INSIDE: Problems in banking reform. SME s hit the accelerator. Is currency a priority? SEPTEMBER 2010 VOLUME 18 NUMBER 7

Transcription

1 SEPTEMBER 2010 VOLUME 18 NUMBER 7 INSIDE: Problems in banking reform SME s hit the accelerator Is currency a priority?

2 V o l u m e 1 8 N o. 7 S e p t e m b e r China s Brand-New Banks How strong are China s bank reforms? By Carl Walter Beijing s Economic Roadmap Mapping out Beijing s future investments By Beijing Vice Mayor Gou Zhongwen AmCham-China, the National Headquarters The Office Park, Tower AB, 6 th Floor, No. 10 Jintongxi Road, Chaoyang District, Beijing, , People s Republic of China Tel: (8610) Fax: (8610) Website: AmCham-China, Tianjin Chapter Exchange Tower 2, Room 2918 No. 189 Nanjing Road, Heping District, Tianjin, Tel: (8622) Currency Concerns Are Misplaced An RMB appreciation may not have its intended effect By Patrick Chovanec New Era of Consumer Banking How foreign banks are changing China s banking industry By David Leung AmCham-China, Central China Chapter Wuhan Jin Jiang International Hotel, Suite 720 No. 707 Jianshe Avenue Wuhan, Tel: (8627) Ext. 720 AmCham-China, Dalian Chapter 5 th floor, InterContinental Dalian No. 6 Youhao Street Zhongshan District, Dalian, Tel: (86411) Ext Fax: (86411) SME Finance Set to Become Big Business What is China doing to help entrepreneurs? By Kathryn A. Tsibulsky 22 CSR Corner: Saving Sharks Is Good Business Creates difficult ecological challenges By Steve Trent China Brief content does not necessarily reflect the opinions in positions of AmCham- China or its Board of Governors. 2010, The American Chamber of Commerce - the People s Republic of China. All rights reserved. 6 Note to Readers 24 Chairman s Message 26 Working Groups 27 Recent Events Recap 35 Special Event 36 ACP News 37 People Change 38 New and Renewed AmCham-China Members 39 Monthly Member Mix & Mingle 40 AmCham-China Member Spotlight 42 Learning Curve

3 Note to Readers Editorial Staff VP, Communications Director of Policy Communications Associate Editor Designer Assistant Designer Cover Design Contributors Matthew Wisla Josh Gartner Megan Rhodes Zhang Hui Jin Peng Zhang Hui Anna Belkin Don Buteyn Ben Dorsen Julia Howe Maggie Huang Heather Hausladen Aurelia Kassatly Grace Li Bill Lovering Ben Marino Mariel Montuori Tiffany Tseng Nancy Xu Sujing Wang Qiong Xu Connie Zhao For sponsorship information, please contact Christine Yu at (8610) or Fenghua Advertising Co., Ltd. is a sponsorship coordinator for China Brief. (8622) AmCham-China Board of Governors Ted Dean Individual Michael D. Crain Individual Barry Friedman Wal-Mart China Roberta Lipson Chindex International Ningke Peng Dow Chemical (China) Lester Ross Wilmer Cutler Pickering Hale and Dorr LLP Chairman John D. Watkins, Jr. GE (China) Co., Ltd. vice chairs Mark Duval Motorola China Governors David Wang Boeing China Matthew Estes BabyCare Ltd. Jim Gradoville Individual Malone Ma MetLife Lisa Robins JPMorgan Chase Sharon Ruwart Mars Foods (China) Co., Ltd. China s Banking and Finance Reform With much fanfare, China recently overtook Japan as the world s secondlargest economy. Although it remains one-third the size of the American economy and its GDP growth is decelerating, China s economy is still forecast to increase about 10 percent this year, continuing the country s third decade of double-digit growth. In this issue, China Brief explores how China s state-run banks have contributed to this remarkable economic run. Two years after the collapse of Lehman, China Brief looks at what the Chinese government has done (and can still do) to clean up its banks, which continue to suffer from waves of non-performing loans. As China ushers in a new era of consumer banking, we also evaluate the roles of foreign banks, currency policy, the excessive lending of 2009 (one of China s most aggressive forms of stimulus spending last year) and small-to medium-enterprises (which generated nearly 60 percent of China s GDP in Q1 of 2010). We investigate how these factors will shape the future of one of the world s most robust economies. Find us at: Megan Rhodes Associate Editor Recent and Upcoming China Brief Insight Podcasts: Stephen Kho of Akin Gump, an expert on government procurement, joins China Brief Insight to discuss China s latest offer for accession to the WTO s Agreement on Government Procurement. Shaun Rein, managing director of China Market Research, discusses China s recent move on currency Anshan Steel, a Chinese state-owned enterprise, is seeking to buy a minority stake of a Mississippi-based company that makes rebar steel. The attempted purchase has been opposed by a group of 50 Congressmen, who allege security and economic risks. Dr. Derek Scissors of the Heritage Foundation joins China Brief Insight to discuss the situation. Ambrose Evans-Pritchard of the Daily Telegraph talks to China Brief Insight about China s recent reduction in the amount of rare earth that can be exported from the country and how it fits into broader trends. US FDA Commissioner Dr. Margaret Hamburg talks about her agency s China operations. itunes president Christian Murck AmCham-China Fan page: Name: AmCham-China Subscribe: AmCham-China General Counsel Nathan G. Bush O'Melveny & Myers LLP Treasurer Gus Kang Deloitte Touche Tohmatsu CPA Ltd. Article Submisson Policy: China Brief actively seeks article submissions. We give strong preference to AmCham-China members. Full submission details are available on AmCham-China s website Please send letters and submissions to: editor@amchamchina.org. 6 c h i n a b r i e f s e p t e m b e r

4 China s Brand-New Banks How strong are China s bank reforms? By Carl Walter On July 16, 2010, the Agricultural Bank of China (AgBank) completed its initial public offering (IPO), raising almost US $22 billion in total. This marked the end of a 12-year government effort to strengthen and modernize the Big Four banks, which also include Industrial and Commercial Bank of China (ICBC), Bank of China (BOC) and China Construction Bank (CCB). These four banks hold over 40 percent of Chinese total financial assets and are the foundation of China s financial system. Judged by the rankings of Chinese banks on the Fortune 500 list, China has achieved its decade-long goal. In terms of market capitalization, ICBC is the largest bank in the world and the second largest company in the world behind ExxonMobil. How did China create these fortress banks? China s Bank Reforms China s economic reforms are driven by crisis. In 1997, the Asian Financial Crisis hit China s financial system hard, causing the bankruptcy of Guangdong International Trust and Investment Corporation (GITIC), at the time China s second largest non-bank financial institution. GITIC s collapse forced Beijing to reassess the strength of its banks in 1998, 40 percent of bank loans were non-performing. In other words, at the turn of the century, China s banking system was technically bankrupt. To address this threat, in 1998, Beijing adopted a plan with three major objectives: 1) strengthen bank balance sheets by removing problem loans; 2) improve bank management skills to avoid problems in the future; 3) increase bank capital by the sale of shares. The plan involved 8 c h i n a b r i e f s e p t e m b e r

5 Illustration by zhang hui the creation of asset management companies (AMC), to which the non-performing loans of the banks would be sold. Over the next decade, the problem loans of China s banks declined from RMB 3.5 trillion (US $500 billion) in 1999 to RMB 504 billion (US $75 billion) in This is a startling achievement. The second step involved the introduction of foreign bank partners as strategic investors. At the time, Beijing saw active foreign bank participation as a critical component of the restructuring program. Its intent was not only to strengthen bank balance sheets, but also to be transformational. The foreign partners role was to introduce risk management and other modern management techniques to enable Chinese bankers to mitigate, if not largely avoid, the bad loan debacles of previous decades. More practically speaking, since the Big Four banks are controlled by the government, the objective was to create professional bankers who could advise the government effectively to avoid another lending bust. Following the introduction of these foreign partners, CCB completed a wildly successful IPO in 2005 followed by BOC and ICBC in Altogether these three banks raised US $42.2 billion in new capital. The problem loan spin-offs plus new capital increased the capital of these three banks to levels significantly above internationallyrecognized standards of eight percent of total risk assets. Against the background of the near-implosion of the international banking system, China s banks seem to have emerged as world beaters. Lingering Questions Looked at a bit more closely, however, the picture is not quite so robust. These are brand new organizations that did not exist in their current form only a few years ago. First of all, the method Beijing used to spin-off bad loans to the AMCs has left the banks still exposed to their old problems; the banks helped finance AMC purchases of bad debt by acquiring nearly US $100 billion in 10-year AMC bonds in 1999 (see Figure 1). For three of the Big Four banks, these bonds account for 30 to 56 percent of their total capital. As for the AMCs, recoveries on bad loan portfolios were at best 25 percent. If the other 75 percent was actually written off, the AMCs would be bankrupt and the bonds worthless. This has not been done. To make their IPOs possible, the Ministry of Finance was compelled by bank auditors to provide a letter of support for the AMC bonds (not a guarantee), thus enabling them to be carried at full value. But as the bonds came due, their maturity was extended for an additional 10 years. This begs a question: how can these bonds have the full value attributed to them on bank balance sheets? These days, the press is replete with Chinese banks capital raising projects. Yet why, after having recently raised tens of billions of dollars in new capital, do the banks now have to come up with tens of billions more? One reason is the lending binge of 2009 in support of what some are calling the New Great Leap Forward Economy (Figure 2). This spike in loans suggests the banks have continued in their roles as public utilities and the second goal of the bank reform program has been less than a success. There is a second reason the banks need more capital. Over the four years between 2004 and 2008 when three of the Big Four were incorporated and listed, they raised US $42 billion in new capital. However during these same four years they also paid out US $42 billion in cash dividends, 70 percent of which ultimately went to the Ministry of Finance. Now Figure 1 Historical baggage on bank balance sheets, December 31, 2008 RMB bn BOC CCB ICBC ABC 1999 AMC bonds MOF I.O.U Total receivables Total Capital Bonds and Receivables to Total Capital 34.5% 55.8% 82.1% 229.3% Source: Bank audited financial statements, December 31, 2008 Figure 2 Trends in Chinese bank lending, New Batch of New Bank Loans Issued NPLs Created 1st Batch of NPLs Created st Batch of NPLs Worked Out NPLs=Non-performing loans Source: People s Bank of China these same three banks are in the market to raise US $37 billion more, which Beijing will have to contribute 70 percent to prevent its shareholding from being diluted. In other words, the cash dividends the Ministry of Finance approved as controlling shareholder will have to be put back into the banks. Given the high growth rates of the banks, why did Beijing require such high dividend payouts roughly 50 percent of bank profits during this period? One important reason is bank dividends are the primary source of repayment of the US $120 billion of Ministry of Finance IOUs held by ICBC and AgBank. This type of financial planning makes little sense. The consequence of binge lending and excessive dividend payouts is the declining trend in capital adequacy; bank capital adequacy is now at pre-ipo levels. This trend suggests that the government s original goal of building capital has yet to succeed simply because Beijing has forced banks and not the national budget to bear their restructuring burden. The banks will be able to raise new capital this round, but the excess lending of 2009 will inevitably give rise to losses, and these will inevitably give rise to a new round of capital raising in two to three years. With their old bad loan burdens still shadowing them and with new ones emerging, will investors still support them the next time around? And will it take another banking crisis to drive a new round of reforms? Carl Walter is the co-author of Privatizing China: Inside China s Stock Markets (Wiley), as well as the forthcoming Red Capitalism: The Fragile Financial Underpinnings of China s Extraordinary Rise (Wiley, Fall 2010). s e p t e m b e r c h i n a b r i e f 9

6 Currency Concerns Are Misplaced An RMB appreciation may not have its intended effect By Patrick Chovanec There is no question that China needs to move towards a more market-based exchange rate for the RMB. For starters, it benefits China s trading partners by removing one factor that aggravates their competitive disadvantage. More importantly, it would benefit China allowing the country s citizens to finally realize the buying power and quality of life they ve rightfully earned over the past 30 years. Additionally, it eases the economic burden imposed by the ceaseless accumulation of foreign exchange reserves far beyond what China needs or can invest profitably. The real question is whether the US should make twisting China s arm on currency its sole policy objective, to the exclusion and detriment of all other concerns or how much an appreciation will help the US at all. While a more flexible exchange rate and the stronger RMB that would likely result would be a step in the right direction, it s not a silver bullet. Also, it would have little effect in the absence of more substantive economic reforms. The narrow focus on currency is a huge distraction from far more pressing issues. For some time now, China has sold more than it buys from the US, and brings in more capital than it invests abroad. That means unused dollars are piling up in China, and normally when the supply of something outstrips demand, its price should drop. These fundamentals dictate that the dollar should depreciate (making US goods more attractive to Chinese consumers) while the RMB strengthens (making Chinese goods more expensive in America), eventually closing the gap in trade. Instead, the Chinese government steps in and buys dollars at the current exchange rate and stockpiles them as official reserves. If only the Chinese would stop interfering, critics argue, and allow both currencies to find their true level. Doing so would allow American products to become more competitive and the trade imbalance to correct itself. Sounds good, but the problem is we ve been here before. In the early 1980s, Japan was running a chronic trade surplus with the US and accumulating dollar reserves on a massive scale. Economists argued an undervalued Japanese yen was to blame. So in September 1985, the central banks Tin Hok Tiong - Fotolia.com of the US, Japan, Britain, France and West Germany agreed on what became known as the Plaza Accord. Over the course of the next two years, they intervened heavily in global currency markets to bring the value of the dollar down by over 50 percent against the yen, moving from 250 to 125 yen to the dollar. The outcome baffled and frustrated economists. While the cheaper dollar had a significant effect in reducing America s trade deficit with Europe, Japans trade s e p t e m b e r c h i n a b r i e f 1 1

