Insight Magazine October 2012

w w w. a m c h a m - s h a n g h a i . o r g

The Journal of the American Chamber of Commerce in Shanghai October 2012

ALSO INSIDE • SME Center Nears Fruition • Doorknock 2012

EXCLUSIVE INTERVIEW

SLEEP, RUN, LOVE Spiritual guru Deepak Chopra, in Shanghai, talks about leadership and shares his views on the importance of spirituality, health and politics

INsIGht OCTOBER 2012

the Journal of the american Chamber of Commerce in shanghai

AMCHAM SHANgHAI DIRECTORS vICE PRESIDENT OF PROgRAMS

scott Williams

F e at u r e s

12 A Prescription for Success

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heaLthCare

By Clancey Houston

Innovative business solutions are needed to stay competitive in a new healthcare environment.

COMMITTEES

stefanie myers

ISTOCKPHOTO

PRESIDENT

Brenda Foster

INSIgHT EDITOR-IN-CHIEF/ COMMUNICATIONS & PUBLICATIONS

David Basmajian EvENTS

Jessica Wu FINANCE & ADMINISTRATION

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16 The Suzhou ‘Pipeline’

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reGIONaL FOCus

By Jonathan Shyu

The executive director of J.P. Morgan China’s Suzhou branch talks about the U.S. bank’s first branch in the region.

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INSIgHT MANAgINg EDITOR

Bryan Virasami esther Young, erika Wang SENIOR COMMUNICATIONS ASSOCIATE

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26 Sleep, Run, Love

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COVer stOrY

By Esther Young

Spiritual guru Deepak Chopra talks to Insight about leadership and shares his views on the importance of spirituality, health and politics.

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34 It’s All a Game

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By Esther Young

American gaming companies are coming to China not just for factories but to look for creative workers.

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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GamING

11 Movers & Shakers

DeaL OF the mONth

China Buys New A320s

50 Favorite Airport in Asia-Pacific eXeCutIVe traVeLer

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From the Chair Government relations amCham shanghai in Pictures Committee highlights COvER PHOTO By TODD MACMILLAN

BRyAN ADAMS

SENIOR ASSOCIATE EDITORS

Editor's note

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

efore I left Shanghai for the Chamber’s annual Doorknock in Washington, DC, I read our cover story interview with mind-body-health guru and best-selling author, Dr. Deepak Chopra.

Chopra is known for his provocative ideas on spirituality, science, religion and human relationships, and he did not disappoint in his one-on-one interview with Insight magazine.

The focus of the discussion was on leadership.

Chopra’s definition of a leader – one who “symbolically expresses the longings, the yearnings, the dreams of a collective consciousness, and also acts as an agent of transformation” – stayed with me as we touched down in D.C. What is the quality of U.S. leadership that will drive the U.S.-China relationship forward in the years to come?

Positions on China from both parties battling for the White House – essentially an argument on who will be tougher on China – would be unlikely to meet Chopra’s above definition and is probably not anyone’s idea of visionary leadership that many believe is needed. But despite the discouraging tone and tenor of debate on the presidential campaign trail, I found reasons to be optimistic during my time in our nation’s capital.

We met with dozens of U.S. policy makers on our

trip – politicians on Capitol Hill, administration officials at the White House, State Department and other agencies and “thought leaders” who populate top think tanks. Not all agreed with everything we said and many disagreed with each other. But most had a passion and interest – key traits of successful leadership according to Chopra – in promoting a healthy U.S.-China relationship. Assistant Secretary of State Kurt Campbell’s globetrotting efforts to maintain relations at the most tense of times comes to mind. U.S.-China Working Group co-chair Rep. Rick Larson’s efforts to educate members of Congress reflect a deep commitment to a healthy bilateral relationship.

While it doesn’t often grab headlines, we should all be heartened by the leadership exhibited by many in Washington, and right here in Shanghai, whose commitment and dedication will, I hope, keep the most important bilateral relationship in the world, on track.

Finally, I’d like to thank Esther Young, who after more than two years at AmCham Shanghai leaves us for opportunities in New York City. Esther was integral to Insight, both as a contributor and editor.

See her final story on page 34.

Xinhua

News

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CHINA BUSINESS

Ctrip.com links with Booking.com Ctrip.com International Ltd., China’s biggest online travel service provider by market share, and Booking.com, the world’s foremost online hotel reservation service provider, will work together to supply an overseas hotel reservation platform to Chinese domestic tourists.

The new program will provide reservation services at over 200,000 international hotels in 172 countries and regions. The new partnership will enable Ctrip.com to update and expand its overseas hotel information, while Booking.com will expand its market presence in China and increase its access to potential consumers.

The Shanghai-based company said it hopes the new service will help solve the language barrier problem and lack of knowledge about foreign hotels that has made travel difficult for many Chinese tourists.

Auto sales pick up Total sales of vehicles in China rose 8.4% month-on-month to 1.49 million units in August, while industry output grew 4.5% from July to 1.5 million vehicles, according to the China Association of Automobile Manufacturers. Passengervehicle sales growth fell to 3.7% to 1.23 million from July, its slowest pace in three years, but the figure rose 8% yearon-year to reach 10 million units in the January–August period. Prices for locally made passenger vehicles fell 1.6% in July from a year earlier, while imported vehicle prices dropped 2.6%, the third consecutive monthly decline. Despite stalled overall growth in the world’s biggest car market the past two years, analysts said high savings rates and pentup demand mean Chinese consumers

FedEx, UPS gain foothold in China U.S. package delivery companies FedEx Corp. and United Parcel Service, Inc. (UPS) have been approved to provide express-package services on their own in some Chinese cities.

The approval gives FedEx access to eight cities: Shanghai, Guangzhou, Shenzhen, Hangzhou, Tianjin, Dalian, Zhengzhou and Chengdu; while UPS’s license covers five: Shanghai, Guangzhou, Shenzhen, Tianjin and Xi’an. Memphis-based FedEx already provides services to more than 400 cities via domestic joint ventures and had sought countrywide access of its own, while Atlanta-based UPS has no partnerships with Chinese companies.

Both companies have invested heavily in Chinese hubs for their international business to and from Asia, and though it remains small, the domestic market for documents and packages is seen growing at 20% annually. FedEx said it expects China’s domestic delivery market to grow to about US$26.3 billion overall in 2020, from about US$5.1 billion in 2010. The authorization comes months after Chinese securities regulators approved a US$1.6-billion initial public offering by state-owned China Postal Express & Logistics, one of China’s largest courier companies.

will likely exceed their U.S., Japanese and German counterparts combined by 2015 to buy an estimated 25.5 million vehicles.

Online retail grows Online retail sales in China are projected to triple to more than US$360 billion by 2015, when it is expected to overtake the U.S. as

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the world’s largest market, according to a report by the Boston Consulting Group.

Demand for online shopping continues to grow fast, and the market is becoming more competitive as many companies are focusing increasingly on e-commerce to seek new growth opportunities. Alibaba Group, the Chinese e-commerce giant, expects transactions hosted by its main

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shopping websites, Taobao and Tmall, to triple to US$473 billion over the next 5–7 years. Taobao and Tmall together account for about 85% of total transaction value in China’s online shopping market.

Corporate News

Citibank enters investment market Citigroup, Inc. started an investment banking joint venture with Shanghaibased Orient Securities Co. as a way to gain access to China’s growing investment market. The joint venture currently has a registered capital of RMB800 million (US$126 million), with Citigroup’s share at 33.3%. Domestic investment banks manage most stock and bond sales in China, although the country has agreed to raise the ceiling on foreign banks’ ownership in investment-banking ventures to 49% from 33%. Citigroup said it plans to apply for regulatory permission to maximize its share in the future, as it aims to reach 100 outlets and double its workforce to 12,000 in China in 2–3 years. Other global banks such as J.P. Morgan Chase & Co. have also formed joint ventures with Chinese security companies.

New Lincoln town car Ford Motor Co. will begin selling its new Lincoln MKZ sedan upgrade in China in 2014. Ford’s entrance into the Chinese market comes as other luxury car makers are expanding local production, and the rapid increase of Chinese auto sales is expected to slow. China, already the world’s largest car market, is projected to become the largest luxury auto market by 2020, overtaking the U.S. The newest Lincoln model is expected to do well in China, with an interior look and engine designed specifically based on Chinese consumer preferences. With a larger back seat and lower powered engine, the new MKZ Lincoln car will be made in the U.S. until sales in China are strong enough to warrant opening a factory in China.

Microsoft to expand in China Microsoft announced plans to increase its investment in China with new hires, increased research and development efforts and additional locations to promote cloud computing services. The strategy calls for increased presence in 15 provinces and 20 cities and the addition of 1,000 employees to its current China staff of 4,500 over the fiscal year. The company also plans to increase its research and development investment in China next year by 15% from its current annual amount of US$500 million, and to develop more technologies and products specifically for China.

The investment is expected to promote Microsoft’s cloud offerings – including Windows Azure, Office 365 and Windows Server 2012 – in China as the company prepares for the upcoming release of Windows 8 and Microsoft Office 2013.

Merck, Simcere launch JV Merck & Co., Inc., the second biggest drug maker in the U.S., and China’s Simcere Pharmaceutical Group established a company to help market Merck’s advanced drugs for chronic diseases in lower-level medical institutions in China. Merck owns 51% of the Shanghai-based joint venture SMSD, and both companies will use their facilities in China to produce the drugs.

Merck currently operates one R&D center and three plants in China with more than 5,000 employees. The companies said the JV will also improve the accessibility of high-quality drugs for Chinese patients, especially those in rural areas. More than 260 million people are diagnosed with chronic diseases each year in China.

Macroeconomics

Lending surges Chinese banks extended RMB704 billion (US$111 billion) of new localcurrency loans in August, beating market expectations of RMB600 billion and marking a sharp increase from RMB540

billion in July. Medium- and long-term new loans rose to RMB166 billion in August from RMB118 billion in July, giving hope that the economy could get a boost from new credit and reinforcing signs that banks are opening up their purse strings to support the government’s move to fast-track infrastructure projects.

Still, Chinese data for August have mostly continued to disappoint, with weak trade data prompting analysts to project China may miss its official 7.5% growth target for 2012 despite monetary and fiscal easing measures implemented since last year and the RMB950 billion-worth of infrastructure projects announced recently.

Manufacturing orders dip China’s manufacturing industry has been plagued by a slowing number of new orders, a further indicator of the economy’s slowdown. Privately held and exportoriented manufacturing companies in particular experienced the fastest pace of decrease in orders. In addition, the manufacturing purchasing managers’ index has fallen from expansion to contraction levels for the first time since November 2011, indicating China’s economic slowdown. The Chinese government cut interest rates in June and July and introduced more cash into markets as a way to support the economy and bolster growth. However, such government policies have become less effective as capital exits the China market and there is low demand for loans.

Exports remain weak amid downturn China’s exports improved slightly in August to 2.7% year-on-year to US$178 billion, indicating prolonged weakness in the global economy. Imports dropped for the third consecutive month to 2.6% from the US$151.3 billion recorded last August. The trade surplus rose moderately to US$26.7 billion in August from US$25.2 billion the previous month. In the January–August period, total foreign trade reached US$2.5

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trillion, an increase of 6.2% from last year but below the 10% full-year growth target set for 2012. China’s trade with its largest trade partner, the European Union, dropped 1.9% year-on-year to US$365 billion in the January–August period, while trade with the U.S. climbed 9.6% year-on-year to US$313 billion in the same period.

U.S.-China

Home Depot to close China stores Home Depot, Inc., the largest U.S. homeimprovement retailer by sales, said it will close its remaining seven outlets in China and record an after-tax charge of about US$160 million, or 10 cents per diluted share, in the third quarter for the closures.

The company will focus instead on Internetbased sales and specialty stores. The move will result in a loss of 850 jobs, while 170 people will be retained to work either in sourcing offices in Shanghai and Shenzhen or at two specialty stores in Tianjin. Home Depot entered China in 2006 by acquiring The Home Way, a 12-outlet chain of stores modeled after its American counterpart.

Sales of home-improvement products in China have been hurt by an economic slowdown that has reduced housing sales and curbed consumer spending.

