOARD

Chairman Charles-Edouard Piet Derks Martin Kraemer Thierry Laurent Marco Marazzi Valerie Tang Piter de Jong Bouee Philips Lanxess Roquette Baker & McKenzie Barco ING Bank Roland Berger Strategy Consultants SHENYANG BOARD

Chairman George Van Xiaobai Wang Heiko Schaefer Flor Knudt Gary Scheide Oosten Siemens Ltd., Jinbei Johnson BMW Michelin Sheraton Hotel China Controls

TIANJIN BOARD

Chairman Hermann Georg Gabriele Castaldi Gilles Ivan Salamin Eric Bouteiller Kleinod HTP (Tianjin) Desesquelles Alcan (Tianjin) Ipsen Siemens Ltd., Construction Airbus (Tianjin) China Material Co. Ltd

EUROPEAN CHAMBER OFFICE TEAM

Chengdu Office Nanjing Office Pearl River Delta Shanghai Office Shenyang Office Tianjin Office General Manager: General Manager: Office General Manager: General Manager: General Manager: Yue Zhou Patricia Enzmann General Manager: Ioana Kraft Sierra Wang Kitty Wang Francine Hadjisotiriou

Secretary General: Dirk Moens

September/October 2011 EURObiz 55 THE ADVISORY COUNCIL OF THE EUROPEAN CHAMBER The European Union Chamber of Commerce in China is driven and funded by its members. The 26 members of the Advisory Council are particularly active in representing and advising the Chamber, and make an enhanced contribution to the Chamber’s funding.

56 EURObiz September/October 2011

EURObiz The Executive Interview THE EXECUTIVE INTERVIEW: DUNCAN CLARK

Duncan Clark, Chairman of BDA (China) Limited and Vice-Chairman of the European Chamber's ICT Working Group. A pioneer in China's telecommunications industry, he co-founded his consulting and investment firm in 1994. Mr. Clark also serves as the Chairman of the British Chamber of Commerce in China.

What don’t most people outside You’ve witnessed China’s trans- Innovation in China today remains Towards a safer world. of China know about its techno- formation into a tech giant first- principally incremental – tweaking or logical development, especially hand. What has been the biggest combining existing business models. in regards to Information and surprise for you? However policy makers have focused Communications Technology on state-driven efforts to fast-forward (ICT)? The growth in China’s e-commerce radical innovation, the ‘Eureka!’ style market. In the first dotcom boom, of breakthrough that is more inven- Recent headlines about fake Apple problems with online payments, con- tion than innovation. For example stores in Kunming have shown that sumer trust and logistics all seemed TD-SCDMA - a ‘made in China’ Chinese consumers are now able to like pretty intractable obstacles. standard for 3G – is one example. afford legitimate and pricey consumer Today, buying online in China is an This has proven to be an expensive electronics. easier and faster experience than in distraction. Now however we see a the West, this has happened quickly. healthier, more pragmatic approach China’s vibrant online content mar- The number of jobs created for small to innovation emerging in China. TD ket is less visible to outside observers. business owners is something we is likely to play a viable role in global Yet so much of what is happening could all learn from. 4G deployments thanks to efforts to online today is driven by the diversity make it a mainstream component of of Chinese voices online, and the As Vice-Chair of the European LTE. improbable achievements of Chinese Chamber’s ICT Working Group, entrepreneurs who are catering to what are some of the policy chal- Given its huge number of Inter- them. lenges facing European technol- net and mobile users, China’s ogy businesses in China? large ICT user base should also Global market Global company Sites such as Sina’s Weibo, Tencent’s mean lots of opportunity. Where QQ and Alibaba’s Taobao offer fea- European companies and investors do you see those in the next Ansaldo STS, a Finmeccanica group company , is leader in the field of railway and urban transport tures or services that are increasingly would benefit from greater market three to five years? technology. The company operates through two business units, Transportation Solutions and Signalling, on a par with or even superior to access. In our Working Group, we those of their Western counterparts. aim to maintain a healthy dialogue The real opportunity in the future lies in designing, producing and managing rail and signalling systems. with the relevant Chinese officials in the fact that users will increasingly Where is European industry’s over key areas of interest to Euro- be using smartphones and tablets, Ansaldo STS with more than 4,300 employees in 28 countries incorporates the know-how, excellence niche in China’s technology mar- pean interests, in areas such as stand- accessing broadband connections at and technological expertise of leading companies that have operated on international markets. ket? ards, intellectual property and policy home and on the move. This vital improvements to facilitate a free flow link between connectivity and con- As value in the ICT industry shifts of services and capital. The chal- sumption is where the real opportu- from hardware to content, Europe lenges remain great, but we need the nity lies in future, not the connectivity needs to raise its game to ensure that engagement of companies sharing per se. Mediating these transactions, investors, entrepreneurs and estab- specific cases to let us know how we whether through selling devices, apps lished players at home can play a vital can try to help. or storefronts, is where the greatest role in China tomorrow. Europe has opportunity lies. tended to focus on traditional export We hear a lot about China em- www.ansaldo-sts.com markets, but many of these will see phasising innovation, but where sluggish growth for years to come. are we really seeing it in ICT?

58 EURObiz September/October 2011 Towards a safer world.

Global market Global company

Ansaldo STS, a Finmeccanica group company , is leader in the field of railway and urban transport technology. The company operates through two business units, Transportation Solutions and Signalling, in designing, producing and managing rail and signalling systems.

Ansaldo STS with more than 4,300 employees in 28 countries incorporates the know-how, excellence and technological expertise of leading companies that have operated on international markets.

www.ansaldo-sts.com 2011-旧版芬航SPA广告新图-英文竖版-Eurobiz-210x285.pdf 1 11-2-17 下午4:19

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