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EURObiz

Journal of the European Union Chamber of Commerce in China

www.europeanchamber.com.cnMarch/April 2012

Full Coverage:

The 7th EU-China

Business Summit

URBANISATIONThe Cost of Managing Waste

AUTOMOBILES

Morgan Motors Rolls into ChinaINTELLECTUAL PROPERTY RIGHTS

Protection for the Textile Industry

CERTIFICATIONLocal Players Enter the Testing Market

THE EXECUTIVE INTERVIEWJens EskelundMaersk China

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Rethink Tomorrow

Helping biofuel move ahead

Moving ahead in the fuel ethanol industry means that we mustnot only optimize the first-generation, starch-based processesused today; we must also prepare for the next generation ofbiofuels based on cellulosic biomass. For many years, enzymeshave been providing a big helping hand in streamlining biofuel

production.

www.bioenergy.novozymes.comwww.bioenergy.novozymes.com.cn

14:100085:+86 10 6298 7888:+86 10 6898 1283

As a pioneer and leader in the bioenergy industry, Novozymes offers a broad portfolio of robust, high-yielding enzymes for all areas of biofuel production

that are second to none in terms of performance, quality, and reliability.Novozymes China Headquarters 14 Xinxi Road, Shangdi Zone, Haidian District, Beijing 100085 Phone:+86 10 6298 7888 Fax:+86 10 6898 1283

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In 2010 alone, the power saved by our installed base of drives cut global

CO2emissions by 220 million tons. This intelligent motor control system that

adjusts the speed and reduces the amount of energy used by motor-driven

equipment is just one of many ABB power and automation solutions to

manage energy consumption efficiently, reduce carbon emissions and bring

savings to our customers.

www.abb.com.cn/betterworld

Cut CO2 emissions by 220 million tons a year?

Absolutely.

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BUSINESS FEATURES

EU-CHINA BUSINESSSUMMIT INTERVIEWSInterviews with leading European

Business executives on the state of

the EU-China relationship today.

24JORGEN BUHLRASMUSSENCarlsberg

26FERNANDO CALVOCovex Pharmaceuticals28ENRICO LODICRIF

30STEPHEN

DOBOCZSKYDSM Sinochem Pharmaceuticals

32RAPHAELSCHOENTGENGDF Suez

34MICHAELCHRISTIANSENNovozymes (China)

36PATRICK GAONACHSchneider Electric

12EUROPEAN CHAMBERLOBBYING REPORTA summary of recentlobbying activities.

23GALA BALLJo in the European Chamber sShanghai Chapter for its annual Gala

Ball on 12th May.

COVER STORY

14A HISTORIC EVENT:THE 7TH EU-CHINABUSINESS SUMMIT

Convening for the seventh time innine years, the EU-China BusinessSummit brought together politicalleaders, captains of industry, top ex-ecutives, key regulators to discuss andstrengthen one of the worlds mostimportant business relationships.

17WORKSHOPS:INVESTMENT, SME,URBANISATION

Three workshops at the EU-ChinaBusiness Summit highlighted both the

issues and opportunities facing thetwo sides.

20IMAGES: THE EU-CHINA BUSINESSSUMMITA full day of workshops, a plenarysession and speeches by the Euro-pean Union and China's top politicalleaders highlighted the 7th EU-ChinaBusiness Summit.

TABLE OF CONTENTS

14 3917

43CERTIFICATIONShenzhen-based CTI is leading local

rms in the standards andcompliance testing and

certication market.

46IPRIntellectual property rights protec-tion for the textile industry, part 1.

49URBANISATIONWaste is about to get a monetary

value in Beijing and cities where pi-lot projects are being implemented.

58THE EXECUTIVEINTERVIEWJens Eskelund

Managing Director

Maersk China Ltd.

REGULARS

11PRESIDENTS

FOREWORD

22CALENDAR

52EVENTS GALLERY

54CHAMBER BOARD

56ADVISORY COUNCIL

On the coverChina's Premier WenJiab ao (l eft ) andEuropean CommissionPresident Jose ManuelBarroso shake hands atth e EU- Chi na Bus in essSummit in Beijing, 14thFebruary, 2012.

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The Executive Interview EURObiz

EURObizJournal of the European Union Chamber of Commerce in China

www.europeanchamber.com.cn

BeijingBeijing Lufthansa Center,

Office C412,50 Liangmaqiao Road,

Beijing, 100125, P.R. China

C-412Tel: +86 (10) 6462 2066Fax: +86 (10) 6462 2067

[email protected]

Chengdu04-A, F16, Tower 1, Central

Plaza, No.8 ShunChengAvenue, Jinjiang District,

Chengdu8

11604-ATel: +86 (28) 6155 7184Fax: +86 (28) 6155 7194

[email protected]

Guangzhou -Pearl River Delta (PRD)Unit 2817, 28/F, Tower A,

China Shine Plaza,No.9 Linhe Xi Road,

Tianhe District,Guangzhou, 510613,

P.R.China9

A2817Tel: +86 (20) 3801 0269Fax: +86 (20) 3801 0275prd@europeanchamber.

com.cnShenzhen -

Pearl River Delta (PRD)Rm 308, 3/F ChineseOverseas Scholars

Venture Bld,South District, Shenzhen

Hi-tech Industry Park,Shenzhen, 518057,

P.R. China3308

Tel: +86 (755) 8632 9042Fax: +86 (755) 8632 9785prd@europeanchamber.

com.cn

NanjingZhujiang No.1 Building,

30/F, E11 Zhujiang Road,

Nanjing, 210008, P.R.China1

130E1Tel: +86 (25) 8362 7330 /

8362 7331Fax: +86 (25) 8362 7332

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ShenyangRoom 20-10.

Office Tower 1, ShenyangRich Gate Plaza,

No. 7-1 Tuanjie Road,Shenhe District

Shenyang 110001,P.R. China

7-1

20-10Tel: +86 (24) 2334 2428Fax: +86 (24) 2334 2428

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TianjinMagnetic Plaza, Building 17,

Room 15A17,Junction of Binshui West& Shuishang East Road,

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1715A17Tel: +86 (22) 2374 1122Fax: +86 (22) 2374 1122

[email protected]

EURObiz is published bimonthly by

the European Union Chamber of

Commerce in China, and is distrib-

uted free to all Chamber members.

All material is copyright2011 by

the European Union Chamber of

Commerce in China. No part of

this publication may be reproduced

without the publishers prior

permission. While every effort has

been made to ensure accuracy, the

publisher is not responsible for any

errors. Views expressed are not

necessarily those of the European

Union Chamber of Commerce in

China.

Chief EditorSteven Schwankert

Art DirectorVincent Ding

Publications ManagerVicky Dong

Marketing &Communications Manager

Jessica Schroeder

For European Chamber

Membership andAdvertising inEURObiz:

Member Relations &Sponsorship ManagerFernando Cutanda

Tel: +86 (10) 6462 2066ext. 31

Fax: +86 (10) 6462 2067fcutanda@

europeanchamber.com.cn

Advertising &Sponsorship Coordinator

Betty YinTel: +86 (10) 6462 2066

ext. 23byin@europeanchamber.

com.cn

JOIN THE EUROPEANBUSINESS CONVERSATION

IN CHINAAdvertise in EURObiz

Reach 24,000 senior Europeanand Chinese business

executives, governmentofficials and

over 1,600member companiesof the EU Chamber nationwide

with the only publicationdedicated to covering

European business in China.

To place your ad,please contact:

Fernando CutandaMember Relations & Sponsorship Manager

Tel: +86 (10) 6462 2066 ext. [email protected]

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Tel: +86 (10) 6462 2066 ext. [email protected]

European Chamber Chapters:

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EUROPEAN CHAMBERLOBBYING HIGHLIGHTS

Position Paper Presentation Meeting withthe Vice Commissioner of the GeneralAdministration of Customs, Sun Yibiao

Roundtable Meeting with the Vice Minister of the State Administration of Industry andCommerce, Liu Yuting

Meeting with the Vice Minister of Commerce, Wang Chao

Dinner with the Commissioner of the European Commission Directorate General forTrade, Karel De Gucht

On 18th January, 2012, a European Chamber delegationled by President Davide Cucino met with Sun Yibiao,Vice Commissioner of the General Administrationof Customs, to present the Position Paper. During themeeting, Chairs of the European Chambers Logistics,

Energy, Maritime Transport and Aerospace WorkingGroups, as well as the Vice Chair of the Lighting Group,raised various issues with Vice Commissioner Sun anda number of his Director-Generals who also joined themeeting. These issues included manual changes of cargomanifests, containers with abandoned goods and relatedcustoms procedures, the issuance of oil import licenses,the repair turnaround time for aircraft components andthe storage of aviation parts in bonded warehouses, aswell as HS codes for lighting products. Vice CommissionerSun and the Director Generals gave direct and concreteanswers to many of the issues, recognised the need forfurther internal discussions on some issues and strongly

encouraged all parties present to continue the dialogue inworking level meetings.