7 surplus with the US hardly budged. In fact, it grew. How could this be? Why didn t the new exchange rate make US goods more competitive and erase the trade imbalance with Japan? The reason was structural. The postwar Japanese economy had been based on export-led growth. Its financial system, supply chains and distribution channels were all geared to push exports. The cheap yen was one pillar supporting this structure, but when that changed, other factors swung into effect to maintain the status quo. Following the Plaza Accord, the Japanese banking system flooded the economy with cheap credit to fuel continued expansion and brushed bad debts under the rug. On the equity side, Japan s incestuous system of corporate crossholdings within industry groups created an environment where managers cared more about preserving market share and output than maximizing profits. The country s domestic distribution system, virtually impenetrable to outsiders, created a formidable barrier to imports, regardless of price. Exchange rates are prices, but they only matter so long as prices matter. We normally assume that prices do matter, but soft budget constraints and subsidies embedded in the structure of an economy can blunt or entirely negate the impact prices should have. That s what happened in Japan. China, too, has relied on an exportled model to fuel its stupendous growth in the past 30 years. With the collapse in overseas demand caused by the global financial crisis, much talk has been devoted to the need to foster domestic consumption as an engine of growth. But China s actual response to the crisis has been to rely on an explosion of cheap lending and state subsidies to freeze the existing economic structure in place, in the interests of social stability. Foreign companies are increasingly worried they will be locked out of China s most promising markets, in favor of state-owned firms that often put other goals ahead of profits. If the US were to successfully strongarm China into strengthening the RMB against its will, the result could be a replay of the Plaza Accords. Like Japan, China would find other ways cheap credit, soft budgets, subsidized inputs to insulate its export sector from market forces, in reaction to what it would see as a hostile assault. The result would be lose-lose. The US would not get the trade correction it was looking for, and China would adopt policies that end up harming its own economy. America s interests, and the world s, would be much better served by encouraging China to open its markets to greater competition, foster capital markets that allocate resources more efficiently and develop a social safety net that makes labor markets more flexible and unlocks the savings of China s vast population. America can also send a clear signal that it welcomes Chinese investment, offering China a more productive way to use the dollars it does earn. If progress is made on these fronts, it will help create an environment in which prices do matter, and a more market-based currency can make a difference in producing lasting outcomes. Patrick Chovanec is an associate professor at Tsinghua University s School of Economics and Management and chairs the AmCham-China s Public Policy Development Committee. 1 2 c h i n a b r i e f s e p t e m b e r

8 SME Finance Set to Become Big Business What China is doing to help entrepreneurs hit the accelerator By Kathryn A. Tsibulsky While the mainland Chinese capital markets have historically served large, stateowned enterprises, the government is making a fresh push to expand formal financing to small and medium enterprises (SME). Following the financial crisis, the government directed banks to make more loans to SMEs, and recently announced statistics that are encouraging. China s central bank reported that lending to SMEs rose 23 percent year-over-year to RMB 1.1 trillion in the first quarter of These days, SMEs also have a new venue in the domestic stock market. In October 2009, a NASDAQ-like board opened on the Shenzhen exchange, providing growth-oriented Chinese SMEs with another option to raise money. Response from the business community has been mostly positive, with a steady stream of companies gaining approval to issue shares on the new board. New Interest in the Little Guys As in many of the world s economies, China s SMEs collectively add up to big business. According to the Chinese Association of Small and Medium Enterprises, SMEs defined in China as having fewer than 3,000 employees and RMB 300 million of annual revenues generate nearly 60 percent of China s GDP. More importantly, SMEs created an eye-opening 75 percent of new jobs in China. Smaller businesses have accomplished all of this despite having limited access to formal bank lending or other long-term financing. In the US, where SMEs are defined more narrowly by the Small Business Administration (SBA) as having fewer than 500 employees, they are estimated to generate roughly half of private, non-agricultural GDP. Government guaranteed loans administered by the SBA have provided access to capital for many of those businesses. In contrast, China s SMEs have been financed largely by personal savings, business profits, informal lending associations (sometimes likened to loan sharks) and other grey-market lending. These resources are often limited in scope and subject to excessively high fees and interest rates. Private equity investors have also played an important role in financing growth enterprises, but they generally focus on only the largest of China s SMEs. Matt Fish, managing partner of New Pacific Consulting, notes that the uptick in lending to bigger SMEs during 2009 made it more difficult for private equity investors to close deals. The largest of the SMEs had enough access to capital during that period, explained Fish. Nonetheless, he believes that private equity will continue to play a significant role in financing larger SMEs. This is because he says they may still experience limited access to sufficient loans and may also be receptive to financial and operational guidance. Given that SMEs have driven economic and employment growth in spite of limited access to formal capital, they could give a timely boost to the economy if given greater access to capital. Jason Bedford, manager of Financial Services at KPMG s Beijing office, notes that, SMEs are slowly gaining easier access to bank loans simply because the increasingly competitive environment is making it impossible for banks to ignore these high potential clients. More Room for Improvement Despite progress, serious obstacles to SME lending remain. Most importantly, China 1 4 c h i n a b r i e f s e p t e m b e r

9 photo-dave - Fotolia.com lacks a well-seasoned system of credit rating and credit scoring for borrowers, forcing lenders to conduct more extensive and costly due diligence. Industry groups are working with the government to develop a unified credit scoring system for SMEs. However, the system must be in place for a number of years before it can ensure that it provides an accurate indication of credit quality. In the absence of uniform, accurate credit ratings or credit scores, banks have typically relied on land and equipment as collateral to secure business loans. However, most SMEs don t own land and have limited equipment. Financial disclosure is another problem. According to Bedford, there are often quality issues surrounding the financial statements of SMEs that can make them hard to rely on. Additionally, the existence of several sets of books, which are used for different purposes (i.e., for tax, for internal use, etc.) create further problems. Interest rates are another key concern. Banks can only charge a limited, relatively modest interest rate. SMEs are, by nature, riskier and more prone to fail during downturns. If banks are unable to charge SMEs a risk-adjusted interest rate, they have no financial incentive to lend. Along those lines, some have speculated that a disproportionate amount of the recent surge in SME lending went to state-owned firms, which already have relatively stronger access to loans because they have an implicit government guarantee. Given the limit placed on interest rates, it s hard to blame banks if they ve sought to stack the deck with lower-risk borrowers. Bedford notes that some foreign banks have found a way around this problem, charging SME borrowers an advisory fee to supplement artificially low interest rates. The government has sent clear signals that it wishes to address some of these obstacles. Nonetheless some skeptics believe that, even with better disclosure and risk management, SME lending is a bad idea in China. A recent study out of the UK s University of Nottingham found that as Chinese SMEs achieved greater profitability, they did not take on more debt. That stands in contrast to many other economies, where firms take on more debt as profits rise, deducting interest payments to shelter profits. Are Chinese SMEs less inclined to use leverage because of unattractive loan terms? Or, do they simply dislike debt, seeking to shelter profits through other means? If this latter explanation is ac- s e p t e m b e r c h i n a b r i e f 1 5

10 curate, banks are more likely to end up lending to the worstperforming, most-stressed SMEs, while star performers pre-pay their loans and go debt free. Time will tell if China s rising entrepreneurs will use long-term leverage to accelerate growth. Developments While the debt markets continue to evolve and develop, a new small and medium-cap exchange on the Shenzhen exchange has provided a near-term solution to the more than 100 companies that have listed since October of The ChiNext requires firms to have an initial minimum market capitalization of RMB 30 million, opening up the door for some of China s emerging private firms to raise funds. Commercial lenders often rely on land and other tangible goods, attributing little value to the intangible goods which form the core value of tech-focused startups. So far, ChiNext has been dominated by technology, manufacturing, and petrochemical firms, which represent over 60 percent of listed companies. Metals and mining, pharmaceuticals, and electronics manufacturing have also listed in significant numbers. If the exchange is able to establish credibility and momentum, it may someday rival the NASDAQ, which has nearly 3,000 listed ticker symbols. Enabling more firms to go public can have far-reaching consequences. Once listed on ChiNext, firms are also eligible to issue convertible bonds, which are often used by growth companies in other markets as a stepping stone toward conventional corporate bonds. In general, publicly-listed firms have a far easier time raising money in the bond market, opening up a means of relatively low-cost long-term financing. If SMEs represent an unmet demand for capital, Chinese institutional investors and high net worth individuals represent a major potential source of funds. Domestic investors are clamoring for lower-volatility, higher-return investment vehicles, suggesting that there is enough demand to support a robust convertible and high yield bond market. Investment trusts have begun to structure that trade, creating wealth management products from private loans to firms that are not well-served by the banking sector. However, investment trusts are restricted from listing on domestic and foreign stock exchanges, limiting the scope of this type of specialized lending. According to a report published by KPMG in June, the SME financing capabilities of trust companies and the number of SMEs financed by trust companies would be much higher were this restriction relaxed. Although many obstacles remain for SMEs to access formal financing, the tide seems to be slowly turning in their favor. It s still unclear who among China s financial institutions will take the lead in SME financing. Nonetheless, assuming efforts to expand lending are accompanied by better financial disclosure and the establishment of a reliable credit scoring system, efforts to help out China s little guys has the potential to support widespread economic growth going forward. Kathryn Tsibulsky, CFA, worked as a fixed income analyst for Jefferies & Company in Stamford, Connecticut for five years. She currently lives in Beijing and can be reached at: kat.tsibulsky@gmail.com 1 6 c h i n a b r i e f s e p t e m b e r

11 Beijing s Economic Mapping out Beijing s future investments By Gou Zhongwen Recently Beijing s Vice Mayor Gou Zhongwen addressed AmCham-China members and government officials at the Peninsula Hotel. This marked the office of the Vice Mayor s fifth annual dialogue with the chamber. Below is an abridged version of his speech in Chinese and English. To read his speech in its entirety, please go to: * * * * Dear Chairman John D. Watkins, Jr., President Christian Murck, Ladies and Gentlemen: On behalf of the Beijing municipal government, I would like to express a sincere welcome to all guests and heartfelt thanks to the American companies for your active involvement and great contributions to the capital s economic development! First, I would like to share with you the overall economic and social development in Beijing. In 2009, Beijing succeeded in dealing with the global financial crisis, achieving a gross regional product of RMB 1.19 trillion, with an increase of 10.1 percent and a per capita GDP of over US $10,000. Beijing was ranked as a moderately developed city. With the most developed service industry in China, its tertiary industry accounted for 75.8 percent (primary industry one percent and secondary 23.2 percent). The city generated a gross social consumption of RMB billion, with an increase of 15.7 percent over the same period of last year, surpassing Shanghai for the second year in a row to become the biggest consumption market in China. The foreign direct investments it used in the whole year continued to increase under the unfavorable conditions of the global downturn and reached US $6.12 billion. In the first five months of 2010, the city continued to gain a good momentum with respect to primary social and economic indicators: compared with the same period of last year, the added value of largescale industries in the city increased by 19.6 percent, the export delivery value of large-scale industrial companies 21.1 percent, the gross social consumption 15.8 percent and financial incomes 34.6 percent. The confidence in the market continued to increase, and the Entrepreneur Expectation Index picked up for five quarters in succession and was close to the level before the global financial crisis hit. From January to May this year, Beijing actually used US $3.02 billion foreign direct investments, with an increase of 2.4 percent over the same period of last year. The investments from US increased by 74 percent, compared to the year before. Currently, Beijing is in a new stage to build an international metropolis. We established a development strategy, People, Hi-tech and Green Beijing, that proposes an objective of building a world city, and we have already begun executing the following initiatives: 1. Accelerate indigenous innovations The State Council approved the Indigenous Innovation Demonstration Area (IIDA) to be built at Beijing s Zhongguancun Science Park (ZSP) in March The reform pilots will promote equity investment, equity incentive, technological finance, government procurement, industrial and commercial administration, among others. Furthermore, the IIDA will drive the development of strategic and emerging industries including new energies, environment protection and energy conservation, electric vehicles, new materials, new drugs, biological breeding, information industry, and more, while actively developing high-end manufacturing industry, focusing the introduction of major industrial projects with superior technology and great added value, supporting the industrialization of hi-tech achievements with independent intellectual property in Beijing, and promoting the integrated development of secondary and tertiary industries. It is a national strategy to build the IIDA at the ZSP, both the central government and the Beijing city government provide many favorable policies for it, and foreign companies can also enjoy these policies if they make indigenous R&Ds and industrialize their s e p t e m b e r c h i n a b r i e f 1 7

