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News briefs

The gadgets that will drive car demand

“The function of a trademark is to give credit to a brand and help consumers choose from different products on the market. However, the buying and selling of trademarks has become an industrial chain in China.”

Chinese drivers want to keep up with the latest technology in cars that keep them connected.

Business | 12 Next stop: China Aviation giants are looking to deep pockets in China to buoy private jet industry.

Centerspread | 16

LIU CHUNTIAN, an intellectual property rights expert at Renmin University of China, speaking in a media interview. China is the world No 1 for the number of trademarks, but only 11 Chinese brands were among last year’s top 500 list by World Brand Lab.

Rewards of the journey Shifting gears to conform to market realities pays off for entrepreneur.

Travel | 23 Kunming check-in Southwestern hub refreshes with natural and cultural attractions.

Life | 26 Way to go Ancient board game captivates more and more minds in the West.

Last word | 32 Law of the lands is in his hands Former Cornell University head wants more foreign legal talent in China.

LI KANG / FOR CHINA DAILY

Unidentified empty drug capsules lie in a gutter on Zhengshang road in Zhengzhou, Henan province, on April 21. SAFETY

Toxic capsules to be cracked Pharmacy supervision agencies nationwide must strictly monitor conﬁscated capsules made from toxic industrial gelatin to prevent them from ﬂowing back into the market, the top drug regulator has said. Drug control authorities should keep a tight rein on non-compliant capsules and ensure they are destroyed, the State Food and Drug Administration said on its website on April 23. Nine companies have been accused of manufacturing drug capsules with industrial gelatin, which contains a greater amount of chromium than edible gelatin and may result in chronic diseases if ingested in excessive amounts. Local drug authorities should take strict measures to stop pharmacy companies from randomly discarding the tainted capsules, the administration said.

employees numbered about 600,000, according to the 2010 national census. COMMERCE

Group-buying sites hit rough path Half of China’s group-buying sites have folded since the industry peaked and only 10 big players will survive the reshuffle, experts say. A recent report from tuan800.com, a group-buying service navigation site in China, says more than 2,000 of the sites in China closed in the past year. The top 20 sites accounted for more than 96 percent of market share, leaving 3,800 smaller players vying for the remainder. Tuangou, or group buying, aims to create bargains by combining the reach of the Internet with the power of the mob.

Chongqing reassures foreigners

Cameron may work on Chinese film

Published by China Daily UK Co Ltd, 90 Cannon Street, London EC4N 6HA, UK.

Printing:

Chongqing municipal police have vowed better protection of foreigners in the megacity for business, study or tourism, following the scandal involving the death of the British citizen Neil Heywood. The Heywood case is highly unusual, an official with the municipal public security bureau said, and very few foreigners have been the victims of crimes or other offenses in Chongqing in the past two years. Investigators have uncovered evidence indicating that Heywood’s death was homicide. Bogu Kailai, the wife of Bo Xilai, the former Communist Party chief of Chongqing, and Zhang Xiaojun, an orderly at Bo’s home, are suspects in the case.

James Cameron, director of the box office hits Titanic and Avatar, and who is known for his cuttingedge special effects, may soon work on a 3-D Chinese ﬁlm. Cameron told a news conference at the Second Beijing International Film Festival on April 23 that his company would probably join the crew of The Art of War, a 3-D Chinese ﬁlm based on the classic book about military strategies. “We are still in discussions, but have agreed on the principles that we will provide certain service to ensure the quality of 3-D,” he said.

UK: Newsfax International Ltd, Rainham, UK

EMPLOYMENT

Charities to come under scrutiny

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Work visa proposals considered A new visa category has been proposed, in a draft law by the top legislature, to streamline hiring procedures for international talent and to centralize records of foreigners. The second draft on regulating arrivals and departures from China, proposed to lawmakers on April 24, envisages a new speciﬁc visa for international expertise, in addition to the existing tourist, student and business visas. The move is part of initiatives to attract more talented individuals from overseas, experts said. Authorities have tried to attract more expatriate workers in a wide ﬁeld of professions. Foreign

“Despite their statement, that their pesticides comply with national standards and that they are determined to minimize the amount of chemicals, the facts prove it is nothing but empty promises.” WANG JING, a Greenpeace executive in charge of food and agriculture in Beijing, responding to Unilever’s claim that all of its products are safe. According to a report by Greenpeace, methomyl, a pesticide banned in China, has been detected in some Lipton teas.

ENTERTAINMENT

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Quotable

SOCIETY

The country’s top watchdog for charity organizations plans to keep a closer eye on foundations, after a series of charity scandals in the past year that greatly eroded public trust. On April 24 the Ministry of Civil Affairs issued draft regulations on its website setting out rules for foundations on fundraising, information disclosure and their cooperation with commercial organizations. The ministry is soliciting public opinion on the draft regulations until May 3. The regulations, once enacted, will mainly apply to domestic foundations and international foundations’ offices on the Chinese mainland. CHINA DAILY

“I’m responsible for what I said. I just want to eliminate public panic.” SUN ZHONGSHI, an expert from the National Drug Use Monitoring System under the Ministry of Health, responding to criticism of his remarks that there is no harm in someone taking six gelatin capsules that are made with industrial gelatin, which contains a much higher level of chromium than edible gelatin. Sun’s remarks triggered public anxiety.

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News

Premier Wen Jiabao waves to employees during his visit to the Volvo factory in Gothenburg, Sweden, on April 24.

BJORN LARSSON ROSVALL / REUTERS

Wen paints Europe green in 4-nation trip PREMIER CALLS FOR MORE GLOBAL ACTION ON SUSTAINABLE DEVELOPMENT By ZHANG HAIZHOU and CECILY LIU

Trade and investment deals and business cooperation have been the focus of Premier Wen Jiabao’s tour to four European nations this week. Such fare is common for such visits, but there was a new ingredient in the latest trip: Wen and his delegation have been paying particular attention to green and innovative industries in almost every destination of the seven-day visit, which ends on April 29. As China switches from high growth to sustainability in the current ﬁve-year plan and as the country’s foreign trade growth slows, politicians, businesses and industrial leaders from China and Europe are seeing more opportunities in each other’s markets. Before his scheduled arrival in Warsaw on April 27, Wen pressed for global action on sustainable development that strikes a balance between economic growth, social progress and environmental protection, instead of focusing exclusively on the environment, at the Stockholm+40 conference in Sweden. “We aim to achieve development over 50 years, 100 years … dozens of generations. Therefore we must attach great importance to China’s sustainable development.” He also witnessed the signing, on April 24, of a memorandum of understanding between China Development Bank and the Swedish automaker Volvo Cars, now owned by Zhejiang Geely Holding Group of China. Under the deal, the bank will offer long-term ﬁnancing to support Volvo’s

