Insight Magazine June 2013 Issue

Chinese Firms Roar into the U.S. Chinese executives say accessing U.S. market is ‘difficult’ with cultural challenges but cite overall success, according to FDI survey

ALSO INSIDE • Commentary on U.S.-China Relations • Violence a Risk in Business Disputes

A Special Tribute

to Departing AmCham Shanghai President Brenda Foster

INSIGHT The Journal of the American Chamber of Commerce in Shanghai

THE APP IS HERE The Insight magazine iPad app is now available in the App Store. The brand-new app from AmCham Shanghai includes the same in-depth articles and news plus special content found only on the app.

Visit the App Store and download the Insight app today.

INSIGHT JUNE 2013

The Journal of the American Chamber of Commerce in Shanghai

amcham shanghai VP OF PROGRAMS & Services

Scott Williams

VP of Administration & Finance

F e at u r e s

12 Violence a Risk in Business Disputes

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LEGAL UPDATE

By Kevin Biggs

Helen Ren

Intimidation and violence during disputes still concern foreign companies.

Directors Business development & Marketing

Patsy Li

Committees

Stefanie Myers insight editor-in-chief/ Communications & Publications

David Basmajian Events

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16 Farewell to Brenda Foster Special Tribute

Our special 10-page special tribute to outgoing President Brenda Foster includes testimonials from colleagues and friends, as well as a letter from Brenda to members.

Jessica Wu Government Relations & CSR

Steven Chan

Membership & CVP

Linda X. Wang

INSIGHT managing editor

Bryan Virasami Senior Associate Editor

Erika Wang

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26 Chinese FDI Roars into the U.S. COVER STORY

By Marc Parich and Karen Buerkle

Chinese executives say the U.S. market is difficult to enter but report overall success, according to a survey.

senior communications associate

Ryan Balis INTERNS

James Miller Michelle Tong Design

Alicia Beebe Printing

Mickey Zhou Snap Printing, Inc.

34 A New Power Relationship?

Former Obama advisor Jeffrey Bader sees finding solutions to conflicts in third countries around the world as an opportunity for cooperation, or conflict, between the U.S. and China.

INSIGHT Sponsorship (86-21) 6279-7119 ext. 5667 Story ideas, questions or comments on Insight: Please contact David Basmajian (86-21) 6279-7119 ext. 8066 david.basmajian@amcham-shanghai.org Insight is a free monthly publication for the members of The American Chamber of Commerce in Shanghai. Editorial content and sponsors' announcements are independent and do not necessarily reflect the views of the governors, officers, members or staff of the Chamber. No part of this publication may be reproduced without written consent of the copyright holder.

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U.S.-CHINA

I n s ig h t s ta nd a r d s

5 News Briefs

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11 Movers and Shakers

MONTH IN PICTURES

Highlights from Recent Events

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EXECUTIVE reading room

What’s on Your Summer Reading List?

INSIDE AmCham Shanghai Centre, Suite 568 1376 Nanjing West Road Shanghai, 200040 China tel: (86-21) 6279-7119 fax: (86-21) 6279-7643 www.amcham-shanghai.org

40 From the Chair 41 Board of Governors Meeting 46 Government Relations 47 Event Highlights cover ILLUSTRATION by Mickey Zhou

shutterstock

P r esi d ent

Brenda Foster

Editor's note Moving On

A

s expats, we’re all used to saying goodbye to trusted friends and associates who depart China for new opportunities. Among them have been many notable figures who have left their mark on the U.S. business community here. But few have had the lasting impact as Brenda Foster, who will return to her home state of Hawaii after serving eight years as AmCham Shanghai’s president. In this issue, we say goodbye, and thank you, to Brenda. Insight’s farewell tribute includes snapshots of her time here and a special letter from her. While it was impossible to include everyone who wanted to offer their best wishes and tributes, you’ll find a sample from Brenda’s many colleagues and friends who will greatly miss her leadership and driving spirit.

There is much to celebrate about Brenda’s legacy. The establishment of a globally recognized CSR program, the launch of the Chamber’s digital publications and the opening of the Yangtze River Delta Center in Suzhou, just to name a few. But if there is one thing I hope you take away from this issue it is that Brenda never forgot the Chamber’s primary mission: to serve the interests of the Chamber membership and to support the business success of the people and the companies we serve.

This also happens to be my last month at AmCham Shanghai. But I’m happy to say I’m not going far. I’ll be working for a U.S. company headquartered here in Shanghai.

It would not be an exaggeration to say that working at AmCham Shanghai has given me a front-row seat to “history in the making” as U.S. companies compete and win in the world’s fastest growing market. But even more than that, I’ve had the privilege of learning from the best of the best – the AmCham Shanghai membership and the Chamber’s Board of Governors. From the battle-scarred old China hands to those just arriving on their first international assignment, from Fortune 500 CEOs leading multi-billion dollar operations to the entrepreneurs and SMEs here to tap

David Basmajian editor-in-chief/ Director Communications & Publications

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China’s historic market opportunity.

Thanks to all of you who have made my time at the Chamber so valuable.

Finally, over the past two and a half years I’ve been this magazine’s Editor in Chief. My goal has been to steadily improve the quality and accessibility of Insight and to the extent

“

It would not be an exaggeration to say that working at AmCham Shanghai has given me a front-row seat to ‘history in the making’...”

that has happened, I thank the talented Insight team. Insight’s managing editor for the past two years, Bryan Virasami, has brought a higher level of professionalism to the magazine along with a focus on ensuring Insight content is relevant to our readers.

Ryan Balis and Erika Wang, both excellent editors and writers in their own right, have been the source of many of our most creative story ideas and informative policy pieces.

Bryan has taken on the role of Editor in Chief, starting in June. I’m confident that Insight will continue to develop under his leadership.

And as I said, I’m not going far. I look forward to becoming an active AmCham Shanghai member and perhaps even an Insight contributor.

All the best,

David Basmajian

imaginechina

News

n ne ew ws s b br r ii e ef fs s

CHINA BUSINESS

Ctrip.com now selling train tickets Ctrip.com, a major online travel agency in China, is now offering train tickets for high-speed trains. Customers may purchase the tickets using Chinese or major international credit cards. Train tickets must be booked a minimum of two days and maximum of 17 days in advance of the date of travel. Tickets are delivered within 24 hours, though deliveries are limited to addresses in the Shanghai Outer Ring Road, which includes the districts of Huangpu, Xuhui, Changning, Jing’an, Putuo, Zhabei, Hongkou, Yangpu and Pudong. There is a RMB40 delivery fee for the first ticket and RMB20 for each subsequent ticket.

Hainan rakes it in with duty-free program Hainan province has earned more than US$750 million in revenue over the last two years from its trial offshore duty-free program, local customs authorities said. Customs data showed that as of April 20, RMB4.85 billion worth of goods (US$752 million) were purchased by 1.94 million visitors.

Since the program started in April 2011, tourist revenues rose 25.8% and 17% in 2011 and 2012, respectively, according to local tourism authorities. Under the program, tourists and local residents aged 16 and over can purchase certain imported commodities worth no more than RMB8,000 duty-free before flying to other parts of China. Hainan has two duty-free shops, one in its capital, Haikou, and the other in Sanya.

China Shipping expands fleet China

Shipping

Container

Lines

Baidu buys PPStream online video business Baidu Inc., China’s largest Internet search engine, said it has agreed to pay US$370 million for the online video service of PPStream Inc., a popular Chinese streamingtelevision service. The deal will enable Baidu to challenge online streaming video leader Youku Tudou Inc., which controls 30.2% of the Chinese market share. The transaction will create the country’s largest online video platform by number of mobile users and viewing time, according to Baidu.

Nasdaq-listed Baidu said it would integrate the video service into its iQiyi online-video unit. The company said it expects the deal to close in the second quarter. Once the acquisition is complete, PPStream’s online service and iQiyi will continue to operate as independent brands but will share back-end technical integration, the company said. Figures from iResearch forecast the total online video audience size on the mainland, excluding mobile users, to grow to 483 million this year, compared with 445 million last year.

Co., China’s second-largest shipping company, ordered five of what will be the world’s largest container ships from South Korean Hyundai Heavy Industries Co. The order is valued at US$700 million. Each vessel can carry 18,400 20-foot containers. Sources say China Shipping bought the containers at a

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lower price than Danish conglomerate A.P. Moller-Maersk, which ordered 20 of the same vessels in 2011, because of the decrease in shipbuilding prices amid a global shipping downturn. The new containers will lower the shipping costs of each container and give the company a competitive edge, said China Shipping.

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CORPORATE NEWS

Coca-Cola to increase China investment Coca-Cola announced plans to increase Chinese investment by US$4 billion by the end of 2014. New investment will be made in the construction of plants and retail outlets and in the facilitation of transportation routes, local media reported.

A new plant in Shijiazhuang, northern Hebei province, is slated for completion this October. Coca-Cola is strengthening efforts to expand westward in China to second- and third-tier cities, according to the president of Coca-Cola International.

Coca-Cola has 42 manufacturing plants in China, a current total investment of US$5 billion and 50,000 Chinese employees.

Coca-Cola first came to China in 1978 and started operations in 1979.

China Vanke sales up 66% Shenzhen-based China Vanke, the largest real estate company in China, saw its sales jump 66% from April of last year, despite government attempts to curb rising housing prices. In April, it attained revenues of RMB12.38 billion and sold 1.11 million square meters of property. But despite its annual growth, Vanke’s April figures were 19% lower than its March total. The company credited this monthon-month decrease to seasonal changes in demand. Sales figures for the rest of the real estate market have taken a larger dip, with volume of housing transactions decreasing from March to April in 36 out of 43 cities surveyed by the China Real Estate Index System.

Baosteel to open branch in Zhanjiang China’s Baoshan Iron and Steel (Baosteel), the country’s leading listed steelmaker, will open a new branch in Zhanjiang, Guangdong province. Production in Zhanjiang is set to start in 2015. The move comes after the company cut its budget by 40%, from RMB69.68 billion to RMB41.5 billion (US$6.65 billion).

The new production plant is seen as a significant move made by Baosteel to save costs by transferring production to coastal areas. The goal for the new plant is for it to be a highly efficient carbon steel plate factory, while Baosteel’s manufacturing base in Shanghai will switch to high-end manufacturing to meet the need for home appliances, the company said. Baosteel listed a 41% increase in 2012 net profit, with RMB10.39 billion compared with RMB7.36 in 2011.

GM to build billion-dollar factory in China General Motors announced plans to build four new plants in the next three years in China to raise its production capability to 5 million vehicles per year, local media reported. General Motors’ plans for a US$1.3 billion factory in Shanghai were green lighted in the beginning of May. Construction is set to begin in June and the factory will be located in Shanghai’s Jinqiao district. The planned capacity for the plant is 150,000 vehicles, said GM. The other three plants will bring the total number of assembly plants owned by the U.S. carmaker and its joint venture partners in China to 17 and will increase production by 30%. GM commands a 15.2% market share in China.

MACROECONOMICS

FDI in China grows Foreign direct investment in China grew 1.21% year-on-year in the first four months of 2013 to US$38.3 billion. FDI reached US$8.4 billion in April at a 0.4% rise from April 2012. Though FDI was up for a third consecutive month, the increase was a sharp decrease from 5.65% growth in March and 6.32% growth in February.

Investment from the U.S. from January to April rose 33.2% to US$1.40 billion, while the EU’s investment in China increased 29.7% to US$2.47 billion. Investment from Japan climbed 9.2% but rose only 0.21% from the rest of Asia. By contrast, China’s outbound investment climbed 27% during the same period.

China’s non-manufacturing sector shrinks China’s non-manufacturing sector contracted in April, according to figures by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP). The purchasing managers index (PMI) for the sector decreased by 1.1% month-on-month to 54.5% in April. Despite the decrease, a PMI reading above 50% signifies overall expansion. Meanwhile, the sub-index for service business activity decreased by 1.4% in April month-on-month for a reading of 52.5%, and the sub-index for business outlook climbed 0.1% to 62.5%. The nonmanufacturing PMI is based on a survey of around 1,200 companies comprising 27 industries, including real estate, catering, software development and transportation.

Pork price drops to 30-month low The price of pork in China has been declining since mid-February and officially reached its lowest point since January 2011 at the end of April. China is the world’s largest pork producer and pork consumer.

Prices at the end of April were down more than 18% from prices in mid-February.

Some provinces experienced drops of up to 30% in areas such as Hebei, Shanxi, Liaoning and Shandong provinces and Chongqing municipality. The prices for vegetables and edible oils also dropped while prices for beef, mutton and fruit rose.

Real estate prices climbing The average price in April of newly built apartments across 100 Chinese cities rose 1% from March, hitting RMB10,098 (US$1,640) per square meter. Prices for new homes have consistently risen over the last 11 months since June of last year, according to the China Index Academy.

The government implemented new measures in March in an effort to cool rising property prices. Measures include a 20% tax on capital gains from property sales and a ban on single adults in Beijing from buying a second home.