12 achievements in Beijing. 2. Develop economic headquarters In May 2009, Beijing released the new Provisions for Encouraging Multinational Companies to Establish Regional Headquarters in Beijing, as well as implementing measures, which are advantageous over the policies of other provinces and cities in China. According to the new provisions, a lump-sum fund subsidy of RMB 5-10 million will be provided for the regional headquarters that are built or relocated in Beijing since January 1, 2009, based on the amount of their registered capitals. Meanwhile, for the approved regional headquarters, a certain amount of funds will be awarded to the companies with an annual turnover of more than RMB 100 million from Since the launch of this policy, many multinational companies are eager to establish regional headquarters in Beijing. In fact, 32 new regional headquarters have been approved within one year. Now the multinational companies have established a total of 68 regional headquarters in Beijing, including 54 Global 500 companies. On behalf of the Beijing municipal government, I d like to welcome even more American companies to establish regional headquarters in Beijing. 3. Actively promote service outsourcing Beijing released the Opinions on Promoting the Development of Service Outsourcing Industry in Beijing in May The Opinions state that the service outsourcing companies that are identified as technology-advanced companies can enjoy favorable taxation policies. For example, from 2009 until 2013, the enterprise income tax rate has been reduced to 15 percent, and is exempt for offshore service outsourcing business. At the same time, Beijing will grant corresponding funds to support the development of the service outsourcing industry. This amount will not be less than twice the annual supportive funds from the central government. Beijing will also provide greater credit support for service outsourcing companies, expand their financing channels and strengthen their financing capacity. 4. Optimize industrial structure Beijing is accelerating its economic development, continuing to adjust and optimize its industrial structure in line with the central government s requirements. Last year, Beijing launched plans to reinvigorate six industries: electronic information, biomedicine, urban industry, automobile, equipment manufacturing and new energies. In February of this year, Beijing also released the Implementation Plan of Beijing Municipality on Adjusting and Reinvigorating Logistics Industry. According to this plan, social logistics will exceed RMB 7 trillion, the production value of logistics industry will exceed RMB 60 billion and the logistics industry will become a pillar industry in Beijing by Beijing will strive to introduce Top 100 logistics companies eight to 10 globally recognized and domestic in the next three years to promote development of the logistics headquarters. American companies have advantages in the sectors that Beijing prioritizes, and we hope that more American companies can participate in the industrial development of Beijing. 5. Focus regional layout adjustment With the objective of building a world city, Beijing focuses the adjustment of existing space structure and the construction of a new structure while we develop six highend industrial functional zones. These include: the Zhongguancun National Indigenous Innovation Demonstration Area, Financial Street, the Economic and Technical Development Zone, Central Business District, Airport Economic Zone and the Olympic Center. I. Drive the integration of administrative resources of Beijing Economic and Technical Development Zone and Daxing District. II. Implement eastward expansion of the Central Business District III. Start westward expansion of the Financial Street.. IV. Accelerate the construction of Tongzhou New Modern International City V. Develop and release the Action Plan on Accelerating the Development of Southern Urban Areas VI. Strengthen investment promotion. Our philosophy is, The government should help investors do business, while the investors help the government develop industries. For many years, American companies in Beijing have made active contributions to Beijing s social and economic development. We will continue to welcome American companies to invest and develop in Beijing, striving to create a better development environment and provide better governmental services... Let me close by sincerely wishing AmCham-China and the American companies in Beijing continuous and new achievements, wishing everyone a prosperous business, a happy family and a joyful life Gou Zhongwen is a Beijing Vice Mayor. 1 8 c h i n a b r i e f s e p t e m b e r

13 在北京市政府与中国美国商会座谈会上的讲话北京市人民政府副市长苟仲文 节选 阅读全文, 请登陆网页 尊敬的华金声主席 孟克文会长, 各位朋友, 女士们 先生们 : 今天, 我们在这里举行一年一度的北京市政府与中国美国商会座谈会, 我谨代表北京市政府, 对各位来宾的到来, 表示诚挚的欢迎! 向积极参与首都经济建设并做出贡献的美国企业表示衷心的感谢! 首先, 我向大家简要介绍一下当前北京经济社会发展的总体情况 2009 年, 北京成功应对国际金融危机的冲击, 实现地区生产总值 亿元, 增长 10.1%, 人均 GDP 超过 1 万美元, 进入中等发达城市行列 ; 第三产业比重达到 75.8% ( 第一产业和第二产业比重分别为 1% 和 23.2%), 是中国服务业最发达的城市 ; 实现社会消费品零售额 亿元, 同比增长 15.7%, 连续两年超越上海, 成为中国消费市场最大的城市 ; 全年利用外商直接投资逆势不降, 达到 61.2 亿美元 今年前 5 个月, 本市主要经济社会指标继续保持良好的态势, 全市规模以上工业增加值同比增长 19.6%, 规模以上工业企业实现出口交货值同比增长 21.1%, 社会消费品零售额同比增长 15.8%, 财政收入同比增长 34.6% 市场信心不断提升, 企业家信心指数连续 5 个季度回升, 已接近国际金融危机前的水平 今年 1-5 月, 北京实际利用外商直接投资 30.2 亿美元, 同比增长 2.4%; 其中, 美国在京投资同比增长 74% 当前, 北京已经进入全面建设现代化国际大都市的新阶段 我们确立了 人文北京 科技北京 绿色北京 发展战略, 提出了建设世界城市的目标, 并为此采取了一系列重要举措 一是加快推进自主创新 2009 年 3 月, 国务院批准北京的中关村科技园区建设国家自主创新示范区 示范区将通过深入 推进股权投资 股权激励 科技金融 政府采购 工商管理等改革试点, 促进新能源 节能环保 电动汽车 新材料 新医药 生物育种 信息产业等战略性新兴产业发展, 同时积极发展高端制造业, 着力引进科技含量高 附加值大的重大产业项目, 支持具有自主知识产权的高新技术成果在京产业化, 促进二三产业融合发展 建设中关村国家自主创新示范区是国家战略, 中央政府和北京市都给予了诸多优惠政策, 外资企业在京进行自主研发和创新成果在京产业化, 也可享受同样的优惠 二是大力发展总部经济 北京市于 2009 年 5 月发布新的 关于鼓励跨国公司在京设立地区总部的若干规定, 并出台了具体的 实施办法, 这些政策与国内其他省市相比具有明显优势 新规定对 2009 年 1 月 1 日以后在京新设立或新迁入的地区总部, 依注册资本规模给予 500 万元至 1000 万元一次性资金补助 同时对经认定的地区总部, 从 2009 年度起, 对年营业收入在 1 亿元以上的企业给予一定资金奖励 该政策实施以来, 跨国公司在京设立地区总部十分踊跃, 一年来新认定跨国公司地区总部 32 家, 全市累计有跨国公司地区总部 68 家, 其中世界 500 强企业 54 家 我在这里代表北京市政府, 欢迎更多的美国企业在京设立地区总部 三是积极促进服务外包 北京市于 2009 年 5 月颁布了 关于促进本市服务外包产业发展的若干意见 意见规定, 服务外包企业被认定为技术先进型服务企业, 可享受到相关税收优惠政策, 包括自 2009 年起至 2013 年止减按 15% 的税率征收企业所得税, 对离岸服务外包业务收入免征营业税等 同时, 北京市将设立服务外包产业发展配套资金, 额度不少于年度中央支持资金的 2 倍 北京市还将加大对服务外包企业的信贷支持力度, 拓宽服务外包企业融资渠道, 增强企业融资能力 四是进一步优化产业结构 当前, 北 京市正在按照中央的要求, 加快经济发展方式转变, 不断调整和优化产业结构 去年, 北京市政府陆续出台了电子信息 生物医药 都市型工业 汽车 装备制造和新能源等六大产业振兴规划 今年 2 月又发布 北京市物流业调整和振兴实施方案 根据规划, 到 2011 年北京市社会物流总额要突破 7 万亿元, 物流业产值要突破 600 亿元, 物流业要成为首都的支柱产业 为此北京市将力争在 3 年内引进 8-10 家国际知名物流企业, 引进 家国内百强物流企业进京, 促进物流总部经济发展 美国在北京市重点发展的产业领域都具有优势, 希望更多美国企业参与到北京的产业发展中来 五是着力调整区域布局 着眼于世界城市目标, 北京在继续大力发展中关村国家自主创新示范区 金融街 经济技术开发区 商务中心区 临空经济区和奥林匹克中心区等六大高端产业功能区的基础上, 正在着力调整和搭建新的空间架构 一是推进北京经济技术开发区和大兴区行政资源整合, 二是实施北京商务中心区 (CBD) 东扩, 三是启动金融街西扩工程, 四是加快建设通州现代化国际新城, 五是制订和发布 促进城市南部地区加快发展行动计划, 六是加大投资促进力度, 我们有一个基本理念 : 政府要帮投资人做企业, 投资人要帮政府做产业 多年来, 美国在京企业为北京经济社会发展作出了积极贡献 我们将一如既往地欢迎美国企业家来北京投资发展, 努力创造更好的发展环境, 提供更好的政府服务 最后, 我代表北京市政府, 衷心祝愿中国美国商会和在京美国企业在北京不断取得新的发展成绩, 祝各位朋友事业兴旺 家庭幸福 生活愉快! 下面我和我的同事愿意借这个机会回答各位的提问 谢谢大家! s e p t e m b e r c h i n a b r i e f 1 9

14 China s New Era of Consumer Banking How foreign banks are impacting China s banking industry By David Leung April 2007 ushered in a new chapter for China s banking industry. Since then, foreign banks have legally been allowed to incorporate in China. This has meant that foreign banks can offer full RMB-denominated financial products and services to local residents. Three years have past, yet the foreign banking community still only accounts for a very small percentage of the overall consumer banking business in China. Despite the relatively small market share, their global expertise and rich experience has enabled foreign banks to import many new business concepts, creating a benchmark for loan banks, which has rapidly driven the development of China s banking industry. With China s rapid economic development and steady growth momentum, individual income continues to increase and the financial needs of individual customers has also become more diversified. Customers are always looking for new, innovative products and services. However, before 2007, the financial products available to Chinese consumers were still limited in terms of variety. With licenses to offer full scale RMB-denominated financial products, foreign banks have introduced a wide range of new financial products to Chinese consumers. Standard Chartered, for example, was one of the first foreign banks to incorporate locally in China and was able to develop a full scale retail bank in China within six months. Furthermore, the bank introduced personal loan products in China, the Xiandaipai, the first unsecured personal loan product specifically designed for Chinese consumers. While this was a very mature product in other international markets, no 2 0 c h i n a b r i e f s e p t e m b e r

15 similar products were available in China. Tapping into the needs of the local mass market, this unsecured personal loan product gives customers the opportunity to receive their own line of credit. Upon approval, the loan amount can be directly credited to a designated personal bank account. The application process is simple and straightforward and no collateral or guarantor is required. Instead, the applicant is assessed based on their employment and income stability. This product provides a new solution to meet the increasing consumption demands of the Chinese public, especially the younger generation. Thus far it has received very good feedback from the market. The business installment loan was another imported improvement. It is an unsecured lending product for small and medium enterprises. Low capital and lack of suitable collateral are common problems for local SMEs, and can cause financing bottlenecks. Business installment loans help to eliminate these obstacles for many clients. Also, a simplified application process for business installment loans ensures fast turnaround times, minimizes operating expenses and helps enterprises seize every window of opportunity. These are just two examples of the innovative financial products introduced by foreign banks. They illustrate how the positive role foreign banks play in opening new doors for Chinese consumers to access world class financial products. Another area that is highly influenced by foreign banks is private banking. Rapid economic growth in China over the past decade has resulted in a significant rise in the wealth of the Chinese population. The number of high-net worth individuals with ingestible assets above US $1 million has grown at a double-digit pace, with the number set to reach 610,000 at the end of The financial needs of this group of people are very different from those of the general public and are more individualized and sophisticated. In the past, there were no specific financial services which catered to this group of individuals even though private banking had reached a very mature stage in the global banking industry, with foreign banks offering on-shore private banking business in China. In addition to introducing more innovative financial products and services to the Chinese market, the biggest change that foreign banks bring to China is the advanced wealth management concept. Previously, for most Chinese individuals, wealth management simply equaled investment. Foreign banks aim to introduce the advanced concept of wealth management into the Chinese market, which is a holistic and integrated approach to managing one s finances. Additionally, foreign banks are driving customer education through organizing education seminars and giving lectures. Foreign banks have brought many changes to China s consumer banking industry. Chinese consumers are benefiting greatly and are now able to enjoy worldclass financial services and products as well as financial concepts. Similar to the Chinese economy, China s banking industry is set to develop quickly and steadily in the future. David Leung is the general manager of wealth management at Standard Chartered China. s e p t e m b e r c h i n a b r i e f 2 1