Debt holdings no threat: Pentagon China’s holdings of more than US$1 trillion in U.S. debt and the prospect that it might withdraw funds don’t pose a national security threat, the Pentagon has assessed. After the Federal Reserve, China is the largest holder of U.S. government debt. According to Treasury Department data, China’s holdings of U.S. government securities were US$1.164 trillion as of June.

China has increased its holdings this year as the U.S. economy stalled and Europe’s sovereign-debt crisis deepened. But China decreased its holdings last year with little apparent impact in the market, data showed. The holdings declined 0.7%, or by US$8.2 billion, to US$1.15 trillion last year, according to the Treasury Department.

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Partnership for smoke-free policy China and the U.S. established a partnership to create smoke-free workplaces and workplace tobacco control in both the public and private sectors. More than one million people in China and approximately 443,000 in the U.S. die from tobacco-related diseases every year. The two governments also hope to improve workers’ health by bringing to light the dangers of smoking.

In addition, Beijing has implemented a new public smoking ban into the country’s 12th Five-Year Plan. The Chinese government is also working to create tobacco legislation that will stop smoking in indoor public places, as the effectiveness of the previous ban has been questioned.

Government & Policy

China invests US$130b in affordable housing China invested RMB820 billion (US$129.4 billion) to build affordable housing units for low-income groups in the first eight months of this year, with local governments across the country starting to build 6.5 million such units from January to August, up from 5.8 million units in the first seven months of the year. Construction on 4.2 million affordable housing units was basically completed in the January–August period.

The scheme is part of the government’s plan to build 36 million such units by 2015.

The government has stepped up its efforts in the construction of affordable housing in recent years, aiming to cool what has been a red-hot property market.

China to subsidize energysaving appliances China has earmarked RMB14 billion (US$2.22 billion) in subsidies to encourage the purchase of energy-saving products, including desktop computers, air conditioners, fans, water pumps, compressors and transformers. The oneyear subsidy program is expected to raise the market share of energy-saving

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products to more than 40%. China expects to help save 31.3 billion kilowatthours (kwh) of electricity every year and drive sales of energy-saving products

by RMB155.6 billion with the program.

Every year, China’s 130 million desktop computers consume 31.2 billion kwh of electricity, while air conditioners reach 350 billion kwh. In 2011, the power consumption of fans, pumps, compressors and transformers accounted for 40% of the country’s total, but they were only 80% as efficient as those in developed countries.

Tougher rules for iron and steel industry China has announced a series of new regulations to fine-tune its iron and steel industry in a bid to make it more energy efficient and environmentally friendly.

The new regulations relate to stricter requirements on product quality, energy consumption, emissions, technology and equipment standards, production scale as well as security and social responsibility.

To be enforced in October, the new rules forbid iron and steel companies to produce a list of obsolete products, including hotrolled silicon steel and twisted steel of primary level. In addition, any serious accidents within two years could deprive a company a production qualification in an effort to guarantee work safety and employee payments.

Investor approval process eased China’s Securities Regulatory Commission simplified the approval process for foreign investors under the Qualified Foreign Institutional Investors (QFII) program.

The qualifications for all five categories of QFII have been lowered. Foreign investors may now hold 30% of shares in a domestic company, compared to the previous 20%.

The commission has also sped up the approval process for new QFIIs this year, with 37 new licenses from January to June compared with 29 licenses for all of 2011. In addition to the expansion of the

QFIIs, Beijing has launched several other changes in the financial sector in the hopes of boosting China’s slowing economy.

The government also hopes to increase investment and market confidence before China’s leadership transition.

other expenses in Shanghai. As California’s third-largest trading partner, China bought US$14 billion in California-produced goods and services in 2011.

more than 7,000 kilometers, 4.3 times the current length.

Subway projects approved

Shanghai Business

China has approved 25 new subway projects with an investment of some RMB800 billion (US$127 billion), including five projects in Shanghai. By 2015, Shanghai’s Metro system will reach the future Disneyland in Pudong New Area and the China Expo Exhibition Complex in Qingpu District. The projects are expected to have an average construction time of 4.6 years, with local governments providing 40% of the funding and the rest to be financed by banks. While Shanghai and Harbin in Heilongjiang province will see extensions to their existing urban rail systems, second-tier cities such as southern Xiamen in Fujian province and northeastern Taiyuan in Shanxi province are to build metro lines. By 2020, 40 cities in China will have subways that run for

Shanghai plans to promote its higher education system internationally by increasing the number of projects with overseas institutions to reach 260 by 2015.

The city plans to expand the number of Sino-foreign academic credentials, as well as the number of overseas education institutes. China’s first Sino-U.S. higher education institution, New York University Shanghai, opened in 2011 as a cooperation between New York University and East China Normal University. Shanghai also plans to open several Sino-foreign high schools as a way to promote international perspectives in younger students. As the city attracts more educational institutions, top priority will be given to maintaining education quality and accreditation, and each new system will be evaluated prior to opening.

California to reopen Shanghai office California Governor Jerry Brown has authorized the reopening of the state’s trade office in Shanghai after nearly a decade-long absence. Scheduled to open in early 2013, the Shanghai Mission is the first overseas trade office the state plans to open since it closed all of its 12 such locations in 2004. A second California trade office is planned for Beijing and a third in Mexico.

The new trade offices are to be supported by the Bay Area Council, a corporatebacked public policy organization in San Francisco. Initially, the council is looking to raise US$1 million to cover the estimated seven- to 10-member staff and

Foreign education systems to be promoted

CHINA & THE WORLD

ASIA-PACIFIC SIA PACIFIC SOUTH AMERICA

NEW ZEALAND: Haier launches takeover bid Chinese electrical appliance giant Haier has made an offer for a full takeover of Fisher & Paykel Appliances Holdings Ltd. (FPA), among New Zealand’s most reputable whiteware manufacturers.

The takeover notice was sent from Haier New Zealand Investment Holding Co., Ltd., a whollyowned subsidiary of Haier (Singapore) Management Holding Co., which has a 20% stake in FPA. Haier intends to make a full takeover offer for all of the ordinary shares in FPA not already held

by Haier at an offer price of 1.20 NZ dollars (US$0.97) per share in cash. The FPA independent board said it was supportive of Haier’s offer if the offer price were within or above the valuation range as determined by an independent advisor and the terms and conditions were acceptable.

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SOUTH AFRICA: Chinese train maker signs contract China’s largest train manufacturer, CSR Corp., Ltd., has announced its subsidiary, CSR Zhuzhou Electric Locomotive Co., Ltd., secured a contract worth US$400 million to supply freight electric locomotives to South African logistics firm Transnet. The contract sets a precedent for Chinese train manufacturers in Africa, one of the world’s fastest-growing rail markets. The agreement calls for CSR’s subsidiary to transfer electric locomotive manufacturing technology to South Africa, and more than 60% of the parts and components to be produced in South Africa. The first locomotive is expected to be delivered by the end of 2013.

AFRICA

GERMANY: Lanxess to build rubber plant in China Germany’s Lanxess, the world’s largest maker of synthetic rubber, plans to spend US$295 million on a new plant in China to tap into the world’s largest car market. Located at the Changzhou Yangtze Riverside Industrial Park, the new facility is slated to begin operations in 2015 with an annual output capacity of 160,000 tons of ethylene propylene diene monomer, a substance mainly used in door sealants and windscreen wipers. The company is banking on long-term growth of the burgeoning auto industry in Asia, while seeking proximity to global tire makers who are expanding production there.

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IRAN: China eyes closer trade ties China and Iran agreed to further increase their trade exchanges during a recent meeting in Tehran.

The countries have in recent years cooperated on areas like trade, energy, infrastructure and project contracting. China encouraged cooperation on areas such as rail transportation and water and power project construction, as well as the implementation of an agreement on double taxation avoidance, increased convenience on visa and customs clearance and protection of cooperative enterprises. Meanwhile, Iran said it was willing to enhance coordination with China and create favorable conditions to expedite energy cooperation and expand cooperation on other fields like trade, agriculture and infrastructure.

AFRICA

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UNITED STATES: Fisker electric sports cars to enter China California-based Fisker Automotive has set a November launch date for its high-end, electric Karma sports car to enter the Chinese mainland market as part of its Asia expansion. The model is the first environmentally friendly car with extended range in China. Billed as “the world’s first high performance electric luxury vehicle,” the car has both a plug-in feature and an internal combustion engine, as well as a curved solar power roof that generates electricity when the car is parked. Lithiumion batteries allow the vehicle to achieve up to 80 km on electric power at speeds of up to 200 kph.

BRAZIL: Lenovo to buy CCE for US$147m China’s Lenovo Group Ltd., the world’s second-largest PC maker, has agreed to buy CCE, a group of three consumer-electronics manufacturers of Brazil’s Digibrás group, for US$147 million. The purchase of Digiboard Eletrônica da Amazônia, Digibrás Indústria do Brasil and Dual Mix Comércio de Eletrônicos will allow the Chinese giant to boost its market position in Brazil to third from seventh, while narrowing the global market share gap between it and world PC leader Hewlett-Packard Corp. to 0.6%. The move will also help Lenovo diversify its product line to offer mobile phones and televisions in South America’s largest country. Brazil’s PC market is forecast to grow by 8% this year, fueled by a growing middle class eager to snap up electronic gadgets in increasing numbers.

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MOVERS AND SHAKERS CO M P I L E D B Y J OYC 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.

GM CORP.

General Motors General Motors Co. announced that Robert Socia will succeed Kevin Wale as president of GM China and chief country operations officer, China, India and ASEAN, effective October 1. Socia has worked in every GM region around the world and was most recently GM vice president, Global Purchasing and Supply Chain, and previously executive vice president of Shanghai GM. Since joining GM in 1975, Socia has had oversight of GM’s global purchasing, supplier quality, logistics, order fulfillment and supply operations. Wale will retire on October 31 after nearly 40 years at GM. Robert Socia

PRIVATE SECTOR JOHN DEERE John Deere appointed Liu Jinghui president of John Deere China in September. Liu was promoted from general manager of sales and marketing. Liu joined John Deere in 1999 and has managed the company’s manufacturing and sales in China. Liu succeeded Luke Gakstatter, who is moving to John Deere’s headquarters in the U.S. The company said the appointment underscored the importance of developing local talent at John Deere and its commitment to long-term development in the China market.

FORD MOTOR Ford Motor (China) Ltd. appointed Richard Baker general manager, Lincoln China, in late August, just as the company unveiled plans to bring the Lincoln brand into China’s growing luxury car segment.

The company said Lincoln products will be Richard Baker launched in China during the second half of 2014. Baker joined Ford in 1977 as a sales analyst and has held many sales and marketing positions in the U.S., Southeast Asia and Japan. Baker was deputy general manager for the Changan Ford Sales Company in China.

Peter Sproson

THE TIMKEN COMPANY The Timken Company named Peter Sproson president of Timken China in late August. Sproson was most recently vice president of commercial transportation systems for Mobile Industries at Timken.

Since joining the company in 1978, Sproson has held a variety of sales and marketing management positions, including director of automotive sales in Europe from 2003 to 2005.

CISCO Cisco Systems, Inc. appointed Jaime Vallés new leader for Cisco Asia Pacific, Japan and Greater China in August. Vallés was senior vice president of Cisco Latin America, in which role he made Latin America one of Cisco’s highest growth regions. Vallés has over 20 years of Jaime Vallés leadership experience in the IT industry, having previously served in senior leadership positions at Sun Microsystems, Inc. and IBM Corp. prior to joining Cisco in 2007. Vallés succeeded Edzard Overbeek, who was appointed to head the company’s Global Services Business.

SHANGHAI MUNICIPAL GOVERNMENT The organization department of the Communist Party in Shanghai named Zhu Yuchen president of Shanghai Pudong Development Bank Co. Zhu was previously chief executive officer of China Financial Futures Exchange (CFFEX), a position he was appointed to when CFFEX was established in August 2006. In that role, Zhu led the launch of the CSI 300 Index Futures, the first index futures in China, in Zhu Yuchen April 2010.