technological innovation and research and development for new energy vehicles. Wen also attended the signing ceremony of a series of deals on environmental protection and energy conservation the same day. He began his European trip in Reykjavik, capital of Iceland, on April 20. He visited the Hellisheidi Power Station in the country’s southwest the next day, and said China will advance cooperation with Iceland in geothermal energy. In Germany, Wen and Chancellor Angela Merkel opened this year’s Hannover Messe, the industrial and technology fair. The fair, held from Monday to Friday, has attracted about 5,000 exhibitors from 65 countries and regions. Almost half of these exhibitors come from outside Germany, among which nearly 600 came from China, partner country this year under the theme of “Greentelligence”. The fair opened as China’s foreign trade posted slower growth. Year-on-year export growth slowed from 18.4 percent in February to 8.9 percent in March, according to ﬁgures issued by the General Administration of Customs. The growth in imports fell more markedly, from 39.6 percent in February to 5.3 percent in March. Gu Chao, director-general of the exhibition administration office of China Council for the Promotion of International Trade, said China’s exports to the EU, its biggest export market, had experienced “negative growth”. “Against this backdrop, attending international trade fairs is an effective way for Chinese ﬁrms to

stabilize and strengthen exports, but that isn’t our only goal here,” Gu told China Daily in Hannover. He referred to low-carbon and green economies when asked in which areas China is seeking more exports to Europe. “Low-carbon economy and energy conservation are receiving increasing attention from consumers and manufacturers from all over the world, as these industries have experienced a smaller impact from the global downturn,” Gu said. Chinese firms in these areas “hope to improve technology exchange and cooperation with European counterparts to promote industrial sustainable development and achieve global economic recovery”, he said. Twenty-five years have passed since China was Hannover Messe’s partner country the last time. This time Chinese firms had brought to Europe and the world their achievements to demonstrate their advanced industrial technologies and huge potential for further development, Gu said. Citic Guoan Mengguli Power Source Technology, a Beijing company specializing in high energy density lithium-ion batteries, promoted its ecofriendly batteries. As the only Chinese company to successfully realize large-scale production of high-capacity lithium-ion batteries, the firm plays a key role in accelerating the industrial commercialization of new-energy vehicle technology. Machinery Technology Development, a Beijing company specializing in environmental protection equipment and engineering, showed China’s first non-battery automated guided vehicle solution at the fair.

Delivering energy savings of at least 10 percent compared with battery solutions, the system is regarded as a big breakthrough for China’s automotive manufacturing industry. Broad Group, a Changsha company specializing in central air conditioning, presented at the fair its air-conditioning systems that achieve almost zero CO2 emissions by harnessing waste heat from electric power generation. Exhibitors at the fair also included many Chinese cities. Qingdao displayed the Sino-German Eco Park, a 10-square-kilometer complex designed to help China attract German investment in sectors such as renewable energy, energy reduction and environmental protection. German exhibitors see China’s market and demand for technological innovation as great business opportunities. Karl Tragl, chairman of the executive board at Bosch Rexroth, a German firm specializing in drive and control technologies, said China will become the main driving force behind global machinery manufacturing growth. First expanding into China in 1978, Bosch Rexroth has already established four factories and five sales branches in 33 cities. Its sales in China were a record 1 billion euros ($1.32 billion) last year. “To carry out research and production in China using a Chinese team is the only way to take advantage of this revolution,” Tragl said. Festo, a German supplier of pneumatic and electrical automation technology, has also enjoyed great success in China. The company, which entered the country in 1985, now has 42 sales centers, 1,800 employees and more than 13,000 customers. “We are very glad to see that Festo’s products have helped many Chinese companies improve their own technology and competitiveness,” said Ulrich Stoll, vice-chairman of the supervisory board at Festo. German engineers like to develop intelligent products and smart solutions, said Rainer Gehnen, managing director of the German-Chinese Business Association. As a particular strength of the German economic system, there are, Gehnan said, “hundreds if not thousands of” small and mid-sized enterprises in Germany that are world technology leaders in their respective fields and market niches. “As purely private businesses they show great innovativeness and can identify and (make the most of) market opportunities rather quickly. These so-called hidden champions in Germany will often be ideal cooperating partners for China.” Gehnen said an increasing number of Western companies will find themselves “on a level playing field” with their Chinese competitors. “Germany welcomes this development: We are confident about our ability to innovate and, most importantly, we are willing to work together with Chinese companies in mutually beneficial ways.” Trade between China and Germany totaled $190 billion last year, and Germany accounts for about a third of China’s total trade with the EU. Wen had said at the Hannover Messe that China wanted to reach a volume of trade in 2015 of $280 billion. German firms have proven much more successful than their European peers in entering the Chinese market. “Business ties with China trump political concerns voiced within Germany by opposition parties, NGOs or the media,” Cornelius Focke, researcher at the business intelligence firm Diligence, based in London, said of the key to German companies’ success in China. The German government knows that business ties with China are “dependent on a good bilateral relationship on a high political level”, he said. Contact the writers at zhanghaizhou@ chinadaily.com.cn and cecilyliu@chinadaily. com.cn

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News

Premier Wen Jiabao waves to employees during his visit to the Volvo factory in Gothenburg, Sweden, on April 24.

BJORN LARSSON ROSVALL / REUTERS

Wen paints Europe green in 4-nation trip PREMIER CALLS FOR MORE GLOBAL ACTION ON SUSTAINABLE DEVELOPMENT By ZHANG HAIZHOU and CECILY LIU

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Cover story

Mission: On course, despite hiccups By XIN DINGDING xindingding@chinadaily.com.cn

hina has made remarkable strides in its space program five centuries after it made the first-ever unsuccessful attempt in the world to put a man in space. History records that some 500 years ago, a Chinese official called Wan Hu tried to launch himself to the moon from a wicker chair to which were fastened 47 rockets. Some records state that there was a huge explosion when the rockets were lit and Wan was never heard of again. Since then nothing much happened on the space front for nearly four centuries in China. Much of this had to do with the general apathy toward rocket technology in China, considering that historical records on the subject were confined to just 25 words. But in the last 50 years, China has not only successfully sent men into space, but also launched lunar probes on its own. On the anvil are plans for a space station, a mission to bring lunar soil samples to Earth, and make available globally by 2020 the Beidou (Compass) satellite navigation, the Chinese version of the US’ Global Positioning System (GPS). The rapid pace at which the space program has grown has also had its downside. Many Western nations have expressed doubts and concerns over the true purpose of China’s space program and often attach ulterior motives to it. But experts point out that China has no intentions of dominating the space technologies. Rather, they point out that China is sharpening its technological edge and improving its industries by harnessing space technologies in a peaceful manner for the overall benefit of mankind. The experts further add that most of the technologies that are being used by China are based on technologies already used by nations like Russia and the United States. In other words, the experts say that while China has no intention of leading the world in space technologies, it would also not like to be left behind.