16 CSR CORNER Saving Sharks Is Good Business Creates difficult ecological challenges By Steve Trent Wildlife conservation is good business. It provides employment, income and a basis for development in countless ways. Many of these benefits remain poorly understood or unrecognized by businesses globally. The latest scientific studies spell out the importance of effective species conservation in building an economically sustainable architecture for our development into the future. We ignore this fact at our peril. Nowhere are these needs greater than in China. As the world s single largest consumer of wildlife products, China s market is growing exponentially and unsustainably. Hundreds of millions of Chinese are reaching the ranks of the middle class, and their spending habits are shifting accordingly. The combination of old customs and new money are driving an explosion in the use of wildlife parts and products in China. A crucial example is shark fin soup. Traditionally served throughout China at weddings and to show respect at business meetings, people are eating it more regularly as the cost becomes less prohibitive. The rapid increase in market demand has resulted in sharks being targeted for their fins, a practice called finning. The shark fins are cut off and as much as 98 percent of the shark is thrown back into the water, dead or dying. Illegal incursions into marine protected areas across the world, specifically for finning, are increasing. According to a report by SC Clark, ap- 2 2 c h i n a b r i e f s e p t e m b e r

17 The economy is a wholly owned subsidiary of the environment Gaylord Nelson, environmentalist, former US senator and governor. Illustration by zhang hui proximately 79 million sharks (1.7 million tons) are killed each year to meet the increasing demand for shark fin soup. The actual impact, however, is far greater, as further shark mortality occurs when boats are fishing for other species and sharks are caught as by-catch. Shark finning and the impact of by-catch have contributed to collapsed populations of up to 99 percent. The International Union for Conservation of Nature s, Red List of Endangered Species, states that 20 percent of all shark species and more than 50 percent of pelagic sharks are threatened with extinction. Of the more than 500 known species of shark, only three are protected in the majority of countries in which they are found. China s mounting consumption of shark fin is causing the greatest concern for shark conservation globally. It simply makes ecological and economic sense to protect sharks. Most sharks are the top predator within their ecosystems and play a key role in maintaining the ecological security of our seas and oceans, thereby supporting our own economic well being. We know from past experience that removing a keystone species can lead to cascading species loss throughout the ecosystem. In the northwest Atlantic Ocean, for example, the shellfish fishery collapsed as larger sharks were hunted too aggressively. The massive increase in consumption of shark fin soup in China is having a devastating effect on shark populations. This impact has reached both commercial fisheries and those providing food security for poorer communities. To put it into economic terms, the world s fisheries employ approximately 200 million people, provide about 16 percent of the protein consumed worldwide and have a value estimated at US $82 billion, as stated by the Convention on Global Diversity s Global Biodiversity Outlook. The risks to upsetting this delicate ecosystem are huge. Businesses control one important part of the solution. Companies, particularly in China, can discuss with their workforces the problems associated with shark fin soup and discourage consumption, particularly on official outings. Cumulatively, this could make a big impact on the practice of finning. Addressing consumer demand has long been viewed as outside the expertise of conventional conservation organizations. However, a coherent portfolio of actions to address this problem must include demand reduction plans. WildAid has developed a unique, integrated model to address demand for shark fin in China and build collaboration across all sections of Chinese society. Working with government, business, media partners and celebrities, WildAid has successfully encouraged attitudinal and behavioral change to reduce demand for endangered species. We have engaged a unique network of media partners enabling us to reach one billion people each week with high-impact messaging, and Chinese basketball star, Yao Ming, is our international ambassador. China has an opportunity to take a global conservation leadership role and eliminate unsustainable wildlife consumption. A simple reduction in the consumption of shark fin soup will achieve a dramatic and permanent shift in the global demand for unsustainable wildlife products. WildAid believes in China s ability to take on this role, but the country needs the help of its business leaders to become a world leader for wildlife preservation. Steve Trent is president of WildAid. He can be reached at: trent@wildaid.org. For more information, please see: WildAid international ambassador Yao Ming, with President Steve Trent A Survey Conducted Across Asia Found: % percent said the reason they eat 56 shark fin soup is social habit % they would eat it regardless of price 46 % said they would not eat it if they 45 knew the shark was finned alive, its body discarded or that sharks were threatened by the trade % thought that sharks were important 65 to the balance of marine life % (In Taiwan prior to WildAid s 43 campaign) knew shark fin soup was made from shark (the local name is fish fin soup ) and 13 percent believed that the fins grew back Source: WildAid courtesy of wildaid s e p t e m b e r c h i n a b r i e f 2 3

18 chairman s message CONCERNED YES. SPOILED NO. The concerns of American companies in China are legitimate China has done an outstanding job opening and reforming its economy over the past three decades. While the implementation has not been without problems, the results are impressive, even historic. The Chinese people are right to have tremendous pride in these accomplishments. While the Chinese led the dramatic improvements the world witnessed over the last 30 years, they also benefitted from the contributions of others. From my perspective, US multinationals have been one of the most significant and reliable friends supporting China s amazing transformation. So it is surprising, even discouraging, to see some in the Chinese media call American companies spoiled and exceptionalists in response to recent concerns we expressed over certain regulations and trends in recent months. The Chinese government invited, even wooed American businesses for the last 30 years to invest heavily in China. American firms did what neither the Chinese government nor companies were able to do for themselves. In a spirit of goodwill and risk-taking capitalism, American businesses brought technology, management operating systems, financial capital and know-how to China. Chinese officials regularly promised steadily widening market access to China s domestic market and a gradual transition to a market economy. In fact, until recently, American and other international companies received incentives such as tax incentives, R&D credits, below-market land prices and other incentives to attract investment and off-set the high risk factors and other costs associated with investing in China. Gradually, these incentives were withdrawn and, with some exceptions, there is little difference between incentives foreign multinationals and Chinese companies receive in making new investments in China. Generally speaking, most American firms are still willing and continue to invest because the risk levels have mitigated and current returns are robust. However, if laws and regulations are passed and implemented in their current forms including indigenous innovation, the anti-monopoly law and an associated national security review and certification and patent law it will represent a step backwards in China s openness and reform policies. We believe the effect will be, over time, to restrict foreign companies access to China s domestic market. American companies are not seeking exceptionalism or special privileges as some in the Chinese media are claiming. American firms are advocating for non-discriminatory, consistent and transparent treatment that allows our firms to fully participate and grow in China s robust domestic economy as it transforms itself from an export-led economy to a domestic consumption-led economy. Chinese leaders promised investors this type of environment for the last 32 years. It is entirely right for those who invested to expect these promises to be kept and for us to have a fair and non-discriminatory opportunity to earn returns on our investments. It was US multinationals in the early-1980 s who began investing tremendous amounts of human, technological and financial capital in China long before China was guaranteed to be the economic juggernaut it is today. The American business community went to Washington, DC, in the spring of 1990 to successfully fight for China s renewal of Most Favored Nation (MFN) trading status, and has continued to go to Washington, DC, every year since 1990 to successfully support China on MFN, permanent normal trade relations, WTO Accession and other controversial topics. It was the American business community that invested millions of dollars training China s best engineers, scientists, technicians, business leaders and government officials on our corporations best practices, tools, processes and systems. American multinationals also invested hundreds of millions of dollars in advanced R&D centers in China, hired and trained thousands of bright and ambitious young Chinese students not only in their field of study, but also in management and leadership. Finally, it was the American business community that responded within 24 hours of the May 12 Sichuan earthquake with generous donations for the rescue, relief and rebuilding effort with contributions eventually exceeding $100 million in goods and services. These are not the acts of those who are spoiled. These are acts of long-term friends and partners. We support open markets for trade and investment in both the US and China as articulated by AmCham-China s Three One Trillions vision. We strongly support gradual currency reform, Chinese financial and non-financial investment in the US (including the An- Shan Steel investment) and reform of US export control regulations allowing the exports of more US high technology products to China. At the same time, we oppose illegitimate acquisition of technology, copyrights and other intellectual property. We oppose large, profitable firms who use, but do not pay for, commercial software. We oppose market-tightening regulations that contradict multilateral trade agreements in either country. We oppose the politicization of the trade and investment relationship in both the US and China as the US approaches mid-term elections in 2010, full-term elections in 2012 and as China prepares for its leadership changes in These are not the advocacy positions that exceptionalists take. These are positions taken by those who are good friends, partners and investors in China s long-term growth, prosperity and peace. John D. Watkins, Jr. AmCham-China Chairman 2 4 c h i n a b r i e f s e p t e m b e r

19 26 Know Your Working Groups THE MANUFACTURING AND SOURCING FORUM SMALL BUSINESS FORUM TAKES NEW DIRECTION 26 Working Groups What they do and a listing of leadership 28 Events A roundup of the chamber s activities 35 SPECIAL EVENTS TIANJIN CHAPTER ELECTS MICHAEL HART CHAIR ACP LAUCHES FIFTH EMDT PROGRAM 38 New Members A list of AmCham-china s newest additions 40 MEMBER SPOTLIGHT ANDY MOK KRIS NAIDU 42 The Learning Curve AN UPDATE ON SUMMER S VISA SURGE s e p t e m b e r c h i n a b r i e f 2 5

20 AmCham-China In Ac tion Working Group Know Your Working Groups Forum Chairs Please see for more infromation about AmCham-China's forums and committees. The Manufacturing and Sourcing Forum Members participating in a simulation training event AmCham-China s Manufacturing and Sourcing Forum provides information, education and updates on manufacturing and sourcing industry related developments for the chamber, Chinese and US government officials. The forum hosts bi-monthly events featuring prominent speakers from the field. Recently, David Mitchell, general manager of Kronos, Greater China, spoke on overall labor effectiveness and creating more efficiency in a Chinese labor force. The forum also hosted a breakfast event featuring Professor Ou Jihong of Cheung Kong Graduate School of Business, who discussed the unique characteristics of China s manufacturing industry. In addition, recently the group hosted a manufacturing industry simulation training event (pictured above) where Gordon Sheppeck of Business Today, an international business simulation development firm, led the day s interactive business training session. The simulation involved every aspect of building a business, from planning and purchasing market research to balancing a balance sheet. Participants included members who work in sales, human resources and operations. The Manufacturing and Sourcing Forum also supports AmCham-China in government relations efforts that impact manufacturing and sourcing, while advocating for member companies on various manufacturing and sourcing related policies in China. Harold Lang of Terex (China) Investment Company, Limited and Dwight Nordstrom of PRI Management and Consulting Limited co-chair the forum. To get involved, please contact Nancy Xu at: nxu@amchamchina.org Nancy xu Aerospace 4 John Bruns, Boeing (China) Co., Ltd. Jason X. Liao, Bombardier Inc. Kevin Wu, Textron Agriculture 1 TBA Aviation Cooperation Program 11 Pat Power, FAA David Wang, Boeing (China) Co., Ltd. Beijing 4 John Holden, Hill & Knowlton (China) Public Relations Co., Ltd. Business Process Outsourcing 1 Julie Liu, Cummins China Michael Liu, Compupacific International Inc. Gabrielle Sanders, Convergys Corp. Clean Technology 1 Robert Jones, Individual Chris Raczkowski, Azure-International Cosmetics 2 Carol Shen, Estee Lauder (Shanghai) Commercial Co., Ltd. Oil, Energy and Power 1 Greg Ray, Independent Project Analysis, Inc. Zhiyong Zhao, Hess China Oil and Gas Beijing Environmental Industry 1 Daniel Li, Albemarle (Shanghai) Chemical Co. Export Compliance Working Group 8 Chris Szymanski, SMIC David Wang, Boeing (China) Co., Ltd. Financial Services 3 Joshua Kurtzig, Gao Fei Consulting Services (Beijing) Co., Ltd. Vivian Zhao, Visa International Bing Zhou, Paypal Co. Food 5 Owen Ma, PepsiCo, Inc. Brad Smith, Nestle (China) Ltd. Healthcare Industry 5 Eric Kong, Edwards Lifesciences World Trade (Shanghai) Co., Ltd. Roberta Lipson, Chindex International, Inc. Human Resources 3 Jim Leininger, Watson Wyatt Worldwide Insurance 3 David Zhang, Liberty Mutual Insurance Company Committee Chairs American Community and Culture (ACC) 2 Kathy Chi, Golden Richland Business Consultants Anthony Goh, US - Pacific Rim International, Inc Chinese Government Affairs 13 Greg Gilligan, APCO Worldwide Inc. Xiaoping Jiang, Flextronics (China) Li Wan, Cummins Corporate Social Responsibility 6 Andy Andreasen, Shanghai AIAL Information Consulting Co., Ltd. Kaying Lau, APCO Worldwide Inc. Customs & Trade 8 Zhaokang Jiang, Sandler, Travis & Rosenberg P.A. Election 7 Kamal Latham, Diplomatic Treatment Corporate Concierge, LLC, Beijing Representative office Golf Program 1 Hans Lootiens, Renaissance Beijing Capital Hotel Su Cheng Harris - Simpson, SCHS Asia Legal 12 Mark Cohen, Microsoft Hank Wang, Garvey Schubert Barer Support Staff: 1, Sujing Wang (sjwang@amchamchina.org) 2, Julie Leng (jleng@amchamchina.org) 3, Nancy Xu (nxu@amchamchina.org) 4, Cindy Du (cdu@amchamchina.org) 5, Victoria Qu (vqu@amchamchina.org) 6, Mariel Montuori (mmontuori@amchamchina.org) 7, Heather Hausladen (hhausladen@amchamchina.org) Intellectual Property Rights 12 Mark Cohen, Microsoft James Haynes, Tee & Howe Sean Mok, Warner Bros. (F.E.) Inc. IT/Telecom 1 Ted Dean, BDA (China) Ltd. Jimmy Goodrich, Cisco Systems. Inc. Manufacturing and Sourcing 3 Harold Lang, Terex (China) Investment Co., Ltd. Dwight Nordstrom, PRI Management & Consulting Ltd. Marketing, Advertising and Public Relations 1 Kate Wang, John Deere (China) Investment Co., Ltd. David Yusah, Lenovo Media and Entertainment 2 James Dyson, Dow Jones & Co. Alan Kahn, Beijing Family United Hospital Provincial & Regional Development 14 Emory Williams, SureBlock Company Lily Young, Schneider Electric Real Estate and Development Industry 1 Eric Hirsch, Jones Lang LaSalle Retail and Distribution Industry 1 Matthew Estes, BabyCare Ltd. Barry Friedman, Wal-Mart Small Business 6 & 7 Anthony Goh, US-Pacific Rim International, Inc. Standards 3 Chris Lanzit, American Society of Mechanical Engineers Tax 4 Gus Kang, Deloitte Touche Tohmatsu CPA Ltd. Alan Wu, PricewaterhouseCoopers Tourism Industry 2 Jamie Lee, Los Angeles Convention and Visitors Bureau China Office Training and Development 3 Alan Babington Smith, LMI China (Shanghai) Inc. Transportation and Logistics 2 TBA Real Estate (Tianjin Chapter) 10 Micheal Hart, Jones Lang LaSalle Don Stewart, Rex Group Ltd. Public Policy Development 8 Patrick Chovanec, Individual US Government Relations 8 James McGregor, APCO Worldwide Inc. Visas 9 Gary Chodorow, Frederick W. Hong Law Offices Beijing Darlene Macneill, Deloitte Touche Tohmatsu CPA Ltd. Women s Professional 6 Su Cheng Harris - Simpson, SCHS Asia Nina Hsu, LTI Associates Young Professionals 6 Jeremy Huff, NBA Kevin Li, PricewaterhouseCoopers Ryan White, Santa Fe Relocation Service Golf (Tianjin Chapter) 10 Hank Martin, Hank's Sports Bar & Grill 8, Elizabeth Rowland (erowland@amchamchina.org) 9, Judy Karp (jkarp@amchamchina.org) 10, Amanda He (amandahe@amchamchina.org) 11, Michael Chen (mchen@amchamchina.org) 12, Julia Howe (jhowe@amchamchina.org) 13, Michelle Guo (mguo@amchamchina.org) 14, Breeze Wang (bwang@amchamchina.org) 2 6 c h i n a b r i e f s e p t e m b e r