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

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H e a lt H C a R e B y C l a n C e y H o u s to n

A Prescription for Success ISTOCKPHOTO

Clancey Houston

Innovative business solutions are needed to stay competitive in a new healthcare environment

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s C h i n e s e L u n a r N e w Ye a r festivities ushered in the Year of the Dragon in January, that particularly auspicious marker of optimism, a wealth of reports had indicated that the healthcare industry’s multinational players had a positive outlook on future business in China. In fact, a PricewaterhouseCoopers study around that time said 37 percent of pharmaceutical and life science CEOs saw China as a top source of future growth. As we near Q4 and questions about the broader macroeconomic situation and health reform remain, how is this optimism playing out?

China is still described as one of the world’s most attractive emerging pharmaceutical markets, and it’s currently the world’s third largest with sales of more than US$50 billion, according to one analysis from McKinsey & Company. Similar reports have projected that China’s US$63 billionstrong medical instrument market will soon rank second in the world.

We read often of how China’s changing demographics, urbanization, lifestyle habits and diet have led to an increase in the number of p e opl e l iv i ng w it h ch ron i c d i s e a s e s l i ke

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hypertension, cancer, infectious disease, chronic obstructive pulmonary disease and diabetes.

Today, one in 10 adults in China – some 92 million people – has been diagnosed with diabetes, while by 2030, the number of people with cardiovascular disease is expected to double in urban areas.

The economic burden from the cost of disease is very real. As early as 2005, a World Health Organization report on chronic diseases projected a loss of US$550 billion in national income in China by 2015 due to the effects of heart disease, stroke and diabetes only. Put this in the context of this year’s drop below the magic threshold of 8 percent of China’s projected economic growth rate, and the need to address rising healthcare costs takes on additional urgency.

Given this broader macroeconomic situation, and questions about many aspects of ongoing health reform initiatives, what’s the prescription for success in China for businesses intent on capturing as large a share as possible?

Broad access First and foremost, efforts to drive market

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China is one of the fastest-growing markets for pharmaceutical drugs

access should be broad and everyone’s goal.

Access should be a central objective that goes b e y o n d t h e p r i c i n g a n d r e i m b u r s e m e nt departments and around which all business functions rally. Strive for internal alignment that brings functions together to determine how to help the system expand patient access to services, access to medicines and access to valuable information and education.

An integrated view of access will lead to the opportunity to engage budget holders, professionals and providers in discussing a product’s value. The key is to demonstrate the broader impact of a product, supported by relevant health economics and outcomes data.

Connecting the treatment to established unmet needs will form the foundation of a compelling value proposition, an essential element of success for innovative products in China.

Clear and compelling communication of a product’s value in a way that is relevant to the audiences involved is critical to driving changes in both beliefs and behaviors. Most often, relevance is established by drawing connections with key government priorities or specific issues, such as improving efficiency and reducing medicine

wastage, unnecessary referrals or hospitalizations.

This creates opportunities for collaboration that drives change in an area that might otherwise b e under-f unde d or under-supp or te d by government resources. It also provides teams with the direction needed to develop practical tools – interactive screening tools or budget impact models, for example – which will support f u n d e r s an d h e a lt h c are profe s s i on a l s i n understanding the business case for an innovative new treatment and how best to put it to use with their patient population. innovative education Underpinning all efforts to improve access is the need for a sufficient pool of healthcare professionals to address patient needs. In a country weighed down by disparate levels of access to care and massively overburdened physicians, training new doctors and enhancing the education level of the current 2.4 million registered doctors is a critical task for the government and one in which businesses can play an important role. Despite advances in care and education around many disease states, there is still

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ELS Shanghai Center In September 2007, ELS opened the American Education Center in Shanghai. The ELS AEC allows students to begin their language preparation in an environment that is similar to what they’ll receive at any of the US-based ELS Language Centers. With small classes and an all-American teaching staff, the ELS AEC provides a unique opportunity to experience American-style education in China.

• Maximum class size of 12 • Uses the same curriculum as US-based ELS Language Centers • Guaranteed on-level transfer to US Language Centers • ELS certification accepted as proof of English proficiency by more than 650 universities in the USA • Apply for conditional admission to ELS university partners while studying at ELS Shanghai • Meet representatives from ELS university partners on the ELS Shanghai Campus.

SHANGHAI ADDRESS: 201 Anfu Road, Xuhui District; Shanghai, 200031 TELEPHONE: 86.21.5404.5800 FAX: 86.21.5404.8900 EMAIL: aec@els.edu WEB: www.els.cn

a vast unmet need in terms of awareness, e du c at i on an d c l i n i c a l out c om e s am ong healthcare professionals in China.

Through innovative and effective medical education programs which support the physicians tackling new breeds of diseases, industry can be part of the government’s effort to manage disease and improve he a lt h outcomes across t he population. Opportunities include enhancing their knowledge in key therapeutic areas, introducing innovative methods for disease prevention, and sharing research into the newest treatments to enable selection of the most appropriate therapies for China’s patients.

None of the above can be achieved solely through the focus on congresses, meetings and advisory boards that continues to dominate as the primary education channels employed in China today. Digital innovation and the readiness of technology have transformed all communication globally, medical education included.

Consider the enhanced interactivity that an iPad app can add to an educational meeting by asking physicians to view and answer a question about an image and then instantly creating and displaying a heat map that highlights the audience’s most selected regions, providing the professor an opportunity to discuss the correct answer with the group in an interactive manner that enhances learning.

Consider the patient Nowhere is the digital revolution’s impact on productive conversations about health more apparent than within the realm of the patient. As the pre ventable, lifestyle-related chronic conditions which are on the rise in China demand that individuals take a greater role in managing their own health, patients increasingly going online – websites, blogs and social media - to look for on-going support and information about their treatment options. This is in no small part due to the limited patient contact with healthcare professionals over the course of a year, putting a significant portion of the management of their condition and the success or failure of a treatment in their own hands, or those of their caregivers.

This makes their day-to-day decisions about what they will and will not try or take, their schedule, type

of diet and exercise of utmost importance. As people become more aware and active consumers of health, conversion and adherence are supported by arming them with the knowledge to make smart decisions about care and treatments, for themselves and for their family members.

In China’s highly regulated market, education for and engagement with professionals and patients are enabled through public-private partnerships. Working with government bodies has always been an essential part of the business landscape here. Whether with local hospitals, research centers or medical schools, healthcare industry partnerships abound.

But today more than ever, companies need to ensure that these public-private partnerships are both practical and truly benefit both parties. They need to press forward with a transition from traditional, transactional relationships to deeper, more substantive and stakeholder-centric collaboration with various government and quasig ov e r n m e nt g roup s . C re at i n g re s p e c t e d collaborations that aim beyond product or even disease-specific targets and consider the drivers behind better quality, greater access and higher efficiency will position businesses as true partners investing in the future health of the nation.

Conversations about solutions for driving better health outcomes are cutting across borders and becoming more global in nature. Yet health systems, policies and priorities continue to be distinguished by local market characteristics. One size does not fit all. There needs to be people on the ground to complement global thinking with a deep understanding of the local regulatory environment, cultural norms and the various nuances of social behavior. Combining this with global expertise will drive effective strategies that demonstrate value, engage stakeholders and deliver behavior change, which, ultimately, will help China achieve its long-term health goals.

A 20-year veteran of the China business landscape, Clancey Houston is the Managing Director of inVentiv Health Communications/ China (iHCC), a multi-disciplinary integrated communications group dedicated to improving health through innovation and superior communication programs.

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[T]here is still a vast unmet need in terms of awareness, education and clinical outcomes among healthcare professionals in China.”

REGIONAL FOCUS B Y J O N AT H A N S H Y U

The Suzhou ‘Pipeline’

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Eddie Zhu

Eddie Zhu, executive director of J.P. Morgan China’s Suzhou Branch, talks about the bank’s first branch in the region

.P. Morgan Chase Bank opened its first wholesale branch in Suzhou on July 20. It’s the seventh wholesale branch in China for the largest bank in the United States by assets (US$2.3 trillion). J.P. Morgan also has offices in B eijing, Shanghai, Tianjin, Guangzhou, Chengdu, Harbin and Zhongshan.

We sat down with the Executive Director of J.P. Morgan’s Suzhou branch, Eddie Zhu, who is the newly appointed branch manager of the Suzhou branch. He shared his views about doing business in the Yangtze River Delta.

Insight: Tell us a little about yourself and your background in banking.

Eddie Zhu: “I was born in Hunan, and went to university in Beijing, majoring in economics. I have been in the banking industry for over 14 years, working in different locations throughout China and also abroad experiencing different cultures, and accumulating experience in different lines of banking business, with a focus on corporate banking. I joined J.P. Morgan around one year ago, and have been involved in the process of obtaining a license for our Suzhou branch, and setting up our Suzhou office. I have now been living in Suzhou for over three years.”

Insight: Tell us a little about the new office in Suzhou and what services it will offer.

EZ: “Our office officially opened on July 20 of this year, and is located in the Suzhou Industrial Park, on the east side of JinJi Lake, near Harmony Times Square Mall. We offer RMB and foreign currency financial products and services across cash management, trade finance, liquidity management, risk management and foreign exchange. These services and products are consistent with the seamless and first class

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services provided to clients in other J.P. Morgan branches across China.”

Insight: Why did J.P. Morgan choose Suzhou for a bank branch?

EZ: “We believe that the Suzhou market is very important to J.P. Morgan’s success in China.

Suzhou is a dynamic industrial center where many of our global clients have a presence. We see the Suzhou area as a steady pipeline for our corporate wholesale banking business in terms of servicing our existing clients, as well as servicing new multinational clients and Chinese companies in Suzhou who are looking to go abroad. We see a trend in increased investment abroad by Chinese companies in the area.

“The Suzhou branch has always been a priority of o u r s e n i or m a n a g e m e nt at c or p o r at e headquarters in New York City. We have been in plans to open a branch in Suzhou for the last few years.”

Insight: What are J.P. Morgan’s plans for expansion in the Yangtze River Delta?

EZ: “Our main focus is to build the most comprehensive wholesale banking business in China. We hope to leverage our Suzhou branch with our six other branches in China to build an extended banking network which reaches not just the coastal regions of east China, but more importantly, extends our coverage into central China.”

Insight: What are some lessons learned from opening branches in the past?

EZ: “Through our past experience in opening branches outside first-tier cities such as Shanghai, Beijing and Guangzhou, we have built strong project management teams who provide analysis of local markets, manage branch site selection and

“

Our main focus is to build the most comprehensive wholesale banking business in China”

The opening ceremony of J.P. Morgan Suzhou Branch

also build comprehensive local government and client stakeholder relationships.”

Insight: Many service companies say that talent recruitment is a great challenge in locales such as Suzhou. How have you dealt with recruitment in Suzhou, factoring in the proximity of your Suzhou office from the Shanghai office?

EZ: “We believe that maintaining J.P. Morgan’s corporate culture wherever we go is the key to our business. To ensure that we bring J.P. Morgan’s culture to Suzhou, we have offered career mobility and staff development opportunities for J.P. Morgan China employees who have been working in other regional China markets to work in Suzhou. We have developed a good balance of locally hired staff as well as staff transferred from other locations as well. In fact, some of our China staff have expressed a desire to transfer to Suzhou.”

Insight: Where are your favorite locations to take

clients and corporate executives in Suzhou?

EZ: “Having lived and worked in Suzhou for over three years, and catered to clients with different cultural backgrounds and culinary tastes, I think that there are many options to suit both Western and Eastern tastes. It certainly is not a problem to find Western and Chinese restaurants and venues for business meetings. Suzhou really is a great place to work and live.

“When our corporate executives are in town, we like to take bus tours of the Suzhou Industrial Park. We circle JinJi L a ke, and v isit ke y destinations such as the Suzhou cultural center, Dushu Lake Hi-Tech Park and other prime business areas to provide our executives with a context of the growth in Suzhou over the last two decades. If and when time permits, we take our executives on a tour of Suzhou’s renowned water gardens, and nearby destinations such as Tongli and Zhouzhuang. If it happens to be October, we like to take our executives to Yangcheng Lake to dine on hairy crab.”

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Fiscal Anxiety in DC An analysis by the BGR Group sees little evidence both parties are prepared to tackle the big financial issues before the U.S. elections President Barack Obama and former President Bill Clinton at the Democratic National Convention

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By Jonathan mantz

he U.S. Congress and the president – whoever he might be after the November election – face one of the most daunting challenges in years: the socalled “fiscal cliff.” The combination of automatic spending reductions, especially in the Pentagon, and the prospect of higher tax rates for almost anyone – all at the turn of the year – has economists and pundits extremely worried.