Early days

In the 1950s, global space programs were largely dominated by the quest for supremacy between the former Soviet Union and the US. Most of the activities centered on putting unmanned satellites in space. China, at that time, was still a newborn country that was in the throes of transformation and facing several economic hardships. The main priority for policymakers was to feed the masses and as such space programs took a backseat. Things changed after eminent rocket scientist Qian Xuesen, or Tsien Hsue-shen, who had helped establish the Jet Propulsion Center in California during the 1940s, returned from the US to China for good in the 1950s. In 1956, Qian wrote a letter to the policymakers urging the necessity for China to develop rockets and missiles along with the need for a strong

defense industry. Supported by the top leadership, efforts soon started to develop missiles and rockets, which laid the foundation for launching satellites, according to data from the book The 50 Years of China’s Space Industry. In 1958, buoyed by the satellite launches of the US and the former Soviet Union, the late Chinese leader Mao Zedong expressed the need for China also to launch an artificial Earth satellite. But that was easier said than done, considering that China did not have the money or the scientific talent at that time. In 1959, the satellite initiative was called off, as it was found not to be in line with the country’s strengths. Scientists, however, were worried that if China completely stopped research on complicated projects such as satellites, it would not be able to catch up with others in the future. In 1965, Qian submitted a report to the top leadership highlighting the usefulness of satellites in various functions like reconnaissance and communications. Subsequently the satellite program got the green light from the government. After five years’ of work, China launched its first satellite, Dongfanghong-1, into space on April 24, 1970. Qi Faren, designer of the Shenzhou manned spacecraft who participated in Dongfanghong-1’s development, says after the launch, China became the fifth country in the world to independently develop and launch artificial satellites. “Western nations were shocked that a developing nation like China could successfully launch a satellite. Even more surprising was the fact that at more than 173 kg, the Chinese satellite weighed far more than the combined weight of the satellites launched by other nations,” he says. Since then, China has continued to develop satellites of various types. But it was the technology for recoverable satellites that laid the foundation for manned spaceflights.

Manned missions

In 2003, Yang Liwei became the first Chinese astronaut in space and China the third nation in the world after the US and Russia to independently carry out manned spaceflights, Qi says. China, however, started preliminary work on manned space flights >> PAGE 5

4 1. China’s first satellite Dongfanghong-1. 2. Dongfanghong-3 launched in 1997. 3. Yang Liwei, China’s first astronaut. 4. Zhai Zhigang floats out of Shenzhou VII. 5. Simulation of Shenzhou VIII docking with Tiangong-1 space module.

SPACE MISSIONS • April 24, 1970: Dongfanghong-1, China’s first satellite, launched successfully. Weighing 173 kilograms, the satellite broadcast a song for 28 days in space. • April 8, 1984: Experimental communications satellite Dongfanghong-2 launched successfully. It was China’s first geostationary orbit communications satellite that operated 36,000 km above the Earth. • May 12, 1997: Dongfanghong-3, a new generation of communications satellite launched. It become the platform on which a number of other satellites, including China’s first lunar orbiter, Chang’e-1, were developed. • Nov 20, 1999: Unmanned Shenzhou I spacecraft launched, marking the first step for China’s manned space missions. • Oct 15, 2003: Shenzhou V, China’s first manned spacecraft, with astronaut Yang Liwei on board is sent into orbit and circles the Earth 14 times in 21

hours and 23 minutes. • Oct 12, 2005: The second manned spacecraft Shenzhou VI, with two astronauts on board, is launched and remains in space for 115.5 hours, or nearly five days. • Oct 24, 2007: The first lunar orbiter Chang’e-1 takes to the skies, marking a big step forward in space exploration. It sends the first full map of the moon’s surface back to China one month later. • Sept 25, 2008: Shenzhou VII spacecraft carries three astronauts into space for a three-day mission. One of the astronauts, Zhai Zhigang, becomes the first Chinese to walk in space. • Nov 3, 2011: Unmanned Shenzhou VIII spacecraft rendezvous and docks with the unmanned target orbiter Tiangong-1, which was launched on Sept 29, in an orbit 343 km above the Earth, marking China’s first space docking.

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Cover story

Cosmic cooperation PROVIDED TO CHINA DAILY

From left, Yin Liming, president of China Great Wall Industry Corp; Qi Faren, designer of the Shenzhou manned spacecraft; Ouyang Ziyuan, chief scientist of China’s lunar exploration program. FROM PAGE 4

way back in 1967. Scientists had completed the sketches and miniatures of a spaceship called Shuguang, which means “dawn” in Chinese. The plan was approved by the government in 1970 and more than 1,000 fighter jet pilots were selected for the space missions. But, due to economic and technical reasons, the former Commission of Science Technology and Industry for National Defense cancelled the spacecraft project in 1975. In the following decade, China’s aerospace industry was instead told to focus on satellite development. The late leader Deng Xiaoping was quoted by The 50 Years of China’s Space Industry as saying in 1978 that China would not join the space race, and efforts should be pulled together to develop application satellites that were urgently needed and of practical use. But sometimes, even a nation cannot follow its own will, and instead follow the global tide. In the 1980s, the world experienced a new round of competition in science and technology. The then US president Ronald Reagan in 1983 introduced the Strategic Defense Initiative, a defense project that aimed to use ground and space-based systems for protecting the US from attacks by strategic nuclear ballistic missiles. The Soviet Union also introduced its own strategic defense plan. European nations established the European Research Coordination Agency (EUREKA) to coordinate advanced technology projects being carried out by European companies. Japan, India and Brazil also followed and adopted their own high-tech development plans. Identifying this trend, four top Chinese scientists wrote a letter in March 1986 to the government, suggesting that China should also catch up with the tide by developing cutting-edge technologies. They added that some of the important high technologies needed to be developed over a period of time and could not be purchased. If China missed the trend now, it would be difficult to catch up later, they wrote. The suggestion received immediate response from authorities and a green signal was given to a high-tech development project code named 863, with manned space flight a part of the overall program. In 1992, the manned space flight program was finally approved, and outlined a three-step path for developing a reliable spacecraft to transport humans, master the key manned spaceflight technologies, and eventually assemble a space station. The first unmanned spacecraft Shenzhou I was launched in 1999, fol-

lowed by three more unmanned space ﬂights, all of which were successful. In 2003, the country’s first manned spacecraft Shenzhou V put Yang Liwei into orbit, and he stayed in space for 21 hours. In 2005, two more astronauts went to space on board the Shenzhou VI and stayed in orbit for ﬁve days.

Next steps China moved to the second phase of its space program with the Shenzhou VII launch in 2008. The mission put three astronauts in space, with one of them also carrying out China’s first space walk. Scientists also conducted spacecraft rendezvous and docking technologies in space. Last September, an unmanned space lab module Tiangong-1 was launched, and docked with the unmanned Shenzhou VIII spacecraft in November. At some point between June and August, China will launch the Shenzhou IX spacecraft with three crew-members attempting to manually dock with the Tiangong-1. Around 2016, China will also launch a space laboratory to conclude the second phase. China is also planning to assemble a 60-ton space station around 2020 in the third and final step of its manned spaceflight program. Around the time the manned spaceflight program was mooted in 1992, space scientists also floated a proposal to conduct lunar missions. But with limited economic and technical strength, more attention was given to manned spaceflights, according to China Lunar Exploration Program, a book compiled by the former Commission of Science Technology and Industry for National Defense in 2007. Ouyang Ziyuan, chief scientist of the program and an academician at the Chinese Academy of Sciences, says that China was “pushed” by the global trends to start lunar explorations. The lunar exploration program, Chang’e, named after the Chinese moon goddess, got the government nod in 2004. The program has three stages — circling, landing and returning with soil samples. China’s first lunar orbiter, Chang’e-1, was launched on Oct 24, 2007, making China the world’s fifth country to launch a lunar orbiter. The second orbiter, Chang’e-2, was launched in 2010 to test some key technologies for a soft-landing on the moon by Chang’e-3 next year. Eventually, China hopes to return lunar soil samples to Earth before 2020.