21 Small Business Forum Makes Big Changes Michael Crain discusses plans to ramp-up forum activities Jin peng By Megan Rhodes AmCham-China s Small Business Forum (formerly the SME Forum)is taking on a new direction. Recently, China Brief sat down with Michael Crain, an AmCham-China governor, to talk about what the working group is looking to accomplish. Michael outlined the chamber s new resources for small businesses and what ways members can get involved. What was the reasoning behind re-branding the SME Forum the "Small Business Forum?" A priority of this year s AmCham- China Board of Governors was to engage the forums and committees and, specifically, work to identify ways to more closely involve the small and medium enterprise (SME) community. AmCham-China recently completed a formal survey of those members identified as SMEs. We found that traditional SMEs were more involved in forums that addressed their specific issue area and the smaller businesses felt they didn t always benefit from an SME label or approach. Due to their nature, smaller businesses in the community need more assistance with basic areas of doing business such as legal, tax and HR issues. Additionally, these members join AmCham- China for the opportunities to network and gain exposure for their business. While all businesses face these same issues, addressing them seems more difficult for smaller and entrepreneurial businesses. Based on the survey findings (and after more than a few conversations with smaller entities and entrepreneurial types) it became clear that re-branding this forum to more accurately describe the group will assist in more appropriately addressing this population s needs. What kinds of resources does AmCham-China have for members to address challenges that face small businesses in China? China is a busy place and all of AmCham-China s members are pressed for time. Since they are normally very small offices, the Small Business Forum members are stretched even thinner. AmCham-China recognizes their pressures and we are ready to do more to meet the basic needs of these members. We have produced a web-based Small Business Forum Handbook that addresses many of the larger issues this group faces, such as how to register a business and tax implications of living in the PRC. We will continue to synthesize pertinent information break and present it in an easy-to-use format. For example, content is being added to the AmCham-China website to make it more of a one-stop shop for all small business information which will help those members stay informed without requiring much time. In addition, we plan to host more small business oriented events, which will provide pertinent, timely information. We will also focus on networking opportunities which will provide needed exposure to expand and grow their business. Connecting our small businesses with larger corporations is also a priority, so AmCham-China will identify ways for these connections to be made. How can members get involved with the Small Business Forum and what's on the horizon? AmCham-China is a memberdriven organization, so we are really looking to those members who can benefit from a more active Small Business Forum to get involved and let us know as an organization the specifics of what they need. Looking ahead, we want to make the forum more streamlined in identifying and providing resources that are useful to these members. This includes monthly meetings where ideas are exchanged and priorities are set all in an effort to assist these businesses with making the most of their affiliation with AmCham-China. In addition, AmCham-China plans to host a small business seminar in the next few months to highlight and address some of those issues that most effect this growing population. We will develop ways for our smaller businesses to interact on a regular basis with the larger corporate AmCham- China members in order to connect their services with larger corporate needs. The website will also be expanded to include relevant and timely information synthesized for a quick read. Also, content will be added to the online Small Business Forum Handbook on an ongoing basis. I cannot stress enough how critical the input from members is to the success of this forum, so I hope that more individuals step forward to assist in making the forum an active, integral part of the AmCham- China organization. Anthony Goh (US-Pacific Rim International, Inc.) is providing tremendous leadership and chairs the Small Business Forum. Anyone who is interested should please contact Julie Leng at: jleng@amchamchina.org Michael Crain is an AmCham-China governor. s e p t e m b e r c h i n a b r i e f 2 7

22 AmCham-China In Ac tion Summer events Vice Mayor Gou Zhongwen discusses Beijing s development plans Beijing Vice Mayor Fifth Annual Dialogue with AMcham-china Recently, Vice Mayor Gou Zhongwen addressed members and government officials at the Peninsula Hotel. AmCham-China Chairman John D. Watkins, Jr. gave the introductory remarks for the vice major. Vice Mayor Gou, highly experienced in the IT and manufacturing sectors, began his speech describing how Beijing climbed out of the financial crisis in 2009, and then spoke briefly about each of the city s thriving areas, detailing foreign direct investment between China and the US. He noted that from January to May this year, Beijing used US $3.02 billion in foreign direct investment, an increase of 2.4 percent over the same period last year. Meanwhile the investments from the US increased by 74 percent compared to the year before. The vice Mayor also highlighted the service, financial, entertainment and green sectors among others, describing future initiatives and plans for investment. After Vice Mayor Gou s informative presentation, AmCham-China President Christian Murck asked questions submitted by members prior to the event. Questions ranged from traffic and customs in Beijing to air quality and communicating with the government. The event, co-hosted by the Beijing Municipal Government and AmCham-China, concluded with informal networking between government officials and members. To read an abbreviated version of the vice mayor s speech, please see page 17. Healthy Cities Initiatives The AmCham-China Healthcare Forum and the AmCham-China CSR Committee jointly offered a presentation and networking session to over 30 attendees on Healthy Cities and Opportunities to Participate, featuring World Health organization (WHO) Environmental Health Advisor, Dr. Mukundan Pillay. Andrew Andreasen, managing director of AIAL, introduced Dr. Pillay, gave an overview of China's participation in the global healthy cities program, which is supported by the China Ministry of Health and the WHO. Based on the Chinese government s China Health Reform 2020, this national initiative aims to provide "safe, effective, convenient and affordable" healthcare services to urban and rural residents. This public service to the people will require government funding and supervision. It is here that new business opportunities will be created across the multiple determinants of health, including environment, climate, infrastructure, pharmaceutical and medical device availability, education, and food safety among others. The central idea of the program Connie zhao is to ensure continual growth along with documented data to encourage private investments in one of the many facets of social responsibility that involves multi-sector collaboration. Kitty Vorisek, executive vice president, DHR International Beijing, spoke after Dr. Pillay, discussing some of the examples of partnership, commercial and CSR programs in the pilot cities in China. During a lively Q&A session following the presentations, members asked about the significance of addressing public healthcare, environmental standards and public health education in the current trend of economic growth and urbanization in China. Roberta Lipson, CEO of Chindex and an AmCham- China governor, gave examples of how individuals and companies are already making a difference. Women in the Workplace The Women s Professional Committee (WPC) hosted a panel discussion featuring some of Beijing s leading businesswomen on the opportunities and challenges they face in the workplace. Co-chair Nina Hsu of LTI Associates introduced the panel s moderator, CNN correspondent Emily Chang. Ms. Chang began by introducing each of the panelists: Vicky Gu, a principal for Booz & Company in Greater China; Lillian Li, human resources manager at Catepillar; and Ying Shea, executive director of smart and connected communities marketing, Greater China, Cisco. Panelists were asked questions about their life in the corporate world, balancing work and home, and how being a woman impacted their careers. Panelists discussed the delicate balance between being both a good employee or employer and Moderator Emily Chan (right) listens to Ying Shea discuss work and family balance Tiffany Tseng and Mariel Montouri 2 8 c h i n a b r i e f s e p t e m b e r

23 being a good mother. During the Q&A session, AmCham-China member Stacy Palestrant asked about the difference between international and domestic companies when it comes to offering flex-time. It was agreed that a possible reason for the lack of flextime offered in China is that women don t realize they have the option. Members then gathered for wine and hors d oeuvres. Manufacturing Industry Simulation Training Members take notes and experiment with different manufacturing models AmCham-China and Cambridge Pragmatix, partnered to co-host a manufacturing industry simulation training event. Fourteen AmCham-China Manufacturing and Sourcing Forum members walked into Cambridge Pragmatix s office to find multicolored chips, a manufacturing firm manual and a business game board. Gordon Sheppeck of Business Today, an international business simulation development firm, led the day s interactive business simulation training session. Mr. Sheppeck began by explaining the rules of the game to the five teams. The simulation involved every aspect of building a business, from planning and purchasing market research to balancing a balance sheet. Going through the simulation quarter by quarter, participants learned how to use both product scale and product scope, how to use balance sheets, income statements and cash flow statements to measure success of their business and how quality, timely deliveries, credit terms and service win customers. Participants ranged from members who work in sales to HR to operations. At the business simulation, members learned the effects of every decision made by departments and employees in running a business. Development of Micro-Finance in China The AmCham-China Financial Services Forum, in cooperation with the French Chamber of Commerce and Industry in China and SwissCham-Beijing brought 50 respective members to the Development of Microfinance in China panel and reception at the Grand Millennium Beijing. The speakers included Sara Jane Ho, business development associate at Wokai; Elaine Chou, director of administration and finance and Justin Zhang, microfinance consultant, both at Planet Finance; and Li Qi, manager in the resource development department at China Foundation for Poverty Alleviation. Each panelist briefly introduced the concept of micro-lending and the unique role of their firms in working with microfinance in China. All the panelists emphasized the importance of the emerging microfinance market in China, in terms of economic opportunity, development and sustainability. The exciting role that microfinance can play in terms of economic development in rural regions was the primary area of discussion, which was complemented by thoughts on future possibilities of the microfinance industry in developing nations. Nancy xu Supporting a Low Carbon Economy Members of AmCham-China, BritCham, BenCham and the China-Britain Business Council gathered to listen to Brian Such of the British Standards Institution (BSI) discuss carbon neutrality over breakfast at the Grand Millennium Beijing. After breakfast and a brief introduction, Mr. Such shared BSI s recent projects that are trying to minimize the carbon footprint of companies, cities and individuals worldwide. He discussed BSI s Carbon Management Specifications, PAS 2050 and PAS 2060, and how they were born out of concern revolving around global climate change and the result of the carbon footprint left by major companies. He elaborated on the differences between the two initiatives, noting PAS 2050 could be used to achieve PAS While PAS 2050 is used as a guide to quantify the carbon footprint of a single entity, PAS 2060 works to help a company or individual achieve carbon neutrality. As it is necessary to use some kind of methodology to assess the current carbon footprint, PAS 2050 and PAS 2060 complement each other well. Once PAS 2050 is used to evaluate a company s carbon footprint, PAS 2060 may be put in place to try and achieve carbon neutrality. Before opening up the floor to questions that touched on new technologies, clean energy, guidelines for reduction and more, Mr. Such concluded, carbon neutrality is indeed a concept whose time has come. Latest Visa and Residence Permits Information AmCham-China s Beijing Forum held an informative event at the AmCham-China conference center, which included a detailed presentation by the Chinese immigration officials on current exit and entry visa regulations and policies. Officials from the Beijing Exit-Entry Administration Bureau of the Ministry of Public Security, Ms. Chen Yan and Mr. Liu Qiang, shared up-to-date policies and procedures for obtaining Chinese visas, residence permits and permanent residence permits. Mr. Liu also discussed how the Exit-Entry Administration Bureau is implementing its management plans to help protect the personal security of foreigners in Beijing. Attendees were encouraged to submit questions before the event, which were then answered by the officials at the Q&A session at the end of their presen- Public Security officials field questions about changes to visa and residence permit applications Anna Belkin s e p t e m b e r c h i n a b r i e f 2 9