If Washington decision-makers allow the government to go off this cliff, a recession could return next year and U.S. debt instruments could be downgraded again by rating agencies. In other words, a fiscal calamity may be about to befall the U.S. Unless Congress acts before the end of the year, automatic across-the-board spending cuts, known as sequestration, are set to take effect on January 2, 2013. Additionally, current tax rates and provisions are set to expire by the year’s end. The stakes were made clear by the Congressional Budget Office (CBO) in an

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August 22 report. CBO analysts predicted that the U.S. economy will enter a recession early next year if the country is allowed to go off the fiscal cliff, with the economy contracting by 0.5 percent and the unemployment rate topping 9 percent.

But no one seems much worried about this on Capitol Hill.

A small group of senators – six to eight of them – are meeting to find a solution. Other lawmakers give the situation lip service.

But no one knows what will be done to prevent the government from going over the cliff.

They have some guesses about what might happen, which come down to postponing the scheduled pain for three months, six months or a year. But how that might happen and whether a down payment on the deficit cutting will accompany the postponement are questions that have not been decided by anyone. The outlook, in short, is uncertain.

The best guess is that the automatic cuts and the tax rate

Campaign photo

increases now scheduled to happen at the turn of the year will be could produce any one of the following outcomes. postponed until a more palatable alternative can be found. That here are the possible scenarios: is likely to happen in whole or in part. Which part is a mystery.

Some taxes could be allowed to increase, and some spending cuts off the cliff – No extensions of any tax rates or provisions, no could be offered as well to reduce the political price for once again agreement to replace or prevent spending cuts. failing to complete a legislative task. But what goes up and what Given the past behavior of the current players, this scenario goes down is anyone’s guess. What we can say is that nothing will is frighteningly possible but hopefully will be avoided. If it does be done of substance on this issue until Congress returns after come to fruition, however, it will most likely be because of a the November 6 election for its lame duck session. dramatic change in the political landscape and a desire to tackle Neither presidential candidate is saying much about what these issues in a fresh environment in the new Congress. In that he will do about the fiscal cliff. President Obama, however, case, a new Congress will be able to take retroactive action to would do little and his Republican opponent Mitt Romney extend provisions or rates that were forced to expire. Retroactive would do much more – in terms of deficit reduction. Voters will be choosing between these minimalist or aggressive stances and, as a result, the presidential winner will have a mandate (or claim to have one) to implement his druthers. That makes the election a pivotal factor in how the cliff is handled.

The lame duck will be primarily focused on resolving the fiscal cliff. The election could result in four different political scenarios for 2013 and may influence how, if any, of the fiscal cliff issues are resolved. It is widely expected that the House will remain in Republican hands.

Regardless of what happens on November 6, the same players will be in place for the lame duck session – a Republican House, a Democratic Senate and a Democratic President.

This will guarantee a great deal of posturing but not necessarily results. A politically volatile climate combined with Presidential Candidate Mitt Romney on the campaign trail tremendous fiscal uncertainty

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rates and provisions and replace the spending cuts fail in the lame duck session. In this case, a six month-year postponement would provide the time necessary to hammer out a deal in the new Congress.

A digital board was installed inside the hall at the Republican National Convention to show the national debt

action on the spending cuts is also possible, but would be more difficult. to the edge – Postpone action on tax rates or provisions with clean, temporary extensions, stall on spending cuts.

This scenario seems most likely if the President wins reelection and repeated attempts at a deal to renew the tax

Back from the brink – Extend tax rates/provisions, replace cuts with a down payment on a larger deficit reduction deal.

This scenario could be the result of serious economic deterioration and a desire of both parties to prevent complete economic collapse and is possible in any of the political scenarios described above. It could also be based on agreements reached in previous deficit reduction discussions and measures.

According to The Hill newspaper, a bipartisan group of eight senators has been negotiating a potential “down payment” of US$55 billion in cuts to “temporarily turn off automatic spending cuts and buy Congress at least six months to work out a bigger deal.” Disputes over “revenue” are a factor in these discussions and may doom them as they have other efforts. It should be noted that tax benefits for oil and gas companies remain a favorite target of House Democrats and the Administration. Whenever WhitE hoUSE photo

President Obama with Treasury Secretary Timothy Geithner

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“

…No one knows what will be done to prevent the government from going over the cliff.”

revenue is mentioned, oil and gas companies are almost always their top target.

Crisis averted – A grand bargain is reached on taxes and spending.

This scenario is highly unlikely but cannot be ruled out given how close a grand bargain was in the summer of 2011. If the President loses reelection but wants to achieve some sort of deal to preserve his legacy, a grand bargain seems possible. If he wins, he may be more willing to cut long-term deals than he was

before facing reelection. However, he will still have to deal with a divided Congress that has rebuffed him before. What’s more, the amount of time it would take to draft and pass legislation this consequential may exceed the four weeks available in the lame duck session. With so many deficit reduction discussions having taken place over the last two years, there are positions from which the President and the Congress can negotiate – if they choose to do so.

Former Secretary of Defense Donald Rumsfeld once said: “There are known knowns; there are things that we know. There are known unknowns; that is to say there are things that, we know we don’t know. But there are also unknown unknowns – there are things that we do not know, we don’t know.”

That is an apt description of the next three months in Washington. We know the Congress will attempt to pass a spending bill to keep the government operating. We don’t know what the outcome of the election will be, or how it will dictate the actions of the lame duck session. And we don’t know what may happen between now and December 31, 2012, that may spur the President and the Congress into action.

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                       

What Do You Think?

We asked Americans in Shanghai what they have to say about the U.S. presidential election. Here’s what they said.

Question: Who do you think is going to win the U.S. presidential election?

Peter Calafiura 48, New York Work: Psychiatrist

“Mitt Romney, because I think people are fed up with the poor state of the economy. I think they feel that President Obama had enough chance to make things better and basically failed at doing that.”

Joshua Schroeder 26, Oregon Work: Law firm intern

“It’s hard to say but I think Obama will win. I don’t think Romney is a very good candidate – the biggest thing is that he is ‘big business’ and that’s what a lot of Americans see as a part of what drove the economy to the ground.”

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Vicky Choi 29, California Work: Project manager “I think whoever wins needs to do a good job with China because China is trying to grow their economy and I think the U.S. understands that, and it’s kind of a co-dependent relationship between the two countries and if the U.S. doesn’t promote U.S.-Sino relations it could be pretty detrimental to both sides.”

R.J. navarro 29, California Work: Non-profit healthcare professional

“Obama is going to win. Just because Mitt Romney seems extremist. He wants to uphold these values when the U.S. wants to be more open to other views, he wants to be pro-orthodox.”

By ERiKA WAng

Tonya Parham North Dakota Work: High school vice principal Who will win? “i hope Obama.”

Q: Who would do a better job at improving relations with China?

Eleanor Leyden New York Work: High school teacher Who will win?

Obama Q: Who would do a better job at improving relations with China?

“Oh absolutely Obama, he has an international perspective. I’m not sure Romney really is crossculturally aware.”

“I think Obama because I don’t think that Romney really has the experience to work in a culture such as China and I think that Obama has a greater understanding of cultural diversity and being openminded to other cultures.”

Kaelen Park Washington State Work: Account manager Who will win?

Obama Q: What issues would you like to see the next U.S. president discuss with his Chinese counterpart?

“Visa reform, probably. I think they’re both kind of strict because one another is strict. It will take both sides to be more lax and negotiate a bit in order for the right type of reform.”

Matthew spriegel 26, Massachusetts Work: Pharmaceutical liaison Q: Have you been keeping up with the U.S. elections?

“Actually since I’ve been out of America I haven’t been keeping up with U.S. politics. Now that I’m in China I’m pretty much out of the loop in U.S. politics, for a good reason I think. I voted for Obama four years ago, because I was slightly informed then.”

Who will win? “i hope Obama wins.”

Why? “I think people are more accepting of ideas coming from someone like Obama versus someone like Romney. Obama is more for the people, not just Americans, but just good for keeping the U.S. as an open-minded part of the world.”

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deal of the month B y E r i k a Wa n g

photo courtesy airbus

China to buy 50 new A320 jets German Chancellor Angela Merkel and Chinese Premier Wen Jiabao at the Airbus assembly plant in Tianjin

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hina’s ICBC Leasing has signed an agreement valued at US$3.5 billion with France’s Airbus SAS, a unit of Netherlands-based aerospace group EADS, for the purchase of 50 A320 jetliners. The company also signed a US$1.6-billion framework deal to extend an Airbus A320 assembly line in the northern Chinese city of Tianjin.

This is the first major deal in China for Airbus since a dispute between Beijing and Europe over emissions trading interrupted earlier deals worth up to US$14 billion, according to Reuters. But while China has blocked the purchase of larger Airbus planes as protest against the scheme, procurement of short-range models such as the A320 has not been negatively affected, as the second largest economy seeks to meet domestic demand and promote skills for its own fledgling aircraft industry.

The company recently celebrated the completion of the 100th A320 assembled at the Airbus A320 Family Final Assembly Line China, a joint venture between Airbus and a Chinese consortium of Tianjin Free Trade Zone and China Aviation Industry Corporation.

Airbus has a 48 percent market share in China against its main competitor, U.S.-based Boeing Co. Business volume from China for Airbus planes is expected to reach US$634 billion from 2012 to 2031,

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according to wire reports.

Although China plans to enter the market’s largest segment with its Comac C919 jetliner from 2016, it is expected to remain a significant importer of Western aircraft for decades. Airbus estimates China will need 4,270 new passenger and cargo airliners in the next 20 years, dominated by narrow body aircraft like the A320. Meanwhile, Boeing placed the figure at 5,260 new commercial airliners, with small and intermediate twin-aisle jets expected to be the most popular market segment.

Both manufacturers said the domestic market is still the main market for Chinese airlines, and Airbus estimates that China’s domestic passenger traffic will overtake U.S. domestic traffic to become No. 1 in the world in the next 20 years.

Airbus has also announced it would open its second assembly plant outside of Europe in Alabama. Airbus planes are currently assembled in Toulouse, France; Hamburg, Germany; and Tianjin, with parts made in France, Germany, Spain and Britain.

At present, China has about 2,000 commercial airliners and 1,100 general aviation jets. Chinese officials said that more than 2,500 aircraft will be delivered to China between 2011 and 2015, including 1,000 for general aviation and 1,500 for commercial purposes.

small business

SME Center Coming to Fruition

A rendering of AmCham Shanghai’s SME Center

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By Eric Meng

fter weeks of hammering and nailing, AmCham Shanghai’s new Conference and SME (Small & Medium Enterprise) Center at Shanghai Centre is coming to fruition. At the end of September, workers were focusing on the final stages of the project, and were planning to finish by the October holiday.

On November 6, in lieu of the monthly member briefing, AmCham Shanghai will mark the opening of the Center with a ribbon-cutting ceremony that will feature invited government dignitaries and members.

The sparkling new meeting rooms in the Conference Center will provide significantly more space for events programming. The conference center can hold up to 120 guests.

The SME Center will serve as a referral and resource hub for companies entering or expanding in China. It will have a business library, terminals with database access and space for advisory and networking sessions. It will be staffed during AmCham Shanghai office hours. Though the services are primarily geared toward SMEs, all members will have access.

More than just a physical center, the SME

Center will also deliver resources and referrals virtually through a web interface and provide workshops and trainings of interest to SMEs. How can you get involved? If you are a service provider, you can send in information about yourself to help SMEs find the right providers. You can also share books and other printed material for SMEs to read, as well as digital resources such as databases and tutorials.

Various sponsorship arrangements are still available, too. Write to sme@amcham-shanghai. org or visit the SME Center website at sme. amcham-shanghai.org to learn about the Center and its programs.

SME Center under construction

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New space to include larger meeting rooms and a conference center

BRYan aDams

SLEEP RUN LOVE Spiritual guru Deepak Chopra talks about leadership and shares his views on the importance of spirituality, health and politics

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By EsthER yOUng

eepak Chopra is a medical doctor by training with millions of fans in the U.S. and around the world. He is arguably the world’s leading celebrity spiritual guru, as well as a bestselling author and a master when it comes

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to teaching and talking about the mind-body-spirit movement, which combines faith with Eastern and Western medicine. Born in New Delhi, he moved with his wife to the U.S. in 1969 and worked at several hospitals including the New England Memorial Hospital in Stoneham, Massachusetts, where he was chief of staff.

