Some discussion points “Foreign Multinationals in China: Learning to Adapt to NewRealities”

Introduction

China CEOs of foreign companies are under severe time constraints. According to a recent research*, forty percent said they don’t have time to respond quickly enough to the rapid changes in the China market, and another 40 percent admit that they are hard pressed to do so.

Two challenges that China CEOs say demand large amounts of their time are hitting the numbers while they cope with the downturn in demand, as well as building their local teams. Another major issue is managing headquarters, including explaining the unique Chinese context to senior management there. About 40 percent of their time, they are dealing with headquarters. Even locally focused China CEOs spend about 20 percent of their time at or speaking with the global HQ.

Most China CEOs have direct line control over go-to-market and support functions, such as branding and corporate affairs, but limited direct line reporting in upstream areas like product development, operations, and supply-chain management. Less than 50 percent can make decisions about pricing and product strategy independently of headquarters. Among those with integrated control over country operations and commercial results, most must still involve HQ in overall China strategy, long-term multiyear plans, and annual budgeting (source: W. Baan and Ch. Thomas, How China country heads are coping, in: McKinsey Quarterly, October 2015).

The above analysis shows important challenges, but we think, out of our broad experiences in China, that the smart companies actually reverse the dynamics by giving more authority to local product development and marketing, while keeping their global CEO directly involved with government relations and other relationship issues.

During the discussion in our Horasis dialogue session on October 23, 2015, we discussed the following.

A. Experiences of corporate executives

  1. Many foreign investors – including US investors – continue to view China as an attractive market. However, they are looking for more and better guidance on how best to access the market and better manage risk as China’s economy continues to grow and mature, now frequently referred to as the “new normal”.
  2. Some “friends of China with over twenty five years experiences working on investment and other bilateral issues impacting US-China”, they continue to see opportunities for Chinese investment in the US and Latin American markets. But some China experts also feel we could be at the beginning of greater challenges and risk for Chinese investment driven primarily by changing political attitudes in these markets.
  3. One obvious thing to follow is the US Presidential election campaign. US foreign policy will be debated, which will likely include discussion on appropriate responses to what will likely be described as the “China Challenge.” While it is not clear at this time, we should assume that unlike the past elections in recent years, there could be a a residual impact from these public discussions, where the US public and their political representatives begin to see China as a competitor rather than a partner. Similar to US companies needing to make further adjustments to their strategies to succeed in the “new” China, Chinese companies may have to adjust their strategic approach to the US and the European market.
  4. China should also consider a renewed effort to build new networks of relationships in the US and Europe to create better understanding and more support for productive bilateral relations. Similar to China, but not often fully appreciated, the US market places great value on relationship building, as well.
  5. Anti-corruption governance rules encourage Chinese parent companies to look for more suppliers. An opportunity for foreign companies has arisen. The fact that Chinese companies should look for alternative suppliers, because they are under pressure of new corporate governance regulations, provides a market chance. The more alternative qualified suppliers Chinese parent companies can have, the better. This opens markets for foreign US and European companies.

B. How can foreign investment tap into China’s economic potential?

  1.  Nothing symbolizes China’s drive to be a dominant player in innovation and technology more than its huge investments in science and technology parks and the search of Chinese companies for new technologies. Technology transfer between Chinese and European organizations has become more important.
  2. In order to get most benefits from the intensified cooperation with China, it is key to aim high by not focus on small projects but instead, to aim for larger, value adding, and contributing projects.
  3. For foreign small and medium size companies it is important to make use of the fact that China has become the world’s largest and most dynamic e-commerce market. This phenomenon has become an opportunity for foreign companies to expand faster in the Chinese market.
  4. Foreign companies are now able to sell their European brand products in a more efficient way than before. Of course, being successful requires understanding and embracing its unique digital landscape and consumers. Need to know more about your potential customers? Brand owners and retailers can uncover consumer insights by collaborating with digital-platform businesses in China.
  5. Working with China’s e-commerce providers to co-develop consumer insights can benefit brand owners, retailers, and platform companies—and help strengthen a company’s relationship with China’s e-commerce players beyond being purely transactional.