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U.S.-CHINA

U.S. exports to China grow According to the U.S.-China Business Council’s April Full U.S. Exports Report (2003–2012), China was the third-biggest export destination for the U.S. in 2012, behind Canada and Mexico. In 2012, China purchased US$109 billion worth of goods, with 30 states contributing more than US$1 billion each. The leading export industries included crop production, transportation equipment, computers and electronics, chemicals and non-electric machinery. In 2012, total U.S. exports amounted to US$1.612 trillion.

Meanwhile, China’s share of U.S. exports in 2012 amounted to 6.7% of U.S. global exports, down 0.1% from 2011.

BYD to build U.S. plant BYD Co., Ltd., a Chinese manufacturer of automobiles and rechargeable batteries, broke ground on May 1 for its first U.S. manufacturing plant. Located in southern California’s Lancaster city, the plant will produce electric buses which will be powered by BYD’s own iron-phosphate batteries. Production is expected to begin next May, and, according to the company, the plant could employ as many as 1,000 people. The Shenzhen-based company already received an order of 10 electric buses, worth US$12 million in total, from the Long Beach, Calif., transit authority.

By the end of 2014, BYD, which stands for “Build Your Dreams,” aims to produce more than 50 electric buses, which will service public transportation in California.

Chinese online retailer to be listed on NYSE LightInTheBox Holding Co., a leading Chinese online retailer, may become the first Chinese company of the year to list its stocks on the U.S. stock exchange. The Beijing-based company filed a registration with the U.S. Securities and Exchange Commission in early May for an initial public offering of up to US$86.3 million.

The company said it plans to list the

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shares on the New York Stock Exchange (NYSE) under “LITB.” LightInTheBox carries a variety of products including clothes, electronics and toys at discounted rates from China-based suppliers that is shipped to customers in more than 200 countries. As of December 2012, the company had more than 205,000 product listings and 2.5 million customers.

U.S. industrial gas supplier builds Chongqing base Praxair Inc., a global leader in providing industrial gas, has started to build a liquid oxygen production base in Chongqing, which will be the largest one in China, the Connecticut-based company said. Located in the Changshou Chemical Park, the production base is set to be completed by late 2014. The production base will be set up by a joint venture between Praxair and Chongqing Chemical and Pharmaceutical Holding Company for a total investment of RMB1.1 billion (US$179 million).

Once completed, the base is projected to provide 5,000 tons of liquid oxygen daily to local industrial enterprises.

GOVERNMENT & POLICY

SAFE sets up new U.S. office China’s State Administration of Foreign Exchange (SAFE), which oversees the country’s currency reserves, has established an office in New York to invest in private equity, real estate and other U.S. assets, the Wall Street Journal reported.

A large portion of SAFE’s US$3.4 trillion foreign-exchange portfolio is held in U.S. government bonds. According to U.S. Treasury Department data, China reduced its holdings of U.S. government debt in March by 0.1% to US$1.25 trillion.

The new office is separate from another one that SAFE has been running in the U.S. to buy government debt, corporate bonds and asset-backed securities.

Gains from local govt bonds to be tax-exempt Gains from local government bonds

june 2013

will now be exempt from income tax, according to a joint statement issued by the State Administration of Taxation and Finance Ministry. This will include bonds bought in 2012 and after. The new measure is expected to promote the purchase of bonds by companies and individuals. The move was seen as realistic by observers who pointed out that as Chinese local governments’ public finances are under pressure, investment remains the largest engine to keep economic growth on track.

China announces more economic reforms China’s State Council has outlined a plan to further economic reform while cutting back on the central government’s intervention in the economy. The plan details 62 items that will no longer require central planning from the state. Reforms include increased support for the use of private capital in operating railways and investment in new lines, a tiered pricing system for household utilities, new rules on foreign exchange and interest rates, new penalties for environmental damage and a new system of registering rural property. The government also plans to curb its own debt and to make the budget system more transparent. Since 2001, the State Council has adjusted or canceled its involvement in 2,400 investment and production items.

Harsher penalties for food crimes introduced To combat increasingly visible and severe food scandals, the Supreme People’s Court has offered judicial interpretation for laws relating to food safety and has vowed to increase punishment for severe food safety crimes. From 2010 to 2012, 2,088 people were convicted as a result of food safety crimes. The number of criminal cases concerning unsafe, toxic and harmful foods rose 225% and the number of people convicted on food crimes rose 257%, year-on-year in 2012.

For the first time, the use of “gutter oil”

has been clearly criminalized. The court’s ruling covers crimes including illegal food additives, illegal slaughtering and the dereliction of duty by regulatory bodies.

SHANGHAI BUSINESS

Shanghai visa policy to attract global tourists Shanghai is trying to consolidate its status as a global hot spot by allowing visitors arriving by passenger liners to spend three days in the city without a visa. The Shanghai Municipal Tourism Administration said it plans to extend the visa-free policy at its two airports to the cruise terminals, and set up dutyfree stores and tax-refund outlets there, pending approval from the central government. The policy will hopefully be in place within the year, the government added. Since Jan. 1, air travelers from 45 countries have been allowed to stay inside the administrative area of Shanghai for 72 hours visa-free.

New communities planned for Lingang New City To accommodate an expected growth of 800,000 new residents by 2020, the Shanghai Municipal Government announced plans to begin construction of “international communities” in the Pudong New Area’s Lingang New City. The government said it expects Lingang to attract top-level manufacturing and service industries and is preparing to attract thousands of permanent foreign residents. By the end of 2012, Shanghai contained a quarter, or 173,000, of China’s total permanent foreign population.

Metro Line 16 will connect the 315.6 square kilometer Lingang New City to the city center later this year.

Used home market cools in Shanghai Shanghai’s housing index, which tracks price variations of pre-owned homes, gained 40 points from March to April amid a significant decrease in transaction volume. Housing prices rose for the 11th

consecutive month in Shanghai, though at a slower rate than previous months.

March saw pre-owned home sales reach a record high as sellers and buyers sought to close deals before a 20% capital gains tax on earnings from property sales was imposed. Since the government’s stricter property controls took effect in April, speculative buying has calmed and home prices rose an average of 1.71% in 120 of Shanghai’s 130 city areas.

Shanghai cuts car plate stock The Shanghai Municipal Government reduced the number of car plates to 9,000 for May’s plate auction and lowered a price ceiling to RMB79,900 (US$13,098) to rein in soaring car plate prices. In April, the quota was set at 11,000 and the price ceiling was RMB83,600. Price ceilings for auctions will be maintained until a new auction scheme is launched in the second half of this year, the government said. Price ceilings were set for the first time in April’s auction because plate prices fell for the first time in 10 months to RMB84,100.

NORTH AMERICA

CHINA & THE WORLD

ASIA-PACIFIC SIA PACIFIC SOUTH AMERICA

KAZAKHSTAN: China increases investment in Kazakh oil The China National Petroleum Corporation and its Kazakh counterpart, KazMunaiGas, have signed agreements to expand an oil pipeline between the two nations. The 1,200-km-long pipeline has been in operation since 2006 and has transported 50 million tons of crude oil exports from Kazakhstan to China. The expansion plan will increase annual output capacity to 20 million tons from 14 million tons. Between January and March of this year, Kazakh oil exports increased 36% on a year-on-year basis. By 2020, Kazakhstan plans to export a total of 120 million tons worldwide, according to government officials. Currently, China accounts for 25% of total oil production in Kazakhstan. After the expansion of the pipeline and other agreements, this figure could rise to 40%, according to the Global Times.

MIDDLE EAST

EUROPE ASIA-PACIFIC SIA PACIFIC

TANZANIA: China to build port China has been awarded the rights to build a US$10 billion port at Bagamoyo in Tanzania as part of a series of infrastructure development deals between China and Tanzania. The port, scheduled for completion in 2017, is expected to handle and facilitate China-bound mineral shipments from Zambia, Zimbabwe and the Democratic Republic of Congo. The port is estimated to handle 20 million containers annually, compared to the current largest Tanzanian port of Dar es Salaam, which handles 800,000 containers annually. The port construction project will also include the construction of new roads joining Bagamoyo and Mlandizi and a new railway connecting Bagamoyo to the Tanzania-Zambia Railway.

AFRICA

NORTH AMERICA MIDDLE EAST

MIDDLE EAST EUROPE

Airbus inks huge China deal China has agreed to buy 60 Airbus jetliners for US$8 billion from European aircraft manufacturing company EADS. The deal includes an order of 42 Airbus A320 and 18 A330 planes, the majority of which will be built at an Airbus manufacturing plant in Tianjin. This is the first deal of its kind since the EU enacted the Emissions Trading Scheme, which set carbon emission levels for EU and foreign nations’ airline companies. The Airbus deal is one of 18 signed with Chinese firms in late April during President Francois Hollande’s visit to China. Other deals included plans to construct a nuclear waste treatment plant and various agreements in the tourism, urbanization and agricultural sectors.

AFRICA

ISRAEL: China offers increased protection for Israeli exports Israeli Prime Minister Netanyahu signed business agreements with Chinese Prime Minister Li Keqiang during his visit to China in early May that incentivized increased Israeli exports by offering extra Chinese financial protection for Israeli exporters. One agreement raises the insurance against currency risks offered to both nations’ exporters. This new deal increases the total insurance from US$1.35 billion to US$2.05 billion. Another agreement enables state backing to long-term export contracts, decreasing export costs for Israeli exporters looking to China. Last year, the governments signed a protection deal for exporters of water-saving technology worth US$300 million.

SOUTH AMERICA MIDDLE EAST AFRICA

NORTH AMERICA

UNITED STATES: Merck to build new manufacturing plant U.S. pharmaceutical company Merck & Co. opened its new pharmaceutical manufacturing plant in Hangzhou in April. The plant, which cost nearly US$120 million, will package Merck medicines serving China and the Asia-Pacific region, the company said. The new facility covers 75,000 square meters and its production output is expected to reach 300 million packages annually. In 2011, Merck established its Asia-Pacific headquarters in Beijing and pledged to invest more than US$1.5 billion in China by 2016.

Merck already has an R&D center in Beijing, three China-based manufacturing facilities and a marketing and sales headquarters in Shanghai. It employs more than 5,000 people in China.

SOUTH AMERICA

SOUTH AMERICA NORTH AMERICA EUROPE

ASIA-PACIFIC SIA PACIFIC AFRICA NORTH AMERICA

ECUADOR: China lends US$312.5m for hydroelectric plant Ecuador signed a loan agreement with the Export-Import Bank of China for the construction of a hydroelectric project worth US$312.5 million. The project is estimated to cost a total of US$477 million, and US$90 million has been invested already. The plant, which will be built in the southern provinces of Azuay and El Oro, is expected to be operational by December 2015 and yield 1,290 GWh, according to the Ecuadorian Ministry of Strategic Sectors. The plant will reduce carbon dioxide emissions by 700,000 tons annually, replacing the current system of thermal power.

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ASIA-PACIFIC SIA AMERICA PACIFIC SOUTH

Movers and Shakers c o m p i l e d by j o y c e b i a n

Movers and Shakers highlights major personnel changes within the Chinese government at various levels and senior management-level movements within multinational companies in China.

AMCHAM CHINA Mark Duval has been named president of the American Chamber of Commerce in China and will take up the new role in July. Duval succeeds Christian Murck, who will retire. Duval has been a longtime leader within AmCham China and is currently serving his sixth term on the board of governors. During a 16-year career at Motorola China, Duval held positions in corporate strategy and operations, government relations and public affairs, and go-to-market strategy and business operations.

Duval expressed his interest in working with AmCham Shanghai and said, “I’ve been really impressed with what AmCham Shanghai has built over the years and the services and value they provide to members.”

PRIVATE SECTOR

Mark Duval

BAXTER INTERNATIONAL Baxter appointed David Basmajian Head of Policy and Government Affairs for Asia Pacific, effective in June. In this new role, Basmajian will lead policy initiatives in David conjunction with Baxter’s government Basmajian affairs and market access teams across the region, including Japan, Korea, Greater China (China, Hong Kong, Macau and Taiwan), South East Asia, India, Australia and New Zealand. Basmajian had served as Director of Communications and Publications at AmCham Shanghai since 2008, where he led initiatives in developing and overseeing Chamber publications, executing policy statements, organizing annual government advocacy Doorknock trips to Washington, D.C., and directing media strategies.

addition, McEathron will continue to provide leadership oversight to manufacturing operations in Suzhou and the company’s joint venture with TMC in Japan. McEathron is also chair of the Suzhou Committee of AmCham Shanghai.

MERCURY MARINE Bill McEathron was appointed General Manager – Asia at Mercury Marine in May. In this expanded role, Bill is responsible for overall Mercury Marine business in Asia including Sales and Operations. McEathron Bill McEathron will lead the Asia team to focus on Mercury Marine’s profitable growth and market share gain in Asia. In

SHANGHAI Shen Xiaoming was appointed the district party secretary for the Pudong New Area in May. Shen has served as Deputy Mayor of Shanghai since 2008 and also took the position as Director of the Administration Committee of the Zhangjiang High-tech Industrial Park Development Zone in 2010.