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In 1999, he was named among Time magazine’s list of “100 Most Influential People of the Year” and has been featured on the cover of several prominent U.S. publications, including People.

His work and association with celebrities such as Oprah Winfrey, Michael Jackson, Elizabeth Taylor, Madonna and former U.S. President Bill Clinton have further enhanced his celebrity status.

Chopra’s popularity extends to the social media arena, with more than one million followers on Twitter and his own YouTube channel, TheChopraWell.

Chopra has authored more than 60 books, many of them bestsellers, including The Seven Spiritual Laws of Success and Ageless Body, Timeless Mind. The Wall Street Journal included Chopra’s The Soul of Leadership among the best business books of 2011.

But his fame has not come without controversy. In 1994, Forbes magazine described him as “the latest in a line of gurus who have prospered by blending pop science, pop psychology, and pop Hinduism.” Chopra has been criticized for linking scientific terminology to spiritual concepts, and for his – some would argue – undue emphasis on wealth and materialism in his teachings. Chopra has defended his use of scientific terms by explaining that he used them as metaphors and were not meant to be taken literally.

During a recent visit to Shanghai, Chopra spent an evening

with AmCham Shanghai members where he talked about leadership and answered questions from members. He sat down with Insight to talk about a variety of issues including the U.S. elections, China and what makes a good leader. Here is the interview.

Insight: How would you define spiritual leadership?

Deepak Chopra: “A spiritual leader is the symbolic soul of a group consciousness – whatever that may be. It might be your family, it might be your business, it might be your political party, it might be your country. The principles are the same. The leader symbolically expresses the longings, the yearnings, the dreams of a collective consciousness, and also acts as an agent of transformation.”

Insight: Can anyone learn to be this kind of leader?

DC: “I think anyone can learn if they have a passion for it. It’s like the piano. You’ve got to have an interest for playing music. It’s about interest more than anything. People have different unique interests. If you have an interest in something, you have the skill for it. If you don’t have any interest in mathematics, say, you should not be a mathematician!”

Insight: Do you have a sense of any leaders in China who might

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Deepak Chopra during a visit to the Great Wall

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Self-Reflection Time Sleep Time Exercise Time Meditation Time Creative Time Work Time Play Time Relationship Time

have spiritual leadership?

DC: “I don’t. I don’t think it’s evolved to that stage yet in the Chinese political system. It’s still evolving. I think the business leadership is moving way ahead, very fast. China has a very economically driven mindset, success is the ultimate goal.

Meaning is not that significant at the moment is my impression.

I might be wrong. In a way that’s amazing, because it drives the country to economic leadership, but visionary leadership is more istoCkphoto

Chopra says meditation is a big part of his day

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'slices of the pizza' Deepak Chopra says he maintains a balanced lifestyle by dividing his day into "slices of the pizza"

about creating the wealth of culture, not just economic growth.

It’s about creating happiness in a society.”

Insight: China is not known to be a very spiritual country. Do you have an impression of how it affects people?

DC: “A little bit, I have. I personally don’t think that organized religion in any way is going to be relevant anyway, anywhere in the world. Most religion is cultural mythology. I mean, they have great values – religions nurture communities, they all speak about compassion, truth goodness and harmony, but the context – the mythologies – in which they rose are ancient. So, I think that what I’m seeing emerging in the United States, is a more secular spirituality that’s more about self-awareness, more to do with exploration, more to do with asking the fundamental questions. Who am I? What do I want? What is the meaning and purpose of existence? What is the meaning of death? Why are we here? Why is there a universe? Why is there awareness that there is a universe? These are important questions and I think that where we are as a culture, as a society, as a civilization, perhaps coming to a place where a new spirituality can be understood scientifically as well as experientially. I think we have a long way to go, but it is coming.”

Insight: You mentioned before that religion is usually mired in a cultural context. In China, is there an opportunity to form the thinking you’re describing since it doesn’t really have this spiritual cultural context?

DC: “I think so, but it has to be done gradually. I’m a physician, and my training is in neuroscience and endocrinology. You bring people first into the concept of well-being – you start with

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I think what’s happening is that there is a lot of posturing. It’s not real.The U.S. needs China, and China needs the customers. It’s an interdependent ecosystem.”

physical well-being and then career well-being, and then social well-being and economic well-being. These are all components of an individual’s well-being. If you’re economically impoverished, it’s going to affect your health. So, if you start with well-being, and you introduce to people how their well-being relates to their success, including their health, including their leadership.

Their social well-being relates to their economic well-being in the long-run.

“You start with that, and then slowly, spirituality creeps in.

First, people want success, and then they want love, belonging and then self-esteem; even with all their success, they don’t feel like they have inner worth. Then they long for higher guidance, they become aware of intuition and creativity. Ultimately, they ask themselves: ‘What does it all mean? Is there more than what I can see?’

“I was thinking about that earlier – how do I even begin to introduce that here, not being so experientially familiar with China? So I think I’ll start with well-being.”

Insight: China is in this transition period, from a focus on economics, but now it’s more focused on work-life balance. Do you have any concrete advice for this transition?

DC: “I divide the day into slices of the pizza. There is sleep time – sleep-deprived people are unhealthy people. There’s a lot of interesting data about how important sleep is to self-repair mechanisms in the body and how it affects emotional well-being and even creativity. There is meditation time, self-reflection time, exercise time, creative time, play time, relationship time and focused work time. They all have to be given their individual importance. Multitasking is a myth. Your autonomic system can multitask – it’s doing that right now, taking care of your blood pressure, and your hormone regulation and all that – but the conscious brain, the cerebrum? It can’t do more than one thing at

Deepak Chopra during the Insight interview

a time. So if I’m speaking to you and emailing at the same time, I’m not doing either. That’s the bane of today’s society. Nobody’s really focused on anything.

“So if you focus on what you’re doing, that’s half the secret.

And you must equally prioritize these things. If you’re working, you’re working. You’re focused on that. But if you don’t have playtime, if you don’t have creative time, if you don’t sleep well, if you don’t pay attention to your relationships, then somewhere or

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another, your work-life balance will go awry.”

Insight: Sleep time is very concrete. How does one focus on something more abstract – like relationship time?

DC: “There is some work being done with Gallup – that organization that compiles data. We have found that healthy people spend at least six hours a day communicating with the people they care about, even if it’s just a text or an emoticon or a little email that says ‘I’m thinking about you.’ They have time to pay attention to the people they care about. They are good listeners. They focus on strengths of their relationships, not on the weaknesses. They pay attention, they appreciate, they show affection. They consciously spend time with their family, friends, loved ones. If you have happy friends, your own happiness goes up by 15 percent. But if your happy friend has a happy friend, your happiness goes up another 10 percent. And if your happy friend has a happy friend who has a happy friend, your happiness goes up another 6 percent even if you don’t know these people.

When two people interact, it doesn’t affect just those two people, it also affects the other people in their lives.

Insight: So you find inspiration from science?

DC: “I do. There are two big questions in science right now. One is the origins of the universe – why is there a universe, No. 1? How did it begin? You can go back 10 to the power of 43 seconds after the Big Bang. But you don’t know why the Big Bang occurred and what happened in the first few microseconds. And that’s an

unknowable, because the laws of physics didn’t exist back then.

Why did they exist suddenly? And why are they so precise that 14 billion years later, you and I are having this conversation? The constants of nature have to be precise to a decimal point for the universe to exist as it does and for life to emerge.

“The second big mystery is the nature of consciousness. We do not know how we experience anything. What’s the origin of thought, where does it come from? Why do we have emotions?

What is creativity? Why is there awareness to begin with? Does the brain produce consciousness or does consciousness exist in the universe. There’s a lot of very interesting research going on about this. One of the most interesting things is that our perceptual experience of the world – what I’m experiencing right now – does not necessarily represent what’s actually there because perception is species-specific. Every life form has its different perceptual apparatus. Insects have hundreds of eyes. Bats will experience the world though the ecosystem of sound. The snake experiences things through infrared. Is perceptual experience actual reality? The answer is that it couldn’t be because there’s so many versions of it.

“So what is fundamental reality? Is it even material? This is where science is right now. There’s cutting-edge research that suggests that we live in a conscious universe.”

Insight: How does this affect your perceptions of leadership?

DC: “I think the way that they inform leadership is that a good leader should be aware of the ecosystem that he or she is leading.

In HIS OWn WORDS “about 11 percent of the american workforce is emotionally engaged in what they do. the rest are either disengaged, about 61 percent and 27 percent are actively disengaged, which means they are unhappy but they come to work to make other people unhappy. this costs the u.s. economy about us$350 billion dollars a year.”

– Deepak chopra, The Seven Spiritual Laws of Success

– Deepak chopra, ABC News online interview, Jan. 11, 2011

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“if you have guilt, fear and insecurity over money or success or anything else, then these are reflections of guilt, fear and insecurity as basic aspects of your personality. no amount of money or success will solve these basic problems of existence; only intimacy with the self will bring about true healing. and when you are grounded in the knowledge of your true self – when you really understand your true nature – you will never feel guilty, fearful, or insecure about money, or affluence, or fulfilling your desires, because you will realize that the essence of all material wealth is life energy, it is pure potentiality. and pure potentiality is your intrinsic nature."

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Society is always at different stages. There are leaders that are essentially protectors, because their ecosystem is in the mode of survival and safety. There are leaders who are entrepreneurs and achievers, because that’s what everyone is looking for, and that’s their stage of development. There are leaders who are team builders. There are leaders who are visionaries. There are leaders who are saints. All of them have their place.”

“

Whether he [Romney] is a Mormon, it doesn’t matter. He’s part of the extreme right wing agenda.”

Insight: Speaking of leadership, the U.S. will have elections soon.

Mitt Romney has been accused of downplaying his religion, as a Mormon. Do you think this will help or hurt him in the election?

DC: “In the U.S. you can look at the population as having three kinds of people. Twenty-five percent are religious fundamentalists – the extreme right wing, also – and they are coming from a place of extreme fear because the U.S. is gradually becoming increasingly multicultural, multiracial. You have a president who is black, for all practical purposes. They are holding onto values that they won’t be able to hold onto for a long time. So they are

getting together.

“Whether he [Romney] is a Mormon, it doesn’t matter. He’s part of the extreme right-wing agenda. Fifty percent of the U.S. is post-modern. They are not spiritual. They are very ambitious.

They are cutthroat. They are ruthless. They believe in power mongering, cronyism, influence peddling. They are corrupt – they are the people who have led the economic downfall of the country and the economic scandals on Wall Street.

“Then there’s another 25 percent, which are called the ‘cultural creatives.’ These are the people I relate to. They are questioning current values. They are questioning the fact that we’re ignoring the dangers of climate change, or that we have so much economic injustice, that 50 percent of the world is still living on less than two dollars a day, 20 percent more on less than 20 dollars a day.

That emerging economies like India and China, even though they are moving very fast economically, have huge poverty still, and huge economic disparities. So the cultural creatives are a fastmoving group or demographic, but they are still only 25 percent.

“I would say the U.S. at the moment is going through a lot of turbulence, chaos, and the political dialogue is extremely polarized on simple things, like gun control. President Obama, who I really favor, I think he’s a great visionary and a great leader.

But because of the lobby and Washington, where there are 28 lobbyists for every Congressman, he hasn’t taken a stand on gun control. It’s too political. There’s a lot of turbulence and it’s not going to end soon. There are these three groups and the majority of the group doesn’t really care, about anything.

WHaT CRITICS Say “Chopra – a medical doctor and proponent of mind-body treatments – preaches with the authority of a healer, mystic and celebrity on virtually everything, including love, sleep, energy, weight, money, reincarnation, heaven, peace, yoga, desire, physics, addiction and success. his ideas are either saving us from ruin or slowly poisoning us, but they’re in the water.”