24 AmCham-China In Ac tion Summer events tation. Michael Dardzinski, co-chair of AmCham-China s Beijing Forum, moderated the event and read the previously submitted questions. Examples of inconveniences and hurdles were brought to the attention of the officials by audience members who had spent a considerable amount of time in China. Such challenges included difficulties in the legal adjustment process that occur transitioning between companies, which impacts their employment visa or residency statuses. Another issue that held considerable attention was the process of obtaining Chinese residency for children whose parents have different nationalities. These and more issues experienced by the non-chinese nationals were presented to the officials, who tried to outline the best possible solution to each dilemma. Liberalization of Legal Practice in Asia Left to right: Andrew Godwin, Antony Dapiran, David Livdahl and Sammy Fang Members from AmCham-China, BritCham, AustCham and the European Chamber gathered at the Kerry Centre to listen to a panel presentation featuring Professor Andrew Godwin, the associate director (Asian Commercial Law) of the Asian Law Centre at The University of Melbourne. Panelists included, David Livdahl, a partner at Paul Hastings, and member of AmCham- China s Legal Services Subcommittee; Sammy Fang, legal director at DLA Piper UK LLP Beijing; and Antony Dapiran, a partner at Freshfields Bruckhaus Deringer LLP and chair of the European Chamber s Legal Working Group, who moderated the discussion. After a brief introduction by Mr. Dapiran, Professor Godwin defined the benefits and drawbacks of liberalization in the international market of legal services. He noted that currently the world is trending towards internationalization for global markets and foreign lawyers attract foreign investors. He used South Korea, Singapore, Japan and India to draw parallels between legal markets in Asia at different stages of liberalization. When the panel discussion began, members posed questions about foreign lawyers working in local law firms and how the law as it stands limits growth of the legal profession in China. Following an active Q&A session members from the different chambers enjoyed networking over cocktails. US FDA Commissioner Addresses Members Recently, an audience of 30 members gathered in the AmCham-China Conference Center to hear US Food and Drug Administration (FDA) Commissioner Margaret Hamburg introduce the FDA s position on food and drug safety issues in China and the wider Asian region. Ms. Hamburg was visiting Beijing on her Anna Belkin first official trip to China since her confirmation. After a brief introduction by Christian Murck, AmCham- China s president, Ms. Hamburg shared her vision for the FDA s global engagement and an update on the agency s work in China. As a result of globalization, she noted, millions of food, beverage and drug products are shipped overseas to the US every year. In order to ensure the quality and safety of goods exported to the US, the FDA has created FDA overseas offices. In China, these offices are located in Beijing, Shanghai and Guangzhou. These offices play a critical role in sharing information with their local counterparts and in working with the pharmaceuticals industry in various countries to overcome challenges together. In her concluding remarks, Ms. Hamburg encouraged the pharmaceuticals industry in China to partner with the US FDA to shape expectations about the quality and safety of goods exported to US, as well as to identify problems in China and work together to find better solutions. After the presentation, the panel answered questions ranging from the FDA s expectations in engaging with the pharmaceuticals industry in China to the FDA s efforts in harmonizing standards of medical devices. Members interested in hearing commissioner Hamburg's views can listen to her China Brief Insight Podcast on the AmCham-China website or on itunes. A New Manufacturing Model for China A breakfast discussion at the Cheung Kong Graduate School of Business commenced with their very own Professor Ou Jihong launching into his presentation of The World s Factory: A New Manufacturing Model for China. He commended China s manufacturing industry s developments, pointing out characteristics unique to China s manufacturing industry, such as labor-intensive work and low labor, environmental and legal costs. Professor Ou also tied in examples of push factors like the appreciation of the RMB and pull factors of high-profit incentives. In answering the question of how to manufacture in China, Professor Ou dispelled myths about moving operations. He advised a slower road. Emphasizing the importance of manufacturing in China for foreigners and Chinese, Professor Ou recommended: 1) implement ing lean manufacturing 2) automating and inform and 3) developing assembly processes. After Professor Ou s talk, Dwight Nordstrom, co-chair of the Manufacturing and Sourcing Forum, discussed issues he has seen in management and product models in certain manufacturers in China. Audience members posed questions regarding continuing education and housing for employees of manufacturing industries. Multiple Level Protection Scheme Effects on US ICT Industry The music room of the Capital Club was filled with more than 40 people to hear Robert Ness, manager of policy coordination at the US Information Technology Office (USITO), give a presentation about Multi-Level Protection Schemes (MLPS). Wenjie Gu, USITO vice president of policy and operations, gave the introductory remarks. MLPS provides guidelines and standards for cyber-security infrastructures intended to guarantee internal security. This policy is overseen by the Ministry of Public Security (MPS), the Ministry of Industry and Information Technology (MIIT) 3 0 c h i n a b r i e f s e p t e m b e r

25 and the State Encryption Management Bureau (SEMB). Under MLPS, when companies want to hire a vendor to protect their information security, the MPS will evaluate the sensitivity of their data and provide a one to five rating, five being the most sensitive. Information that receives a level three rating or higher can only have a company with indigenous intellectual property (IP) hired to protect it. However, if the technology to protect the data is not available from vendors with indigenous IP (non-substitutable) then the company can hire a vendor without indigenous IP. One important difference between MLPS and China Compulsory Certification (CCCi) is MLPS regulates the consumer, whereas CCCi regulates the vendor. Also, CCCi only stands within the government procurement market, but MLPS applies to all sectors. Questions from the audience were concerned with similar polices in other countries, engagement with the relevant agencies on MLPS and the telecom network industry. Inside China s Communist Party Over lunch at the Kempinski Hotel, Richard McGregor, author of The Party: The Secret World of China's Communist Rulers, shared his observations on the power and role of China s Communist Party. After AmCham-China Vice President of Membership, Services and Operations Judith Karp gave the introductory remarks, Mr. McGregor spoke about the trends China s Communist Party (CCP) has taken since its inception in 1921 and how the CCP has contributed to China s remarkable growth. He noted the Party s ability to keep 1.3 billion people stable, and then concluded his Richard McGregor brings members inside the CCP presentation by answering questions from the audience. Questions ranged from the CCP s relationship with the environment to state-owned enterprises. Some attendees stayed afterwards and continued the discussion, with Mr. McGregor signing books and sharing additional insights. Global Digital Infrastructure David Hoffman describing the importance of collaboration to global digital infrastructure AmCham-China s IT-Telecom Forum and US Information Technology Office (USITO) cohosted a recent installment of their breakfast series in The Capital Club s music room. Members exchanged business cards over breakfast before listening to Director of Security Policy and Global Privacy Officer at Intel, David A. Hoffman s presentation. Julia Zhu from USITO opened the event by introducing Jimmy Goodrich, director of government affairs at Cisco Systems and co-chair of AmCham-China s IT-Telecom Forum. Before launching into a brief introduction of Mr. Hoffman, Mr. Goodrich began by explaining how the breakfast series is intended to keep members informed with up to date knowledge of progress in the IT-Telecom industry. Mr. Hoffman began by asking questions such as: "Where is economic growth going to come from next? What is innovation? Where is the technology industry headed in the future?" When speaking with engineers from around the world, Mr. Hoffman referred to different labs in different cities, noting that the efforts for technological innovation have become globally connected. Using music as a metaphor, he quoted Ma Liuliu saying that each participant needs to honor each other s tradition and build off of common conditions. The common components of information technology Connie zhao could be phrased as openness, interoperability and enabling economic growth. For the final part of the presentation, Mr. Hoffman stressed the importance of collaboration and flexibility when it comes to global digital infrastructure policy. A lively Q&A session focused on potential issues with policy. After closing remarks by Mr. Goodrich, members networked with one another. Anna Belkin Business and Service Models for Shared Services and Outsourcing An audience of nearly 40 members and non-members gathered at the AmCham-China Conference Center for a Best Practices in Business and Service Models for Shared Services and Outsourcing event, hosted by the Business Process Outsourcing (BPO) Forum. Gabrielle Sanders of Convergys Corporation, and co-chair of the BPO forum introduced Alex Peng and Kevin Wei Wang of McKinsey & Company. The two speakers began their presentation with a BPO industry overview, focusing on foreign firms and the challenges and critical issues foreign firms face in the BPO industry. Opening their presentation with a list of six reasons China is an attractive market for off-shoring and out-sourcing, both noted there is still a lot of talk and not enough walk when it comes to foreign firms looking to enter the China market. They said it is still quite difficult to identify the key players. In addition to this challenge, many companies seem to face a problem with talent supply and vendors. The presentation concluded with both presenters describing anecdotal case studies of clients entering the China market and some of the issues they faced including the worry that the inclusion of too many cities in BPO growth might dilute the market and slow its potential growth in comparison to rival markets such as India. Afterwards, a lively Q&A session followed with questions on branding local and small BPO firms and improving their corporate reputation. Both presenters agreed companies need to take a three-pronged approach: secure lighthouse accounts to improve portfolios and employee skills, globalize and professionalize management, and manage capabilities. s e p t e m b e r c h i n a b r i e f 3 1

26 AmCham-China In Ac tion Summer events Heat, Fun Highlight Three Independence Day Celebrations Beijing, Dalian and Tianjin celebrate in style Courtesy of Image Photography Studio By Anna Belkin, Nicholas Christian and Olga Churkina Amcham-china tianjin chapter staff Amcham-china tianjin chapter staff With summer winding down, AmCham-China would like to look back at the 2010 versions of one of our most popular annual events: the Independence Day party. This year, the parties took place in three cities. AmCham-China, Tianjin Chapter celebrated American Independence Day at the International School of Tianjin. The event included delicious food, talented entertainment and fun games. Entertainment included the voice of Ms. Derede Williams of the Raffles Hotel as well as Latin dancers and several great lucky draw prizes from our sponsors. Members and their families enjoyed soaking each other with water guns, being part of the water balloon toss and the egg spoon race. It was a great opportunity to relax with old friends and make new ones. The evening ended with a spectacular fireworks show and a promise to do it all again next year! The Dalian Chapter hosted its first Independence Day at the Dalian American International School in the beautiful area of Golden Pebble Beach. Over 450 guests from the greater surrounding areas of Kaifa Qu, Lushun and even Shenyang all came together to enjoy a beautiful day with live music from Frederick, a popular local band. Children happily played three-legged races, bobbed for apples and looked for treasures in a scavenger hunt. Many visitors took this opportunity to try out the qinggui light rail that runs from Dalian to Jinshitan. Guests were excited to win fantastic lucky draw prizes, generously donated by our sponsors, such as dinner at fivestar restaurants, overnight stays at luxury hotels, import store gift certificates and traditional Chinese handicraft gifts. The celebration concluded with fireworks provided by the American School. Meanwhile, in Beijing, a crowd of over 1,200 members and their families gathered at Ch ienmen 23 in the Legation Quarter for an afternoon of sun, games and refreshments. Judith Karp, vice-president of membership, services and operations at AmCham-China, announced over 40 raffle winners, which included weekend hotel stays and airline tickets. Members mingled, networked and enjoyed everything from paninis and quesadillas to hot dogs and hamburgers, playing in the fountains and dancing to swing music and relaxing in the shade. AmCham-China would like to thank all of our generous sponsors for making contributions to these very successful July 4 th events in all three chapter locations. Image Photography Studio Amcham-china dalian chapter staff 3 2 c h i n a b r i e f s e p t e m b e r

27 AmCham-China thanks its Independence Day party sponsors! Beijing Site sponsors: Food and Beverage sponsors: sponsors: s e p t e m b e r c h i n a b r i e f 3 3

28 AmCham-China In Ac tion Summer events Thank you, Independence Day party sponsors! Dalian Chapter tianjin Chapter Cash sponsors: Major sponsor: firework sponsor: prizes sponsor: In-kind sponsors: food and beverage sponsors: entertainment sponsor: other sponsors: firework sponsor: 3 4 c h i n a b r i e f s e p t e m b e r