On 12th December, 2011, Miroslav Kolesar, VicePresident of the European Chamber, led a delegation ofEuropean Chamber representatives to meet with StateAdministration of Industry and Commerce (SAIC) ViceMinister, Liu Yuting at the 7th annual meeting between

SAIC and Chambers of Commerce. The EuropeanChamber representatives raised various concerns andlistened to Vice Minister Liu explain how suggestionsgiven at the 6th annual meeting had been addressed overthe course of the last year.

On 15th December, 2011, in Ningbo, Zhejiang Province,the Chair and Vice Chair of the European ChambersAuto Components Working Group met with Wang Chao,Vice Minister of the Ministry of Commerce. This was

the second meeting with the MOFCOM InvestmentDirectorate and it focused on the rights of innovators inthe context of the inclusion of patents within nationalstandards.

On 13th February, a day prior to the EU-China Politicaland Business Summits, Commissioner De Gucht andDirector General Demarty of DG Trade joined theEuropean Chamber President, Davide Cucino, Vice

Presidents, Miroslav Kolesar and Jens Ruebbert, and 12

representatives of the European Chambers AdvisoryCouncil to discuss recent developments in the Chinesemarketplace and to listen to concerns from industry.

European Chamber President Davide Cucino presented the Position Paperto Sun Yibiao, Vice Commissioner of the General Administration of Customs.

12 EURObiz March/April 2012

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Meeting and Breakfast Seminar with the Commissioner of the European DirectorateGeneral for Internal Market and Services, Michel Barnier

Other Lobby Highlights

On 17th January, at the start of Commissioner for InternalMarket and Services, Michel Barniers visit to China,

a meeting was held with a number of representativesof the European Chamber, including President DavideCucino. The meeting, which was held just prior to abreakfast seminar organised by the European Chamber

for Commissioner Barnier to speak to European Chambermembers, allowed the European Chamber to brief the

Commissioner on the main issues affecting Europeanbanks and consumer nance.

Over the last two months, the European Chambersubmitted 13 comments on Chinese regulation to theChinese government, and held 16 meetings with Chinesegovernment officials. The Chamber has also met 25times with officials from the European Commission and

European Member States. To promote an aligned messageto the European Union Member States, the EuropeanChamber has been honoured to hold 16 meetings withAmbassadors to promote the Position Paper. Recentmeetings include with Their Excellences, the Ambassadorsof Finland, the Czech Republic, Luxembourg, Romaniaand Estonia.

At the central level of the Chinese government, recentmeetings include with the Director of the New Energyand Renewable Energy Division at the National EnergyAdministration, as well as with the Director of theNational Policy & Compliance Division of the NDRCs

Department of Climate Change to discuss issues relatingto renewable energy and to low carbon development,respectively. The European Chamber also met withthe Director of the Cooperative Finance SupervisionDepartment of the China Banking RegulatoryCommission who visited the Chamber to speak at aWorking Group meeting on recent policy developmentsin the rural financing and the status of rural creditcooperatives. The Chamber was also contacted by theState Food and Drug Administration for a meeting withthe Director General of the Health, Food and CosmeticsSupervision Department to solicit input from industry onthe draft re-classication rules for cosmetics.

The European Chamber has also conducted a numberof meetings at local levels of Chinese government. InShanghai, two meetings were held with both the ShanghaiArbitration Committee and two meetings were also heldwith the Shanghai Food and Drug Administration, bothtimes to discuss cosmetics related issues, including onledger management and adverse-effect surveillance. On17th February, the Shanghai Chapter of the EuropeanChamber was also delighted to host the Deputy Directorof the Foreign Investment Management Division of theShanghai Commission of Commerce, who delivered apresentation on the recently released Foreign InvestmentCatalogue. In Beijing, two meetings were held with

the Beijing Administration of Taxation; firstly with the

Director General, followed by a more focused meetingwith the Deputy Director of the International TaxationAdministration Division to discuss issues related to thelegal framework governing representative offices ofinsurance providers.

The European Chambers PRD Chapter signed aMemorandum of Understanding with the Bureau ofForeign Trade and Economic Cooperation of GuangzhouMunicipality (BOFTEC). In the agreement, BOFTECagreed to communicate the key messages of the EuropeanChambers Position Paper among Guangzhou municipalgovernment ofces and institutions. Also in the PRD, theEuropean Chamber met with the Director of Energy andCircular Economy of Shenzhens municipal Developmentand Reform Commission to discuss policies regardingthe low carbon economy and the establishment of anemission trading scheme in Shenzhen. The European

Chamber also met with another municipal Developmentand Reform Commission, this time in Chengdu, wherethe Vice Inspector and Director of Regional EconomicCooperation shared information with Chamber memberson the latest policies and strategies for Chengdus futureeconomic development.

The European Chamber has also been involved in a num-

ber of events in recent months. These include the confer-

ence on low carbon best practices for standards and certi-

cation, which was organized by the Standardisation and

Conformity Assessment Working Group of the European

Chamber and which invited speakers from government

bodies including the China National Institute of Stand-ardisation and the China Quality Certification Centre,

alongside European speakers from both the Chamber and

from European Standardisation Organisations. The Eu-

ropean Chamber also participated in a number of exter-

nally organized events, like the China Clean Energy Expo,

where European Chamber Secretary General Dirk Moens

presented on a panel together with the China Electric-

ity Council, the National Energy Administration and the

State Electricity Regulatory Commission on how Europe-

an companies can assist with Chinas green economy aims

and on how barriers currently restrict them from doing so.

Lobbying Report EURObiz

March/April 2012 EURObiz 13

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A Historic Event: The 7th

EU-China Business SummitConvening for the seventh time in nine years, the EU-China Business Summit brought to-gether political leaders, captains of industry, top executives, key regulators to discuss andstrengthen one of the worlds most important business relationships. EURObizs StevenSchwankertattended and reports on the years most important event on the EU-Chinabusiness calendar.

On 14 February, the European Union

Chamber of Commerce in China co-organised the 7th EU-China BusinessSummit at Beijings Great Hall of thePeople. The day-long event, whichclosed with speeches by EuropeanCommission President Jose ManuelBarroso, European Council PresidentHerman Van Rompuy, and ChinasPremier Wen Jiabao.

Held in partnership with the ChinaCounci l for the Promotion ofInternational Trade (CCPIT) andEurochambres, over 700 European

and Chinese executives attended the

day-long event, which included threemorning workshops, followed by theEU-China Business Summit plenarysession, and nally, the conclusion ofthe political summit, which was heldalongside the business event.

Convened on an alternating basisbetween Brussels and a major cityin China, the EU-China BusinessSummit has been held regularlysince 2003 to facilitate a dialogue onbusiness and political issues betweenthe two s ides , not only among

government leaders and officials,

but executives and top industryproles with a deep interest in furtherimproving the environment forbusiness and understanding in bothEurope and China.

The morning session of the Summitsaw executives guided to workshopsrelated to their industr ies (seeworkshop review coverage beginningon page 17). These covered thehighly relevant subjects for Chinasc o n t i n u ed ec o n o m i c g r o w t h :Opportunities in Urbanisation; The

EURObiz EU-China Business Summit

European Council President Herman Van Rompuy (left) shakes hands with China's Premier Wen Jiabao during the last part of the EU-China

Business Summit.


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Role of SMEs; and Investment:Industrial Upgrading and Support.Each of these workshops featured adiverse group of speakers, includingb u s i n e s s r ep r e s e n t a t i v e s a n dgovernment officials, presenting on

their field of expertise. Moderatedby experts in the field, these panelsallowed for discussion not onlyamong the participants, but also for avigorous question and answer sessionwith the attendees.

A f ter a r eces s f o r lunch andnetworking in the Golden Hall diningarea, participants convened in theGreat Halls third-floor auditoriumfor the Business Summits plenarysession. Moderated by StephenPhilips, Chairman of the EuropeanUnion-China Business Associationand Chief Executive of the China-Britain Business Council, panelistsincluded Yu Ping, Vice Chairman ofCCPIT; Davide Cucino, President ofthe European Chamber; Shi Lirong,President of ZTE Corp.; Jorgen BuhlRasmussen, President and CEO ofCarlsberg; Xiang Wenbo, Presidentof Sany Heavy Industry; and StefanDoboczky, Pres iden t o f DSMSinochem Pharmaceuticals.

The 12th Five-Year Plan confirmsthe direction of China, especiallyin terms of development of a green

economy, urbanisation and industrialupgrading, said CCPITs Yu Ping inhis presentation.

In his opening remarks, EuropeanChamber President Davide Cucino

said The European Union andother countries are looking to Chinato further comply with World TradeOrganization commitments and tomore speedily carry out the processof reform and opening up. Notdoing so could lead to increasedfrictions and to the risk of closure ofthe markets. On the contrary, doingso would bring massive benefits forChina at a time when it is aiming toshift its economy to new drivers ofsustainable and green growth and toencourage industrial upgrading.

Calling upon political leaders in theaudience, ZTEs Shi Lirong said, Itis up to politicians to help businesspeople to realise the goals of thepolicies they establish.