– virginia heffernan, New York Times, July 20, 2008

“Chopra's approach is both calm and challenging, particularly when exploring the seductive nature of power and its potential for misuse. Compassionate managers, the author maintains, must move from the needs of the ego to the needs of the group. This volume teaches that influential world figures don't have a monopoly on vision, and anyone can improve the lives of others by merging self-awareness and compassion. in the business of making positive contributions, it is possible to ‘lead and serve at the same time.’ ” – Publishers Weekly review of The Soul of Leadership, nov. 29, 2010

– cOmpilED By ERika Wang

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“So – Mitt Romney, I don’t want him to win, but who knows?

That’s my personal bias.”

Deepak Chopra has a strong opinion of Mitt Romney

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Insight: A lot of large American companies who are members of AmCham Shanghai complain about IP problems. They feel that China should do its own research and development. Do you have any advice about how that can come about?

DC: “I think it’s uncontrollable, personally, so I wouldn’t even bother. What you can’t control, you shouldn’t bother. The fact is,

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Insight: In the U.S. there is suspicion of the outside world, especially China. Do you think there is anything they can learn from China?

DC: “I think what’s happening is that there is a lot of posturing.

It’s not real. The U.S. needs China, and China needs the customers. It’s an interdependent ecosystem. And the rest is posturing, usually for political purposes. But if, somehow, China and the U.S. really got into a conflict, that would be the end of both economies.

“The indigenous American population has developed a sense of entitlement, has become lazy, is dependent, actually, on the outside world, but still postures that it isn’t. In 20 years, there will be more Spanish speaking people than English speaking people.

South Asians are everywhere, as well as Chinese, Korean, Thai.

America is going through a huge transition, and the more AngloSaxon community – the right-wing, extreme, demographic – is fearful that it cannot be stopped, it cannot be controlled. On the other hand, if you look back at the past 20 years, Apple,

Microsoft, Yahoo, Google, YouTube, everything creative comes out of America. And the rest of the world follows.

“It’s very interesting to me that America, with all of its problems, is hugely creative and it’s because it’s a melting pot. I have a grandson now – my son is married to a Chinese-American – who is now 4. He speaks Chinese, he speaks Spanish because his nanny is from Guatemala, English and Hindi. That’s the future American citizen, by the way. When you go to Los Angeles, and you go to a school, you see a multiracial, multicultural world.

Every child speaks two languages. So there’s something very exciting about America and something very frightening about America, and I think in the long run, if America stays with its immigration policies and allowing people to come from all over the world, it will do fine.”

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Deepak Chopra with Larry King, center, and Dr. Sanjay Gupta of Cnn

the people who are first on the block in anything will remain first on the block. For me, creativity is a very important aspect of life.

It has its own rewards, besides economic. China at the moment is going through an economic surge, and it’s not going to stop.

“I think creativity has its own rewards. If you’re creative because you want to be successful, then that’s not creativity. If you write a song, you’re not looking for royalties, you’re writing the song. If you’re writing a book, you’re writing a book. The creative impulse has its own rewards. There is a spirit of entrepreneurship and creativity in the youth of America. Facebook was created by a Harvard student. That is very unique to this ecosystem, which has people from all over the world. You go to any college campus in the U.S., and you see South Americans, you see Korean, you see Chinese – it’s not just the students, it’s the faculty!

Insight: Can that environment be created in China?

DC: “It might take a long time. Societies like China, or India, are much more ethnocentric, and so tend to be more isolationists.

Even though they might be globally and economically in relations with the rest of the world, culturally, they are isolationists. The environment will change, but it will take its own time.”

Insight: What are three things you do for your own spiritual well-being?

DC: “Well, I meditate for almost two hours every day – and I’m not suggesting at all that everyone should do this! I read a lot,

thanks to iPads, and eBooks – I can travel with 400 books. I enjoy reading, read history, I read fiction, I read philosophy, I read science. I am compulsive about exercise. I pay attention to my relationships.”

Insight: I was reading today about how you have seven spiritual questions – and one of them to ask yourself is what you would like to contribute. What would you like to contribute?

DC: “I would like to see a peaceful, just, sustainable, healthy, happy world. I think we are still very early in our stage of development. We’re ethnocentric, we’re racist, we fight over silly things. There are creative ways to solve problems in the world. It’s still medieval. It’s not creative at all. It doesn’t do justice to human genius. Human creativity and innovation is so amazing that there’s not a single problem that cannot be solved or reversed.

Three days ago, a little spaceship landed on Mars! [Curiosity] And we’re seeing that it probably has atmosphere, it had riverbeds, there are frozen water streams, there are mountains, there are volcanos, there is tectonic activity. It should be possible to create a biosphere there. And there, seed Mars with life – with technology, with genomes – you can seed it with life forms. And soon this will happen across galaxies.

“And yet, we have tribal identities. It’s mind-boggling, that our capabilities of such creativity, innovation, scientific thought has so far outpaced our psychological and spiritual and emotional development. That’s dangerous. We have old habits and modern capacities.”

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COnsUMERs B y E s t h E R yO U n g

It’s All a Game

American gaming companies are coming to China in a new way

James Gwertzman, general manager of PopCap Games

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n a recent Friday afternoon, inside a gray concrete building in the outskirts of Shanghai, a few dozen workers hunch over their humming machines in neat rows among a low buzz of chatter.

At first glance, it looks like a factory scene that some have come to expect in China, with migrant workers churning out the same shirt or toy hour after hour. These workers, however, are making a unique product and they’re hardly identical.

This is Concept Art House, and the employees are working on computer-rendered design and illustration for computer, mobile and board games. They are using their imagination to develop everything from dragons to a vast

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wasteland of a post-apocalyptic world. Whatever you call it, it is part of a growing industry.

This company also produces art and game design for mobile and PC game companies like Zynga, Electronic Arts and Wizard, which produces the popular Dungeons & Dragons board game in the U.S. Concept Art House is a 140-person strong, San Francisco-based company – an area still known for its game and game-related development – and its growth in China is a shift from the Silicon Valley-concentrated industry norm. It’s just one of a number of companies started by Americans that are tapping creative talent in China to leverage the dynamic game development market in China and the talent emerging from the market growth.

Costumed participants at the 2012 Cartoon-Comic-Game Expo in Shanghai

Consumer spending on games in China topped RMB41 billion in 2011, a 17 percent increase from 2010, and with that is a growing slew of game developers and artists to meet the demand.

Concept Art House tripled its year-on-year revenue in 2010.

“China is cost-efficient in a company’s ability to build a team, and speed is also an advantage here. Building a team in the U.S., for example, can take some time and is expensive,” says Michael Yuann, CEO of Game Concourse, a small Shanghai-based company that concentrates on building mobile app tools. “Game production is very art-resource intensive, and in China, with the large pool of talent available, companies can

scale on production resources quickly.”

For Jerry Lin, co-founder of MobileNow, the company is finding success building itself in Shanghai and developing products for the Chinese market. The company has built Chinese mobile apps for companies as diverse as Standard Chartered and China’s Vancl, and their own photo app has been a hit.

“We knew that the mobile was going to grow pretty fast – but it grew faster than we expected,” says Lin. For Yuann, the decision to build in China not only stemmed from the ability to build up quickly, – he had grown up in Shanghai. “I had a stronger business network here than I did in the U.S., and I

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c ame for p ers ona l reasons, such as enjoying the vibrant, dynamic culture of Shanghai,” he says.

That was also the case for Xuan Li and Concept Art House.

“Our advantage is that Jerry Lin we have a Chinese background. I grew up here, for example, and I got my bachelor’s degree here before I went to the U.S. I have a fundamental idea of how things are run here,” Li says.

Even with their personal connections to the China market, finding the right talent was still an obstacle. “HR does remain a challenge. The most difficult part is navigating your team and its cultural differences,” says Yuann.

For Li, the difficulties in understanding the local labor force were surprising. “The reward system is different – here, instead of company stake, employees are asking for 12 months’ salary, and two months’ extra bonus. I had to get used to that,” Li says.

Another challenge is keeping the right talent as employees eye their next move and salary bracket.

“Some people jump to Motorola or Google, or Apple, because the companies are big. It is very hard to keep the really talented people,” says Lin. “They’re going to go find other opportunities.

One way [to keep talent] is to try to reach scale, and have interesting projects for them to work on. That’s why it’s good that we have branded clients – who doesn’t want to have Red Bull in their portfolio?”

These companies have also encountered their fair share of intellectual property (IP) theft, but most view it as an advantage rather than a disadvantage, or simply part of business.

“Actually, if someone copied my game, I’d be pretty happy – we’ve reached such a level of success that someone wants to copy us, that would be pretty interesting. But no, we haven’t had that problem yet. There are a lot of other applications

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that are similar to ours, and they have to develop their theme packs and graphics anyways.”

James Gwertzman, general manager of PopCap Games, which produces Plants vs. Zombies and Bedazzled, had his own unique experience with IP theft that had a unique twist.

“We did a massive raid on a factor y in Guangzhou, which was responsible for making many of the ‘shanzhai’ [unlicensed] Plants vs Zombies plush toys. But what was interesting was that these guys were making these toys that were lower quality, and thus had a lower price. We were making toys that were much higher quality at a much higher price. The low-end stuff started disappearing from all these mom-and-pop shops and a lot of our legitimate partners – seeing our brand disappearing from these shops – started

A cartoon character at the expo

Fans pose at the expo

saying that the brand was declining in popularity, when in fact we just stopped the flow of cheap crap, basically,” he says. “So that’s an interesting lesson of where doing the right thing legally may be the wrong thing for your business. The lower-end stuff props up the demand for the higher-end products.”

With these companies developing games in China, does this mean that Shanghai may become the next center for creativity and design, much like Silicon Valley in the U.S.? Not so fast, say those who work here. Much of the innovative drive seems to stem from the expats themselves, and China’s talent force has a way to go in creating game-changing content.

“The China talent market has a dozen years of

experience developing this ‘freemium’ model,” says Gwertzman, referring to the simple free games that users can download, only paying for premium content. “But I think the talent base here is still challenged at spurring rapid innovation – creating very original, creative content from scratch. That is an area that I’d be curious to see how these other foreign-started companies are handling this challenge – what their business model is.”

For Yuann, the type of game development creativity is simply different, and suits the nature of his small business. “China has an advantage from a microlevel. I see small incremental changes in China that can add and change a preexisting technology.”

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CEO briefing

Food: Safety, Hunger and Waste

William Hickey, chairman and CEO of Sealed Air, talks about food safety

World hunger can be alleviated with collective effort, says Sealed Air CEO

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illiam Hickey, chairman and CEO of Sealed Air C or p., was t he guest speaker at AmCham Shanghai’s CEO Briefing on September 10, when he talked about food safety, food waste and food access. He also gave an overview about possible technological and social solutions to world hunger.

Hickey said that there are food safety risks at every level of the supply chain, and minimizing t his r isk is achie vable, but on ly t hroug h collaboration among governments, academia and business.

“We are producing more than enough food globally to feed everyone on the planet, yet close to 1 billion people are living very close to starvation,” Hickey told the crowd during a lunch event at the Four Seasons Hotel. “We have made significant advances in technology and distribution, but food contamination is still a large societal problem with fatal consequences regardless of how rich or poor you are.”

Sealed Air is a global maker of packaging

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products with operations in 62 countries and a distribution network that reaches 175 countries, according to its website.

On the issue of food waste, Hickey said that nearly 40 percent of the food produced in the world is never eaten, due to lack of access, poor handling and excessive buying.

“We throw away nearly as much food as we eat, the results of which devastate our environment, communities and the economy,” said Hickey. “When I was growing up, nothing went to waste in our house. If it wasn’t eaten, it was jarred, pickled or dried. But today, the world still grapples with the crippling issue of food waste.”

Hickey also pointed out that in the United States, roughly 25 percent of food is thrown out; in Europe, more than 200 million tons of food is wasted each year – 90 million of which is thrown out by consumers, restaurants and supermarkets; while in Africa, up to 66 percent of all food spoils before it is consumed.

The CEO a ls o note d t hat, cont rar y to popular belief, rotting food can be harmful to the environment: “The first thing I hear from people when we talk about food waste and the environment is: ‘Food biodegrades, so where is the problem?’ The problem, environmentalists say, is just that. When food rots, it releases methane, a greenhouse gas.”