BEST BUY Best Buy appointed Max Zhou President for China and CEO of Five Star Electronics, Best Buy’s subsidiary retailer in China, in May. Zhou previously served as CEO for China of Central Retail Group, the largest retailer in Vietnam, and executive vice president and chief operating officer for China Paradise Electrical Limited, the third-largest electronics chain in China.

GOVERNMENT

If your company has executive personnel changes, please contact Joyce Bian at joyce.bian@amcham-shanghai.org.

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Shen Xiaoming

l e g a l u p d at e

By Kevin Biggs

Violence a Risk in Business Disputes

O Intimidation and violence during disputes still concern foreign companies

verall levels of violence or violent crime in Shanghai are low when compared with major We s t e r n c i t i e s . H o w e v e r, workplace related violence associated with labor or commercial disputes continues to be a concern for companies, including senior managers. Tactics used to negotiate or settle disputes can be more aggressive than those typically used in more developed markets. If workers perceive their job security or pay to be at risk, or third parties are in a poor financial situation, there is a greater risk of aggressive tactics being applied to settle a dispute.

During disputes, foreign companies may have concerns of or encounter actual security incidents at their facilities. However, when companies execute proactive risk mitigation strategies security incidents can often be avoided.

Labor activism and commercial disputes in recent years have become an important security concern for foreign companies as disruptive or violent actions are sometimes associated with disputes. Individuals engaged in local restructuring or third-party negotiations should carefully assess associated risks and the potential for any escalation in worker or third party actions.

In some cases, labor actions can turn disruptive or violent necessitating the need for proactive crisis management and contingency planning.

A recent Chinese language media report highlighted the violent nature of a labor dispute in January at a Japanese factory in Shanghai. An intense standoff where Japanese and Chinese managers were locked in a factory surrounded by over 1,000 workers required late night action by police to extract the management team from the factory.

Since last year, H&A has been engaged in 27

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cases involving disputes of a commercial nature.

These cases involve a variety of issues, including disgruntled employees, employee terminations, supplier payment disputes and local fraud. The number of engagements in 2012 increased over 2011 and the number of cases in 2013 appears to be tracking at a similar level to last year, according to H&A statistics. H&A anticipates that this trend will likely continue throughout 2013.

Approximately 13 of these 27 cases took place in Shanghai, with the remainder in Jiangsu, Guangdong and Zhejiang provinces. A small number of the cases took place in northern China’s Shandong province, Beijing and Tianjin.

This figure does not include a number of other anecdotal cases that H&A has received reports of, b u t d i d n o t u n d e r t a k e a s p e c i f i c c l i e nt engagement. In cases involving third parties, disputes are often precipitated by: • Ac tu a l or p e rc e ive d suppl i e r c ont r a c t modification, reduction or termination • Lack of payment or receivables • Cost, quality or scheduling disputes • Performance bonuses or penalties Commercial disputes in China are not always resolved according to commercial mediation, arbitration or through litigation. Some third parties if faced with increasing financial pressure may resort to intimidation, threats or outright violence. Aggressive tactics are primarily used to apply pressure when first confronted with contractual modification or a dispute has escalated to the point of significant monetary value. However, there are also incidents where second- and third-tier suppliers will attempt to seek compensation from a first-tier supplier’s customer. In some cases, it is even possible that a first-tier supplier will encourage this activity.

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A typical escalation is the sending of workers or other “hired” individuals to a facility to demand immediate payment or contract negotiations. The numbers of individuals taking part in gatherings outside facilities could be more than 100 at a factory. In an office environment, the number of individuals will typically range from a few individuals up to 20 or more depending on the nature of the dispute. However, it is important to note that the number of individuals gathered at a facility may at first be small, but over a period of days can increase in size.

The types of individuals that may accompany aggrieved parties may also pose varying levels of threat to business operations. In some cases, unscrupulous businesses may even hire low-level gangsters to assist in aggressive negotiation tactics which can lead to threats or an altercation with employees.

Specific physical security measures and procedures to consider include: • Proper procedures for recording, identifying and controlling access of visitors • Reinforcing/augmenting access control measures and personnel at all entries into a facility/office • Evacuation plans in the event of a threatening or violent situation in the workplace • Review of alarm and access control systems to ensure that they are functioning properly and well-maintained • Deployment of security personnel for specific employees especially if credible threats have already been directed against the company or specific employees

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“

The level of threatening language when verbal threats are issued is becoming increasingly extreme, in some cases including threats of physical violence/mutilation or death. In one case in Shanghai, a determined third party even rented a facility in the same complex of a foreign manager in order to circumvent local security and directly intimidate the manager’s family. In another case earlier this year in Shanghai, a laid off worker was suspected of vandalism and threatening behaviour at the home of a mid-level manager at a foreign manufacturing facility. In the two above mentioned cases, the deployment of security personnel helped to address concerns by fami ly memb ers and deter red f ur t her threatening actions.

In addition to intimidating or violent tactics, protracted disputes may also result in local authorities imposing exit travel bans on the legal representative or other s enior managers.

Companies have the option to seek legal action, which can include requests with local authorities to impose travel bans on local and foreign management until a dispute is resolved. In some cases, local companies involved in a dispute may utilize minimal evidence and exploit their local government connections to use travel bans and

Some third parties if faced with increasing financial pressure may resort to intimidation, threats or outright violence.�

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Disagreements can lead to threats

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even the freezing of bank accounts to apply pressure. Exit bans typically result in an individual being placed on a travel restrictions list that will prevent them from boarding international flights until a resolution is reached with disputed parties.

The process of lifting travel restrictions can be lengthy, lasting months in some cases, especially if multiple entities are involved in a dispute.

Proactive risk management Before communicating any decisions on compensation or terms to employees or third parties, senior management should conduct strategic war gaming-type strategy sessions with key personnel. These sessions should be used to consider a variety of scenarios, including those that have a low likelihood but high potential impact. By considering a variety of scenarios, managers can establish a strategic foundation and identify specific responses that are common to most scenarios.

Throughout the planning stage, senior management should remain vigilant to any indications of possible employee disgruntlement or the escalation of a dispute with internal and external stakeholders. Often, senior managers, including expatriates, become the target during a

dispute as they are the key decision makers of the company. It is not uncommon for a senior executive to be held up in dispute negotiations for hours and in extreme situations several days.

Therefore, when negotiating any type of dispute, management should move the meeting so as to transfer the risk of an escalation away from their facilities to a neutral location.

Management should also consider having security personnel or local authorities present or on stand-by when negotiating with disgruntled parties. In major cases of intimidation, companies should also consider deploying security personnel and enhancing security measures at the residence of the key representative of the company during dispute negotiations. In order to minimize the risk of a disgruntled party resorting to aggressive tactics in the workplace, particular focus should be placed on ensuring that the security practices

employed at the company are effective at preventing unauthorized access.

Management should prepare for specific risk scenarios. These plans should consider how employees should respond in the event of a security incident at the workplace, as well as evacuation routes and procedures for employees.

When communicating compensation or supplier payment terms during negotiations, these considerations are especially critical. Deploying adequate security at a carefully selected neutral venue, with planned escape routes, will also help to ensure rapid evacuation of key staff in the event of a security incident during negotiations.

Kevin Biggs is senior risk intelligence consultant, China, and risk report editor at Hill & Associates (PRC) Ltd., based in Shanghai.

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letter2.pdf 1 13-5-30 S p下午2:49 ecial

Tribute

Aloha!

A

Dear AmCham Shanghai Members: s I step down on July 1, 2013, after eight wonderful years as President of AmCham S h a n g h a i , I w ou l d l i k e t o t a k e t h i s opportunity to say what an honor it has been to lead this Chamber. It has clearly been one of the most rewarding experiences of my career and one for which I will be forever grateful. Rarely does one get the chance to live one’s dream to work with so many dedicated individuals from a cross-section of two of the most important economies in the world in an attempt to make a difference in the future direction of those economies and, by extension, their peoples. My involvement with China has spanned nearly my entire career and working at AmCham Shanghai has clearly been the highlight.

Since I began in September of 2005, AmCham Shanghai has changed considerably, driven in large part by a rapidly changing business environment in China, and the Chamber’s commitment to its members to ensure their continued competitiveness and success in what can only be described as one of the most dynamic and challenging markets in the world. Listening to you, the members, we designed and developed new and innovative programs and services to meet your needs. We established a Committees Department to provide more personalized support for each of the diverse industry sectors represented in the membership. We added a Government Relations (GR) Department to enhance your interaction with government officials at the national, provincial and local levels in both the U.S. and China so that your voice would be heard. We launched a nationally recognized Corporate Social Responsibility (CSR) program, n ow t h e Bu s i n e s s C ou n c i l on Su s t ai n abi l it y an d Responsibility (BCSR), to bring together industry leaders, government officials, academicians and CSR practitioners to collectively address and resolve pressing social issues in China through partnership and cooperation, all the while

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highlighting the best of American values and supporting our member companies’ desire to make a difference in the community. And, we als o est ablished a Business Development and Marketing Department to focus on membership development and retention, as well as provide different avenues of promotion and advertising for our members under AmCham Shanghai’s brand.

As the membership has grown in size, diversity, and geographic location, AmCham Shanghai launched two new initiatives – the SME Center and soon to be unveiled SME Virtual Platform to support U.S. small to medium sized companies already in the China market or wishing to enter the market, and the Yangtze River Delta (YRD) Center to support U.S. companies in the YRD by providing additional resources and developing programs and services unique to the needs of expanding or locating a business in the YRD. Both initiatives were designed with member input and with the goal of enhancing market penetration in China by U.S. companies.

Just as the number of programs has grown exponentially each year, so too has the stature of AmCham Shanghai as a thought leader on the U.S.-China commercial relationship.

Along with this has come the need for the Chamber to diversify its communication platforms to more effectively reach an ever expanding and technologically savvy demographic. To this end, the Chamber moved into the “digital age” with the launch of Insight magazine as a

“

For me, it has been an incredible experience to have been a part of this process, if only for a short while.”

downloadable app from iTunes, and our annual China Business Repor t and Orientation China Guidebook downloadable on Apple’s iBooks and Barnes & Noble’s Nook.

In addition, we are utilizing Facebook, Twitter, LinkedIn and Sina Weibo to push out messages, announcements, events and press releases so members will be up-to-date on the latest news and information. And, most importantly, AmCham Shanghai will launch a new interactive website in summer 2013 with a customer relations management (CRM) system built into it so we can better respond to and service each member’s individual needs.

Obtaining visas to the U.S. for the staff of AmCham Shanghai member companies has always been a top priority for the Chamber as we know how important this issue is for members. So, in partnership with the U.S. Consulate General in Shanghai, the Corporate Visa Program (CVP) was launched in 2004. Since then there has been a steady growth in the number and type of visa applications processed – from 74 a month in 2004 to over 1,300 a month in 2013. This year, AmCham Shanghai processed a record 15,155 corporate visa applications, pushing our total to over 100,000 cases since the program began! In doing so, Chinese staff of U.S. companies in China have been able to visit the U.S. to receive advanced training, attend important meetings and conferences, as well as sightsee – all of which has been invaluable for U.S. companies to be able to retain highly qualified staff in a very competitive market.

Finally, given the growing number of programs and activities of the Chamber and the lack of a law in China allowing the formal registration of non-governmental organizations, AmCham Shanghai took the unprecedented step of establishing a Wholly Foreign Owned Entity (WFOE) in 2010 which has enabled members to utilize an online payment system via credit card in either RMB or USD when registering for Chamber events, and receive official receipts or fapiao. The WFOE has also facilitated the settling of

accounts with many of our member companies who provide services to the Chamber such as hotels, vendors and suppliers making it much easier for everyone to do business.

If I were to summarize my view of the last eight years in China, it would be to highlight the role of change – in society, in business and in government. Who could have imagined even a few short years ago the changes that we now see taking place – the rise of the middle class, the impact of social media, the role of public opinion, consumerism, urbanization, the emphasis on quality of life, entrepreneurs in the Communist Party and millionaires in the National People’s Party Congress, to name just a few. Although fundamental challenges still exist as China transitions to a more innovative, high value driven economy, I am optimistic that China will succeed.

The role for AmCham Shanghai in China’s transitioning economy will be what it already does so well – anticipate change, innovate and design and implement strategies to ensure its members are well positioned to take advantage of the business opportunities in this ever-changing “must have market.”

For me, it has been an incredible experience to have been a part of this process, if only for a short while. The dedication of the staff, the Board, the members, Chinese and U.S. government officials and other individuals with whom I have had the privilege of working with over the years, has really made the difference in ensuring that AmCham Shanghai would become the “Voice of American Business in China”. I am proud of what has been accomplished and am optimistic about what the future holds for our members.