29 AmCham-China In Ac tion Special events Our Vision for the Tianjin Chapter Tianjin s new leaders make plans for the city s rapid development By Michael Hart In early July, just after the ever-popular July 4 th event ended, AmCham-China announced the results of the referendum for the Tianjin Chapter Executive Committee (EC). Over 50 percent of our members participated and helped us set a new direction for the coming year. I was very pleased to see such active voting participation and was honored to be elected chairman. We owe much gratitude to Douglas Red and his referendum committee, who truly engaged our members, encouraging them to run and vote. We need to build on this momentum to energize the Tianjin Chapter. The new Tianjin Chapter EC includes both returning members and a number who are serving for the first time. Representing a diverse group of industries, the EC will serve as a conduit for Tianjin s business community, which includes manufacturing, hospitality, training and education, healthcare, food and beverage, accounting and property services. I believe the American business community can also take advantage of the energy and investment that is driving Tianjin s development. Over the past several years, the government and private sector have been building, renovating and opening new buildings and cultural institutions that Courtesy of MICHAEL HART are making Tianjin a more livable city. The city s leaders have been open to meeting with AmCham-China in the past and we look forward to further developing this relationship. The Tianjin Chapter has an opportunity to be a positive force during this moment of city development. The AmCham-China staff and I have already begun visiting member companies to remind them of how AmCham-China can contribute in three key roles for members: government advocacy, professional membership introductions and providing information through our professional events. Some specific goals I have set for the EC and the chamber for the next year include: Increasing member engagement and participation Making the most of both our central Tianjin and TEDA members experience Increasing the quantity and quality of our events Being the first port of call for AmCham- China companies when they set foot in Tianjin AmCham-China is a member driven organization and it is important for us to have high levels of involvement to ensure success. For example, we are looking for your Tianjin's Executive Committee Chair: Michael Hart, Jones Lang LaSalle (Tianjin) Amy Chan, Renaissance Tianjin Hotel Natalie Ebden, International SOS (Tianjin Clinic) George Grosshans, LDI Tianjin- Tianjin MTI International School Lucy Liu, The Executive Centre Tianjin Vincent Lo, Deloitte Touche Tohmastsu CPA Ltd. Tianjin Branch Hank Martin, Hank s Sports Bar and Grill Jon Reed, Tianjin Custom Wood Processing Company, Ltd. input to help us arrange the right number of events that focus on the right topics. The EC and I look forward to meeting with the members of the Tianjin Chapter, as well as all AmCham-China members, to help our chapter continue to improve. We have already begun to work on an exciting slate of events. So far, we have planned a tour of the Sino-Singapore Eco City and a visit to the Raffles Hotel, which will host a new member cocktail. When the weather cools we will also host an updated tour of Tianjin s old concession buildings. Many more member events are being planned and we look forward to having you join us and hearing about other ideas for future events. I have seen Tianjin grow and develop since I arrived in the city nearly four years ago. Recently I represented the chamber at an event in Tianjin s East Port, where Caribbean Cruise Lines launched their Legend of the Seas ship. They will call Tianjin its home port. I could not have imagined four years ago (before the East Port was even built) that tourists would be flying into Tianjin from around the globe to board cruise ships touring north Asia. This is just one example of how fast the Tianjin economy is changing and I am confident members will continue to find opportunities here as the city grows and develops. I look forward to leading the Tianjin Chapter over the next year as we help member companies discover new areas to develop and prosper and watch as Am- Cham-China members play a vital role in the city s development. We look forward to seeing you all in Tianjin! Michael Hart is the managing director of Jones Lang LaSalle(Tianjin) and the new AmCham-China, Tianjin Chapter Executive Committee Chair. s e p t e m b e r c h i n a b r i e f 3 5

30 AmCham-China In Ac tion Special events Courtesy of ACP (Left to right): Shen Zejiang, Pat Power, David Wang and Yang Shenjun ACP Launches Fifth EMDT Program Dinner honors aviation executives and officials By Grace Li The US-China Aviation Cooperation Program (ACP) recently launched its fifth Executive Management Development Training (EMDT) for Chinese aviation executives and officials. The kick-off dinner was held at Civil Aviation Management Institute of China (CAMIC) with Vice President Sun Xiaomei opening the dinner by introducing the honored guests at head tables. CAAC Deputy Administrator (DA) Xia Xinghua followed to greet the guests, and spoke highly of EMDT. Xia indicated that with support from the US Trade and Development Agency (USTDA), US Federal Aviation Administration (FAA) and ACP member companies, the EMDT students made impressive accomplishments in the past four years. In the first half of 2010, the figures of total CAAC transport turnover and passenger throughput were encouraging, and the airlines profit margin exceeded previous records. This may be attributed to the global economic rebound, the Expo effect, the continued growth of Chinese economy and the ever-deepening reform in the Chinese aviation industry. CAAC remains optimistic about the airline industry for the rest of the year as ACP has created a successful program which boosts the strategic collaboration together with CAAC. DA Xia hopes the cooperation between the US and China will continue to develop and prosper as the EMDT not only enables the potential leadership from Chinese aviation industry to further their learning from the US industry, but also promotes the development of Chinese aviation elsewhere. DA Xia hopes the cooperation between CAAC and ACP continues to strengthen and prosper in the future. William Weinstein, economic minister coun- CAAC officials in attendance included: Xia Xinghua, Deputy Administrator Yang Shengjun, Deputy Director General of Personnel and Education Department Wu Chengchang, Deputy Director General of Flight Standards Department 3 6 c h i n a b r i e f S e p t e m b e r

31 Officials and executives in attendance included: William Weinstein, Economic Minister Counselor, US Embassy Geoff Jackson, Director for policy and programs, USTDA Pat Power, FAA Senior Representative North Asia, ACP Co-chairman David Wang, Boeing China President, ACP Co- Chairman Christian Murck, President, AmCham-China Daniel Kachur, Economic Officer, US Embassy Andrew Edlefsen, FCS US Embassy selor at the US Embassy, noted in the 30 years of reform, China s civil aviation sector has grown an average of 17 percent each year, with the overall aviation sector growing nearly twice as quickly. We see evidence of growth of China s aviation sector all around us new airports, new airplanes and new technology. Along with this rapid growth, China s aviation industry has been able to achieve world-class standards of safety and customer service. These achievements can only be realized with great human talents, and the US government, through the FAA and USTDA, is proud to play a role in the EMDT Program. Counselor Weinstein hopes this learning experience can provide a reference for the students future careers in aviation in China and encourage them to share their experiences with new American friends, since now more than ever, Americans are interested in China. The EMDT students have the chance to share first-hand knowledge and their perspectives on the aviation industry. In addition, Geoff Jackson, director for policy and programs of USTDA, expressed special thanks to DA Xia, ACP member companies and AmCham-China. ACP has become a successful model of cooperation between the government and various companies, and has earned a positive reputation in China, and even in the world. USTDA appreciates the support and endeavor from everyone and he also noted that participation in the EMDT is very helpful for career development. Pat Power, FAA senior representative and ACP co-chairman appreciated DA Xia s strong leadership and continued support on behalf of David Wang, his ACP co-chair, and the more than 40 ACP member companies. The EMDT would not be possible without help from the CAAC, TDA, the US Embassy, AmCham-China and individual companies. Mr. Power made special thanks to Celia Fu Fremberg from MITRE, Jessica Shan and Vice President Wei from CAMIC, and wished the students a great time in Beijing and the three cities in the US they will visit. President Wei Jincai of CAMIC concluded that during the years CAMIC has witnessed the development between China and the US, CAMIC made significant achievements and received great support from both the US side and Chinese colleagues under the leadership of CAAC. Lastly, President Wei proposed the final toast to wish the fifth EMDT a great success. Grace Li is a program associate at the US- China Aviation Cooperation Program. People changes WELCOME Elizbeth Rowland Policy Analyst Heather Hausladen US Government Projects Manager Mandy Guan Receptionist Nina Wang Business Development Manager, Dalian Chapter S e p t e m b e r c h i n a b r i e f 3 7

32 AmCham-China In Ac tion Membership and services New and Renewed AmCham-China Members Corporate Members Andy Tian, XPD Information Technology (Beijing) Co., Ltd. Richard Fawell, VOA International LLC Tim Beagle, Cintas (Tianjin) Enterprise Services Co., Ltd. Raymong Fung, Abbott Laboratories Ltd. Henry Koh, Goodrich Aerostructures Service(China) Co., Ltd. Michael House, Perkins Coie LLP Beijing Office Luke Stevens, Cargill Investments (China) Ltd. Sarah Li, PiSat (Tianjin) Solar Technology Company Ltd. Natasha Si, Globe Express Services, Co., Ltd. Joseph Edward, Crowne Plaza Tianjin Binhai Vivian Tian, JDSU (Beijing) Ltd. Hao Wu, Expedia Business Service(Beijing) Co., Ltd. Representative Ken Cai, Hexcel (Tianjin) Composites Material Co., Ltd. Charles Stevenson, Verify Enterprises Management Consulting (Shenzhen) Ltd. Zia Mian, Global Industrial Solutions Inc. Beijing Representative Office Benjamin Koellmann, AMUCO, Inc. China Representative Office Winston Chen, McLarty Associates LLC Beijing Representative Office Nathaniel Harding, Harding Shelton Energy Consulting (Beijing) Ltd. Additional Corporate Members Yuewang Zhang, Energizer (China) Co., Ltd. Redmond Yeung, Gap (Beijing) Commercial Co., Ltd. Alison DeMille, Gap (Beijing) Commercial Co., Ltd. Jimmy Goodrich, Cisco Systems (China) Networking Technology Co., Ltd. Ken Lousberg, Terex (China) Investment Co., Ltd. Lorenzo Moretti, Gap (Beijing) Commercial Co.,Ltd. Christopher Groesbeck, VOA International LLC Jason Rieger, Cintas (Tianjin) Enterprise Services Co., Ltd. Shang Zhi Wu, CDH Investments James Wang, Knowles Electronics (Weifang) Inc. Pearl Woon-Tai, JPMorgan Chase Bank (China) Company Ltd. Tina Gong, Northern Lights Tech Development (Tianjin) Co., Ltd. Weimin Gao, Goodrich Aerostructures Service(China) Co., Ltd. Haitao Wang, ATI Tectoniks China- Wuhan Daijia Electrics Technology Co., Ltd. Timothy Guo, PiSat (Tianjin) Solar Technology Co., Ltd. Melissa Lau, Crowne Plaza Tianjin Binhai Libin Song, Rolls-Royce Commercial (Beijing) Co., Ltd. Freda Wan, Rolls-Royce Commercial (Beijing) Co., Ltd. SC Xiao, United Technologies International Operations Michael Ma, Hexcel (Tianjin) Composites Material Co., Ltd. Jean Francois Ausseur, Ernst & Young Hua Ming Jenny Wang, Ernst & Young Hua Ming Weifang Zhou, UL Electrical & Mechanical Technology (Shanghai) Limited Crystal Yang, Compuware Covisint (Shanghai) Software Services Co., Ltd. John Petropoulos, Harding Shelton Energy Consulting (Beijing) Ltd. Non-US Corporate Members Vince Xu, Macquarie Leasing (China) Co., Ltd. Jolie Zhou, SK China Company Ltd. Beijing Office Michael Zhang, Castrol Dongfeng Lubricant Company Lawrence Zhu, Oshkosh JLG(Tianjin) Equipment Technology Co., Ltd Liz Lu, Crystal Digital Technology Co., Ltd. Kristian Kender, CMM-I Edward Pulford, Crown Worldwide (China)Co., Ltd. Kasia Baran, Yew Chung International School of Beijing Lisa Bao, ADP Business Services (Shanghai) Co., Ltd. Sherwood Yang, Beijing Tiantan Puhua Hospital Greg Savarese, SinoTaste Consulting(Beijing) Co., Ltd. Tim Clark, PDM International (Beijing) Ltd. Additional Non-US Corporate Members James Luo, Bird & Bird Law Firm Beijing Representative Office William Guo, Danaher Setra-ICG (Tianjin) Co., Ltd. Helen Lee, Beijing Ipsos Marketing Consulting Co., Ltd. Tom Manning, Cerberus Beijing Advisor Ltd. Andrew Vines, Colliers International Property Services (Beijing) Co., Ltd. Fangjin Mao, Castrol Dongfeng Lubricant Company Yoo Suk Kim, SK China Company Limited Beijing Office Susan Chang, Oshkosh JLG(Tianjin) Equipment Technology Co., Ltd. Apple Yu, Crown Worldwide (China) Co., Ltd. Stephen Joske, The Economist Group Beijing Representative. Office Reiko Yuan, Softtek Information System Technology (Beijing) Co., Ltd. James Quinlan, Beijing Tiantan Puhua Hospital Omar Ali, SinoTaste Consulting(Beijing) Co., Ltd. David Soffer, SinoTaste Consulting(Beijing) Co., Ltd. 3 8 c h i n a b r i e f s e p t e m b e r