C a r l s b e r g C E O J o r g en B u h lRasmussen said that operatingin China required a completelydifferent and agile business model.The new realities require flexibilitybut also certainty on behalf of

g o v e r n m en t r eg u l a t o r s . H eexpressed confidence that Europeanleadership is up to the task. I do

believe we will overcome thesechallenges, and I believe that the EUwill emerge from this stronger.

Of changes in the foundations of theChinese economy and new trends

in investment, Stephen Dobczsky,P r e s i d en t o f D S M S i n o c h emPharmaceuticals, said We arenot talking about philanthropy;we are talking about innovationat its most basic, adding that inChina, sustainability, innovation andcollaboration with be at the forefrontin the future.

Sany Heavy Industrys PresidentX i a n g W e n b o , w h o s e r e c e n tacquisitions in Europe had drewsignicant notice as a possible modelfor greater Chinese investment inthe EU, said that in contrast to theway China and Europe view itsrelationship, Americans always worrythat if you sell you technology, it willlead to building planes and tanks thatwill be used to bomb Americans.During the question and answersession, Xiang said that We dontthink of Sany as a Chinese brand, wethink of it as a global brand, and assuch, making acquisitions in Europeshould not be a surprise.

Following their political Summitand a news conference with Chinese

EU-China Business Summit EURObiz

The Great Hall of the People's Macau Room hosted the 'Opportunities in Urbanisation' workshop.


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and international media, PresidentsBarroso and Van Rompuy and

Premier Wen arr ived to maketheir presentations and close thesession, accompanied by EuropeanCommissioner for Trade KarelDe Gucht and Chinas Ministerof Commerce Chen Deming. Onthe night prior to the Summit,representatives of the EuropeanChamber s Adv i sory Counc i lhad the opportunity to meet withCommissioner De Gucht for a frankdiscussion and exchange of vi ewson European trade policy towardsChina.

I n ev e r y c r i s i s , t h e r e i s a nopportunity, said President VanRompuy in his remarks , c i t ingthe Chinese phrase wei ji, whichcontains the characters for both ofthose words. The question must be:what are our shared opportunities toovercome the crisis? He suggestedthat discussions in Beijing wouldcontinue and become a part of thelarger G20 meeting in Mexico, to beheld in June. He indicated that both

sides China and the European Union

are striving to create sustainableand green growth, and facing aging

population.

Throughout, he emphasised the needfor a stronger partnership between thetwo sides. Today more than ever theEU and Chinas interests convergeThere are enormous tasks that wecan only take on together, PresidentVan Rompuy said, concluding Ourstagnation is your slower growth. Oursuccess is your success.

He was fol lowed by EuropeanCommission President Barroso calledon both sides to use our partnershipto address global issues. We havedecided to establish our relationshipat the level of strategic partnership,he said, adding that Balancedeconomies are wise policy. In theglobal economy, there is not alwaysthis wisdom.

Chinas Premier Wen was the daysfinal speaker. He began by notingthat he had partic ipated in al lseven of the EU-China Business

Summits, although this one would be

his last.

China is a responsible, long-terminvestor. China is willing to assistwith the EUs re-balancing [of itseconomy]. Trade relations are themost holistic facet of the Sino-European relationship, Wen said.

Premier Wen offered suggested stepsforward, including Next will be toexpand the scope of the Chineseand European trade relationship.China is willing to import moreEuropean products. For mutualinvestment co-operation, the nextstep is for fair, open and transparentinvestment. He also called forincreased scientific exchanges, co-operation on aerospace, support forSME funding and European ideas onwaste management and other aspectsof urbanisation.

Lastly Premier Wen said, When weencounter difficulties like this, it iseven more important that we standtogether, closing the 7th EU-ChinaBusiness Summit.


European Chamber President Davide Cucino toasts the success of the Summit with CCPIT Vice Chairman Yu Ping.


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WORKSHOP:INVESTMENT: INDUSTRIALUPGRADING AND SERVICES

Moderator:Mr. Wu Qi, Senior Partner and VicePresident at Roland Berger StrategyConsultants Greater China

Guest Speaker:Ms. Magdalena Alvarez Arza, VicePresident of European InvestmentBank

Speakers:Mr. Claudio Facchin, Senior VicePres iden t o f ABB Group andPresident of ABB North Asia RegionMr. Michael Fredskov Christiansen,President of Novozymes (China)InvestmentMr. Caspar Luyten, Chief RegionalOfcer Asia, TelefonicaMr. Yu Rumin, President of Tianjin

Port Group Co., LtdMr. Ding Hongxiang, Vice Presidentof the China National MachineryIndustry Corporation

Industrial upgrading is stressed in the12th Five-Year Plan, and innovationand productivity are also promotedin the EU 2020 strategy. Thesesimilarities in medium-term strategieswill bring China and the EU closertogether, creating synergies andopportunities, if business leaders andgovernment officials can align their

thinking and practices.

Industrial upgrading will also helpto bring about other societal goals,for example environmental andenergy-related goals. The processof industrial upgrading and thesynergies of the two plans will bringmassive opportunity for cooperationbetween Europe and China.

In this area, Europe tends to have thebest and most advanced technologyand experience. However, industrialupgrading is driven by demand,and the Chinese market is bringingmassive demand, creating at thesame time significant opportunityfor cooperation in various sectors,inc luding new energy, energyefciency, biotech and infrastructure.

By working together, both sides candevelop new markets by utilising

their core strengths. Europeantechnologies in these areas are themost advanced in the world and canhelp be adapted together with Chinato respond to Chinas own needs andsituation, e.g., using Chinas massiveamount industrial waste and sugarcrops into useful materials, saidMichael Christiansen, President ofNovozymes (China) Investment.

However, policy is also needed tosupport this process and create the

environment for cooperation. At the

same time, industry needs to worktogether to develop standards andtechnology together through jointresearch and development (R&D),both in China and in Europe.

To upgrade, more needs to beinves ted in R&D and g rea terproportions of revenue should beallotted to R&D, said Caspar

Luyten, Chief Regional Ofcer Asiaof Telefonica.

Newly introduced EU efficiencylegislation will speed up the adoptionof smart motor control systems andnew energy efcient motors that cansave up to 30%. This is one areawhere joint cooperation can use bestpractices and experiences to bringabout direct benefits, especially ata time when the introduction ofnew energy efficiency standardsare highly expected in China in

2012, said Claudio Facchin, SeniorVice President of ABB Group andPresident of ABB North Asia Region.

Key to this cooperation is theneed to further develop trust andrelationships, in particular throughgreater transparency, planning andcloser communication betweenbusinesses. That spirit of trust andco-operation, coupled with an openmarket environment, can createmore opportunities for growth and

investment.


ABB Group Senior Vice President Claudio Facchin answers questions during the 'Investment: Industrial Upgrading and Services' workshop.


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WORKSHOP:THE ROLE OF SMES AND IN-STITUTIONAL SUPPORT

Moderator:Mr. Yang Yunsong, Cha ir of theAPEC Business Advisory CouncilsSME & Entrepreneurship WorkingGroup and President of XY GroupInternational.

Guest Speaker:

Mrs. Bozena Lublinska-Kasprzak,President of the Polish Agency forEnterprise Development (PARP)

Speakers:Mr. Stephen Philips, Chairman ofEuropean Union China BusinessAssociation and Chief Executive ofChina Britain Business Council (aleading managing consortium partnerof the EU SME Centre)Mr. Martin Malmros, Global CEOof Aura Light

Mr. Enrico Lodi, CRIF Credit

Bureau, Managing Director & CRIFGroup Board MemberMr. Tian Chuan, Deputy DirectorGeneral of the SME Departmentat the Ministry of Industry andInformation Technology (MIIT)Mr. Zhang Shiming, Vice-Presidentof China Bohai BankMs. Karen Ji, Assistant Presidentof Kingdee International SoftwareGroup

The role of small and medium-sizedenterprises in any major economy,both developed and developing,cannot be underestimated. About99% businesses in Europe areSMEs, according to the EUCBAand CBBCs Stephen Philips. Theirimportance is underscored by twoprogrammes through which theEuropean Chamber assists EuropeanSMEs: the EU SME Centre and theChina IPR SME Helpdesk.Room for expansion in the Chinese

marke t i s s i gn i f i can t . As was

noted, while as many as 99% of allenterprises in the EU are SMEs, only9% of them are currently exportingto China, offering opportunities,especially at a time when exportselsewhere are sluggish.

Nowhere in the EU is the opportunityfor SMEs more apparent than inPoland. SMEs are driving the Polisheconomy, now number one in termsof growth, said Bozena Lublinska-Kasprzak of the Polish Agency forEnterprise Development. Currentlyabout 1.7 million SMEs operatein Poland, with 96% of them asmicro-SMEs, employing four or fivepeople. Despite their small individualsize, they now account for 50% ofPolands GDP, Lublinska-Kasprzaksaid.