I extend my heartfelt thank you to each and every one of you whom I have had the pleasure of knowing and working together with in advancing the U.S.-China relationship. I leave AmCham Shanghai fully confident it is in good hands, and have no doubt that it will continue to achieve even greater success and recognition in the years to come.

Mahalo and aloha,

Brenda Lei Foster AmCham Shanghai President 2005–2013

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Five Questions with Brenda Outgoing president responds to a few questions about her tenure at AmCham Shanghai and future plans

Q1:

How will you spend your time after you are back in Hawaii?

Brenda Foster: “I have accepted a position as an Executive-inResidence at the Schidler College of Business at the University of Hawaii where I will serve as a resource for faculty and students on Asia-Pacific business programs, international conferences, field studies and exchange programs with special emphasis on, but not limited to, the College’s programs with academic institutions in China. In addition, the College is letting me design the position which will allow me the flexibility to utilize my background and experience to be very creative.

“I am also still weighing some very interesting business opportunities that I have been offered, but before I commit to an extensive travel schedule between the U.S. and China, I would like to take some time off to spend with family and friends, and enjoy just being home in Hawaii.

“Although I will be living in Hawaii, I will still be active in U.S.-China relations and intend to stay in touch and involved with AmCham Shanghai, only this time as a member – a very active member!”

Q2:

What are some of the biggest changes you have seen in China and/or the U.S. business community in China?

BF: “Some of the biggest changes I have seen in China are the rise of the middle class, the impact of social media, the role of public opinion and the integration of China due to massive infrastructure development which has lead to unprecedented urbanization. Young professionals are increasingly more sophisticated and socially aware which highlights to me the importance the role education has played in China’s drive to modernize.

“With regard to the U.S. business community in China, it has continued to grow in strength and diversity over the years.

We now see more small- to medium-sized enterprises (SMEs) in China or wishing to enter the China market. Originally SMEs came to China as part of the supply chain of multinational corporations; now they are coming in search of their own markets.”

Q3:

You’ve met dignitaries from many countries over the years. Who made the strongest impression on you?

BF: “Although I have met many dignitaries over the years, it is everyday people who have made the strongest impression on me, especially those individuals who I have met through our Corporate Social Responsibility (CSR) program. Particularly poignant for me were those individuals I met who suffered such great loss during the Wenchuan earthquake. Their dignity, self-determination and sheer sense of humanity made an indelible impression upon me and moved me beyond words. It is something I will always remember.

Q4:

What will you miss most about living and working in Shanghai?

BF: “What I will miss most about living and working in Shanghai will be interacting with people from all walks of life and being at the ‘heart’ of one of the most dynamic and vibrant economies in the world. I don’t think there is any place quite like it.”

Q5:

What’s your proudest achievement as president?

BF: “Everyone who has ever been associated with AmCham Shanghai has contributed to making the Chamber what it is today, and enhanced its reputation as the ‘Voice of American Business in China.’ I am particularly proud of AmCham Shanghai’s newly launched SME Center, and soon to be unveiled SME Virtual Platform, which has the potential to revolutionize the Chamber’s ability to support our members already in the China market, those U.S. companies wishing to enter the market and Chinese companies wishing to partner with U.S. companies already in China or on foreign direct investment projects in the U.S. “AmCham Shanghai’s new Business Council on Sustainability and Responsibility (BCSR) is also a very important milestone for the Chamber as it seeks to bring together industry leaders, government officials, academicians and CSR practitioners to collectively address and resolve pressing social issues in China through partnership and collaboration. It has been through our CSR program over the years that we have been able to support our members’ desire to make a difference in the community while highlighting the best of American values and helping those who are most in need. CSR has truly become the ‘heart’ of AmCham Shanghai.”

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As part of our tribute to Brenda Foster, we invited some of her longtime colleagues, friends and associates to share a few thoughts about her as she winds down her stint as president of AmCham Shanghai. The comments below by no means represent the full roster of those who consider Brenda a friend and who admire her professionalism and dedication to the U.S. community in China during the past eight years.

Bob Theleen, chair, AmCham Shanghai Our President, Brenda Foster, is being honored in this issue of Insight. She has been a force of nature at AmCham Shanghai since the day she arrived eight short years ago.

Brenda’s leadership has taken many forms. She gave AmCham Shanghai a heart in the form of CSR programs that annually contributed millions to worthwhile charities throughout the country.

Chinese officials always knew they had a knowledgeable friend, but also a worthy advocate of American business interests of our members. For American industry, she led the fight for advocacy initiatives in both Washington and in Beijing.

Brenda dances with her husband Larry Foster at the 2013 Charity Gala

As a result of her leadership, AmCham Shanghai has become a global brand and a service provider to our members with a depth of knowledge, relationships and influence on American business interests in China. On behalf of your Board of Governors, employees and the members, it is my pleasure to say thank you, Brenda, for your leadership in greatly shaping AmCham Shanghai to become the voice of American business in China.

Ken Jarrett, 2013 AmCham Shanghai board member and incoming president

Welcoming Shanghai Vice Mayor Ai Baojun to the 11th Annual Government Appreciation Dinner

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Brenda has been a commanding presence at AmCham Shanghai. Under her inspired leadership, the Chamber grew in influence, which will benefit the American business community for years to come. On top of all that, we learned a lot about Hawaii too.

Norwell Coquillard, 2008–2009 AmCham Shanghai chair; chairman and president, Enactus China Always full of energy and always with a new idea. These were my initial and now lasting impressions of Brenda. We are all grateful that she transformed an organization searching for its role into a vibrant and well-respected organization. One that can truly say that it is the “voice of American business in China.” I was honored to serve as chairman for two years working with Brenda and I thoroughly enjoyed the experience and learned much from her.

Phil Branham, president, B&L Group

Speaking to attendees at the 2012 Election Day party

Bill Brekke, commercial consul, U.S. Consulate General Shanghai Our two offices have always been closely tied together. Still, I was surprised to discover that instead of the contacts in my cell phone being listed alphabetically, your name was permanently at the top of the list! How prophetic, as you have been both a close personal and professional friend.

I thank you. Enjoy your time in Hawaii to the fullest!

I was fortunate to meet Brenda before she accepted her position as President of AmCham Shanghai to discuss the needs of the organization and what she could look forward to upon joining.

I must say that Brenda has set the bar extremely high for her successor. AmCham Shanghai has enjoyed tremendous growth due to her professionalism, energy and private sector and government experience. Her list of achievements is long and now AmCham Shanghai is truly looked on as the leading voice of business in Shanghai. Aloha Brenda!

Eddie Chan, former board member, AmCham Shanghai; SVP, FedEx Express You are wonderful. I enjoy working with you to serve AmCham members in Shanghai.

All the best to you in your new chapter of life.

Enjoying the 2012 Independence Day party with members of the Harlem Globetrotters

Jeffrey Wang Weicheng, vice president, Shanghai Foreign Investment Development Board Under Brenda Foster’s leadership, the AmCham Shanghai team has truly supported the economic development of Shanghai and helped the internationalization of Shanghai through their work. We sincerely hope the incoming president will carry on President Foster’s heritage to work in cooperation with Shanghai. We welcome her to Shanghai for travel and investment and to share with us the fruit of win-win cooperation.

Brenda and her team at the 2013 Charity Gala

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Beatrice Camp, former U.S. Consul General, Shanghai Brenda was a major partner during my three years as Consul General in Shanghai; she was always eager to cooperate on issues ranging from environment to IPR to promoting women in business. But it was our efforts to ensure U.S. participation in the 2010 Shanghai Expo that really bound us together. Despite heavy odds, Brenda’s passionate involvement helped us reach the goal. I will always remember her guidance, support and friendship.

Brenda and Chamber members attend a Jiangsu healthcare industry roundtable in 2012

Breaking ground at the site of the Shanghai World Expo USA Pavilion in 2010

Eric Musser, 2011 chair, AmCham Shanghai; chairman and CEO, Greater China, Corning China

Brenda greeting Zhu Min, mayor of Xuzhou, at AmCham Shanghai’s First Annual Yangtze River Delta (YRD) Government Appreciation Dinner in April 2013

It’s been a great pleasure to serve with you, Brenda, at AmCham on behalf of the American business community in Shanghai. You have always impressed me with your outstanding leadership, energy and passion. Your commitment and your contributions have made a tremendous difference to the success of our member companies in China. We will miss you greatly, and wish you the very best in your next phase of life. Best wishes to you and Larry, and hope we can see you back in Shanghai or in Hawaii from time to time.

2008 AmCham Shanghai Independence Day party

Tami Overby, vice president, Asia Division, U.S. Chamber of Commerce I have been involved in APCAC for 25 years, as an AmCham Korea member, as head of AmCham Korea and now as the U.S. Chamber’s VP for Asia, so I have seen many AmCham leaders come and go but none with the same vision and passion to help American business. Brenda’s positive impact there will remain long after she is gone.

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N. Bruce Pickering, vice president global programs-executive director, Northern California Center, Asia Society When the Asia Society in Northern California decided to create a series of programs in China, the most important issue for us was to work with a partner who could deliver. I have to say that working with Brenda and the American Chamber in Shanghai was truly superlative in every way. Our partnership with AmCham was just that – a true partnership. And Brenda was key to making it work – she saw the potential in a long-term relationship. Happy Trails Brenda!

We hope to see more of you in San Francisco!

Robert Roche, 2010 AmCham Shanghai chair; chairman, Acorn International What I remember most about Brenda is how she made re-engaging with members a priority in her first year as president. Brenda, in her oh-sogentle way, suggested that I help form the Entrepreneurs committee. It was not so much an offer I couldn’t refuse but it almost seemed that way for me! I got so much out of the experience that it led me to serve on the Board and eventually, to serve as Chair. Brenda, I wish you the best and look forward to hearing about all your new adventures.

Brenda and then U.S. Consul General Ken Jarrett attend 2007 Special Olympics

Robert Griffiths, U.S. Consul General, Shanghai

Richard Vuylsteke, president, AmCham Hong Kong

I have been enormously impressed by Brenda’s outreach to the Yangtze River Delta region and to small and medium businesses. She created in the Chamber a wonderful service organization to American business people of all sorts – a wonderful legacy.

She will be missed.

Brenda – You have impressed and inspired us all in APCAC (Asia Pacific Council of American Chambers) through your dedication to building strong, effective and lasting programs and institutions at AmCham Shanghai.

Your creativity, insights on management and unwavering friendship will be sorely missed by us all. Good luck!

Brenda greeting Colin Powell at a Chamber breakfast event in 2006

Christian Murck, president, American Chamber of Commerce in China

Brenda joins then U.S. Secretary of State Hillary Clinton on stage at a Shanghai Expo event in 2010

I have had the pleasure of working with Brenda over many years, through our respective Washington ‘Doorknocks’, briefings and seminars and at APCAC, where chamber Presidents discuss what works and what doesn’t – how to maximize challenges and opportunities.

Brenda has been one of the most committed, informative, and forthcoming participants of those sessions and I will miss her contributions. Thanks and best wishes, Brenda.

Benjamin Wang, president, AmCham Southwest China It was always a pleasure working with Brenda because of her professionalism and strong personality. She was a great asset to the AmCham community and on behalf of AmCham Southwest, I wish her the absolute best.

Jenny Wang, China CEO, TE Connectivity I had the great pleasure in working with Brenda on various Chamber initiatives in the past few years. And I feel Brenda truly devotes her heart and soul to the Chamber and really makes the difference. We are fortunate to have her as the Chamber President.

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Yue-Sai Kan, media icon/ entrepreneur Brenda Foster‘s full name is Brenda Lei Foster. Lei is the Hawaiian word for a wreath of flowers, revealing her birth place. Yet, she is the most Hawaiian and the most unHawaiian person I have ever met! Like other Hawaiians, she is amazingly friendly, authentic and generous!

But unlike Hawaiians who sometimes move s-l-o-w-l-y, Brenda moves fast! No wonder why the Chamber has grown so successfully during her management. We surely shall miss her a lot. We wish her continued success in her next endeavor!

Posing with staff at the 2008 Charity Gala

Lu Weiqi, director, Zhejiang International Investment Promotion Center Brenda Foster is an ambassador for exchanges between the U.S. and China and spared no efforts to support and help American companies’ development in China, particularly in Zhejiang province.

Brenda is not only a leader with strong determination and competence, but also someone with grace and charm. Her symbolic smile has left a long-lasting impression to us and news of her departure makes us already miss her. We wish our friendship will last long and hope she will continue to support the development of Zhejiang after she returns to the U.S. Best wishes!

Brenda Foster and guests at the 2008 Independence Day celebration

Harley Seyedin, president, AmCham South China It has been a true honor and privilege to have worked with Brenda these past eight years.

Brenda has been the most positive influence in my life as a true friend, guiding light, and colleague. She will be truly missed.