Commercial angle Unlike China’s manned spaceﬂight and lunar exploration programs, which were pushed by global trends, the country’s entry into the commercial launch market industry was a selfmade choice.

In the early 1980s, the huge proﬁts of operating communications satellites attracted many countries to invest in satellites. There were a large number of communication satellites waiting to be launched. China Great Wall Industry Corp, established in 1980 by China Aerospace Science and Technology Corp, decided to scout for opportunities in the commercial launch market. On April 7, 1990, the Long March 3 launch vehicle blasted off from Xichang Satellite Launch Center, sending AsiaSat-1, a communications satellite produced by US satellite maker Hughes Aircraft, into orbit. It marked China’s first commercial launch. The ﬁrst eight commercial launches by China’s rocket carriers were successful. But in 1996, the newly developed Long March 2B launch vehicle, carrying the communications satellite IntelSat 708, hit the ground and exploded. This was followed by another failure in the same year. The consecutive failures dampened customer confidence and five contracts were cancelled, while ongoing negotiations for several other launches were dropped. After efforts were made to improve the launch vehicle’s reliability, the Long March 2B rocket carrier restored its service the next year and sent a communications satellite made by the US for the Philippines into orbit. China launched a few more commercial satellites, until the US banned in 1999 the export of satellites to China containing components covered under the US International Traffic in Arms Regulations (ITAR). Due to the trade barrier, China was denied further opportunities, as US companies still made most of the commercial satellites. Because of this, China did not conduct any commercial launches between July 1999 and March 2005, says Yin Liming, president of the corporation. But after a few years’ efforts, the company found new ways to bypass the US trade barriers. Since 2005, China has began to cooperate with European satellite makers and launch satellites manufactured without components controlled by the US regulations, enabling it to re-enter the commercial launch market. The company also tried to sell domestically developed commercial satellites. With China’s space activities getting more frequent in recent years, including a space station by 2020 and the Beidou (Compass) satellite navigation and positioning system that has started services in Asia last year and will provide global service around 2020, Yin believes that there is a bigger market awaiting to be explored.

MANNED SPACE PROGRAMS TO STRENGTHEN CHINA’S R&D CAPABILITIES By XIN DINGDING xindingding@chinadaily.com.cn

The next stage in China’s manned space program is slated for as early as June, when three astronauts, including a woman probably, will orbit aboard the Shenzhou IX spacecraft to rendezvous with the prototype space station module Tiangong-1. The three astronauts will blast off on a Long March-2F launch vehicle sometime between June and August and will manually dock with the space lab module launched last year. The launch will be China’s fourth manned spaceflight, after three successful missions between 2003 and 2008 that put six astronauts in space. Interest in the Chinese space program has increased after the United States scaled back its spending on such missions, and Russia suffered some launch setbacks. At the same time, there were many who were worried about the rapid advancements made by China in space technologies. Zhang Jianqi, the former deputy commander-in-chief of China’s manned space program, however, reiterates that the missions are peaceful and not a threat to other nations. “Every time China announces a (space) mission, other nations tend to associate it with several other things. There is no need to worry or overreact, as China is still far behind in the space sector,” he says. Concerns were also expressed that China’s space moves are akin to the space race of the 1970s between the former Soviet Union and the US. There were also fears that the Chinese missions would create more space debris and pose risks to the International Space Station. “But China is responsible for only 7 to 8 percent of space debris. Most of the space junk was produced by the US and Russia (the former Soviet Union)… ” Zhang says. “The increase of space debris in low-Earth orbit is a big threat to China’s manned spaceflights as much as it is to others. China has started to monitor the space debris and hopes that effective steps are taken by everyone to reduce the debris as much as possible.” China’s manned spaceflight program aims to build a 60-ton space station around 2020. A core module will be launched first, and then experimental modules will be launched to dock with the core module to build the space station. It will be followed by the launch of cargo spacecraft, which will deliver food and fuel to the space station, Zhang says. To achieve its space goal, China has formulated a three-step plan.

The first has been successfully completed, after four unmanned spacecraft and two manned spacecraft were launched between 1999 and 2005 to transport men between Earth and space. The second step aims to master the key technologies used for assembling a space station. Shenzhou VIII with three men on board has achieved the country’s ﬁrst extravehicular activity in 2008. With that ability, astronauts can work outside a space station. Last year, unmanned space lab module Tiangong-1 was launched in September, while the unmanned Shenzhou VIII spacecraft blasted off in November to dock with Tiangong-1. The rendezvous and docking technology is necessary for space station assembly. This year, Shenzhou IX will attempt a manual docking with Tiangong-1. According to Zhang, the first manned docking mission will fully verify China’s docking technologies, and also evaluate the performance of spacecraft, rocket carrier and the space lab module.

PROVIDED TO CHINA DAILY

Zhang Jianqi, former deputy commanderin-chief of the manned space program.

Experts say that if China succeeds in building a space station, it will become the third country to master such technology. At present, only two countries — Russia (and the former Soviet Union) and the US — have the ability to build and operate a space station independently, though 16 countries are taking part in the International Space Station (ISS). Space officials have said on many occasions that China welcomes international cooperation in space technologies. “China’s point of view is very clear. Our efforts in developing space technologies are for peaceful purposes,” says Wu Ping, the space program’s spokeswoman . China will also beneﬁt from such programs, as it would boost science and technology development and foster talent, he says.

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Cover story: Two views

Innovation need of the hour CULTURAL, SCIENTIFIC, TECHNOLOGICAL IMAGINATION HOLD KEY TO CHINA’S SPACE DREAMS

ooking back at the five decades of man in space, there are two contrasting developments that may prove to be of particular significance for future endeavors. In August, one month after the space shuttle Atlantis flew its last mission, the NASA pulled the plug on its 30-year space shuttle program. The last flight of the space shuttle, The Economist magazine lamented, may very well spell the end of the space age. In September, China successfully launched Tiangong-1, an unmanned space laboratory module. In November, the Shenzhou VIII spacecraft successfully docked with the Tiangong-1 module, thereby ushering in a new era for space exploration in China. While the NASA decision has grounded the space ambitions of the United States, the Tiangong-1 mission can be seen as a take-off point for China’s space dreams. Over the last decade, China’s space program has seen a number of accomplishments and breakthroughs. The successful launch of the Shenzhou V spacecraft in October 2003 made China the third nation, after the former Soviet Union and

the US, with independent capability to put man in space. Chang’e-1 and Chang’e-2, the two unmanned moon orbiters launched successfully in 2007 and 2010, signaled the completion of the first phase of the ambitious Chinese Lunar Exploration Program (CLEP), whose final goal is to achieve a lunar landing, putting Chinese astronauts on the moon and returning them safely back to Earth, possibly by around 2030. The construction of China’s own global navigation system, Beidou, which is scheduled to provide satellite navigation services to customers in the Asia-Pacific in 2012, and become fully global by 2020, is another case in point. The Tiangong-1 module was launched as a platform to help Chinese scientists master the rendezvous and docking (RVD) technologies and marked the beginning of China’s multiphase program to construct a large space laboratory station of its own by 2020. China’s achievements are truly commendable, considering that there are hardly any alliances between China and the US on space programs. The US also turned down China’s offer to participate in the International Space Station (ISS). Much of China’s space capabilities were shaped by the 863

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The answer to this (what drives China in space?) is scientific and technological innovation, now defined as the fundamental driver for economic and social development in China.