We welcome more SMEs to cometo China and invest, and we areready to approve more and newkinds of SMEs, said Tian Chuanof the MIIT. Despite Polandsimpressive numbers, China is insome ways able to surpass them:60% of GDP, 80% of employment,and 50% of tax revenue in Chinais generated by SMEs, Tian said,although Chinas denition of SMEs

leans more towards medium-sizedcompanies than the small firms thathave been recently driving Poland.Tian also noted that development ofSMEs is a priority for Chinas 12thFive-Year Plan, and that as such,resources for them are becomingavailable, whereas in the past theyhad difculty obtaining nancing andfaced signicant red tape in companyformation and operation. He alsohoped that more Chinese SMEswould look to Europe as a potentialmarket.

Enrico Lodi of CRIF said that thedevelopment of credit worthinessassessment systems in China arenecessary and will help to alleviatesome of SMEs trouble in applyingfor loans and other forms of credit.Deciding which businesses are andshould be able to tap into sources ofliquidity remains an impediment tofurther development of companies atthis level, but that China is makingprogress in this area.


'The Role of SMEs and Institutional Support' workshop was opened by Mrs. Bozena Lublinska-

Kasprzak, President of the Polish Agency for Enterprise Development.


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BEIJINGPrivate Equity Study After-noon SeminarTuesday 13th MarchWestin Hotel Chaoyang

Well Being in the Workplace

and the Impact on BusinessThursday 15th MarchWestin Hotel Chaoyang

Breakfast Book Reading withNicholas R. Lardy on Sustain-ing Chinas Economic GrowthAfter the Global Financial Cri-sis21st March

Westin Hotel Chaoyang

Annual General MeetingThursday26th AprilEU Delegation

NANJINGSpring Garden Party21st April

PRDQuality Training - Level 1Wednesday14th March, ShenzhenThursday

15th March, GuangzhouFriday16th March FoshanThursday29th March, ZhuhaiFriday30th March, Zhongshan

2012 MIECF - Green BusinessCo-operation Day Forum Eu-ropean Pavilion29th-31st March

SHANGHAIInterChamber Spring MixerThursday15th March

Retail & Distribution Half-DayConferenceWednesday21st March

Financial Services MixerThursday22nd March

SEPB Joint Half-Day Roundta-

bleWednesday28th March

Legal MixerThursday29th March

Gala Ball 2012 - One Night inEuropeSaturday12th May

TIANJINGM Briefing: EU CommissionDallis visit to TianjinMonday19th March

InterChamber NetworkingnightTuesday20th March

Conference cocktail: GlobalDebt in the year of Drag(on) -How will it affect you?Thursday22nd March

HR Workshop: HR shared ser-

vice centerFriday23rd March

Factory visit in Tianjin BinhaiNew AreaMiddle of March

EURObizEvents

Event information is subject tochange. For full details,please visit our website:www.europeanchamber.com.cn/view/events

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On 12th May, the European ChamberShanghai Chapters annual Gala Ball willbe taking our guests on a tour throughthe best that Europe has to offer. Join usfor a night that will evoke the richnessof European culture, the flavour of themany ancient and diverse countries. Thisyears event will be held at the Kerry Ho-tel Shanghai.

Every May since 2005, members of theEuropean and Chinese business com-munity will converge at the Gala Ball toenjoy an abundance of fine food, wineand performance.

Drawing in many of the EuropeanUnion member state Consul Generals,senior Chinese government ofcials andFortune 500 CEOs, this event has growninto one of the paramount gatherings inthe Shanghai social scene.

For more information on how you canbe a sponsor for this fabulous evening,please contact Petra Nordin by email [email protected] orcall 021-6385 20 23 ext 116

Experience 'One Night

in Europe' this May

Gala Ball EURObiz

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EURObiz (Eb): During your ad-dress at the EU-China BusinessSummit, you mentioned thatCarlsberg participated in ChinasDrive West campaign. Pleasetell us more about what the com-

pany did to take part.

Jorgen Buhl Rasmussen (JBR):We exported our rst Carlsberg beerto China as early as 1876; only a fewyears after we exported our very rstbeer, making China one of our firstexport markets. So you can say wehave had China on our radar for along time.

However, our operation in Chinareally picked up speed in the early

2000s where we followed the Chinesegovernments direction of goingwest and expanded our businessconsiderably in the Western regionsof China. Today, we are a proudmarket leader of the beer market ofWestern China.

This approach has been a strongplatform where weve had very goodpartners, who helped us gain localinsights. In all the Western Chineseregions, we now have local Chinesebrands that we complement with our

international premium brands. Sofar, it has worked very successfully,and starting in the West proved tobe a win-win situation which furtherstrengthened our position in the Chi-nese market.

Eb: Beer consumption in Chinais now double what it is in theUnited States, but given the pop-ulation, that means per capitaconsumption is still relativelylow. Where is Carlsbergs oppor-

tunity in China?

JBR: That is exactly right. We doexpect to see continued strong growthin the Chinese beer market, which atthe moment is around 6-7% marketgrowth.

The average beer consumption percapita in China now is around 35L.If we go to Western China, where thegure now is around 19L per capita,there will be a lot of potential forgrowth.

Meanwhile, Carlsberg is building onstrong local brands as well as a greatmix of international premium brandswhich we look forward to bringing toeven more people in China.

So we believe theres a lot of oppor-tunity for growth.

Eb: Carlsberg has a long historyin China. When did the companyfirst start exporting beer to Chi-na?

JBR:The rst Carlsberg beer was ex-ported to China in 1876. However, asearly as 1869 we have evidence thatthe founder of Carlsberg Breweries,J.C. Jacobsen was contemplating ex-

ports to China. The Carlsberg found-er found great inspiration in Asianculture not least in China and thiscontinues in the brewery today.

Eb: How is Carlsbergs approachdifferent in China than in othercountries?

JBR: China is a dynamic and com-petitive market, Carlsberg respectsand adjusts to the demands of Chi-nese consumers which vary signifi-cantly regionally.

Carlsberg now owns a product port-folio with over 20 brands in China,which caters to these various de-mands of Chinese consumers. Forexample, we tailor made CarlsbergChill for Chinese consumers, whichmeets Chinese consumers preferencefor less bitter beer, as well as Carls-berg Light, a beer for Chinese din-ning occasions.

Carlsberg also attaches importance

in fostering relationships with localpartners to gain local insights, whichhelp Carlsberg to build on strong lo-cal brands as well as a great mix ofinternational premium brands.

Eb: In many places in China, beerdrinkers are very loyal to theirlocal brand. How does Carlsbergtempt them away from popularlocal selections?

JBR:Key to Carlsbergs approach inChina as well as in other parts of the

world is to use a GloCal approachwhere we build on local strengths andparticularities while we contributewith international experience andpremium brands. In China, this im-plies that we will continue to market

strong local brands supplemented byour portfolio of international pre-mium beers. So we believe our suc-cessful local brands and internationalpremium brands are supporting mu-tual growth.

Eb: Do European companies haveany innate strengths that helpthem to do business in China?

JBR: I think European companiescan learn a lot from doing business in

China. But I also believe Carlsberghas a particular strength that will helpus become even more successful inChina, namely the fact that our com-pany is built on a heritage of strongvalues of quality, social engagementand the will to always improving.

Eb: CSR plays a significant rolein Carlsbergs overall opera-tions. Can you tell us how that isintegrated here in China?

JBR:Carlsbergs CSR strategy is em-

bedded throughout our operations.This includes focus areas like envi-ronment, responsible drinking, com-munity engagement etc. Carlsberg istoday the most efcient internationalbrewer in terms of water usage andenergy consumption. This requiresstrong focus and execution across thegroup. And in China we are particu-larly proud that we in December weregranted the Golden Image Award ofEnvironmental Protection. We willcontinue to strive for improvements

in this area in order to save naturalresources such as water.



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EURObiz (Eb): Please tell usabout Covexs business in China.

Fernando Calvo (FC):Covex decid-ed to do business in China from the

very beginning, rstly through the im-port of raw materials as early as 1978after attending the Canton ExportSpring Fair, and since 1988 throughthe export of Vinpocetine (known as

Changchunxiting in Chinese) nisheddosage drugs and active pharmaceuti-cal ingredients. Vinpocetine is a drugof choice in neurology.

COVEX PHARMACEUTICALS

Fernando CalvoThe CEO of CovexPharmaceuticalsdiscusses theimportance ofmarket access and

the opportunitiesthat Chinarepresents forEurope's drugmakers.



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The opportunity in China for Covexhas increased exponentially as Chinahas listed Vinpocetine as a producteligible for social security supportsince 2009.

Eb: Is the EU-China businessrelationship growing in impor-tance? Why or why not?

FC: Covex was already selling thisready-made medicine in Portugal(from 1986), China (from 1988) andformer Soviet Union countries (from1991) as major markets, and later onto 28 different countries (includingnine EU countries). The choice ofChina over other countries was madebased on the market potential. The

fast growth of Vinpocetine market inChina makes it the largest worldwide.