Brenda with AmCham Shanghai members and staff during an earthquake recovery project in Sichuan in 2010

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Brenda poses with members of the 2013 AmCham Shanghai Board of Governors

Dai Xiaowen, director general, Changzhou Bureau of Commerce

Brenda Foster with officials at the Yangtze River Delta Government Appreciation Dinner in April

Ai Baiying, vice chairman, Shanghai Soong Ching Ling Foundation Mrs. Brenda Foster is a great friend of the Shanghai Soong Ching Ling Foundation. When she learned of our efforts to improve mothers and infants‘ well-being, she responded immediately. She travelled thousands of miles to villages in the remote mountain area of Guizhou and Yunnan provinces to better understand the situation and needs of the underprivileged in these communities. Under her leadership, AmCham Shanghai together with the U.S. business community have contributed millions of RMB to benefit more than 10,000 women and children. We can never thank her enough!

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Since 2008, AmCham Shanghai has established and maintained strong and friendly cooperation with Changzhou (Jiangsu province). Mrs. Foster has played an important role as an ambassador of friendship in making such cooperation possible. Under her leadership, AmCham Shanghai’s professional team has successfully cooperated on many programs with the Changzhou Bureau of Commerce. We sincerely hope Foster will continue to be in touch with us after she returns to the U.S. We hope our friendship will last long and wish Foster happiness and good health!

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Dalian Wanda Group, a Chinese company, acquired AMC Entertainment Holdings in a deal valued at US$2.6 billion, making Wanda the largest cinema chain worldwide

OPEN FOR BUSINESS

Chinese executives say in a survey that U.S. market entry is difficult with cultural challenges but report overall success

By Marc Parich and Karen Buerkle

C

umulative Chinese investment in the United States increased from US$280 million in 2004 to US$22.7 billion in 2012. In addition, during the five-year period between 2008 and 2012 Chinese investment in the U.S. jumped more than 300 percent. China is one of the few sources of investment into the U.S. that is growing. The US$6.5 billion of Chinese direct investment into the United States in 2012 was a new record and current trends suggest another record year in 2013.

This is important for many reasons. The number of American jobs associated with majority Chinese-owned subsidiaries in the U.S. grew from fewer than 2,000 12 years ago to more than 27,000 as of late 2012. And if investment from China remains on

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track, Chinese enterprises will employ 200,000 to 400,000 Americans by 2020, according to figures from the Rhodium Group.

These trends strike down much of what has appeared in the mainstream media, where coverage focuses largely on the challenges and failures of Chinese enterprises trying to enter or expand in the U.S. Much of the news one reads in the U.S. about Chinese enterprises’ attempts to penetrate the U.S. market reflects the national-level political discourse about the “China threat.” At the local and state levels, the story is quite different.

State governments, through their economic development arms and led by local mayors and governors, are clearly vying

c o v e R s to r y

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…If investment from China remains on track, Chinese enterprises will employ 200,000 to 400,000 Americans by 2020…”

Marc Parich

Karen Buerkle

for Chinese money with a view toward creating more local jobs.

Los Angeles Mayor Antonio Villaraigosa’s May visit to China is only one recent case in point and followed a major trade mission

by California governor Jerry Brown in April. The State of California has opened a new trade office in Shanghai, just the latest addition to a growing list of state and local trade and investment offices present in China. The increasing investments and new jobs created by Chinese enterprises in Michigan’s automotive sector demonstrate that, in the case of some states, the red carpet has been rolled out for Chinese investment.

The federal government also has initiatives to attract Chinese investment. Ambassador Gary Locke has actively promoted investment opportunities and President Obama launched his

“Select USA” initiative in June 2011 to attract foreign investment.

This by no means suggests that Chinese enterprises have it easy in the United States. Generally speaking, American politicians and local communities do have concerns over Chinese investment. Consequently, some deals in industries deemed “sensitive” are often politicized and ultimately blocked.

But the number of blocked deals is very small. In fact, from 2009–2011, only 20 Chinese transactions went through the formal national security review process coordinated by U.S. Treasury-led Committee on Foreign Investment in the United States (CFIUS), and the vast majority of these were approved.

In an attempt to move beyond anecdotes and gain a broader understanding of the experiences of Chinese enterprises in the United Sates, our company, APCO Worldwide, in partnership with China Daily USA, conducted a survey of senior business executives to better understand both the challenges and successes of Chinese enterprises operating in the United States.

More than 50 senior business executives took part in the survey.

Each enterprise surveyed had at least 10 employees working in the United States with their headquarters located in China.

Those surveyed were asked about the challenges of entering the U.S. market, motivations behind their entry, the challenges of conducting business in the U.S. and their views for future growth in the U.S. market.

The research found that the story of Chinese enterprises in the U.S. is much more nuanced; that if you were to dig deeper, you would discover that the on-the-ground realities for Chinese enterprises are different than initially perceived. Indeed, while undoubtedly facing a number of challenges, Chinese enterprises’ collective experience in the U.S. market is a story of optimism and growth.

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Chart 1

Market entry On the subject of market entry, the survey found that 71 percent of business leaders described their enterprise’s experience entering the U.S. market as difficult.

When asked in an open-ended format about the factors that conditioned their enterprise’s market entry experience, many

business leaders pointed to the regulatory environment as a determining factor. Strength of the competitive environment and market demand for products were also key factors in determining the ease or difficulty of their enterprise’s entry into the U.S. Business leaders who said their enterprise had a relatively easy time entering the United States pointed to good access to

Chinese President Xi Jinping with U.S. Secretary of State John Kerry in the Great Hall in April

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imaginechina

Fosun owns a majority stake in U.S.-based Saladax Biochemical

capital and existing relationships as key factors, with one noting the importance of localization by saying, “You have to operate as a U.S. company and not as a Chinese enterprise.”

Cultural differences were also highlighted as a major challenge. Those who characterized the entry experience as challenging pointed to the difficulty of overcoming cultural differences between the U.S. and China and the challenges of gaining brand recognition in the U.S. When presented with a list of five potential challenges, nearly all business leaders (92 percent) agreed that overcoming cultural differences was a primary challenge for their enterprise. In fact, nearly half (45 percent) said cultural differences presented a major challenge to their enterprise’s market entry, with one executive expressing how difficult it was to be accepted by new customers.

Despite the difficulties navigating cultural differences, adverse economic conditions and a challenging regulatory environment, nearly all business leaders (94 percent)

“

Additionally, those who described their enterprise’s experience as easy credited the transparent and fair U.S. marketplace.”

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Chart 2

characterized their enterprise’s experience entering the U.S. market as successful overall.

Day-to-day operations When asked to think about the day-to-day operation of the business and not just the market entry experience itself, six out of 10 business leaders said it is very (28 percent) or somewhat (33 percent) easy to conduct business in the U.S. On the flip

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side, roughly a third say it is somewhat difficult (35 percent), and only a small handful said it is very difficult (4 percent) to do business in the U.S. One business executive surveyed concluded, “[The United States has a] fair environment and level playing field,” while others remarked that the freedom and ease of communication had a major impact on the enterprise’s success.

Additionally, those who described their enterprise’s experience as easy credited the transparent and fair U.S. marketplace, the fact that the enterprise acquired local talent to help it understand the U.S. business environment and culture, and the strong demand for the enterprise’s products and services for its success. By contrast, those who said their enterprise struggled pointed to difficulties overcoming differences in the way business is conducted in the U.S. and China, challenges navigating the regulatory environment and difficulty gaining brand recognition.

When presented with a list of potential challenges to dayto-day operations, competition from existing U.S. firms (84 percent) and high operating costs (86 percent) were identified as challenges, with

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AMC Entertainment Holdings CEO Gerry Lopez, left, with Dalian Wanda Group Chairman and President Wang Jianlin in Los Angeles last year after signing a deal

about half classifying these as major challenges. Again, cultural differences were highlighted as a key challenge. Roughly eight in 10 business leaders said that adapting to the business culture of the U.S. is a challenge, with a majority of those identifying this

as a minor, rather than major, challenge. One of those surveyed advised other enterprises to hire someone from the U.S. as an enterprise representative to manage the business in order to ease the cultural differences.

Chart 3

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Recommendations for Chinese Enterprises Entering the U.S. Market shutterstock

Here’s a summary of what some Chinese executives say newcomers should know or prepare for before they invest in the United States.

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he sur vey’s findings largely paint a more positive and optimistic picture of the experiences of Chinese enterprises in the United States; however, the survey’s findings show that many fundamental challenges remain. The Chinese business leaders surveyed offered advice to those looking to follow in their footsteps and set up successful operations into the United States: employ local talent, conduct in-depth due diligence to understand the U.S. market and regulatory environment, and devise strategies to overcome cultural differences.

Such advice reinforces the lessons learned and strategies employed by APCO when assisting Chinese enterprises in the United States. These include: • Identify and understand risks in advance – As Chinese firms venture in the United States (or any other foreign market), gaining a clear understanding of

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all the stakeholders who will be impacted by their business is essential. This will help identify the risks – commercial, regulatory, political and social – as well as the strategies to build their corporate standing. Good preparation will help mitigate such risks and enhance the chance of success. It is important to note that the United States is particularly complex because of the separation of powers among the three branches of government and among the federal, state and local levels. The United States is also a highly regulated market for many industries. It is essential to have a full understanding of the regulatory landscape in order to prevent and avoid mistakes that could cause delays.

• Engage, engage and engage – Chinese enterprises need to engage stakeholders early and continuously prior to, during and after market entry. In order to build the public’s trust, Chinese enterprises need to adopt a

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holistic and cross-border approach, engaging and communicating not only with customers, investors and regulators, but also with other key stakeholders who can impact their ability to succeed in the United States. These include influencer groups, such as nongovernmental organizations and the media, as well as those directly impacted, such as employees and local communities. Waiting until there is a problem will make it more difficult to achieve success in entering the market.

• Be patient, strategic and persistent – It takes time for a new market entrant to fully grasp the range of new regulations and standards, consumer habits and cultural differences they face in a new market. These challenges are not unique to Chinese enterprises; they apply to all new market entrants, although often for Chinese enterprises the cultural barriers are a little harder to bridge. It is important to be patient, strategic and persistent.

• D e v e l o p a n d i m p l e m e n t a s t ro n g cultural assimilation program – Such a pro g r a m c ou l d i n c lu d e i n - d e pt h c u ltu r a l immersions and hiring of cross-cultural management. Ensure management teams have professionals who truly understand and have experience with working in both an Eastern and Western context.

• Wo rk w i t h s t ra t e g i c p a rt n e rs a n d advisers – In order to seize market opportunities with confidence, it is advisable to partner with a firm that can provide a global perspective and proven experience in developing strategies on issues relating to commercial due diligence, competition mapping, investment negotiations and political-risk assessments.

China’s Shuanghui International announced plans to buy U.S. pork producer Smithfield Foods for US$4.7 billion in late May

Less than 20 percent believed investment restrictions placed on Chinese enterprises, or a general bias against doing business with Chinese enterprises, posed a serious challenge to their business operations.

After assessing this list of challenges, business leaders who took the survey were asked if they believe Chinese enterprises face more, fewer or about the same number of challenges as other foreign firms, with the response split between those believing they face about the same number of challenges as other foreign firms doing business in the U.S. and those believing that they face somewhat more challenges. Almost no one believed that Chinese enterprises have it easier than other foreign-owned businesses.

Despite the challenges they face, Chinese enterprises are optimistic about their future in the U.S., with 92 percent having a positive outlook on the future of their enterprise. Interestingly, roughly half (53 percent) of the respondents were “very” positive about what the next five years hold. When asked why they are optimistic about the future, business leaders nearly uniformly anticipated growth for their enterprises, in large part because they expect the U.S. economy to fully recover and expand over the next several years.

Karen Buerkle, Ph.D. is senior director of corporate reputation research for APCO Insight in Washington, D.C., and provides opinion research, message development and strategic communication services to corporations.

Marc Parich, director in APCO Worldwide’s Washington, D.C., office, has more than a decade of experience advising clients on political, economic and regulatory risks; market-entry strategies; and government relations in China, India, Russia and Southeast Asia.

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u.s .-china

A New Type of Great Power Relationship?

Jeffrey Bader, John C. Whitehead Senior Fellow in International Diplomacy at the Brookings Institution

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Former Obama advisor Jeffrey Bader cites finding solutions to conflicts in third countries around the world – so-called “hot spots” – as an opportunity for cooperation, or conflict, between the U.S. and China.

onflict, including life and death struggles” has often been the result of the rise of a great power as the dominant countr y and newcomer struggle to find, or maintain, their place in the world order – yet it doesn’t have to be this way for the United States and China, says Jeffrey A. Bader, who addressed more than 200 attendees at the Eighth Annual Barnett-Oksenberg Lecture on May 14 in Shanghai.

At the event, Bader called for the U.S. and China to work together to resolve dangerous conflicts around the world and that such efforts could form the building blocks of a “new type of great power relationship.”

When Bader talks about resolving conflict, he speaks from experience. As one of President Barack Obama’s top China experts, he served as senior director for East Asian affairs on the National Security Council from January 2009 to April 2011.