He explained that in developed countries, a vast amount of food is wasted because it is not sold, is not handled properly, portions are too large or are simply thrown away after spoiling.

“In fact, in developed countries, nearly 33 p e rc e nt of f o o d t h at i s w a s t e d i s at t h e consumer level,” he said.

Hickey added that education can help solve this problem of food waste if food producers, retailers and consumers understand how “packaging can prevent waste.”

On the problem of food access, Hickey

pointed out that the United Nations estimates that 25,000 people die due to hunger and related causes every day.

“Nearly one billion of the world’s seven billion people are hungry,” he said. “Hunger is not just the developing world’s issue. Every region in the world saw double-digit year-on-year increases in their hunger populations, and although food prices have dipped since skyrocketing in the middle of 2008, they remain more than 20 percent higher than just three years ago.”

He added that fighting hunger will require the integration of three basic elements: food, packaging and distribution. “All three are essential, yet none can stand alone. Without farming resources, not enough food can be produced. Without proper packaging, food

spoils or becomes contaminated. Without an effective distribution system, relief will not get to those who need it,” he said.

He concluded by stressing that the solution to these problems can only be achieved with everyone’s participation.

During the Q&A session that followed, participants raised questions on issues including how to re-educate American consumers on correct and healthy portions, and average consumers’ awareness of the importance of food consumption. Hickey commended companies such as The Cheesecake Factory Co., Denny’s Corp. and Nestlé S.A. for leading the field in food waste reduction and piloting innovative packaging solutions that reduce oxygen exposure and extend shelf life.

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“

We throw away nearly as much food as we eat, the results of which devastate our environment, communities and the economy…”

– William Hickey

inside amcham from the chair

Dateline Washington

A

mCham Shanghai has ju s t c on c lu d e d it s 2 0 1 2 Washington Doorknock.

Indeed, I write this column at 30,000 feet on my way back to Shanghai, my mind still swirling with impressions of last week’s meetings and events.

We had three hectic days in Washington, catching Congress on their last week of work before the election recess. For most members, the election was already uppermost on their minds, but we still had plenty of meetings and received a receptive audience from members and staffers alike. We had some unexpected help from the President’s announcement of a new automobile WTO case as we arrived in Washington, which put a spotlight on U.S.China trade tensions and ensured strong interest in our message.

This year’s Doorknock had a special twist. Discussing ways to enhance U.S. competitiveness is always a staple of the Doorknock and this year was no exception.

We urged Congress and the Administration to do more to improve market access, improve protection for intellectual property rights and take some specific steps which we believe would improve conditions for U.S. business in China, such as agreement on a bilateral investment treaty and China’s adherence to the WTO’s Government Procurement Agreement.

The new twist this year was the emphasis on what the Chamber was doing to help U.S. competitiveness and increase U.S. exports to China. By this I mean none other than the imminent opening of the SME Center, one of our key initiatives for 2012.

The response was enthusiastic. Our last event of the program was a roundtable discussion between our delegation and a range of federal, state and local government officials. We were honored to have as

Kenneth Jarrett Chair of the Board of Governors

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participants in that session Under Secretary of State Robert Hormats, responsible for economic affairs, as well as Under Secretary of Commerce Francisco Sanchez, responsible for international trade affairs. Both officials expressed overwhelming support for the center and are already thinking about how it can be replicated in other parts of the world. It is no exaggeration to say that the SME Center has captured the imagination of Washington.

This represents an excellent opportunity for the Chamber to raise its profile as not just an informed player on the front line of business in China, but also as an organization eager to develop – and even finance – initiatives designed to increase U.S. exports to China and create jobs.

Let me share a few other impressions.

During our meetings on the Hill, we heard more than once that an annual pilgrimage to Washington is not enough and that we should look for ways to stay connected between Doorknocks. This is an important piece of advice that the Board will consider when we review the results of the trip. In addition, we had excellent meetings with several Washington-based think tanks – Brookings, Heritage and the Peterson Institute – which should help boost our existing cooperation with these institutions. Finally, we had a wellattended media roundtable with approximately 20 domestic and foreign media representatives.

In sum, this was an extremely productive Doorknock. Allow me to thank Brenda and the Chamber staff for their outstanding preparation and the delegation members for their willingness to make the trip. We were delighted to have Ted Dean, chairman of AmCham China, and Ben Wang, chairman of AmCham Southwest, on the delegation. Their participation added geographic scope and impact to our voice.

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 September 2012 Board of Governors Meeting New Vice President of Programs and Services, Scott Williams President Brenda Foster introduced Scott Williams, AmCham Shanghai’s new Vice President of Programs and Services. Scott is responsible for the day-to-day management and supervision of AmCham Shanghai’s membership engagement activities.

Specifically, the VPP oversees the activities and programs of AmCham Shanghai’s Departments of Committees, Events, Membership and Business Development/Marketing.

2012 Doorknock Board Chair Kenneth Jarrett reported that the delegation members will meet to review key messages and the Viewpoints will be available for review shortly. The final schedule of meetings is being developed and will include elected officials, administration leaders and Washington-based think tanks. Also planned is an SME “roundtable” and a media event.

Committees Strategic Plan The plan, presented by Committees Director Stefanie Myers, is based on insights received by committee leadership, Board members and other stakeholders and cover content,

partnerships, platforms and how to get members more involved with committees. There has been a growth in the number of committees and the complexity of committee activities. Stefanie reported to the board that she will present a more detailed plan with budget requests, later this year.

SME Center Report The AmCham Shanghai front office is currently under construction with an expected completion date of the end of September. The November Monthly Member Briefing will be a ribbon cutting event to mark the official opening of the SME Center.

In Attendance Governors: Eddy Chan, Lienjing Chen, Kenneth Jarrett (Chair), Jim Mullinax, Marie Kissel, Dan Krassenstein, Peter Sykes, Robert Theleen, Eric Zheng Apologies: Andrew Au, William Brekke, Ted Hornbein, Jim Rice Attendees: Brenda Foster (President), David Basmajian, Steven Chan, Kirt Greenburg, Stefanie Myers, Helen Ren, Jonathan Shyu, Linda Wang, Scott Williams, Jessica Wu

The AmCham Shanghai 2012 Board of Governors Governors

Chair

Andrew Au Citibank China

Eddy Chan FedEx Express

Chen Lienjing Pratt & Whitney

Ted Hornbein Richco

Marie Kissel Baxter Asia-Pacific

Daniel M. Krassenstein Procon Pacific

James Rice CSM nv China

Peter Sykes Dow Chemical

Eric Zheng Chartis Insurance

Kenneth Jarrett APCO Worldwide

Vice Chair

Robert Theleen ChinaVest

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DOORKNOCK B y D av i d B a s m a j i a n

A Message for Washington Shanghai’s soon to be launched SME Center.

Messages and ‘asks’

T

he fourteen members that made up the 2012 AmCham Shanghai Doorknock delegation were given a challenge – cut through the noise of a presidential election year in Washington, D.C. and navigate political minefields surrounding China trade to deliver a simple message: the China market offers an opportunity to grow U.S. exports, create American jobs and expand U.S. economic growth; and by working together, government and business can overcome the significant obstacles to achieving these objectives.

Along the way, delegates were confronted with questions such as, “Will the China economy have a hard landing?”, “Will China’s new leadership be more or less reform minded?” and the most popular, “What happened to Xi Jinping?”

By all accounts, the delegation, led by AmCham Shanghai president Brenda Foster and Chair Kenneth Jarrett, more than met the challenge and took the opportunity to introduce elected leadership on Capitol Hill, key Administration officials and top opinion leaders to AmCham

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Fundamental to the objectives of this year’s Doorknock was conveying the increasing importance of the China market, not only to U.S. companies of all sizes, but to the health of the U.S. economy. Despite a slowdown over the past nine months, China remains a bright spot for many U.S. companies. In 2011 U.S. exports to China reached an all-time high of $105 billion which, according to metrics used by the U.S. Commerce Department, supported approximately 535,000 American jobs.

An emerging trend that delegates highlighted is the growing number of U.S. small-to-medium sized enterprises (SMEs) looking to China as an opportunity to develop new export markets and increase sales. But despite making up 99.7 percent of all U.S. companies, only 1 percent of U.S. SMEs export abroad and of those, only 10 percent export to China.

Delegates made three basic requests, or “asks”, of U.S. policymakers. First, continue to engage China to address specific market access and regulatory issues that negatively impact the competitiveness of U.S. companies in China.

Second, capitalize on the increasing interest among U.S. SMEs in the China market by working together with AmCham Shanghai to support and develop programs, like the SME Center, that support SME competitiveness in an increasingly tough China market. And finally, delegates issued a challenge asking U.S. policy makers to set a goal of increasing the number of exporting SMEs from 1 percent to 2 percent by the end of 2014. Programs and policies aligned to reach this goal would benefit AmCham Shanghai SME membership and very likely result in a dramatic increase in U.S. export revenue and corresponding jobs that would be created.

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AmCham Shanghai New Members U.S. Corporate Membership Dresser Shanghai Software Development Center DU Henry Honeywell Sinochem Lantian New Materials Co., Ltd. BAO Rongqing

Beijing CCIParis Consulting Co., Ltd. SUN Jane Monitor Information Consulting (Beijing) Co., Ltd., Shanghai Branch JACOBSON Sheryl Sun Hung Kai Development (Lujiazui I), Ltd., ifc Residence FU Jim The POP Company (Shanghai) Co., Ltd. YUEN Wai Yip

Shanghai Ogilvy & Mather Marketing Communications Consulting Co., Ltd. MURPHY Martin Alejandro

Finisar Shanghai Incorporation CHEN Jiashu

Parker Hannifin Motion & Control (Shanghai) Co., Ltd. ONG Steven

Air Paris (Shanghai) Advertising Agency Co., Ltd. LADGHEM Nora

Diebold Financial Equipment Co., Ltd. (China) GANAPATHI Karthikeyan Subramanian

ERICO, Ltd. MASON Yongyi

Cadence Design Systems Management (Shanghai) Co., Ltd. LIU Guojun

Corporate Int’l Affiliate Membership

Shanghai Cadence Electronics Technology Co., Ltd. BAO Annie

Dow AgroSciences (China) Co., Ltd., Shanghai Branch POON On Shek

U.S. Associated Corporate Membership

Shanghai Cadence Electronics Technology Co., Ltd. CHEN Eva

CHC (Shanghai) Limited CHANG Vivian Wei-Wei

Fluor (China) Engineering & Construction Co., Ltd. ZHOU Andy Game Changing Performance Asia, Ltd. TIAN Jane

Non-Resident Corporate Membership Dacheng Law Offices, Chicago Office, Ltd. LIU Xinyu Fitco-Consulting Pte. Ltd. HEGAN Cliff

Discovery Health MURRAY Andrew

Hu Business (Shanghai) Co., Ltd. HU Lily

JRI Industries MEISSERT Joseph

idX (China) Display System Co., Ltd. OUYANG Jeffrey Chang

Moore Stephens Verschelden KRIVOKOPICH Scott

Industrial Scientific China WILLARDSON Mark Peter

N/A CLEMENTS Sharon GIBBS Ker GRAVES Jacqueline

Ingersoll-Rand (China) Investment Co., Ltd. NOWAK Richard Frank M.Moser Design and Architecture (Shanghai) Co., Ltd. MORAN Sean

Meritor (China) Holding, Ltd. DONG Haochun Microsoft (China) Co., Ltd., Shanghai Branch LEI Dan Monitor Information Consulting (Beijing) Co., Ltd., Shanghai Branch BAEDER George

Small Business Membership

Monitor Information Consulting (Beijing) Co., Ltd., Shanghai Branch HOLE David

West Dragon Trading (Shanghai) Limited ARAUJO Paulo

Monitor Information Consulting (Beijing) Co., Ltd., Shanghai Branch KAO Guofeng

Associate Membership

Monitor Information Consulting (Beijing) Co., Ltd., Shanghai Branch KOGAN Avi Noam

Armstrong Teasdale LLP, Shanghai Office (U.S.A.) GISS Pamela Asian Tigers K.C. DAT (China), Ltd, Shanghai Branch SHEN Jackson Bain & Company China, Inc. YE Ying Cadence Design Systems Management (Shanghai) Co., Ltd. DICKER Arthur

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Tyco Electronics (Shanghai) Co., Ltd. HWANG Gordon

Hu Business (Shanghai) Co., Ltd. GAO Mingming

Monitor Information Consulting (Beijing) Co., Ltd., Shanghai Branch COLE Angus

Anderson & Anderson LLP SAVAGE Louis B.