There is also a new market oppor-tunity that Covex wants to explore,regarding the gradual release of aformulation of Covex Alkaloids forpharmaceutical use, as well as a hugedietary supplements project. The lat-ter one is focused on a beverage basedon Jilin Province ginseng plantations,primarily focused on post-hospitaltreatment for post-ischemia recovery,or post-stroke situations.

Eb: What is the biggest businessissue that the two sides face?

FC:The biggest difficulty for Covexin approaching the Chinese marketwas the bureaucratic barrier relatedto the Import Drug Licence renewalthat has been delayed. The differenceis found in the jurisdiction and courtpractice to stop illegal activities fromcompetitors. The Courts of Justiceand lawyers in Europe are more ef-

ficient, give quicker decisions andremain independent from politicalpressures.

Eb: Where are the bestopportunities for European in-dustry in China?

FC:In China, government regulatorshave kept the public sector as a pillarof the economy as well as have cho-sen to foster the development of cer-tain sectors of the private enterprise.Consequently, the Company Law/

Company Act has been modified,favoring SME establishment.

Eb: How can Europe make itselfmore attractive for Chinese in-vestment? Or what would en-

courage greater investment inChina?

FC: It is complicated for SMEs tosouce funding given the existingbanking crisis, therefore, Chinesecompanies (SMEs) that are largerthan those in Europe acquire a stakein companies capital by injectingnew capital, obtaining technologyand further modernising it.

Eb: How will the current issues

with the Euro affect the EU-Chinarelationship?

FC:Apart from the direct apprecia-tion of the RMB against the Euro fol-lowing an appreciation of the RMBagainst the dollar, this would likelyproduce a depreciation of the Euroagainst the dollar, thereby correctingthe current overvaluation of the Euro.However, the continuation of the cur-rent exchange rates for the U.S. andEurope is a continuous source of ma-jor problems, including imbalances

that can escalate to a larger numberof countries in coming years.

There is a parallel (and ultimately in-creasing) tendency to minimise theseproblems and assume that China willleverage its balance of payments (thuseliminating major international im-balances) naturally, without having totweak the RMB exchange rate. Thisprocess would occur by a progres-sive reduction in the saving rate ofChinese families and according to

the Chinese government, measureswill be implemented to promote con-sumption and social protection.

If the appreciation of the RMB istherefore essential to correct thecurrent international imbalances, itis even more crucial to resolve thefuture of business investments inEurope.

Eb: What do you think is thegreatest misunderstanding ofChina in Europe? Conversely,

where do you think Europeansmostly misunderstand China?

FC:Some Spanish companies haveapproached China with a non-justif ied sense of superiori ty given

the current reality of China. In thepharmaceutical sector, China is thefth world market and in a few yearsit will be the first due to the socialsecurity law which was approved bythe Chinese government. Anyonetraveling to a trade show or fair inChina will notice the great progressand advanced state-of-the-art, of theChinese industry.

Eb: Tell us about the partnersand companies Covex serves in

China. How does the businessdiffer between the Chinese sideand multinational corporations?

FC:After importing APIs from Chinafrom 1978, Covex went to China in1988 with a joint venture with a largelocal state-owned company in theLiaoning province city of Shenyang.Later on, due to different businessobjectives and processes, Covex leftthe joint venture and started workingwith several local distributors.

The Chinese partners approachedCovex directly because only two ofVincamine and Vinpocetine alkaloidscompanies are real manufacturers,Covex being one of them. Usuallypharma labs are aware of this fact, inspite of misleading advertisements inspecialised pharma press or the Inter-net.

As for second-tier cities, Covex is con-sidering Hainan as a location to setup a factory due to the citys splendid

climate and infrastructure. This fac-tory will increase Covexs manufac-turing capacity for catering to thegrowing Chinese and U.S. markets.It intends to re-export its products toother Asian surrounding countries aswell.



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CRIF

Enrico Lodi

CRIF CreditServices GeneralManager tells usabout the rising

demand for creditand related creditinformationrequests, and howChinas financialinstitutionsare preparingthemselves to domore.



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for life sciences and material sciencesproducts.

Let me provide some examples todemonstrate how our products appli-cations make impacts to peoples life.

DSM vitamins in food or supple-ments, DSM omega-3 acids in babyformula, DSM dairy cultures in yo-ghurts or the DSM Dyneema, thestrongest ber in the world in moor-ing ropes and shing lines, DSM Ma-terials for Solar Panels and Windmillsas well as for articial hips and kneejoints, these are all life science andmaterial science innovations made byDSM.

Now, if we benchmark where China

is heading in the next ve years andbased on our own future plan we seea clear alignment. Here are some ex-amples.

First, our approach is to make sus-tainability a business driver. DSMaims that by 2015, 80% of our in-novation products and 50% of ourtotal product sales will be productswith a positive environmental impactcompared to available alternatives. Sobalancing growth with sustainabilityis at the heart of our strategy. Our

growth ambitions and the kind ofgrowth we target are clearly alignedwith Chinas 12th Five-Year Plan.

Second, collaborations and open in-novation are critical components ofour strategy. We have been active inChina for five decades, and partnerwith local Chinese companies to growtogether innovatively and sustainably,such as DSM Nanjing Chemical Co.,Ltd, jointly owned by DSM and Sin-opec. We recently announced plans

to double our caprolactam capacity,from 200 kilotons to 400 kilotons,while reducing energy consumptionby 30%.

We engaged with Sinochem andjointly created a global JV in the eldof pharmaceuticals. Again biotech-nology from DSM is used by this JVhelps to reduce up to 80% of theemissions and saves up to 90% of thewater of our factories compared toother technologies. These are just twoexamples where DSM paired with

great local, leading enterprises createsvalue for shareholders and the society.

Thid, we are a nutritional sciencecompany. Worldwide some 250 mil-lion children suffer from anemia that

will never allow children to reachtheir full potential. Very often this isrelated to poor nutrition.

For example, DSM partnered withthe China Nutrition Society and theChina Children and Teenage Foun-dation and we developed uniquevitamin and mineral mixes so-calledsprinkles. Thanks to these sprin-kles children of the poorest familiesworldwide receive with the staplefood the right dose of trace elements

and vitamins that ensure that theirbrain and bones can develop. Wehelp the CCTF to reach almost 8 mil-lion children here in China. We seeagain in China a strongly increasingfocus to improve people living stand-ard and quality of life. We have andwill continue to contribute to that.

We are committed to do more of thisin China to further grow and makepeoples life brighter by using oureco-technologies.

Eb: How would you describe thelevel of talent available in lifesciences in China?

SD: At DSM China, we believe thatour unique competitiveness lies inPeople. Of course, like many Chinesecompanies, DSM is faced with the ur-gent tasks of addressing talent short-ages and developing local talents. Tofulll DSMs strategy for 2015, DSMChina will need a large number oftalented people with skills includ-

ing management, innovations, andcommercialization. This need will bemet through our corporate culture,employee values, efcient policies andsound management system.

Eb: What kind of customers doesDSM serve domestically in Chi-na?

SD:DSM serves global accounts, lo-cal strategic partners and customers.We deliver innovative solutions thatnourish, protect and improve per-

formance in global markets includ-ing China, such as food and dietarysupplements, personal care, feed,pharmaceuticals, medical devices,automotive, paints, electrical andelectronics, life protection, alternative

energy and bio-based materials.

Eb: In your presentation at theEU-China Business Summit, youstated that philanthropy is in-novation. Can you tell us moreabout this concept?

SD: We believe that using scienceand innovative business models youcan serve the bottom of the pyramidin a fashion that it serves both thecommunity and shareholders. There

are some common interests such asnutrition improvement that allowsus to balance the needs of both sidesbetter. For example, DSM teamed upwith non-governmental organisationssuch as the United Nations WorldFood program to provide our nutri-tion support.

Eb: What is the biggest stum-bling block in the EU-China busi-ness relationship right now?

SD: Given the strong cultures and

rich history, it is crucial that bothsides have an intense and cooperativedialogue, and the willingness to worktogether in an open-minded way.Most times we will find both sideshave a lot to gain from each other.

Eb: Do European companies haveany innate strengths that helpthem to do business in China?

SD : DSM believes that culturalawareness and flexibility are traits

that make European companiessuch as DSM very suitable to serveChinese companies. Of courses, asEuropean companies, we have ourown core values including sustainabletechnology innovations in related in-dustries, which we can partner withlocal Chinese companies to build awin-win solution for the society andits people and even for future genera-tions.



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GDF Suez

Raphael SchoentgenAs his companys ChiefRepresentative Officer,Mr. Schoentgentalks about beingon the front lines of

urbanisation in China.


EURObiz (Eb): Please tell usabout the urbanisation issuesthat China faces and GDF Suezsrole there.

Raphael Schoentgen (RS): Tounderstand GDF Suezs role in ur-banisation you have to know we arethe number one utilities companyin the world. We handle water, waste,power, gas and energy services in 70countries and have a global turnoverof 92 billion Euros. We have beenin China for 30 years, mostly in thewater and waste business. Today wehave 7,000 people and 30 JVs, andwe provide water to 14 million peoplein 20 cities. We have built 200 water

treatment plants in the last 30 years

in the country.As 80% of our turnover comes world-wide from gas, power and energy ser-vices, with the other 20% from waterand waste services, GDF Suez beganexpanding in China and moving intothe energy sector in 2008 to exploitareas in which we were not presentdespite our expertise.