C. How is doing business in China different in terms of risks?

  1. Labour issues: rising labour costs, increasing labour activism, shrinking labour force and aging society, skills mismatch between education/training and market demand;
  2. Corruption: risk of firms losing out on account of corruption, or becoming embroiled in anti-corruption efforts?
  3. Regulators: populist backlash against foreign firms; discriminatory treatment? The importance of a removal of limitations to foreign investors – including joint-venture requirements;
  4. Transparency of corporate governance, financial sources and transactions of foreign investors – a key issue, especially in light of increasing public attention given to large scale investments.
  5. Economic trajectory: can growth be sustained now that the current growth model, led by investment and exports, has reached its limit? Is the political system capable of executing the reforms now necessary?

Contact details Jan Siemons:

Dr. Jan Siemons, President SILC GLOBAL,

E-mail: jan.siemons@silcglobal.com

Mobile: +31(0)652659062

ECFA Chinese Nieuwjaarsviering

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ECFA organiseert de Chinese Nieuwjaarsviering in Amsterdam op 11 februari van 18.00-21.00u in Sea Palace t.o.het Centraal Station.

Wij hopen dat u wilt delen in de feestvreugde en aanwezig kunt zijn op genoemde datum en tijdstip in Sea Palace in Amsterdam. Het programma ziet er als volgt uit:

  1. 18.00u Welkom ( door de voorzitter van de ECFA) met koffie en Leeuwendans
  2. 18.15u Toespraak Voorzitter Chinese Ondernemersvereniging Amsterdam
  3. 1830u Toespraak van de Ambassadeur van China de heer CHEN XU
  4. 18.45u Uitleg van de Chinese dierenriem en het jaar van de AAP door Lulu Wang
  5. 19.00u Diner
  6. 20.00u Netwerken
  7. Sluiting 21.00u

Leiders China en Taiwan schudden elkaar de hand

Onder het toeziend oog van honderden journalisten schudde de Chinese president Xi Jinping zaterdag de hand van zijn Taiwanese ambtgenoot Ma Ying-jeou.

Het is voor het eerst sinds het einde van de Chinese burgeroorlog in 1949 dat leiders van de twee landen elkaar ontmoeten.

Het Chinese persbureau Xinhua spreekt van een historische ontmoeting, die plaatsheeft in het Shangri-La Hotel in Singapore.

‘Familie’

Xi zei na de handdruk dat het Chinese volk aan beide kanten van de Straat van Taiwan, de zeestraat tussen Taiwan en China, het vermogen en de wijsheid heeft om eigen problemen op te lossen. “Geen kracht kan ons uit elkaar halen, we zijn een familie”, aldus Xi.

Ma reageerde door te zeggen dat hij erop uit was vrede te bevorderen en dat de relatie tussen Taiwan en China moet zijn gebaseerd op eerlijkheid, wijsheid en geduld. “Beide kanten moeten elkaars waarden en manieren van leven respecteren.”

Veiligheid

Op een persconferentie zei Ma dat hij hoopte dat China vreedzaam kan meedenken aan oplossingen voor problemen tussen de twee landen. Het volk van Taiwan is volgens de leider het meest bezorgd over veiligheid en waardigheid.

Zowel Taiwan als China maakt zich zorgen over veiligheid. Zhang Zhijun van het Chinese overheidsorgaan voor betrekkingen met Taiwan zei dat strijders die de onafhankelijkheid van Taiwan nastreven de grootste bedreiging zijn voor de vrede tussen de twee landen.

De Taiwanese leider vroeg Xi nog eens goed te kijken naar de plaatsing van raketten in China. Volgens Xi hebben die niets met de betrekkingen met Taiwan te maken.

Nationalisten

De moeizame relatie begon na de Chinese burgeroorlog. Chinese nationalisten weken in de laatste fase van die strijd uit naar Taiwan toen de communisten de overhand kregen in China.