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By ZHANG YONGJIN

Program and later by Project 921. What was similar to both programs was the added importance given to scientific and technological innovation. Most of China’s space ambitions are outlined in the white paper China’s Space Activities in 2011. It articulates a clear purpose for space exploration, outlines an effective five-year plan for the space industry development (2012-17), and specifies the multiple economic and social benefits for the nation. The launch of the manned Shenzhou-IX spacecraft, which will transport the first Chinese astronauts to work in the Tiangong-1 module for setting up China’s space station, is another indicator of the space goals. All of these may give rise to the question: what is it that drives China in space? The answer to this is scientific and technological innovation, now defined as the fundamental driver for economic and social development in China. One can never overstate the pivotal place that China’s space program occupies in China’s National Innovation System (NIS). This should be further considered in the context of the government vision to transform China into an innovative nation by 2020, and to become the world leader in science and technology by 2050.

It is perhaps not a pure coincidence that China is aiming to be an innovative nation by the end of this decade, 2020, around the time when China will have its own space station and global navigation system. Admittedly, in terms of space science and technology, China lags considerably behind the two major space-faring nations, the US and Russia, which have had decades of headstart. Unlike a decade ago, China now has the ability to mobilize sufficient resources and also the required technological and engineering capabilities along with a robust industrial and scientific infrastructure to shape its space dreams. It is also important to remember that most of the ground-breaking innovations in space science and technology have always been stimulated and limited by imagination, be it cultural, scientific or technological. By the same token, it is the cultural, scientific and technological imagination that will ultimately determine the success (or failure) of China, as a space-faring nation and its contributions to space exploration. The author is professor of international politics at the School of Sociology, Politics and International Studies, University of Bristol.

Reaching for the stars TECHNOLOGY, PUBLIC, POLITICAL SUPPORT VITAL FOR SUCCESS OF SPACE PROGRAMS By JOAN JOHNSON-FREESE

he success of the Shenzhou IX mission will move China’s manned space program increasingly close to having demonstrated all the critical capabilities required to set its goals and move forward in space — to wherever it wants to go. China will be, in many ways, in the same position as the United States and Russia, the only other countries to have manned spaceﬂight capabilities. It will be dependent as much on political will for future exploration opportunities as on technological capabilities. China has worked hard to get to this position. China began its manned journey into space in 1992, with the approval of Project 921. The ﬁrst of the Shenzhou missions, one through four, were unmanned technology demonstrators. Having had to cancel the prior Shuguang manned program in the 1970s due to budget and technical issues, China was anxious to move their efforts forward quickly, working with Russia

in areas like life support where they had no prior experience. They came up the learning curve admirably fast, using more and more indigenous technology and know-how with each mission. Then in October 2003, Shenzhou V successfully carried the first Chinese taikonaut, Yang Liwei, into space, creating a national hero and gaining China entry into the exclusive club of countries capable of manned spaceflight. China has been consistent in its path into space. Its course has been simultaneously incremental and ambitious. China’s manned launches are less frequent than the number carried out by the United States or Russia during their early years as space-faring nations, but with bigger leaps forward with each launch. Technology is first tested on unmanned missions, and when deemed safe, a crew follows. Shenzhou V, VI and VIII demonstrated that China’s assent into space was not a one-time event; evolving from a crew of one to a crew of two, then three, with each mission becoming more technically

complex. Shenzhou VII included China’s first extra vehicular activity (EVA) by taikonaut Zhai Zhigang. Then Shenzhou VIII was again an unmanned mission. The Shenzhou VIII vessel robotically demonstrated docking with another vessel, the Tiangong-1 space module. That module has been orbiting since its launch in October 2011, and serves as a small prototype for a larger space station to be launched in the future. In the meantime, however, Chinese taikonauts will make the most of the Tiangong module to conduct not only docking tests, but space science experiments. At least two of the Shenzhou IX crew will leave the Shenzhou module and enter Tiangong. There has been considerable speculation about the crew of Shenzhou IX. The initial group of potential crew candidates includes two women. China has demonstrated a “first” with each manned mission, so it would not be unexpected if this time that “first” was a woman crew member. Since, as Chairman Mao Zedong said, “women hold up half

of the sky”, it seems only right that a Chinese woman should have the opportunity to reach for the stars. Shenzhou X, scheduled for later in 2012, is to be another manned mission to dock with Tiangong-1. With demonstrations of manned docking ability complete, China will have only a very few achievements yet to claim to move from being a “developing” space power to a fully “mature” space power. In particular, China still needs to demonstrate and declare operational new heavy lift capability, the Long March 5, to be able to launch its large space station, and for interplanetary travel. Once that is attained, China will be in the position of being able to decide its own fate in space. Whether it goes forward with to a manned mission to the moon, and potentially even Mars, will be a political decision rather than one of technological ability. Technically, the Chinese manned space program is currently about where the Gemini program was during the Apollo years in the US. The US went on to the moon.

Enthusiasm for space exploration, as evidenced by consistent political support which then translates into required budget support, then waned. The US is now in a transition to move space exploration away from being totally a government initiative; a necessary but painful transition. In China, momentum, enthusiasm and public and political support is very high, and can be as important as technology in terms of planning for the future. Space exploration has signiﬁcant geopolitical implications; China’s clear regional technical leadership is not lost on other countries. Whether China will set a course for the stars and press forward when it has all the technological capabilities to do so will be an important political decision. Congratulations are in order for what they have done to date. The world is watching to see what course China will pursue in the future. The author is a professor of national security affairs at the Naval War College, Newport, Rhode Island.