Since 2008 we started buying car-bon credits in China to help fosterthe development of carbon-friendlyprojects. Then we looked at invest-ing in heating and cooling networksin China. We are currently run-ning two projects, a trigeneration inChongqing and a cooling network

in Tianjin Yujiapu financial district.

More recently we started also sellingliquid natural gas into China, includ-ing 43 shipments to China NationalOffshore Oil Corp. (CNOOC) andprovided them with a floating ter-mina in 2011, which allows for fasterdevelopment of gas distribution. Gasdevelopment in China is indeed anexcellent way to green cities.

In the water sector, we also had devel-opments and became more active inthe sludge business. While it does notsound so lovely, it is key. The treat-ment rate of water in China exceeds80%, but the sludge rate is just above30%. Treating sludge and reusing itis therefore essential to ensure sound

urbanisation and avoid soil and water


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layer pollution. We dry it and send itto a cement plant in Chongqing, oruse it as a substitute for coal in Su-zhou to generate power, whereas inShenzhen, it is just incinerated.

Eb: How do you rate the chal-lenge of urbanisation in China?

RS : In China and in general, ourview is that the challenge of urbani-sation is extremely big. Over the next20 years China will see the emer-gence of more than 100 cities withpopulations of more than 1 millionpeople, as part of a major worldwideshift from the countryside to the cit-ies. And more generally, between nowand 2050, the world population will

increase by 40% with two-thirds ofthe population explosion taking placein cities.

Cities consume extremely high levelsof resources, and produce a lot ofwaste and waste water. As a conse-quence both inows and outows areextremely high. Using the technologythats available, we need to reducethe outow, including recycling whatcomes out of the city. We also neednew models of urbanisation to slowlyreduce inow and outow and reduce

pollutants along the way. We are ac-tive in all of these directions.

As an integrated player we focus alot on gains we can have from bet-ter managing the ineractions of thecycles of power, waste and water. Letme give you an example. from treat-ing water we get sludge, a waste andpollutant, but sludge can be used togenerate power, and power allowsthe treatment of water. If you thinksmartly about an integration of the

components of this chain, you saveboth on pollution levels and on yourpower bill.

China also faces challenges that willtake time to evolve. Firstly energyconsumption centers are distantfrom energy sources. Secondly waterstresses are present in many places.Thirdly building practices have notso far integrated energy efficiencyfrom scratch, it is only changing now.Fourthly the primary energy mix isquite high in carbon dioxide, as it is

still mainly a coal base. We will seean increasing shift from coal-based togas-based cities as well as a change incertain patterns of energy distribu-tion and use in cities, but time will beneeded.

Eb: Is it all about a change in en-ergy and water resources man-agement as well as constructionstandards?

RS:No, there are also other issuesthat will help move to a greener ur-banisation. For instance, changingpeople approach towards energy so-lutions: when you talk about cooling,it is better to move from individualequipments installed at each window

of an apartment building to a centralcooling network for a few buildings.You need to have peoples acceptancefor such changes. Another issue toface is the absence of certain markets.If you look at the waste market forinstance, there is not yet a nationwideor unified one, so there is no realprice tag on waste. Waste policiesare mainly local and its a market indevelopment. In some places wastetreatment works well, in others less.

Eb: GDF Suez is already involved

with some significant municipalinfrastructure projects in China,can you give us some examples?

RS:Definitely, we are a partner ofChongqing Water for water distribu-tion for almost 10 years. In HongKong we handle around 80% ofthe garbage that we put into twoof the largest landfills in the world.We also handle industrial sites andtackle pollution at the source; we arefor instance the provider of water

treatment services to all industries inShanghai, Wuhan and Chongqingpetrochemical parks.

Eb: More Chinese people nowlive in cities than in the country-side. Has any other country orregion ever seen such rapid ur-banisation?

RS:No, we do not believe it occurredbefore. There are of course othercountries with high urbanizationlevels and issues, such as Brazil and

India, but whats key here is that youhave a shift in urbanization modelsand a current development neverseen before. Its not just the speedof changes, its also the size of thechanges in China that make us admi-

rative and create the challenge. Chinadefinitely needs to use this period tobuild the best possible models, as theywill have not only a huge impact onits environment and population, butideas developed here can be helpfulelsewhere.

Eb: How many of GDF Suezsbusiness lines are operating inChina?

RS:All of them now. Gas infrastruc-

tures is the latest one to have joined.Gas is a way to green cities and thedevelopment of the gas market inChina is simply amazing. Right nowits 100 billion cubic meters, which isthe size of the German market. It isexpected to double in ve years, andtriple or quadruple in 10. To supportproperly such gas market develop-ment you need gas undergroundstorages and gas volume optimalmanagement. Our colleagues activefor the past 30 to 40 years in theseareas -- at the time Europe developed

its own capacities -- nd here peopleeager to share to put in place whatChina needs urgently.

Eb: In which city or cities in Chinahas GDF Suez chosen to establisha presence, and why?

RS:Over the last 30 years we havenot emphasised one city over another,although we do have large operationsin Macau, Hong Kong, Chongqingand Shanghai and special relation-

ships with these cities (our CEO is amember of the international advisoryboard of the Mayor of Shanghai andChongqing). We intend to be presentall over China, and our targets aremajor infrastructure projects, newzones, new ports, new cities and dis-tricts. Its less about targeting a par-ticular city, its more about the majorprojects that cities have, such as a newcity center or projects where we canwork with our partners to share andbring our experience from 150 yearshistory in 70 countries.



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NOVOZYMES CHINA

Michael Christiansen

NovozymesChinas Presidenttalks about hisexperiences in

China buildinghis companysbusiness, thebarriers to furthergrowth and theopportunities thatlie ahead.



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EURObiz (Eb): Tell us a little bitabout yourself. How long haveyou been with Novozymes? Howlong have you been in China?

Michael Christiansen (MC): My

encounter with China and Novozymesis one and the same. In 1996 I joinedin Novozymes (then part of NovoNordisk) in Denmark and expatriatedhere immediately to start the Chinaoperation. Its a unique experience tosee Novozymes grow into 1400+ em-ployees, three production facilities, oneregional headquarter and one researchand development hub, coinciding withChinas skyrocketing growth into thesecond-largest economy in the world.

Eb: Please tell us about Novo-zymes business here in China.

MC: Novozymes is the largest pro-ducer of enzyme and microorganismsfor industrial purposes in the world,and our products are widely appliedin biofuels, textiles, detergents, foodprocessing, paper and pulp industriesand more. In the last 10 years Chinaendeavoured to convert economicdevelopment pathways to a sustain-able, less resources-dependent one,and the transformation ignited our

customers enthusiasm for embracingenvironmentally-friendly industry so-lutions. One of our customers, Esquel,a Guangdong-based textile producerwho conducts OEM business in con-

junction with a variety of intentionalbrands, reported less energy and waterconsumption, less GHG emission, lessenvironment impact (by reducing theusage of harsh chemicals e.g. strongacids) and higher prots by upgradingconventional chemical process to mildenzymatic one. Nowadays Novozymes

China business contributes aroundone fifth of our total revenues, andour growth rate here is higher thanother regions.

Eb: How is the quality of talentavailable in China for the biotech-nology industry?

MC : I can see China has a largereserve for gifted and devoted bio-technology talents with internationalperspectives. In our Beijing R&Dcenter, many young scientists got

their undergraduate diplomas fromaccredited domestic universities andthen won higher degree from over-seas the US, UK, Europe, etc. Thediversity of culture and academia isNovozymes valued competence. In

our latest product, Cellic CTec 3, anenzyme for advanced biofuels thatcan slash production cost and make itcommercially viable, our scientists inBeijing lab contributed several criticalgenes and are instrumental in makingthe innovation reality.

Eb: Do you face any barriers tooperation here, such as manda-tory joint ventures or technologytransfer?

MC: As a player in ne chemicals, wedidnt see mandates for joint venture.Currently we are operating solely inChina, however our partner in Su-zhou owns a minority shares in thefacility there as legacy back to 1990s.Currently we are quite active in bio-energy and biochemical industry, inwhich agricultural and metropolitanwastes can be converted into sugarand then ethanol and other funda-mental organic building blocks, andwe envision a future that our depend-ence on fossil fuels can be lessened by

the usage of renewable sources. In thiseld we can see more restrictions andmore pressure for technology transfer-ring. Its the situation ahead and wehave to deal with. One thing is forsure: although the industry is new anduncertain, we will access bigger mar-ket values and undertake bigger socialresponsibilities.

Eb: Science and technology areprominent in the 12th Five-YearPlan. What are some steps have

you seen China taking to supportscientific research and develop-ment?