Bader also served as assistant U.S. trade representative responsible for China, Hong Kong, Taiwan and Mongolia in the early years of the George W. Bush administration. In that capacity, he completed the negotiations for China’s accession into the World Trade Organization. Today, Bader is the John C. Whitehead Senior Fellow in International Diplomacy at the

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Brookings Institution.

The following are excerpts from Bader’s speech given at the Eighth Annual Barnett-Oksenberg lecture co-hosted by the National Committee on U.S.-China Relations, Shanghai Association of American Studies (SAAS) and AmCham Shanghai.

A full transcript can be found in the June issue of the new Insight app available for free download on Apple’s App store, and on the AmCham Shanghai website at www.AmChamShanghai.org.

– David Basmajian

A new power relationship?

In the last year, a new phrase has been used by leaders on both sides to describe the nature of the relationship the United States and China should be building. Presidents Xi Jinping, and Hu Jintao before him, and President Obama have referred to the importance of establishing “a new type of great power relationship.”

This concept has not been particularly fleshed out on either side. As best I can discern, the thinking that lies behind the phrase is the realization that the history of the rise of great

powers has rarely been smooth or easy. The reaction of the dominant power to the rise of a newcomer frequently has been to see the rising power as a threat, and for the newcomer to see the dominant power as an obstacle. Conflict, including life and death struggles, has often accompanied such developments – for example, Germany’s rise in the late 19th century, Japan’s rise somewhat later, France’s conquests propelled by a revolutionary ideology in the Napoleonic years, and the Soviet Union’s rise in the 20th century.

My view is that one makes a mistake by over-generalizing about such historic precedents. Theory matters, but the facts matter too. If the rising and existing power see their raison d’être as to establish or maintain dominance, then conflict is much more likely. But history is contingent on decisions by leaders and peoples, not a set of Newtonian principles that tell us what will happen.

That said, we see signs of the kind of dynamic that the pessimists warn us about: high levels of suspicion of the motives of the other, attribution of aggressive or sinister intentions, a belief on the Chinese side that the U.S. side seeks to contain China, or worse, a belief on the American side that China seeks to supplant the U.S. and corrode its global influence.

What can be the elements of a “new type of great power relationship” that does not lead to conflict? There are at least four broad dimensions to the U.S.-China relationship that provide major opportunities for cooperation or conflict. They are: 1) Bilateral economic relations. Arguably, this is the factor in the relationship that is most salient in our domestic politics, the one that most affects short-term attitudes.

2) International issues of interest to all countries and on which the U.S. and China have disproportionate influence because of their power, e.g., climate change.

3) Political and security competition in the Asia-Pacific area as Chinese military power expands and the U.S. rebalances its capabilities toward the region.

4) Seeking solutions to conflicts, civil disorder, rogue behavior or instability in third countries around the world – socalled “hot spots.”

I believe the U.S. and China need to work persistently to solve problems in all four of these areas. Within each category, there are issues that are hugely consequential for the United States, and the outcomes will be notably better or worse depending on the degree to which the U.S. and China are on the same page. Indeed, I’m tempted to say that the relationship

will only be as durable as the weakest link.

I propose [here] to concentrate on the last of these areas, namely whether the U.S. and China can work together to resolve conflicts and dangerous situations in the rest of the world.

Origins of U.S.-China strategic cooperation The U.S. and China first came together when Nixon was President and Mao was Chairman because of shared hostility to the ambitions of the Soviet Union. This common view about the major geopolitical foe we faced led us to find overlap, though not identity, in our policies toward many of the socalled “hot spots” plaguing the world at that time.

In the succeeding years, so long as the Soviet Union remained the principal foe of each of us, the cooperation or parallel action begun by Nixon and Mao grew, to the point where many referred to an unofficial alliance.

Such issues remain at the top of the U.S.-China agenda today. When Presidents Obama and Hu Jintao met during the time I was at the National Security Council, more than half the time in virtually every meeting was consumed by Iran and North Korea.

Cooperation, conflict, and change One will not be surprised that on many of the key international issues, the U.S. and Chinese perspective is different, sometimes radically so. For example, on issues like Syria, Darfur and Zimbabwe, China does not share the U.S. and Western view that the international community needed to take exceptional measures interfering with the sovereignty of national governments to protect the population. In Libya, China resented the decision by the Western allies to utilize a UN Security Council resolution designed to protect the population of Benghazi as a tool to overthrow Qaddafi.

There are other issues, however, on which China has quietly gone along with U.S. policy, not because of support or fundamental agreement but because they understood the issue was seen as a vital interest by Washington. The obvious examples are the wars in Iraq and Afghanistan.

The world situation in which our views are formed is dynamic, not static. So, for example, the PRC initially approached the Arab spring with complacency about its potential impact on Chinese interests in the region, relying on

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traditional notions that China should align itself with sovereign governments facing unrest and it would not be held accountable for the outcome. In fact, in Libya, Chinese interests suffered when Qaddafi was ousted and the new government considered Beijing unfriendly because of arms transactions with the outgoing regime. This was a new experience for China, to be considered by foreign nationals a significant factor in a domestic situation far from its borders and to pay consequences for poor policy choices.

Our disagreements over democracy promotion can be muted when dealing with specific crises. There is a strong international consensus, demonstrated repeatedly in the last two decades that the resolution of internal conflicts, civil wars, and disintegration of states requires an election process and reconciliation among competing parties, supervised by the international community through the UN Security Council. This is how the war in Cambodia ended, with Chinese support, in the 1990s. Similarly, conflicts in Angola, Namibia, Afghanistan, Nicaragua, Bosnia, Kosovo, South Sudan and East Timor were brought to a close by UN or multilateral mediation culminating in elections. China was involved in supporting many of these outcomes and did not resist any. It understands that legitimacy in such countries requires an electoral process, even if China itself does not have such a system and otherwise rejects unilateral democracy promotion as subversion.

The big ones: Iran and North Korea The most important hot spot issues we face at present are Iran and North Korea. While U.S. and Chinese policy each reflects some of the perspectives I’ve described, in fact at the same time they demonstrate our ability to work past such differences and to find common interests.

In Iran, China has been clear that it does not accept Iranian attempts to become a nuclear weapons state. It has supported UN Security Council resolutions that have put in place unprecedented draconian sanctions on Iran in the last four years. It has worked with the Permanent 5 plus 1 countries in presenting a united front to Iran in negotiating a return to IAEA compliance. It has quietly gone along with U.S. requests to avoid expanding its energy investments in Iran as other countries have pulled out.

The U.S. has reciprocated by waiving sanctions against Chinese companies whose actions could bring them into conflict with provisions of U.S. law.

Why does cooperation work in Iran, albeit within limits?

China genuinely does not wish to see a new nuclear weapons

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state, both because of the impact on stability in the Persian Gulf but also because of its potential impact on the global nonproliferation regime, in which China has become a stakeholder. If Iran, and North Korea, should become nuclear powers, what will be the impact on the Nuclear Nonproliferation Treaty, which China’s neighbors, such as Japan and South Korea, have respected? This gives China pause. China also highly values its relationship with Saudi Arabia, which has made clear to Beijing that Chinese actions to strengthen Iran are contrary to Riyadh’s interest and will draw a reaction. Finally, Beijing understands that Israel’s restraint depends on its belief that the international community, including China, are imposing serious costs on Teheran. The result is that the U.S. and China do not see eye to eye on Iran strategy, but have enough common interest so that there is more cooperation than competition.

North Korea presents a very different set of variables, but the outcome is somewhat similar. Beyond the nuclear issue, where we share a strong interest in eliminating the North’s program and preventing proliferation, North Korea, as China’s neighbor, is much more of a vital interest to China than to the United States.

Above all, Beijing values stability on its border with North Korea.

It does not desire either instability or North Korean collapse that could lead to reunification and a U.S. ally on its border. But at the same time, it holds the North Korean regime in disdain.

Pyongyang’s provocations have led to military responses by the U.S., South Korea and Japan that affect China’s own security.

Beijing is no more pleased with loose talk about nuclear war on its border than are the U.S. and its allies.

Traditionally, China has tried to maintain a balance in its relations between North Korea and the U.S. It has condemned Pyongyang’s nuclear and missile tests, and supported sanctions by the UN in response. It has warned North Korea against provocations, particularly at a time of acute tension in late 2010 after North Korea shelled a South Korean island. On the other hand, Beijing has sought to limit sanctions to avoid pushing Pyongyang into a corner, potentially precipitating either a backlash or chaos or both, and has declined to use its leverage in energy and food supplies to induce behavior change.

This long-standing balancing act may be changing. Chinese disgust over Kim Jong-un’s antics in the last few months has been unmistakable, and manifested publicly. The most obvious step was the decision of the Bank of China to close the account of the North Korean Trading Bank. The Chinese leadership does not have confidence in the new team in Pyongyang to maintain the peace, and fears that its cherished goal of stability is under assault

“

[A] sound U.S.China relationship is arguably the most important foundation of peace, stability, and prosperity in the 21st century...”

An attendee poses a question during the Eighth Annual Barnett-Oksenberg Lecture on Sino-American Relations

not from the U.S. and its allies but from Pyongyang. This creates an opportunity for the U.S. and China to work more closely and effectively on an issue of vital concern to both of us.

Prospects for cooperation in the future I am on balance optimistic about the prospects for U.S.-PRC strategic cooperation.

From the American perspective, we not only welcome but f re q u e nt l y n e e d C h i n e s e c o o p e r at i o n . T h e O b a m a administration was criticized for saying this in 2009, as if by acknowledging a self-evident truth it was surrendering leverage.

So I’ll say it again, and I welcome a debate with critics who think that a cool distance between our two sides serves our interests better. We need to understand that already, China has substantial interests in many such hot spots, and its influence and views can affect behavior and outcomes. But more important, in the future that influence will only grow. If the U.S. adopts an attitude that traditional power arrangements ensure that we will be able to continue in the future to dictate outcomes, we are in for disappointments, surprises and setbacks.

Many Chinese analysts understand that China needs to step up constructive involvement in such issues. Chinese interests around the world, commercial and otherwise, are growing rapidly, and China cannot complacently assume that instability in faraway places will not affect it.

I believe a sound U.S.-China relationship is arguably the most important foundation of peace, stability, and prosperity in the 21st century. Cooperation on strategic issues will make that more likely or the absence of cooperation will undermine it. None of us can much affect the realities on the ground in these areas of conflict and instability, sad to say. But we can affect the way opinion leaders in our countries think about the role of the other in coping with such problems. I don’t whitewash, and I don’t want you to whitewash, behavior by either side that undermines peace and stability. We need to be clear-eyed about American and Chinese conduct. But for those of us who seek to understand the perspectives of the other side, I hope we will all make a greater effort in combating pernicious notions about each other rather than merely presenting them, and in building the bridges of cooperation, not ceding the field to those who want to tear them down.

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inside amcham

AmCham Shanghai Names New President

Kenneth Jarrett to succeed Brenda Foster

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eteran diplomat and U.S.-China affairs specialist Kenneth Jarrett will start a new job as president of AmCham Shanghai on September 1. The announcement in May came after a six-month search led by a committee made up of AmCham Shanghai board members and leaders from the membership.

Jarrett will succeed Brenda Foster, who is stepping down at the end of June after serving eight years as president to return to Hawaii, where she will become an Executive-in-Residence at the University of Hawaii’s Shidler College of Business.

Robert Theleen, 2013 chair of the AmCham Shanghai Board of Governors, said the Board unanimously selected Jarrett based on his unique qualifications, experience and personal qualities.

“I am very pleased that Ken Jarrett will become our new president,” said Theleen. “Ken has been a

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pillar of the American community in Shanghai for many years, both as a distinguished diplomat as well as a successful business executive more recently.”

Jarrett joins AmCham Shanghai from APCO Worldwide, a Washington, D.C.-based public affairs consultancy, where he served as chairman for Greater China for the past five years. Prior to APCO, he served as U.S. consul general in Shanghai from July 2005 to August 2008. Jarrett has been a member of the AmCham Shanghai Board of Governors since 2011, serving as chair in 2012.

As president, Jarrett will act as the public face of AmCham Shanghai, representing the Chamber and American business interests in China with a focus on implementing AmCham Shanghai’s primary mission: to foster the success of its member companies competing in the China market and to strengthen the U.S.-China

commercial relationship.

“As a former chair of AmCham Shanghai and a current Board member, Ken brings depth of knowledge, strong relationships in both the Amer ican and Chines e communities and continuity of management with our talented staff at the Chamber,” added Theleen. “It will be a pleasure to work closely with Ken to further grow our organization as the leading voice of American business in China.”

Peter Sykes, president of Dow Chemical China, AmCham Shanghai board member and search committee co-chair, commented on Jarrett’s selection as the Chamber’s new president. “At the end of the day, Ken’s tremendous experience, combined with his obvious passion for the role, were decisive factors,” said Sykes, who noted that the position drew “tremendous interest.” He added, “I’d like to congratulate him and wish him

the very best of luck in his new role.”