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ZHANG CHENGLIANG / CHINA DAILY

Frank talk lays path for bright future T By WANG QIAN

he visit by China’s Premier Wen Jiabao to the Hanover Messe in Germany on April 23 and his other meetings with the country’s political and business leaders will have enhanced economic and trade relations between the two countries. In fact, German relations have always played a very important role in China’s foreign policy, there being no direct conﬂict of interest on geopolitical and historical issues between the two countries. What’s more, China is very optimistic about the future development of relations with the European Union. However, when German Chancellor Angela Merkel took office in 2005, Sino-German relations went through a tense period. There was a shift in German foreign policy, and she took a pro-American stance, putting Russia off side, keeping China at a distance and rallying together countries regarded as sharing her country’s values. At times this “value diplomacy” brought Sino-German relations to all-time lows. But after the 2008 ﬁnancial crisis, Chinese and German leaders again found the space to cooperate, expanding mutual interests and quickly brought the relationship back into equilibrium. So what are the prospects for Sino-German relations now? Economics will remain the foundation stone on which further development of the relationship will be built. Germany is China’s largest trading partner in the EU and one of China’s source countries for introducing investment and technology. Despite Europe’s debt crisis, economic and trade relations between China and Germany have not only not weakened, but have become stronger. It is expected that by 2017 Germany will still

be China’s most important trading partner in Europe. And recently, leaders from China and Germany agreed on a goal for the value of bilateral trade: $300 billion (227 billion euros) over the next five years. And during the global financial crisis, China’s reaction has enhanced its economic influence internationally. During the financial crisis, the volume of China’s overseas investment ranked fifth in the world, and its purchasing power in the European market has continued to grow. Last year many Chinese enterprises invested in and set up companies in Germany, and China has now overtaken the US with the most companies invested in Germany. Since the 2008 financial crisis, the traditional role of many countries on the geopolitical map has changed dramatically. China now holds the capital that Europe and the US can only dream of, giving it great room for maneuver. This capital will not be realized by buying eurozone government bonds only, but also by buying shares in European companies that ultimately flow into Europe. This will open up the road for Chinese enterprises to obtain more advanced technologies and extend their market share in Europe. Germany has advanced technology in many areas, so more Chinese enterprises and Chinese investment funds will flow into German companies. For example, Lenovo recently bought a German computer manufacturing company, Medion, and Xuzhou Construction Machinery Group bought Fluitronics. All these moves are just a beginning. In the economic sphere, this form of bilateral relations will continue to deepen. In response to the global financial crisis, China and Germany have extensive common interests, and both sides need to work together to further consolidate and deepen economic

and trade relations. During the European debt crisis, Beijing has been a constant supporter of the euro. It has $3 trillion in foreign exchange reserves, and the proportion of its euro investments will continue to increase. For example, China has bought government bonds of Greece and Ireland. During talks between Wen and Merkel in Berlin, he suggested that Germany loosen its restrictions on exports to China. If Germany is willing to take the initiative both sides can benefit. The two countries complement one another in many fields, so the ground is already prepared for more fruitful relations. China and Germany fit well together economically. Economic and technological cooperation is a prominent feature of the Sino-German relationship and highlights the leverage in SinoGerman relations. While Germany needs China’s markets and resources, China needs German capital, technology and its market, which is of great importance to China’s economy and industrial upgrades. During Merkel’s visit to China in February she also expressed the hope that China and the EU would deepen economic cooperation, promoting economic growth in Europe driven by Chinese market. Now the German economy is depressed, many Chinese companies are providing it with investment capital and employment opportunities. For example, Sany acquired the renowned German enterprise Putzmeister to establish a manufacturing plant in Germany. On the one hand, it has provided industrial investment to Germany, and on the other it has learnt Germany’s advanced technology in this way, which has laid the foundation to further explore the international market. In this era of globalization, economic, tech-

nological, political and cultural exchanges have become more frequent, and countries have become increasingly closely related to one another. What that means in the case of China and Germany is that they have developed into their biggest trading partners in the respective continents. In addition, the exchanges of culture, education, science and technology, even in the military ﬁeld between China and Germany are also very close. Mutual trust among China and Germany’s non-governmental interaction is also high. And Sino-German relations do not carry the kinds of problems born of history. But in the ideological ﬁeld, such as with Tibet and human rights issues, there has been friction. But when Merkel came to China in February, addressing the issue of Tibet and human rights, she had softened her tone and came across as more sincere and humble, and did not seek to impose her country’s values on China. In her speech she said: “China and Germany have different views in these areas; there is a need for dialogue and exchange and mutual understanding, which is much better than mutual accusations and criticism.” So China and Germany have essentially ridden out the ups and downs of recent years, and the future is bright. The degree of interdependence between the two countries is high, which is also a good sign, but differences in history, culture, and values cannot be ignored, and it is possible that disagreements and friction will arise. The way of overcoming this is for both sides to be frank and to lay aside their prejudices. The author is a chartered financial risk manager and a professor at Chinese-German College, Tongji University, in Shanghai. The views do not necessarily reflect those of China Daily.

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Cover story modified and launched in 2010 to test some key technologies for soft landing. “Next year, the country’s third lunar probe, Chang’e-3, is expected to be launched as planned and will conduct a soft landing on the moon,” says Ye Peijian, chief designer of Chang’e-1 and chief commander of the satellite system of the Chang’e-2 and Chang’e-3 missions. The orbiter will carry a lunar rover and other instruments for territory survey, assessment of living conditions and space observations. “Chang’e-3 will be the first spacecraft with the first-ever China-designed ‘legs’… The lunar rover is also the first of its kind to be tested in the harsh environment on the moon,” he says. Preparations have also been advanced for the third phase, which aims to bring soil samples back to Earth before 2020. Both the United States and the former Soviet Union have already sent spacecraft to the moon, but in two different ways. Hu Hao, chief designer of the program’s third step, says that scientists have finally decided on how to achieve the goal of returning soil samples from the moon. According to Hu, China will carry out a “Lunar Orbit Rendezvous” — the mode used by the Apollo Programs — to collect as many samples as possible. Under the plan, a rocket will be launched from Earth that will put four modules into the lunar orbit. Two modules will land on the moon, while one will scoop up soil. The soil sample will be placed into the ascending module that will blast off from the lunar surface and dock with the orbiting module. The sample will then be transferred from this module to another one that will be jettisoned for Earth re-entry.

‘‘ PROVIDED TO CHINA DAILY

China plans to launch its third moon orbiter Chang’e-3 next year, which will conduct a soft landing on the moon, as part of the country’s robotic lunar exploration program.

Journey to the moon DECKS BEING READIED FOR THE NEXT GIANT STEP IN SPACE

By XIN DINGDING xindingding@chinadaily.com.cn

nly 12 Americans have so far walked on the moon. The next person to do so could be from China. According to a white paper, China’s Space Activities in 2011, released in December, preliminary research on a manned moon landing will be carried out in the next ﬁve years, along with research on a heavy-thrust carrier rocket, vital for launching manned spacecraft to the moon. Scientists expect a manned moon landing could be achieved by China in 20 years, though there is no ﬁxed timetable yet. Experts, however, say that before taking the giant step, China needs to complete its robotic lunar exploration program, as it will lay the platform for successful moon landings. The chief scientist for the lunar exploration program, Ou-

yang Ziyuan, has already indicated that China has the ability to launch men to moon, but it’s “a single-trip ticket”, meaning the nation does not have the capability to ensure that astronauts can return to Earth. “The three steps set in the unmanned lunar exploration program are something China must undertake before commencing the plan to send men to the moon,” he says. China adopted the robotic lunar exploration program in 2004, which includes three steps — circling the moon, landing on the moon and returning with a sample. China has completed the ﬁrst step by launching the Chang’e-1 probe in 2007 to orbit around the moon, thereby becoming the ﬁfth country in the world to independently launch lunar orbiters. It is now in the second phase of achieving a soft landing on the moon. Chang’e-2, the backup satellite for Chang’e-1, was