33 ChenHui Li, PDM International (Beijing) Ltd. Monthly Member Mix & Mingle (4M) Non-Resident Corporate Members Ellen Marks, RTI International Dave Milkowski, Amer-China Partners, Ltd. Dan Harris, Harris and Moure, PLLC James DeBates, America's Center for Foreign Investment Stanley Shi, Wonderlink, Inc. Andy Mok, Red Pagoda Resources Peter Jiang, Golden State Holding Group Corporation Additional Non-Resident Corporate Members Paul Liu, America's Center for Foreign Investment (ACFI) Rebecca Nicholson, RTI International Tod Gimbel, Levi Strauss & Co. Steve Dickson, Harris and Moure, PLLC Michael Eddo, Golden State Holding Group Corporation Additional Non-profit Organization Members Jeff Pan, Duke University Individual Membership Leif Rogers Patricia Zhu Robert Gray Sigmund Welt Individual Associate Membership Seth Williams Young Professional Membership Jordan Root Fred Groen Senior Professional Membership Douglas Coulter Seeing old friends and making new ones at the Kempinski Hotel AmCham-China held its Monthly Member Mix and Mingle at the Kempinski Hotel, drawing more than 90 attendees. Members enjoyed an impressive array of delicious hors d oeuvres and the wonderful ambiance of the hotel. Always popular, the monthly event is a great opportunity for members to meet their newest peers and network within the business community. AmCham-China Vice President of Membership, Services and Operations Judith Karp and President Christian Murck announced the lucky draw winners: Sally chen Julian Mintzis won Reengineering the Corporation, written by Michael Hammer and James Champy. Johnson of UK Uwin Architectural Design Office Co., Ltd. came away with Inspire! Why Customers Come Back, also written by James Champy. Yeeli Hua Zheng of The Nasdaq Stock Market Inc. Beijing Representative Office, had her name drawn for a high tea for two at Rendezvous Bar and Lounge Kempinski Hotel Beijing Lufthansa Center. Katja Wang of SAS Software (Beijing) Co., Ltd. won a Sunday family brunch for two at Kranzler s Restaurant and Bar in the Kempinski Hotel Beijing Lufthansa Center. Finally, Stephen F. Vogel of Fulbright and Jaworski LLP, Beijing Representative Office, was the lucky winner of a three course business lunch for two at the Trattoria La Gondola Italian Restaurant at the Kempinski Hotel Beijing Lufthansa Center. Thank You, Summer Interns! By Christian Murck This summer, my staff and I had the pleasure of working with a terrific group of interns. The quality of their work helped us achieve our goals in everything from our submission to the US-China Joint Commission on Commerce and Trade to supporting our forums and executing events. We are grateful for their initiative, resourcefulness and enthusiastic contributions. On behalf of the AmCham-China staff, we would like to thank Anna Belkin, Don Buteyn, Ben Back (left to right): Tiffany Tseng, Ben Dorsen, Qiong Xu Front (left to right): Don Buteyn, Christian Murck, Bill Lovering Dorsen, Bill Lovering, Tiffany Tseng and Qiong Xu for the excellent work they did this summer. We wish them the very best and look forward to seeing them again in Beijing. Jin peng s e p t e m b e r c h i n a b r i e f 3 9

34 AmCham- China In Ac tion member spotlight China s business community is made up of one of the most diverse and interesting groups of people in the world. Each month China Brief throws the spotlight on AmCham-China members to give you a view of how they ended up here and what they find exciting about the country. It is a chance to give our readers a more personal look at your neighbors, business associates and friends in the community. Andy Mok 莫天安 Courtesy of ANDY MOK strengthen as income rises and affluent Chinese seek second and third homes beyond their city of residence. Finally, a lesser-known phenomenon is the ownership of multiple homes within a single large metropolitan area. Anyone that has spent time in a big city like Beijing can appreciate the convenience of having flats in different districts since it often takes more than an hour to go from one side of the city to the other. Therefore, potent secular demand drivers seem to be in place. Also, foreign investors should benefit from holding RMB-denominated assets since the RMB is likely to appreciate. Position/Company: President, Red Pagoda Resources, an executive search firm mainly serving venture capital-backed companies in China Time in China: I lived and worked in Greater China for most of the 1990s and moved here last October. Four most played songs on my ipod: "Mo Money Mo Problems" (Notorious B.I.G.), "Love Hurts" (Nazareth), "I Never Promised You A Rose Garden" (Lynn Anderson), "Don't Worry, Be Happy" (Bobby McFerrin) Favorite Food: I'm borrowing a line from my friend, Frank Yu, who said: "I came for the duck but stayed for the chuan r." Sports team I m always rooting for: Sadly, the Seattle Seahawks My take on China s real estate market: I am more positive about this sector than most. For the medium to long-term, investing in Chinese real estate is a smart choice. Here s why: First, as China grows in geo-political, economic and cultural importance, demand for property, especially in first tier cities like Beijing and Shanghai, will go global. This is still a largely untapped source of buyers. Similarly, domestic demand for well-situated urban property will The last film I have seen: I recently re-watched Jerry McGuire, which is a great movie for anyone in the executive search business. One of the most famous lines from that movie is Show me the money! But my own favorite is when Dicky Fox, Jerry McGuire s mentor, says: If this [points to heart] is empty, this [points to head] doesn't matter. Movies are wonderful entertainment, but when I studied military strategy with Dr. Eliot Cohen (at Johns Hopkins SAIS in the late 1990s) I discovered they also could be an incredible source of education and inspiration. He often used films like Saving Private Ryan and Henry V as starting points for class discussions on courage, leadership and determination. Ever since then I've watched movies in a much different way. Key findings of my research on China s technological and economic development: My research was conducted in the late 1990s, when there was still significant uncertainty about China s future, and was published as a study called "The United States and a Rising China: Strategic and Military Implications." While much of the establishment had great skepticism about how successful economic reform would ultimately be, my own conclusion was that the Chinese Communist Party was much more capable than many American opinion leaders wanted, or were able, to believe. The lesson for me was realizing the importance of putting aside one s ideological or cultural blinders to see what is actually occurring, rather than what one wants or hopes to see. The key to success, whether it's policy making, investing or recruiting, is the ability to accurately interpret the data confronting you, and make sound judgments based on that data. As Deng Xiaoping once said, seek truth from facts ( 实事求是 ). This is a core principle for my colleagues and I at Red Pagoda Resources and what we strive to offer to every client we serve. 4 0 c h i n a b r i e f s e p t e m b e r

35 We try to highlight members from different backgrounds and across all industries. Some of our members have been active for decades, while others are just learning about the benefits of AmCham-China. It is this range of people that makes the chamber such an exciting place with so many different viewpoints. The member spotlight is an opportunity to celebrate our unique mix and hopefully introduce you to the advantages of membership about which you might be less aware. If you know an interesting member on whom you think we should shine the spotlight, please send your suggestions to Kris Naidu 科瑞思 Hometown: Nottingham, UK Position/Company: Director of Projects and Operational Development, China at Joy Mining Machinery Time in Tianjin: I have been in China for eight years, the last three in Tianjin. What sets Tianjin apart from working in other cities in China: Compared with the tense working atmosphere in Beijing, Tianjin is more leisurely in both life and work. My favorite places in Tianjin: The five-avenue area where numerous historical foreign buildings remain and the city center where various shops and restaurants are located along the Haihe River. Small sparkling night-lights in the trees in the city center and some busy areas of the city also bring a sense of excitement, energy and pleasure. Favorite ethnic cuisine: I love Thai and French food. The three things I need to start the day: My day usually begins at 6:00 or 6:30AM with CNN news, a cup of coffee and exercise. Courtesy of Kris Naidu For advice, I go to: Depending on the nature of the advice I m looking for, it may be a friend or a colleague who I trust won t laugh at my indecision. My children also give me good advice and help to maintain a sense of the important things in life. The skills that best prepared me for my current job: I never imagined coming to work in China when I was younger. I grew up and completed my education in the UK where I worked for 20 years. But the type of work I am doing now is very much the best part of my career to date. The work is interesting, creative, challenging and brings me great satisfaction. In my early career in management I learned how to work with people and how to encourage them to use their creativity, energy and enthusiasm to work and live better. I think this helped prepare me for my current job. In 10 years I see myself: I will probably be retired in 10 years. I will have more time with family, friends and to play with my grandchildren. I am also looking forward to having more time to travel the world. How Tianjin has changed since I first arrived: The most surprising change is the city s speed of transformation-from an old, disorganized area to a modern, commercial and industrial city, where impressive buildings are going up everywhere and where people are becoming more open and informed. The remarkable fast speed train connecting Beijing and Tianjin also gives the city new power to develop quickly and tighten its ties to Beijing. My greatest work challenges and rewards: I find working in China with a Western mindset can be very challenging. I have worked in three different provinces of China. Each place has particular challenges in doing business and understanding the local people. Once you foster their friendships, however, help and cooperation are easy to gain. In places where we have established our business, we see groups of well-educated Chinese people eager to learn and develop. Many have advanced to senior positions and create a bridge between Chinese and foreign cultures and their different ways of doing businesses. The development of people and the open arms of my friends has been my most rewarding experience in China. s e p t e m b e r c h i n a b r i e f 4 1

36 AmCham-China In Ac tion Learning curve Baseball, Camp and Visas The US Embassy and AmCham-China helped ensure a truly American summer By Judith Karp It s a beautiful July day in West Virginia. Camp Rim Rock is abuzz with children playing, including four Chinese campers, faces flush with expectation. The same month, clear across the US, Major League Baseball (MLB) is preparing to play its All-Star Game and beam it to China with Chinese broadcasters. Yet, these two scenes, which took months of planning, almost did not take place due to massive visa interview backups. What saved camp for a group of Chinese children and the All-Star Game in China? A massive effort from the US Embassy, with an assist from AmCham-China. In 2009, despite the H1N1 scare and global economic downturn, the US Embassy in Beijing and four visa-issuing Consulates processed more than 550,000 nonimmigrant visa (NIV) applications. Yet, compared to 2010, even that record number of visas was nothing. We know now that last year was a bit like the water ebbing before a tsunami, remarked one senior Embassy officer. This year, applications spiked as the fears of H1N1 subsided and Chinese business travelers became more confident. This was good news for the US, which benefits from the influx of visitors. But by May, visa appointment wait times were nearly 100 days as an eye-popping 23 percent growth in visas threatened to disrupt the summer travel season. At AmCham-China, this was initially unnoticed as the chamber's Business Visa Program continued as normal. The problems began to surface in June as businesses without access to the program started calling in a panic as their employees, customers and business associates discovered multi-month interview waits. An inquiry to then-niv Chief, Nancy Abella, confirmed their stories, but also confirmed that a plan was in the works. We knew we had to think outside the box and act quickly, Minister Counselor for Consular Affairs Linda Donahue told China Brief. You can t tell a group of applicants going to the US for summer camp to wait until August to apply; they d miss their program. Working closely with officials in Washington, Mission China took a multi-pronged strategy. First, applicants are now free to make an appointment in any of the US visa-processing posts in China, rather then at the closest one. Next, visa processing hours were extended to three June Super Saturdays. Ms. Donahue told China Brief, From Ambassador Huntsman on down, everyone in Mission China was committed to doing what it took to decrease the wait time, and we had Washington s full support. On one Saturday alone, the consular section in Beijing booked more than 2,400 interviews. Weekdays were also optimized, allowing the Embassy to process more than 400 additional applicants each day. Most importantly for AmCham-China, the US Embassy generously set aside Super Saturday interview slots for members in the Business Visa Program to schedule appointments for their business associates, partners and clients. On one Super Saturday, eight regional broadcast journalists from Shaanxi, Liaoning and Guangdong stood in the Embassy line with hundreds of other would-be tourists. We flew all our broadcast teams into Beijing on Friday to speed up the visa process, said Mike Marone, MLB s Country Manager. It worked. They flew to the US as scheduled on July 5, filmed a documentary during the week about US baseball, broadcast the All-Star game and came back a week later, happy! At MLB, we celebrated our AmCham- China membership and were thankful for the US government s flexibility. Meanwhile, Scott Cline, an AmCham-China member and the Broad Horizons International Education Exchange chief representative in Beijing, waited on line to get four Chinese campers visas so that they could enjoy a West Virginia July. I was impressed and grateful for the immediate response we got from AmCham-China, said Mr. Cline, one of the first to raise the alarm about the problem. With AmCham-China's help, all of our visa applicants got their visas and realized their dreams of experiencing a real American Summer Camp in the US. * * * * * * * * * * Note: The Embassy s long-term strategy includes extending the validity for various categories of visas so that legitimate travelers will have to reapply less frequently. As Chinese demand for US visas continues to rise, the US is committed to keeping business flowing. AmCham-China will continue to press the US government, Congress and the administration for the additional resources needed at Mission China. To avoid visa processing delays, Ms. Donahue advises travelers to apply early and keep valid visas. Applicants who successfully obtain a US visa normally qualify to use the Embassy s drop-off visa renewal service, avoiding subsequent interviews. Please check the Embassy or appropriate consulate website for the current process. More information about US visas is available at: This month, AmCham-China President Christian Murck turns over his column to Vice President of Membership, Services and Operations Judith Karp, to update members on this summer s visa surge. 4 2 c h i n a b r i e f s e p t e m b e r