Trane Air Conditioning Systems (China) Co., Ltd. SUN Jiancheng

Individual U.S. Citizen Membership

NSK Consulting PTE., Ltd. TING Adrian

Packwell (Shanghai) Logistics Co., Ltd. VACEK Bryan

The Executive Centre (Shanghai) CHEN Cici

Hu Business (Shanghai) Co., Ltd. GAO Baojun

Medtronic (Shanghai) Management Co., Ltd. ARMSTRONG Stephen

VIP ABC Co., Ltd. HSU Serena

Shearman & Sterling LLP Shanghai Representative Office, U.S. WANG Xiaogang

Monitor Information Consulting (Beijing) Co., Ltd., Shanghai Branch XU Zhe Navistar (Shanghai) Trading Co., Ltd. WERTH Joseph Andrew PricewaterhouseCoopers BRADT George

Oshkosh-JLG (Tianjin) Equipment Technology Co., Ltd., Shanghai Branch WATKINS Jason Shanghai Forte Land XU Limin Suntech Power Co., Ltd. ULRICH Ryan Individual Int’l Affiliate Memberhsip Kerry EAS Logistics LAM Todd PM Group SCANLON Catriona Yingpan (Shanghai) Industrial Co., Ltd. LU Jean-Yves Ying Non-Resident Individual Membership vonbergconsulting VON BERG Alexander CASIC Corporate Membership Georgia Ports Authority, Shanghai Office YOU Charles Educational Membership Roy E. Crummer Graduate School of Business at Rollins College ALON Ilan

PricewaterhouseCoopers LEUNG Kwok Wai Jimmy

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Do you want to share more information about your company? Contact Sophia Chen at (86 21) 6279-7119 ext. 5667 or sophia.chen@amcham-shanghai.org for a “Standout Listing” opportunity in the New Members Section.

GoverNment Relations Investment and Trade Fair in Xiamen

FCS Procurement Workshop On August 23, AmCham Shanghai and the U.S. Foreign Commercial Service (FCS) held a seminar on U.S. government advocacy for U.S. companies bidding on Chinese government projects. The speakers at the seminar along with the U.S. Department of Commerce's Advocacy Center, coordinated advocacy and outreach efforts across federal agencies to lobby their Chinese Government counterparts on behalf of U.S. companies. Because China has not acceded into the World Trade Organization (WTO) Agreement on Government Procurement, the U.S. Government cannot bring cases before the WTO on unfair practices related to government procurement and tendering. At the state level, governors, district legislators and state trade offices also lobby local Chinese government leaders through sister state and city agreements and relations, reciprocal visits and trade missions.

AmCham Shanghai President Brenda Foster led a 14 member delegation to the 16th China International Fair of Investment and Trade (CIFIT) in Xiamen, Fujian province. On September 7, Foster represented AmCham Shanghai at the welcoming reception and dinner hosted by China’s Ministry of Commerce (MOFCOM) while delegation members joined Shanghai Municipal Government officials for dinner. Foster, AmCham Shanghai board treasurer Eric Zheng and delegation members held a private meeting with Wuhu Deputy Mayor Liu Zhen Hua to discuss investment opportunities, and hosted a lunch meeting with representatives from six second-tier Chinese cities: Chongqing, Xi’an, Shenyang, Wuhan, Hefei and Wuhu.

Foster also was interviewed by China News Agency on U.S.China commercial relations.

During CIFIT, delegation members participated in MOFCOM’s Investment Forum featuring Vice Minister of Commerce Wang Cao, State Councilor Ma Kai and 2004 Nobel Prize Laureate Edward Prescott, among others. Delegation members also participated in the U.S.-China Enterprise Investment Cooperation Forum with a keynote address by U.S. Ambassador Gary Locke. AmCham Shanghai’s delegation members represented diverse sectors covering manufacturing, financial services, chemicals, healthcare, information technology, automotive, consulting, construction and green building.

CIFIT is the largest investment promotion event organized by MOFCOM and approved by the State Council. This year’s themes, “Introducing FDI” and “Going Global,” focused on domestic and international investment policy and promotion, development of national and regional economy and economic and trade exchanges across the Taiwan Strait. It takes place annually in September in Xiamen, China.

Legally, there are several government procurement methods for foreign companies to bid on projects, including: calls for public bidding (primary method), invitation-based calls for bidding, competitive negotiations, single-source purchases, price inquiries and other means of procurement recognized by the State Council.

Roundtable with Minister Counselor On August 17, AmCham Shanghai's Board of Governors hosted Hanscom Smith, Minister Counselor for Economic Affairs at the U.S. Embassy in Beijing, for a breakfast roundtable to discuss business and commercial issues in Shanghai and the YRD region.

In attendance were Consul General Robert Griffiths, Principal Commercial Officer William Brekke, AmCham Shanghai President Brenda Foster and AmCham board members Ted Hornbein, Dan Krassenstein, Jim Rice and Eric Zheng, among others.

President Foster highlighted the Chamber's initiatives to support and promote U.S. businesses and small- and mediumsized enterprises (SMEs) including the YRD Center and SME Center, the AmCham Shanghai "Doorknock" visit to Washington, D.C. in September and opportunities and challenges for U.S. companies in China. Other topics discussed included intellectual property rights, finance and real estate.

A career Foreign Service Officer, Hanscom Smith has held assignments at the U.S. embassies in Yaounde, Cameroon; Copenhagen, Denmark; Phnom Penh, Cambodia; Bangkok, Thailand; and Kabul, Afghanistan.

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AmCham Shanghai Brian Gallagher, president and CEO, United Way Worldwide, second from right, poses with AmCham Shanghai’s Steven Chan, President Brenda Foster and CS Yeung of Intel China

CIFIT conference in Xiamen Brenda Foster and Shenyang official Li Xu Chen in Xiamen

Jane Holl Lute, deputy secretary of Homeland Security, at a roundtable in Shanghai

The 13th annual Human Resources Fair and Workshop

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in Pictures

HR Fair and Workshop Sponsors Platinum Sponsors

Booth Sponsors

Inkind Sponsors

media Sponsors

HR

Committee highlights

i n s i de a m c h a m

Automotive Committee Report: Growth Ahead for Auto Industry AmCham Shanghai’s Automotive Committee hosted the 2012 China Auto Outlook Report on September 11 at the Four Seasons Hotel. This lunch event featured presentations by Ivo Naumann of AlixPartners and Yale Zhang of AutoForesight. The presentations were followed by an expert panel featuring the two presenters as well as Patricia Messar, general manager for sales & marketing, China at General Motors.

Naumann started the event by looking at comparisons and key trends for the Chinese auto industry for the next five years. By analyzing survey responses collected by AlixPartners in areas such as the passenger vehicle market, OEM growth targets, export markets and supplier challenges, Naumann predicted that the Chinese auto market will continue a steady growth rate of 8 percent to 12 percent. Although the industry is optimistic about growth, areas for concern include increased competition and a lack of government stimulus. To combat this, OEMs surveyed plans on using competitive pricing and the introduction of new vehicle models.

Zhang pointed out that Buick, Volkswagen and Chevrolet had the top three car models in 2011, and only one local brand was in the top 10. For 2012 to date, the top 10 car models were dominated by General Motors, Volkswagen and Hyundai, with no local brand presence.

The 2012 China Auto Outlook Reports are available via the AmCham Shanghai website at www.Amcham-Shangai.org. (Sept. 11)

Sourcing & Procurement Committee Roundtable On Moving West The AmCham Shanghai Sourcing & Procurement Committee together with the Manufacturers’ Business Council hosted an afternoon roundtable discussion on the topic of westward expansion that focused on supplier bases. The discussion in late August was held at the U.S. Foreign Commercial Service Conference Room and featured presentations from Anson Tang of Cardinal Health, Vincent Yang of SKF, Inc. and Jeff LeClair of Caterpillar Logistics, Inc. Anson Tang, director of sourcing at Cardinal Health, pointed out that although government tax reduction programs are in place to promote inward investment, the lack of reliable and efficient transportation networks are a hindrance to western expansion. She added that the upsides to industries moving their supplier and manufacturing bases away from the coastal areas include improved labor retention and lower labor costs. On the other hand, even though there are perceived advantages, increased transport lead time, possible interruptions in operations, poor infrastructure and decreased talent pool must be taken into consideration before a company makes any move.

Vincent Yang, director of purchasing at SKF, Inc., focused his attention on moving inland and away from the coast, although not necessarily to western regions. Provinces like Hubei, Hunan and Shandong are sufficient if companies are looking for a geographic area with potential supplier clusters. (Aug. 23)

Reporting by Julia Bakutis, Ryan Balis, Kimberly Chang, Matthew Garner, Eric Meng, Lindsay Ross, Jane Yan and Esther Young

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Event highlights

i n s i de a m c h a m

Visa Policy Forum istockphoto

AmCham Shanghai hosted a forum on U.S. visa policy and procedures for members of the Corporate Visa Program (CVP). Jennifer Jensen of the U.S. Consulate General’s Non-Immigrant Visa Section discussed the application and adjudication process for visas to the U.S. at the September 5 event.

The legal basis of the nonimmigrant visa application process is Section 214(b) of the Immigration & Nationality Act, which presumes that applicants for most visa types intend to immigrate to the U.S. Each applicant is responsible for convincing the visa officer through interview that he or she does not have that intent, by proving the applicant’s ties to China, as demonstrated through a well-paying job, family or property in China.

When applying for business visas through CVP, applicants must in practice explain their entire schedule, the business rationale behind the trip, and the specific business functions they will carry out. Even for group travel, each person in the group must independently rebut the presumption of immigrant intent. Documents are only secondary in importance to a sufficiently detailed oral explanation.

Jensen emphasized that the goal of the visa application process is to facilitate legitimate business travel, and that over 90 percent of nonimmigrant visa applications from China have been approved so far this year.

Under the AmCham Shanghai Corporate Visa Program, direct hire employees of participating companies are eligible for expedited visa interviews at a time reserved for AmCham CVP participants. For more information on the program, please contact the AmCham Shanghai CVP Office at (021) 6279-7056 or write to cvp@amcham-shanghai.org, or the U.S. Consulate’s AmCham Visa Liaison Officer at ShanghaiNIVCorp@state.gov. (Sept. 5)

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EXECUTIVE traveler In this issue, executives tell us about their favorite airports in the Asia-Pacific and explain why a long layover can turn into a pleasant experience. imaginechina

Singapore Changi Airport

Cary Bean, Asia Pacific President, Eagle Ottawa China Airport: Hong Kong International Airport Remarks: “My favorite airport in Asia-Pacific is the airport in Hong Kong. It is a well laid-out facility, easy to access and navigate, comfortable and with all the amenities and shopping you could ask for. A very close second would be Narita airport, mainly owing to one of my favorite sushi restaurants being there, and the available foot massage you can get before a long flight.”

Gary Yu, Managing Director, China, Grebstad Hicks Communications Airport: Hong Kong International Airport Remarks: “My favorite airport is the Hong Kong International Airport at Chek Lap Kok. This is the most efficient airport I’ve ever been in and although it’s big, you never really have to walk that far to go to the gate or go to the immigration after you get off the plane. I travel quite often and the Cathay Pacific lounges there are excellent and top-class so traveling through this airport makes it very comfortable.”

Helen Lin, Business Development Director and Chief Rep, American Express (Shanghai Branch)

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Airport: Singapore Changi Airport Remarks: “My favorite airport would be Singapore Changi Airport, mainly for their friendly customer service, great airline lounges and excellent mix of shopping and dining facilities.”

Angelina Ong, Regional Managing Director, APAC and Senior Vice President, China, Burson-Marsteller Airport: Singapore Changi Airport Remarks: “I love, love, love Changi Airport in Singapore as it's like a massive playground and provides a sparkle of fun in the dreary traveling process. Shopping is cheap, service is go o d , f re e fo ot massages and movies, loads of F&B outlets of all kind, shower facilities, a nice garden and many TV channels.”

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