The three steps set in the unmanned lunar exploration program are something China must undertake before commencing the plan to send men to the moon.” OUYANG ZIYUAN, CHIEF SCIENTIST OF THE PROGRAM

Though the US has done this kind of exercise more than four decades ago, the Chinese aerospace scientists have no one to count on, but rely on themselves to solve the major technical problems, Hu says. China plans to scoop up as much as 2 kilograms of soil samples, but how to do it could also be a tricky problem. The former Soviet Union’s three missions collected just over 300 grams of lunar soil. The US had better success and returned 381.7 kg of rocks and other material from the moon, thanks to astronauts’ participation. “China’s mission is also a robotic one. The probe could land on an unknown spot that could be rocky, and drills could fail to deeply penetrate the lunar surface, just like a mission by the former Soviet Union,” he says. The difficulties also include how to launch the ascending module from the lunar surface and how to conduct rendezvous and docking operations in the lunar orbit. “China conducted its ﬁrst spacecraft rendezvous and docking operation in the low-Earth orbit successfully last year. But how to do it in a lunar orbit more than 300,000 km away from Earth is a new challenge,” he says. The space docking last year relied on the global positioning system, which, however, will not be of much use during a lunar orbit rendezvous. The docking ports on the ascending module and the orbiting module need to be redesigned and tested, as the modules are much smaller in size. Finally, scientists also have to solve the problem to have the probe re-enter the Earth atmosphere safely. China also lacks experience in how to make the samplecarrying capsule re-enter the Earth atmosphere safely, he says. While previous re-entries of unmanned and manned spacecraft were made at 7.9 km per second, the return capsule with the lunar soil sample will be hurtling to Earth at, or close to, speeds of 11.2 km per second. He says that the third phase will launch two orbiters to achieve the goals before 2020. Earlier reports said that the ﬁrst of these is likely to be launched around 2017. “We are under pressure as only a short time is left,” he says. Scientists are also stressed due to the public’s unrealistic high expectations for success, he says. In recent years, consecutive successes in the space sector have buoyed expectations for more missions. “People now tend to underestimate risks in space activities. They think it is easy and have little tolerance for failure. But even space powers like the US and Russia have had several failures,” he says, adding that more tolerance is essential for the healthy development of China’s aerospace industry.

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The gadgets that will drive car demand CHINESE DRIVERS WANT TO KEEP UP WITH THE LATEST TECHNOLOGY IN CARS THAT KEEP THEM CONNECTED By BOB BAO and BEN WANG

he news that China’s vehicle sales are set to miss their 8 percent growth forecast has surprised many in the industry after the recent boom in car sales. In 2009 China overtook the US to become the world’s largest auto market and went on to grow more than 30 percent in 2010, according to ﬁgures from China Association of Automobile Manufacturers. Despite the withdrawal of the incentive policy for car buying, China’s auto market still enjoyed a growth rate of more than 5 percent last year. But, with forecasts in March of a slowdown, auto makers are asking what features and trends will drive the next wave of growth in China’s car market. An Accenture survey on invehicle infotainment (IVI) examined current and future demand for car technologies in Brazil, China, France, Italy, Malaysia, South Korea and the US as we believe this is a key area for brand differentiation and future market success. We analyzed data that covered consumers’ car preferences, car replacement frequency and the demand for in-car technologies. The survey shows that IVI and telematics systems are forcing auto makers to move closer to a connected vehicle. The connected vehicle refers to the rising number of cars or trucks that use the latest on-board devices, telematics and mobile connectivity. Accenture believes that competitive pressures driven by the demand for IVI may have some auto makers focused on individual functions, rather than a complete operating system that could enable long-term success. The research demonstrates the risks of this approach. Accenture expects the global IVI and telematics market to exceed $70 billion (53 billion euros) this year and $80 billion by 2014. While our research found that IVI penetration is relatively low in the mid- and lowerpriced vehicle segments, its application is expected to rise among all segments in the near future and will reach almost complete penetration in luxury brands. So how do Chinese car consumers perceive the IVI and telematics systems and how should car makers respond to the business opportunities this presents? The Accenture survey highlights that China’s auto market, while slow to mature, now demonstrates a high level of consumption. This is illustrated by high market shares of luxury cars and SUVs, the intention of nearly half the car owners to buy a second car in the near future, and the strong interest and demand of Chinese consumers for advanced in-car technologies. This demand for new cars and new technology could be important for sustaining the growth of China’s car market. Drivers in China show a strong desire to see the latest in-car technologies in their next cars. These include streaming music as well as reading and dictating emails, support services

Which of the following driving support features are you already using, which would you like to use in the future and which are you not using and not interested using? Not using, not interested %

Would like to use in the future %

Already using %

80%

China %

Total respondents %

CRUISE CONTROL

AUTOMATED EMERGENCY SERVICES

10%

Which of the information technologies/driving support systems would you like to use in your car?

56%

57%

9% ELECTRONIC STABILITY CONTROL

STOLEN VEHICLE RECOVERY / TRACKER

14%

51%

68%

61%

35% ANTI-LOCK BREAKING SYSTEMS

eCALL

27%

90% 69%

29%

65%

ALCOHOL TESTER

64%

CAR-TO-CAR COMMUNICATION

25%

46%

29%

A WINDSCREEN/WINDSHIELD THAT ACTS AS A VISUAL MONITOR

37%

59%

68%

AUTOPILOT

96% AUTOMATIC INTELLIGENT CRUISE DISTANCE CONTROL

83%

87%

FATIGUE WARNING DEVICE

69%

63%

NIGHT VISION DEVICE

76%

74%

4% REVERSING SENSORS

CAR AUTOMATICALLY STOPS IF A BARRIER IS TOO CLOSE

28%

64%

75%

FULL AUTOMATIC PARKING ASSIST SYSTEM

25%

46%

30%

64%

LANE CHANGING WARNING SYSTEMS/BLIND SPOT WARNING SYSTEM

96%

91%

SPEAKERPHONE

77%

SMART GUIDING ROAD SYSTEM

72%

AUTOMATIC PARKING ASSISTANCE

57%

EMERGENCY CAR SHUT-DOWN

23%

74%

81%

LANE-KEEPING SYSTEM

84%

10%

75%

Source: 2012 Accenture.

such as automated breakdown calls, automated warnings for problems such as congestion or accidents and lane-changing warnings, fatigue warning and night-vision systems. This demand will directly contribute to the growth of IVI and telematics systems, including eco-efficiency, security and safety, and comfort. In terms of in-vehicle services, the annual turnover of the global services market is expected to grow to $20 billion in 2014. According to the survey, some invehicle technologies are more widely applied in China than the other six countries surveyed, such as digital radio, using on-board devices to read and dictate e mails while driving and