MC: Chinas 12th FYP is the cleanestand greenest one ever, and the centralgovernment sets the target to disarmthe resources bottleneck by unlockingthe technology potential. I think its awise and realist strategy and echoedwith Novozymes believe.China invested huge funds in basicresearch and harvested tremendousresults. But not all the scientic break-

throughs are translated into productiv-ity and value. Local companies havethe potentials to play bigger roles inthe missing step, which bridge thefundamental findings into market-oriented products and solutions.

Eb: Do you think the EU-ChinaBusiness Summit will have ameaningful impact on EU-Chinarelations?

MC:We are facing a complicated di-lemma worldwide limited resources,explosive population growth, climatechange and social polarization. Nosingle effort from government or busi-ness can solve the problems by itsown, and a public-private partnership

is a widely-recognized approach toaddress the challenge. For example,the impasse in climate change-relatedtechnology transferring requires amechanism to encourage the coopera-tion between companies in developingand developed countries, whilst the in-novations are rightly valued and pro-tected. I think the EU-China BusinessSummit is a good platform to conductsuch dialogues and knock out solu-tions.

Eb: Where are the biggest oppor-

tunities for European companiesin China right now?

MC: I would like to mention biotech-nology. Of course the list will includemany more such as wind power, nu-clear technology and aviation. I be-lieve biotechnology will be a keystonein the new millennium, which makesour energy and material sources moresustainable and renewable, makes ourproduction and daily life cleaner withless environmental impact, and opens

inspiring and exciting possibilities bybreaking the limitations of the organicand chemical worlds. The EU andChina are complementary in this eld,and will enjoy the same benets fromtwo ends of a shared continent.

Eb: Where are the biggest im-passes for EU-China business atthe moment?

MC:Fewer political and ideologicalfactors in bilateral trade and economicrelations.



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EURObiz: Please tell us about theurbanisation issues that Chinafaces.

Patrick Gaonach (PG): It is well-

known that China is the worlds most

populous country, and with the rapidgrowth of urbanisation, this leads tomany unique problems. With suchhigh urban population density, Chinaneeds to provide smart infrastruc-

ture that can efficiently overcome

the downsides of urbanisation thatinclude issues regarding energy, trans-portation, waste and water, buildings,safety and security and in publicservices. Schneider Electric considers

these problems when developing new

SCHNEIDER ELECTRIC

Patrick Gaonach

SchneiderElectrics Strategy& BusinessDevelopment

Senior VicePresident PatrickGaonach talksabout urbanisationas for the first time,more of Chinaspopulation lives incities than ruralareas.



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smart solutions. We provide smartgrid, smart mobility, smart water,smart public services and smart build-ings and homes solutions to meetmany of these challenges.

Eb: Following the Summit, wheredo you think the opportunitiesfor business in China are for Sch-neider Electric, and in urbaniza-tion in general?

PG:Schneider Electric sees a lotof business opportunities in China.First, we are expanding into Chinaswestern provinces as part of our gowest strategy. We are investing inChinas interior cities and provinces(Wuhan, Xian and other regional

centers), commercially, in manufac-turing and logistically and we arenegotiating with regional partners toinvest in these areas, including jointventures and we are recruiting andtraining talents, including universitygraduates out of these provinces.

We are helping customers creategreener and smarter solutions as partof our commitment to go green.We are very active in helping ourcustomers save energy in industry,in commercial buildings, data cent-

ers and residential programs. Goinggreen is also a top priority for theChinese government and we are in aposition to bring technology and de-velop partnerships with local Chinesecompanies to develop new businessopportunities and train Chinese tal-ents. We believe that this is the indus-try of the future.

Chinas domestic demand has grownrapidly over the past decade and isthe primary growth engine in China.

Domestic demand is a very strongfocus of the Chinese government andour business. So, we are working togo in, by reaching out to this in-crease in domestic demand and work-ing to build our pre-existing businessclients, while expanding and focusingon the average consumer throughbusiness to consumer.

Since Chinas domestic demand iswidely spurred by urbanization, weprovide a full Smart Cities solutionspackage for urbanisation in China

that includes smart grid, smart mobil-ity, smart water, smart public servicesand smart buildings and homes and isa large portion of our future business.

Eb: Schneider Electric is already

involved with some significantmunicipal infrastructure pro-

jects in China, can you give ussome examples?

Schneider Electrics Smart Citiessolutions are already being imple-mented throughout China.

China is working to take the leadglobally on electric vehicles. Throughsmart mobility. We are providing in-frastructure for electric vehicles and

is an area where we are developingsolutions and partnerships in Chinasuch as charging stations for busesand trucks. This also includes solu-tions for traffic management, publictransit and traveler information.

Schneider Electric is working to de-velop a smart grid. While we do notmanufacture solar panel or wind farmsupplies, we help the government andcompanies connect farms to the gridin China through smart integrationsolutions.

Our smart water solutions help toregulate water distribution, detectleaks and measure water quality. Italso works to manage storm water incases of urban flooding, which hasbeen an issue in cities like Beijingduring summer torrential rains.

We also have solutions for smart pub-lic services, which include emergencymanagement, public safety and videosystems, smart street lighting, and

smart eGovernment and city admin-istration.

Finally, we are working to makebuildings and homes more efcient.

Eb: More Chinese people nowlive in cities than in the country-side. Has any other country orregion ever seen such rapid ur-banisation?

PG: While other countries have ex-perienced major periods of urbanisa-

tion, the magnitude of urban growthin China is unprecedented and re-quires many complex solutions to en-sure that the growth is healthy. How-ever, as a European company that hasroots in the industrial revolution, we

have almost 200 years of experiencein helping countries to develop infra-structure for urbanisation.

Eb: How many of Schneider Elec-trics business lines are operating inChina?

PG: Schneider provides the Chinamarket with smart business solutionsthrough EcoStruxure, which is fo-cused on increasing energy efciencyand developing a smart grid, we are

also involved in energy and infra-structure work, industry solutions,buildings and residential, as well aswith data centers and networks. Ourbusiness takes a top-to-bottom ap-proach that provides solutions formany different sectors.

Eb: In what sectors or areas hasChina been particularly success-ful in terms of urbanisation?

PG: While there are a number ofsuccessful cases, the Chinese govern-

ments positive attitude for overcom-ing the challenges that urbanizationbrings and has been a deciding fac-tor in healthy urban development.Regardless of whether a company isChinese or international, the Chinesegovernment welcomes a wide rangeof business and participation oppor-tunities to support smart growth.

Eb: In which city or cities in Chinahas Schneider Electric chosen toestablish a presence, and why?

PG: We are investing in Chinas inte-rior provinces (Wuhan, Xian, regionalcenters etc) as I mentioned before totake advantage of the rapid growthin those provinces. We have also es-tablished 27 successful joint venturesin Shanghai most recently, in the westand throughout China. We hope thatour presence can be felt throughoutthe country as a company that is inChina for China.



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Morgan Motors Rolls into ChinaFerraris, Lamborghinis, Rolls Royce residents of Chinas major cities have grown accus-

tomed to seeing imported luxury and super cars on their roads in recent years. However,for the discerning driver, theres a new mark on the scene, which just happens to be one ofthe worlds oldest car makers: the U.K.s Morgan Motors Co. EURObizs Steven Schwankerttalks to Morgans Jim James about the future of an old-time auto manufacturer.

Morgan is not the kind of car thata nouveau riche pop star, athlete orstock market wunderkind can walkinto the dealer and buy on the spot.These cars whose design seemsto have changed little since thecompany was first founded in 1910 are handmade, with a one to two-

year waiting time between order andreceipt, depending on the model.The company is still run by a Morgan Charles, the grandson of founderH.F.S. Morgan. The companymanufactures its vehicles at the samefactory in Malvern Link, part ofWorcestershire in Englands WestMidlands, where it was established.It is still the worlds oldest privately-owned car maker.

It took a century for the very firstMorgan cars to arrive in China.Fewer than ve of its cars are knownto be in the country currently.

One of those cars belongs to Beijing-based Jim James, now managingdirector at Morgan Cars Ltd. (Hong

Kong), whose rst encounter with thebrand was as an owner.

I purchased a Morgan as it had beena lifelong ambition. The reaction tothe car [in China] was fabulous andas a British entrepreneur I had to askthe question of Morgan, could I begiven the opportunity to build thebrand here in China?

He experienced f irs t-hand theanticipation of buying and thenwaiting for his Morgan to arrive inChina. A six-month ship journeybrought it to China specificallythe Zhejiang province port city ofNingbo that was followed by twomonths in customs, a truck journey to

Beijing, and then a few more monthsbefore the car hit the road, visitingsuch places as the Forbidden City andthe Great Wall.

James was the n able to make asuccessful pitch to the company. Ittook a business plan, a visit to thefactory, a meeting in Shanghai overa period of 12 months to be finallygiven the authority to represent the

Marketing EURObiz

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Morgan brand; and worth each step.Sales of luxury cars across Chinarose to an estimated 60,000 units lastyear -- a rise of 30 percent -- andindustry estimates are that double-digit growth will continue through2012, indicating room for at least onemore player.