Jarrett’s 26-year diplomatic career also includes postings as deputy consul general in Hong Kong and as director of Asian Affairs in the National Security Council, the White House, Washington, D.C., and political officer at the U.S. Mission to the United Nations in New York. He served as board chairman of the USA Pavilion during the 2010 Shanghai World Expo.

Jarrett is a graduate of Cornell University and holds an MA from Yale University and the National War College. He also studied at the Hopkins-Nanjing Center at Nanjing University in 1989, Chinese University in Hong Kong and the Taipei Language Institute.

Look for an interview with the new president in the September issue of Insight.

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inside amcham from the chair

Passing of the Torch

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Dear AmCham members, he new torch has been passed from our distinguished President, Brenda Foster, to our President-elect, Ken Jarrett. There are no better examples of the voice of American business in Shanghai than Brenda and Ken. I have had the privilege of knowing Ken when he was our U.S. Consul General and I have followed his distinguished career from the diplomatic corps to the private sector at APCO, one of the most prestigious strategic advisory firms in the global community.

Ken has seamlessly moved from government to business, first as our top American diplomat in Shanghai, and then to the head of one of the most respected international advisory firms in the world. His career experiences cross over from the American community to the top echelons of leadership in the Shanghai government and on to Beijing and Washington. With Ken at the helm of AmCham Shanghai, we will be able to build on the Chamber’s remarkable growth during these past eight years, which has resulted in our Chamber’s status as the largest and most prestigious in the region. If you have not yet met Ken and his lovely and talented wife, Ann, I highly recommend that you reach out to him at any AmCham Shanghai function you can attend. You will gain invaluable insights on nearly every issue which affects all of us as we continue to assist our members to unravel the DNA of China’s economic, commercial and political systems in the 21st century.

In this issue, we focus on China’s outbound investments, especially to the United States. You will often hear a number of experts discussing the controversial aspects of both state-sponsored investments to that which the private sector brings to America. It is important to know that AmCham Shanghai intends to be a leading institution in understanding the direction, the sources and the industrial focus of Chinese investment to the United States. Our new SME Center website will target U.S. investment opportunities for Chinese investors through the economic development offices of our 50 U.S. state governments. We have listened to many of you, who feel that AmCham Shanghai should be a source of knowledge and of possible investor relationships as more and more Chinese investment capital finds its way to our American shores.

For those of you who wish to say goodbye to Brenda Foster, your last official time will be at our annual Fourth of July celebration on Saturday, June 29 on the grounds near the Mandarin Oriental Hotel Pudong. You will likely have the chance to say hello to our new president and wife, Ken and Ann Jarrett, at this important family event.

Robert Theleen Chair of the Board of Governors

Best regards, Robert Theleen

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inside amcham B O ARD o f g o v e r n o r s b r i e f i n g

Highlights from the May 2013 Board of Governors Meeting Nominations and Elections Committee update Andrew Au, Board member and newly elected Chair of the Nominations and Elections Committee (NEC) reported on his recent meeting with the President to discuss this year’s NEC timeline and strategies to recruit Board candidates. He said he expected to have the NEC formed by June.

Doorknock including selection of delegates and development of messages for AmCham Shanghai to bring to Washington, D.C. He highlighted Doorknock objectives which focus on advocating issues critical to the business success of AmCham Shanghai members, establishing AmCham Shanghai as a thought leader, building relationships with key officials and expanding existing partnerships.

Washington, D.C. trip report Brenda Foster, President, AmCham Shanghai, reported that the recent trip to Washington, D.C., with Bob Theleen, Board Chair, Scott Williams, Vice President, Programs and Services, and Steven Chan, Director, Government Relations, went very well. They attended the U.S. Chamber of Commerce’s Annual Small Business Summit and AmCham China’s outreach event. They met with officials from the U.S. Department of Commerce, the Minority Small Business Administration, the U.S. ExIm Bank, the U.S. Trade Development Association and the National Governors Association to promote and garner support for AmCham Shanghai’s SME Center and Virtual Platform.

Digital program update David Basmajian, Director of Communications and Publications, made a brief presentation on the recently released Insight app and the ebook version of the 2012–2013 China Business Report.

Since its release in April, the Insight app had been downloaded by more than 400 users. That number is expected to increase as the Chamber continues to promote the app.

2013 Washington, D.C. Doorknock update GR Director Steven Chan reviewed the timeline for the 2013

In Attendance Governors: Andrew Au, Jimmy Chen, Keith Cole, Lienjing Chen, Sherman Chu, Curtis Hutchins, Marie Kissel, Jim Mullinax, Peter Sykes, Robert Theleen (Chair), Eric Zheng Apologies: William Brekke, Kenneth Jarrett Attendees: David Basmajian, Steven Chan, Brenda Foster (President), Patsy Li, Stefanie Myers, Helen Ren, Scott Williams, Jessica Wu

The AmCham Shanghai 2013 Board of Governors Governors

Chair

Andrew Au Citibank China

Jimmy Chen FedEx Express

Sherman Chu Cisco Systems

Keith N. Cole General Motors

Kenneth Jarrett APCO Worldwide

Marie Kissel Baxter Asia-Pacific

Chen Lienjing Pratt & Whitney

Peter Sykes Dow Chemical

Eric Zheng AIG Insurance

Robert Theleen ChinaVest

Vice Chair

Curtis Hutchins Eaton (China) Investments

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AmCham Shanghai New Members U.S. Corporate Membership Lennox (Shanghai) Refrigeration Technology Consulting Co., Ltd. FANG Hang

Alcoa Wheel Products (Suzhou) Co., Ltd. PAN Ming

Shanghai SIP Engineering Consulting, Ltd. PUYBARET Florent

Aperian Global (Shanghai) Consultancy Limited SHEN Michael

Shaw Carpet (China) Co., Ltd. CHEN Susan

U.S. Associated Corporate Membership

CLS Communication (Shanghai) Co., Ltd. CAO David

ADP Vehicle Information Technology (Shanghai) Co., Ltd. TAN Peng-Wei

Cooper (China) Co., Ltd. TSE Oi Man Agnes WANG Tao

First Quality Nonwovens (Wuxi) Co., Ltd. BODFORD Allen

Cooper Electric (Shanghai) Co., Ltd. WANG Tao TSE Oi Man Agnes

GroupM (Shanghai) Advertising Co., Ltd. LI Stewart Huntsman Chemistry R&D Center (Shanghai) Co., Ltd. SHENG Enshan Plantronics Trading (Suzhou) Co., Ltd. JING Xiaohong Shanghai Pizzavest Fast Food Co., Ltd. DEBOER Douglas Ryan Xylem (China) Company Limited LIU Wendy Corporate Int’l Affiliate Membership apvision Partners (Shanghai) Co., Ltd. C HONG Kai Hilton Nanjing ZITNIK Joseph Shanghai 21st Century Hotel Co., Ltd. BOYER Scott Small Business Membership Maverlinn Shanghai Limited COISPEAU Chai-Lin Shanghai Far Glory Business Services Co., Ltd. LIN Pamela Associate Membership Agilent Technologies (Shanghai) Co., Ltd. FU Xiangdong AIG Insurance Company China Limited PAN Jeffrey

The Shanghai Lincoln Electric Co., Ltd. HILL Kyle Weber Shandwick Worldwide-Interpublic Marketing Services (Shanghai) Ltd. BOUWER Marco DEVANAYAGAM ANN Carolyn LEE Lei Weldon BORRAS RIERA Elisabeth

Cooper Electronic Technologies (Shanghai) Co., Ltd. WANG Tao

Individual U.S. Citizen Membership

Eaton (China) Investments Co., Ltd. XIAO Vivian

AllStar Technology Co. Limited CHU Philip

Emerson Process Management Power & Water Solutions (Shanghai) Co., Ltd. SHAO Changsong

Asia Base Development Limited LIN Charlie

JPMorgan Chase Bank (China) Company Limited Shanghai Branch CHAN Issac KPMG LIN Doreen L-Com (Suzhou) Electronic Co., Ltd. MEI Maggie Magna Automotive Technology and Service (Shanghai) Co., Ltd. O’BRIEN Frank Mortenson (Shanghai) CPMC, Ltd. WANG Elaine ZHANG Helen O’Melveny & Myers, LLP, Shanghai Office (USA) SHEN Xiajun SHI Sylvia WANG Stewart XU Jean Parker Hannifin Motion & Control (Shanghai) Co., Ltd. TAN Teresa Rogers Technologies (Suzhou) Co., Ltd. JIANG Ina Shanghai International Theme Park Company Ltd. KUSHABI Adam

Collective Responsibility BRUBAKER Richard Infinitas SA CALLIER Michael N/A BATISTA Andres O’Laughlin (Shanghai) Fine Chemicals Trading Company O’LAUGHLIN Michael Shanghai Redleaf Women’s Hospital OREJUDOS Christian Shanghai Redleaf Women’s Hospital YEH John Weihai Foreign Investment Promotion Center FINDLEY Hilary Wayne Individual Int’l Affiliate Membership Dongdu International Group Co., Ltd. WOOD Peter EyezChina Ltd. CARDELLINI Gisella Genpact (Dalian) Co., Ltd. HUTCHISON Scott

Do you want to share more information about your company? Contact Patsy Li at (86 21) 6279-7119 ext. 8966 or patsy.li@amcham-shanghai.org for a “Standout Listing” opportunity in the New Members Section.

deal of the month B y M ic h e l l e To n g

imaginechina

Alibaba Buys Stake in Weibo Jack Ma, chairman of Alibaba

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libaba Group, China’s largest e-commerce group, purchased an 18 percent stake in China’s popular Twitter-like microblogging site Sina Weibo for US$586 million, Sina Corp. announced in a statement in late April.

The deal is expected to help drive Sina Weibo users, which total more than 500 million, to Alibaba’s e-commerce sites like Taobao.

The companies said they plan to build a model of socialized e-commerce reliant on Weibo’s user base and Alibaba’s business platform. They will share user account information, exchange data and cooperate in online payment and online marketing.

The partnership is expected to bring Sina Weibo more than US$380 million over the next three years in additional advertising and social commerce service revenues. As part of the deal, Alibaba has the option to increase its shares to 30 percent in the future.

“We believe that this strategic alliance helps to create a stronger Weibo,” said Jack Ma, founder and chairman, in a statement. Ma stepped down as CEO on May 10, and was succeeded by Jonathan Lu, a former Taobao executive.

Sina’s U.S.-listed shares jumped 13 percent to US$56.99, up US$6.69, on April 29 after the deal was announced. “Weibo and Alibaba’s e-commerce platforms are natural partners,” said Charles Chao,

chairman of Sina Corp., in a press release.

Alibaba owns Taobao and Tmall, which together made US$160 billion (RMB1 trillion) in sales in 2012. As of 2012, Taobao has listed more than 800 million products and has more than 500 million registered users. Online payment service Alipay, a Paypal equivalent, is also owned by Alibaba.

Alibaba’s net income in the fourth quarter ending December 2012 stood at US$642.2 million, while revenue was US$1.84 billion, according to Yahoo Inc., which owns 24 percent of the company. Alibaba is expected to seek an initial public offering later this year on the New York Stock Exchange.

China’s total online sales are expected to rise to US$356.1 billion in 2016 from US$169.4 billion last year, according to Forrester Research. By comparison, U.S. online retail sales are forecast to reach US$327 billion from US$226 billion over the same period.

Yahoo! Inc. bought a 40 percent stake in Alibaba in 2005 for US$1 billion. As part of the deal, which aimed to form a long-term strategic partnership in China for the two companies, Yahoo! Inc. merged its China-based subsidiaries, which included 3721.com, a Chinese search engine it acquired in 2004. However, in 2012 Alibaba completed an initial repurchase of the shares for US$7.6 billion and restructured its relationship with the company.

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AmCham Shanghai U.S. Consul General Shanghai Robert Griffiths arrives at the Eighth Annual Barnett-Oksenberg Lecture on Sino-U.S. Relations

Panelists during an event hosted by AmCham Shanghai Automotive Committee, European Chamber Automotive Working Group and PricewaterhouseCoopers

Month in Pictures

First Annual Yangtze River Delta (YRD) Government Appreciation Dinner Jeffrey A. Bader, right, before delivering the keynote address at the BarnettOksenberg Lecture

Jeanne Barnett at the event

U.S. Federal Reserve Board Governor Jerome Powell during a roundtable at AmCham Shanghai

AmCham Shanghai’s Small and Medium Enterprise (SME) Center breakfast roundtable j u n e 2 0 1 3 i n si g h t 4 5

Government Relations Federal Reserve Governor Meets with AmCham Shanghai AmCham Shanghai hosted U.S. Federal Reserve Board Governor Jerome Powell for a breakfast roundtable on May 10 to discuss China’s economy in transition, specifically focusing on the financial and banking sectors. David Basmajian, AmCham Shanghai Director of Communications and Publications, presented highlights from the 2012–2013 China Business Report. AmCham Shanghai members offered insights on China’s macro policies and key business challenges facing their industries in China. While in Shanghai, Powell also met with representatives from the Shanghai Stock Exchange, the Shanghai Municipal Government and the U.S. and Chinese business communities.