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China’s e-commerce opportunities are hard to ignore

Every European or US company that has high-quality products and clear brands, should have a go at entering the Chinese e-commerce arena. The potential of e-commerce in China is immense and still growing at high pace, says Jacco Bouw, CEO and founder of email marketing specialist Webpower.

Bouw addressed an audience of Club China members at the recently held KLM Open pro golf tournament in Zandvoort, The Netherlands. Founded in 1999, Webpower has 250 employees in nine offices in five countries; the enterprise has a large market presence in China, where it supports a large number of international and Chinese companies in enhancing the performance of their e-commerce activities.

Opportunities

China is offering wonderful e-commerce opportunities for international companies, Jacco Bouw insists. The numbers are impressive. China still is the world’s fastest growing major economy, with yearly growth rates of over 7 percent over the past 30 years. It is also the world’s fastest growing consumer market. Bouw: “And we should not forget: it is also the second largest importer of goods, with a market where online trade has been booming since 2010. I dare to say that the development of e-commerce has reached much further in China than in Europe and the US.”

‘Singles Day’

Bouw refers to ‘Singles Day’ in China – also known as 11/11, a popular event that, in recent years, caused a major sales boom in e-commerce. Every year ‘Singles Day’ breaks new sales records. In 2014, e-commerce giant Alibaba reported more than $9 billion in sales on this day, illustrating the buying power of the Chinese consumer and the importance of the event in the retail calendar.

The buying power of the Chinese middle and upper class consumer should not be underestimated, Jacco Bouw adds. A great example of this is the sales of apartments in a newly finished complex near the offices of Web Power in Shanghai. “All 790 apartments were sold in just one week. Please be aware that the cheapest was $ 900.000, the most expensive one was € 4.7 million. This says a lot, not only about the buying power, but also about the perceived crisis in China. It is just not happening.”

Dozens of channels

“The one thing that every business should be aware of is that China does not just offer one channel, there are dozens of suitable channels. The one that is relatively unknown outside China is WeChat, a mobile messaging app that offers quite a large number of bonuses. Every Chinese that has his bank account linked to – or credit added to – his WeChat account can practically buy anything he wants and pay any bill on this mobile phone app. I envy the Chinese, because only residents with a Chinese passport or identity card can enjoy the full benefits of this app that currently already has 600 million users. Having a WeChat store is one of the options that businesses wishing to enter the market should consider”, Bouw insists.

Western brands

One of the most important things that entrepreneurs should be aware of, says Bouw, is the popularity of western brands and the simple fact that their products are manufactured in the west. He refers to the preference of his Webpower staff in China – they prefer the Audi A5 over de A4 or even the A6, because the A4 and A6 are produced in China and the A5 in Europe.

Three-hour delivery

There are a lot of other channels to choose from, besides WeChat. The best-known is Alibaba’s – relatively high-cost – offering of TMall, but there is also JD and others. “Anything that you can think of is sold via these platforms. I even found a wedding dress vendor, that delivers just in days. Speaking of delivery: it is not uncommon for Shanghai commuters to buy a pair of shoes from a large display in the underground station. Just choose a pair that you like, aim your camera for the QR-code of the shoes, select your size, complete payment while you are on your way to the office. A prepare for delivery within of your shoes within three hours at the office!”

Try new products

One more learning from Webpower’s expertise and Jacco Bouw’s personal experience: the Chinese consumer is eager to try new product and trust new brands. “The are more adaptable to changes. They are also increasingly prepared to pay for value, safety and wellness.”

The numbers are awe-inspiring. There are 1.3 billion people in China, 642,000 of them are internet users. 530,000 of them are mobile internet users. In China, 330,000 people shop online on a regular base, 300,000 shop online. Bouw: “The sheer numbers speak for themselves. This is a market. Your product will not sell by itself, but the opportunity is hard to ignore.”