Morgan sells only around 1,000 carsaround the world each year -- mainlythrough Britain, France, Germanyand the United States -- but hastargeted sales of around 50 in Chinathis year and 100 in 2013, saidJames.

For the l ike s of Rolls -Royce,Bentley or Aston-Martin, all of thepress is about how the downturn inthe rest of the world has basicallybeen swallowed up by an upturn inChina, Morgan Motors operationsdirector Steve Morris.

EURObiz Marketing

Despite a jaunt around Beijing hotspots including the Forbidden City

(pictured above), Morgan Motors' cars will remain a rare sight for the

foreseeable future.

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Publ ic ly l i s ted in China, CTI

offers third-party product testing,in spec t ion , c er t i f i ca t ion , andc o n s u l t i n g f i r m . I t p r o v i d e scomprehensive services for numerousconsumer products, allowing bothEuropean and Chinese exportersto the European Union (EU) andelsewhere to conform the standardsrequirements of the appropriatemarket.

CTI also specialises in inspectionand auditing for ensure qualitythroughout the supply chain. CTI

inspectors specialise in conductinginspections prior to, during and afterproduction, along with supervisionof loading. The auditing teamoffers factory quality assessment andsocial responsibility audits for ourclients suppliers. CTI also offersSedex Members Ethical Trade Audit(SMETA) and assists companies withWorldwide Responsible AccreditedProduction (WRAP) compliance.

Headquartered in Shenzhen, CTIoperates offices in 30 Chinese cities,

along with branches in Taiwan,

Hong Kong, Singapore, the United

Kingdom, Germany and NorthAmerica

EURObiz (Eb): Please describeCTI's business for us.

Zhou Lu (ZL): We operate bothtesting and certification businesses.For testing, CTI has comprehensiveservice areas in 14 business linescovering Rohs, envrionmental, toy,electronic, auto, textile and others.For certif ication we have threecategories. One is management

system certification (MSC) includingQMS, EMS, OHSMS and FSMS,one is sustainability verificationincluding Greenhouse Gas (GHG)and Energy Efficiency (EE). We arecurrently applying for qualificationunder the Designed Operation Entity(DOE) under UNFCCC's CleanDevelopment Mechanism for carboncredit validation and verification. Ifwe receive this we can then providegreenhouse gas certification service.In addition, this would allow us tobetter participate in corporate social

responsibility (CSR) verification and

support.

We also offer training in all of theservices that are related to MSCsustainabil i ty and support andsecond-party auditing for large-scalecompanies like the Carrefour andWal-Mart services market.

Eb: Tell us about your custom-ers. Are they primarily Euro-pean, mostly Chinese, or a mix?

ZL : For testing and most of ourcustomers are export-oriented

companies or suppliers within thiscompany on product manufacture,and some local manufacturers as well.

Eb: How does CTI's approach tothe business differ from that ofyour European competitors?

ZL: Our competence is cost efciency,service efficiency and one-stopefficiency. We have accreditationdiversity. We have combined testingwtih certif ication, auditing andinspection; this is an integrated

services package. Compared to

The Industry StandardComplying with export standards for multiple markets can be a significant challenge fororiginal equipment manufacturers and others with production facilities in China. Alongwith foreign players, local companies are stepping up to meet this demand. EURObizs Ste-ven Schwankertspoke with CTI Certifications Deputy General Manager and CTIs Directorof Certification Development Zhou Lu to find out more.

Certification EURObiz


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Ofces: Australia (liaison), China, Hong Kong, India (associated ofce), Indonesia, Philippines, Saudi Arabia (associatedofce), Thailand, UAE, United Kingdom, USA (liaison), Vietnam

www.iprights.com

Own.

Protect.

Grow.

Email:[email protected]; [email protected] and [email protected]

international testing orgs, we aresmaller, but that is a strength tocooperate and make a conversationva li d, wi th in or among di ff eren tbusiness lines. If the organisation istoo big, it is too difcult to cooperate

within itself.

Eb: How are standards and com-pliance growing in importance asa part of the EU-China businessrelationship?

ZL:I think standards and regulationsrequirements are very importantfor import, export and internationaltrade. As a third party, you can,through th i s k ind of channel ,safeguard business development andbusiness operations. We have the

concept that one part of our businessfor companies who manufacture inChina, the other is made for China.

The rst is export. We are just at thegate of the inlet and outlet. I thinkthe third party can move all theprocesses and create a balance forthe regulatory requirements, suchas we can provide service and helpat facilities, the exporter can exportthe product to Europe, and so if he

enters into that market, he can get afundamental entry pass.

Eb: Where do companies havethe biggest problems with com-pliance? Is it because they do not

understand the relevant stand-ards, or are there other reasons?

ZL: This is an important point.There is no balance in regulatoryinformation, such as between themanufacturing company and theservices provider. For especiallydetailed requirements and localprac t ices , i f you don t have alocal consultancy for regulatoryrequirements, it is very difficult tocomply with local regulations.

Eb: What's the advantage of be-ing headquartered in Shenzhen?Is the environment for businessthere as good as it has been inthe past?

ZL:The advantage of Shenzhen isthat the competitive environmentis relatively fair in this area. Also, Ithink government officials stands onapplicable rules to provide service andsupport. Its not just governing the

company. The government also hasmany professional policies and offersfinancial support to help small andmedium-sized companies, especiallycompared to in the past.

Eb: Which industry or industriesface the most complex testingprocesses?

ZL: I th ink the e lec tr ica l andelectronic sectors are subject toa lot of tes t ing and regulatoryrequirements. Chemical testing andcertification is also an area underclose scrutiny.

Eb: CTI is a publicly-listed com-pany. Is that a function of thesize of the overall testing and

compliance market?ZL:After we listed, we have a five-year plan to be the leading local third-party organisation in the conformityfield. The certification company Iworked for merged in the Groupin 2010. We have this ambition tocompare with international testingand certication rms. We adapt wellto and understand local practices andlocal relationships.

EURObiz Certification


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IPR Protection in China

for the Textile IndustryChinas textile industry is both an opportunity and threat to foreign busi-nesses. It is a major market for those supplying production technologiesand a key supply base for textiles and finished goods. However, foreigntechnologies and brands that are not adequately protected often fall vic-tim to infringement by Chinese competitors.

This article addresses intellectual property (IP) issues across subsectors

of the textile industry, including textile machinery, yarns and specialtyfabrics, finished fabrics and brand apparel and accessories. The areas ofIP most relevant to the above sectors will be discussed over two parts,with this first part addressing trademarks and patents. The second partto follow in the next issue will address copyrights, transfer of technologyand trade secrets.

EURObiz IPR

Trademark Protection forTextile Machinery, Yarnsand Finished FabricsTrademarks provide protectionagainst use of identical or similarmarks on similar goods. China usesthe rst-to-le system, meaning thatcompanies may not have legal protec-tion here and take the risk of infring-ing others trademark if the same orsimilar mark has already been reg-istered by someone else. It currentlytakes up to 18 months to register atrademark in China, provided noopposition is led against the applica-tion upon publication.

Because of Chinas system, it is com-mon for unscrupulous parties to reg-ister others trademarks first. It canbe a difcult and expensive process tocancel, oppose or buy back a trade-mark that has already been registered.It is not uncommon that importagents or distributors register trade-marks on behalf of the principal. Itis recommended that the trademarkis either registered in the name of theprincipal or transferred back to the

principal to avoid later disputes.

In addition to registering the trade-mark in the original language, it isadvisable to register a distinctiveChinese-language trademark, evenif this is not the primary mark used.Without a well-promoted Chinesemark, the market may create a Chi-nese nickname for a product, and thisnickname may be registered by otherparties to exploit the reputation of abrand.

Trademark infringement can be dealtwith through administrative action bythe Administration for Industry andCommerce (AIC) or through civilproceedings in the Peoples Courts.There are also criminal sanctions for

trademark infringement, althoughthis only applies if the trademark isexactly copied or if the scale of theinfringement is large.

Although it is uncommon to findcompletely counterfeit machinery,replacement parts may be copied. Ifa companys spare parts or packag-ing bearing your trademark, it is im-portant to register this trademark inChina as soon as possible.

There is no national trade name

registry in China. Trade names areregistered locally, within districts. Itis not uncommon to find distribu-tors or agents providing maintenanceservices for branded machinery orequipment and using the brand asa registered trade name withoutauthorisation. Trade names thatconflict with prior trademarks canbe cancelled. Trademarks should beregistered even if there is only aremanufacturing but not sales in China.

For the textile industry, a distinctivefabric design may be protected as atrademark if it has become distinctivethrough long use (for example, the

Burberry check design is a regis-tered trademark in China). However,such examples are rare and protec-tion of patterns as a trademark isuncommon.

Patent Protection for TextileMachinery, Yarns and Fin-ished FabricsPatents must be registered in China;a patent registered overseas is not

enforceable in China. China applies

Part 1


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an absolute novelty standard forpatents, meaning that the patentedproduct or invention should not havebeen disclosed anywhere in the worldbefore the patent registration applica-tion, subject to 12 months Conven-

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