U.S. Federal Reserve Board Governor Jerome Powell speaks during a roundtable at AmCham Shanghai

AmCham Shanghai Seeks Earthquake Relief Partnerhips AmCham Shanghai is currently exploring potential partnerships with organizations to support earthquake relief and rebuilding in Sichuan. The earthquake hit Lushan County of Ya’an City, southwestern Sichuan province, on April 20, reportedly killing hundreds and leaving tens of thousands homeless. A number of government and non-government organizations (NGOs) are providing ongoing rescue and relief efforts to those impacted by the devastation. AmCham Shanghai also organized an internal donation drive to support the China Foundation for Poverty Alleviation to provide care packages for earthquake victims. Individuals or companies interested in donating to earthquake relief efforts can find more information at www.amcham-shanghai.org/csr.

Members Attend International Technology Fair AmCham Shanghai participated in the first China Shanghai International Technology Fair (CSITF) from May 8–11, jointly sponsored by the Ministry of Commerce, the State Intellectual Property Office, the Ministry of Science and Technology and the Shanghai Municipal Government. CSITF focused on innovation development, intellectual property protection and technology trade promotion. AmCham Shanghai member companies participated in the Chamber’s booths showcasing their products and services. Senior Chinese government officials, including Mayor of Shanghai Yang Xiong and Minister of Commerce Gao Hucheng, Chinese businesses and organizations, as well as Fortune 500 companies also participated in the fair.

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AmCham Shanghai Team Participates in U.S. SME Summit AmCham Shanghai participated in the U.S. Chamber of Commerce’s annual America’s Small Business Summit from April 29 to May 1 in Washington, D.C. Chair Robert Theleen, President Brenda Foster, Vice President of Programs Scott Williams and Director of Government Relations Steven Chan met with key officials from the U.S. Department of State, the U.S. Department of Commerce, Export-Import Bank, the Small Business Administration, the Minority Business Development Agency, the Trade and Development Agency, the National Governors Association and the Office of Rep. Boustany, among others.

During the meetings, the Chamber’s leadership team provided an update on the development of the Chamber’s SME Center, including the new SME Virtual Center to be launched midyear, and key highlights of AmCham Shanghai’s 2012–2013 China Business Report. The SME Virtual Center will offer online support, referrals and resources to U.S. SMEs interested in the China market and provide an opportunity for U.S. federal, state and local government entities, businesses and trade associations, as well as accredited private companies to post investment projects to attract Chinese investment.

Courtesy IPBA Secretariat

Brenda Foster Addresses Seoul Conference AmCham Shanghai President Brenda Foster delivered remarks at the IPBA 2013 SEOUL Annual Meeting & Conference, which took place from April 17–20 in Seoul, South Korea. Organized by the Inter-Pacific Bar Association (IPBA), the conference attracted about 1,200 attendees, including business and commercial lawyers, legal academics and CEOs from around the world.

Foster joined a distinguished panel of global business leaders, including Yoon-Dae Euh, CEO of KB Finance Group, ChangGyu Hwang, former Samsung Electronics CEO, and Mark AmCham Shanghai President Brenda Foster delivers McCombe, chairman of Asia-Pacific for BlackRock, to discuss remarks at IPBA 2013 SEOUL the present situation of the Asian business market and future perspectives. “As the Chinese economy continues its transition to what we expect to be a healthier and more sustainable growth rate, China’s consumer market is leaping ahead,” she said, adding that as the buying power of the Chinese consumer grows, AmCham Shanghai expects those companies focused on quality of life products to outperform.

Pre-launch of China Greentech Report AmCham Shanghai and The China Greentech Initiative (CGTI) co-hosted a pre-launch of The China Greentech Report 2013: China at a Crossroads, on May 15 at the JW Marriott hotel in Shanghai. The 2013 report was released on June 1.

Addressing an audience of more than 70 experts and professionals in the greentech field, Alan Beebe, managing director of CGTI, noted that targets specified in China’s 12th Five-Year Plan are being outpaced by the impact of rapid growth and urbanization, despite China investing more than US$67 billion in greentech during 2012. He said a new approach that emphasizes collaboration among business and government is needed to achieve results from China’s continuously increasing investment in greentech. To learn more about the report and CGTI, visit www.china-greentech.com/report.

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Event highlights

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SME Center Hosts SME Resources Roundtable AmCham Shanghai’s Small and Medium Enterprise (SME) Center hosted a breakfast roundtable on May 14 with representatives from the U.S. Consulate General in Shanghai and the U.S. Embassy in Beijing to discuss various government programs, services and resources available for U.S. SMEs in China.

Jared Ragland, intellectual property rights (IPR) attaché, and Shi Lan, IPR specialist, highlighted IPR challenges facing U.S. government representatives discuss resources available U.S. SMEs, including trademark theft and patent for U.S. SMEs in China infringements, and discussed programs that the U.S. Patent and Trademark Office (USPTO) is undertaking to mitigate these challenges. They noted that U.S. intellectual property registrations and rights do not provide protection in China. The most common type of intellectual property that SMEs need to register is trademarks, but a usual problem is that third parties are registering trademarks in bad faith.

Peter Yoon, American Citizen Services chief of the consular section, described the U.S. non-immigrant visa process for Chinese travelers and government services for U.S. citizens that include passport renewals, notarizations as well as emergency services, among others. AmCham Shanghai and the U.S. Consulate have established a corporate visa program (CVP), which expedites visa appointments and processing for Chamber member companies to within 48 hours. As of March 2013, the CVP has issued more than 100,000 visas.

Also during the roundtable, Chinchie Killfoil, IRS tax attaché, and Yuen Chan, deputy IRS tax attaché, provided regulatory and taxation updates affecting expatriates and investors in China. Paul Taylor, deputy principal commercial officer at the Foreign Commercial Service (FCS), introduced FCS programs and services for SMEs both already in China and for those who are still in the United States.

‘New Business and Legal Imperative’ Talk AmCham Shanghai’s Legal Committee and Business Council for Sustainability & Responsibility (BCSR), in cooperation with the ABA Section of the International Law China committee, hosted an event on May 9 that discussed CSR as an essential part of the global plan of a company. Bernice Cheng, executive counsel for Transactions Compliance, Asia-Pacific at General Electric, noted that China’s 12th Five-Year Plan follows a policy shift from “growth at any cost” toward a more balanced and sustainable growth pattern. In this new climate, corporations will need robust compliance practices and regulatory awareness, she said. There are new types of opportunities as well, such as partnerships in R&D, energy, environment, healthcare and other sectors. Fighting corruption and waste have also become a focus, Cheng added.

Mark Buchanan, professor of law and international business at Boise State University, presented an ethical and structural overview of the field, noting that CSR has evolved from a focus on philanthropy to a strategic alignment with business interests. Jean-Jacques Cabou, partner at law firm Perkins Coie, LLP, discussed U.S. laws and regulations relevant to CSR, while C.Y. Yeung, CSR director at Intel China, explained how Intel’s development and strategic plan in China fit into wider Chinese policy objectives, and how the company integrates CSR objectives with business innovation.

For more information on AmCham Shanghai’s 22 industr y-specific committees, please contact committees@amcham-shanghai.org.

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YRD Officials Honored at Government Appreciation Dinner AmCham Shanghai’s Board of Governors and U.S. Consul General Robert Griffiths hosted the First Annual Yangtze River Delta (YRD) Government Appreciation Dinner on April 24 for more than 20 Chinese officials from the YRD region. The Chamber hosted mayors and vice mayors from Xuzhou, Suzhou, Taicang, Ningbo, Zhoushan, Cixi and Yiwu, as well as leaders from the Jiangsu chapter of the China Council for the Promotion of International Trade (CCPIT) and the Zhejiang Commission of Commerce.

AmCham Shanghai Board members and Chinese officials from the Yangtze River Delta (YRD) region at the Chamber’s first YRD Government Appreciation Dinner

AmCham Shanghai President Brenda Foster noted that the YRD region has always been a vital business hub for American companies in China. More than 10 percent of AmCham Shanghai members are located in the YRD outside Shanghai. They include not only leaders in the manufacturing of new materials, biopharmaceuticals and renewable energy, but also key players in the services sector, including financial services, software and IT and HR consulting. CG Griffiths thanked the Chinese officials for the YRD’s support for intellectual property rights and legal and regulatory issues.

Marketing Strategies to Reach RMB Billionaires

Panelists discuss effective strategies to reach RMB billionaires

AmCham Shanghai’s Marketing & Media Committee held a lecture on May 17 featuring David Turchetti, managing director of Blu Inc Media, on the lifestyles, spending habits and value systems that set RMB billionaires apart from their wealthy counterparts in China. Turchetti expounded on the various subsections of the ultra-wealthy in modern China, including secondgeneration wealth, affluent spouses, new money and business builders, and how effective marketing campaigns must include accurate segmentation and market strategies targeting each of these groups.

Turchetti said that the Chinese ultra-rich are “pluggedin” digitally, spending an average of more than nine hours a week on their tablets, with 100 percent using the phone app WeChat to stay in touch with an average of 138 friends. Although ultra-wealthy Chinese boat buyers have become favorites at the Cannes and Monaco boat shows and Chinese yacht clubs have begun partnering with international organizations, a 43 percent luxury tax is a limiting growth factor. London, New York City, Sydney, San Francisco and Paris are prime markets for real estate acquisitions for the ultra-rich in China.

Turchetti also joined a panel discussion with Gao Ming, senior VP and GM at Ruder Finn, and Jean Wylie, senior partner at Reuter, on effective outreach strategies. Turchetti emphasized the importance of respecting the anonymity of VIPs for long-term relationship building. Wylie explained how peer networking activities targeted at the ultra-rich have to be leveraged into experiences that form emotional loyalty to brands. The panel agreed that the rise of philanthropic awareness among the ultra-rich in China today is not just a response to public sentiment, but signals a new era in wealth consciousness and marketing in China.

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EXECUTIVE READING ROOM We asked executives what books they are reading or are on their summer reading list. Here is what they reported.

Keith Cole, VP, Government Relations and Public Policy, General Motors International Operations Books: River of Smoke by Amitav Ghosh, Shanghai: The Rise and Fall of a Decedent City by Stella Dong and China in Ten Words by Yu Hua Remarks: “River of Smoke is the second of Amitav Ghosh’s planned trilogy of historical fiction on the opium trade and is a great introduction into the complex relationship between China and the Western powers. Stella Dong’s history of Shanghai brings to life the turbulent years from the turn of the last century, up until the Communist takeover in ‘49 – and it’s frankly amazing that anyone in Shanghai survived these years to see the modern era. Neither of these books is in the must-read category with Richard McGregor’s The Party, Jim McGregor’s 1 Billion Customers or Michael Dunne’s American Wheels, Chinese Roads, but they help provide the context for today’s China – which Yu Hua’s China in Ten Words sums up nicely.”

Curtis Hutchins, President, Asia Pacific, Eaton (China) Investments Book: The First 90 Days by Michael Watkins Remarks: “ The book provides a framework for thinking about the challenges associated with stepping into a new role and approaches that have proven successful.”

Also reading: Moment in Peking by Lin Yutang Remarks: “A great book and story line that outlines the cultural norms and many challenges families experienced in the evolution of China.”

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Kai Guo, Partner, The Martec Group Shanghai Books: Medical Reform of a Large Country by Youli Zhu and See by Jing Chai Remarks: “Medical Refor m of a Large Countr y is a comprehensive and in-depth analysis on China’s medical reform with a lot of history, facts and data. Although I don’t agree with some of the authors’ opinions, I think it is a mustread for anyone whose business depends on China’s medical system. See is written by a CCTV news journalist. I heard good comments from friends recently about its insights and deep analysis on today’s Chinese society.”

Jeremy Burks, Greater China President and VP, Specialty Chemicals Business, Dow Corning Corp.

Books: An Utterly Impartial History of Britain

(or 2000 Years of Upper Class Idiots in Charge)

by John O’Farrell and The Middle Kingdom Ride by Colin Pyle and Ryan Pyle

Remarks: “It’s a very funny take on British history, puncturing all pomposity and a firm reminder that nations and people shouldn’t take themselves too seriously … and since this has nothing to do with my work or daily life, it only takes a few pages and I am completely relaxed and nodding of f ! I also have another b o ok written by Ryan Pyle, my touch rugby friend from Shanghai Touch, which tells the story of the epic motorbike trip around China made

by Ryan and his brother. I love all these stories written by foreigners on their experience in China.”

Gregg Pinick, Head of School, Concordia International School Shanghai Book: Seven Days That Divide the World by Dr. John Lennox of Oxford University Remarks: “I am intrigued by his thoughts on the connection of science and spirituality.”

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