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Chinese taal- en cultuurkalender Mei Tian

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Intertaal is een webshop die diverse boeken verkoopt gerelateerd aan het leren van buitenlandse talen. De uitgeverij van Intertaal brengt daarnaast een aantal eigen producten op de markt. Een van die producten is de Mĕi Tiān, een scheurkalender over Chinese Taal en Cultuur. De bedoeling van de kalender is dat je elke dag iets leert over de Chinese cultuur, karakters en dagelijks taalgebruik. Ideaal voor wie op reis gaat naar China of voor wie iets meer wil weten over China.

De Mĕi Tiān scheurkalender is vooral voor mensen die nog weinig tot niets over China weten een erg leuk product, maar voor iemand die al wat meer over China weet, zal het weinig nieuws te bieden hebben.  De kalender kost €18,95.

Xi and Cameron meeting steers Sino-British relations

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On October 21, Chinese President Xi Jinping held bilateral talks with British Prime Minister David Cameron at 10 Downing Street, marking the highlight of Xi’s UK visit.

The two leaders discussed major issues of substance, which had also occurred during their Beijing meeting in December 2013 and the Hague meeting in Netherlands, March 25, 2014.

They had an in-depth exchange of views on international and regional issues of common concern to enhance mutual trust and consensus. They outlined plans to open a golden era for Sino-British relations.

China and the UK are permanent members of the United Nations Security Council. As two major economies in the world, both play irreplaceable roles in international and regional affairs.

In recent years, the British government led by David Cameron has stood by positive and pragmatic diplomacy with Beijing. They welcome the rise of China.

Cameron has pledged that the UK will act as the strongest supporter for China in the Western world.

The second decade of Sino-British comprehensive strategic partnership is entering an essential moment. Chinese and British leaders should adapt to the times, work together to plan for bilateral pragmatic cooperation.

People are convinced that the Xi and Cameron meeting is very significant, which will lay a foundation to build better bilateral relations. The golden era of Sino-British relations will have a splendid future.

Source: http://iosnews.chinadaily.com.cn/newsdata/news//201510/22/345941/article.html

25 gardens listed as ‘historical gardens’, Summer Palace included

The Beijing Horticulture Greening Bureau announced 6th August 2015 that 25 parks and gardens, including the Summer Palace and Beihai Park, are among the first batch to be inscribed on the “historical gardens” list.

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The concept of “historical gardens” refers to those gardens and parks located within Beijing’s jurisdiction that carry distinctive historical and cultural values and more importantly, played a pivotal role in the development of Beijing’s urban landscape or cultural progression in a given historical period or in a particular area of Beijing. Gardens built upon heritage sites also are included in the list.

Beijing has a great number of world-class cultural relics. Why is it still necessary to set a “historical gardens” list? It can better promote Beijing’s role as a historical city, the greening bureau said. Some of the gardens on the list were built on historical remains, so protecting them can help keep the unique architectural style and cultural features of those gardens, which is conducive to building an urban green system that is rich in historical and cultural treasures.

Related regulations will be made to enforce the full protection of the listed gardens, the differentiation of ordinary and historical gardens in terms of management can better protect Beijing’s historical and cultural heritage.

A full list of the 25 “historical gardens”:

  • The Summer Palace
  • Beihai Park
  • Jingshan Park
  • Tiantan Park
  • Xiangshan Park
  • The Old Summer Palace
  • Beijing Working People’s Culture Palace
  • Ritan Park
  • Yuetan Park
  • Ditan Park
  • Zhongshan Park
  • Eight Sites Park
  • Garden of Palace of Peace and Longevity
  • Imperial Garden of the Forbidden City
  • Prince Gong’s Residence Garden
  • Prince of Chun’s Residence Garden
  • Shuchun Garden
  • Beijing Zoo
  • Beijing Botanical Garden
  • Lianhuachi Park
  • Shichahai Park
  • Taoranting Park
  • Yuyuantan Park
  • Zizhuyuan Park