69% CHINA DAILY

streaming music. Accenture believes a convergence of these devices with the latest mobility services will aid auto companies in their pursuit of competitive positioning as they respond to consumer demand for the future in-car technologies, services and capabilities. The marketplace is exploding with a proliferation of connected-vehicle solutions and applications to meet customer priorities. Accenture estimates that IVI could deliver up to $200 a year in revenues for each new car as drivers and passengers increase the use of services provided by in-car technology. If sales for 2012 in China reached 75 percent of the 20 million units forecast

at the beginning of the year, this would represent total IVI revenues of up to $3 billion. The revenue growth will gather pace as more systems are produced to give consumers access to new technologies, such as cloud computing, and full Internet capability. It is clear that consumers are, for the ﬁrst time, determining in-car technology, and the automakers are being forced to satisfy demand, not create it as they used to. This means shorter timeframes for new ranges and changes to vehicle speciﬁcations. This consumer desire for ever more sophisticated in-vehicle systems that can accommodate the latest advances in technologies, such as smart phones, portable devices, and apps store capa-

bility, will make it increasingly difficult for companies to keep up with and make money out of changing preferences unless they have the appropriate operating systems and processes in place to absorb them. Providing the newest technology is important, but even more important is developing the operational capability to effectively respond to any potential advances down the road. This will be critical to sustaining success in the connected-vehicle market. The industry is already beginning to move in that direction, adopting operating systems to match consumer technologies. Such systems and others like them will give auto companies the agility required to respond to the aggressive pace of technology change, as well as address the emerging trend of product and services customization, while reducing costs on research and development. Furthermore, the Accenture survey reveals two major trends regarding Chinese consumers’ use of, and demand for, in-car technologies that show the importance of this approach. Chinese drivers are particularly focused on in-car safety systems. A higher number of Chinese respondents plan to use these driving support systems than the average level of all the surveyed countries. These include electronic stability control, anti-lock breaking system, autopilot, fatigue warning device, night vision device, reversing sensors, lane-changing warning system/blind spot warning system and lane keeping system. Chinese drivers are showing great interest in and demand for many advanced in-car technologies, such as automated breakdown call, automatic stop if a barrier is too close, windscreen that acts as a visual monitor and car-to-car communication. Taking the automated breakdown call as an example, only 9 percent of Chinese respondents are using this technology, but as many as 80 percent respondents would like to. Chinese consumers’ interest in and demand for these advanced in-car technologies will promote their wide application across the auto market. With the withdrawal of the national incentive policy, it will be very hard to sustain the explosive growth of China’s auto market that occurred in 2009 and 2010. But Chinese consumers’ steady demand for luxury cars, forecasts for vehicle replacement as well as the expected demand for advanced in-car technologies will help maintain a stable and rapid growth for the auto industry in China. However, the car makers, car parts companies and related IT companies planning to target the Chinese market will need to understand consumer expectations for IVI and take a strategic approach for this business opportunity if they are to take a share of this opportunity. Robert Bao is principle of Products, Automotive, Accenture China; Ben Wang is executive director of Products, Automotive, Accenture China. The views do not necessarily reflect those of China Daily.

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In Nokia-Apple rivalry, ‘cool’ & ‘quality’ APPLE ENJOYS HUGE EMOTIONAL EDGE, BUT WITH BRANDING, THE RATIONAL IS ALSO IMPORTANT By MIKE BASTIN

s the Apple brand powers on and on, some say inevitably toward the world’s ﬁrst $1 trillion (760 billion euros) brand, one of the key challenges facing further progress is expansion in China. For Apple, or any foreign brand for that matter, there are clear obstacles in China, such as effective government contacts and protection of intellectual property rights. However, a clear advantage Apple has is its strong brand image with Chinese people. Many mention Nokia’s spectacular demise when they talk about Apple’s future, but Nokia’s brand image in China was, and remains, very different to Apple’s. Nokia enjoyed huge success in China until recently but — and it is a big but — this was achieved with rational positioning of the brand only. For example, Nokia was perceived as “high-tech”, “leading edge” and “excellent quality” but did not achieve, or even attempt to achieve, any emotional positioning in the minds of Chinese consumers. If brand history tells us anything it is that sustainable competitive advantage is achieved only with effective emotional brand values as well as a functional or rational proposition. This, more than competitor technological advance, is the key to Nokia’s recent fall. On the other hand, Apple enjoys a brand image that includes not just “high-tech”, “state of the art” but also “fun”, “cool”, “fashion” and “happy”. It is these emotional values that have contributed most to Apple’s success, especially in China, where the public value emotional association greatly. Apple has positioned itself so positively and emotionally deep in the minds of Chinese consumers with brand name and company placeof-origin association. California is perceived by many Chinese people as “cool”, “exciting” with Hollywood and a sunshine, beach culture. The brand name also evoked feelings of “fun” and “happiness”. Apple also continues to beneﬁt in China from the association with the late Steve Jobs. To the Chinese, Jobs is seen as a charming, engaging, effortlessly charismatic, stylish leader, which adds considerably to the brand’s emotional image. Many can still picture him introducing Apple’s latest blockbuster, breakthrough products such as the iPhone and the iPad. Jobs both informed and entertained simultaneously, with his audience captivated at all times. Jobs’ style and image resonate with the Chinese public, who are used to business leaders with a very different, authoritarian approach and persona. It is extremely difficult to imagine any of the current Chinese business leaders performing on stage as Jobs did, yet this is key to such an emotional image, a Velcro-like attachment between brand and celebrity. Jobs was indeed a celebrity and not just a business leader.

ZHANG CHENGLIANG / CHINA DAILY

In addition, the color “green” also excites an emotional feeling that includes “fresh”, “nature” and “energy”. Greens and yellows, even golds, will work well more and more with ever increasing concern for environmental protection. Apple’s logo, with a bite having been taken from the apple, also contributes to its emotional image, creating a feeling of excitement and even opportunity. Apple very cleverly omits the word “Apple” from its logo, instead just presenting a picture of the fruit with a bite taken. Such a successful strategy in China, where brands are still consumed publicly for symbolic meaning such as “status” and “success”, should be noted not only by Apple’s closest competitors but by all those companies seeking to win over the extremely brand-conscious Chinese public. Despite Apple’s success in China, perhaps the major challenge to its increasingly emotional brand image is accurate ﬁnancial brand valuation, especially in China. Apple, therefore, paves that way

for different financial valuations according to groups of consumers who interpret and perceive the brand very differently. For example, Apple to most US consumers really is “hightech” and “functional” but while the Chinese also share this interpretation they also perceive Apple as a vehicle to enhanced “status” and “prestige”. Financial brand valuation, therefore, has to become multi-faceted, driven by emotional perception and not financial ratios. Such an approach is essential for cross-border takeover and the due diligence that goes into financial valuation of any targeted company and its brands. Quantification of brand value not only depends very much on the brand’s current customer base and the extent to which they are brand loyal and have become emotionally attached to the brand but also to the prospects for increased market share over the medium term for the brand. Apple’s success in China should be seen as a lead for others, including Chinese companies that rely far too much on little or no clear positioning

and simply compete on price. It is quite feasible for Chinese companies to develop the sort of emotional brand image that Apple enjoys. One advantage Chinese companies have over foreign competitors in China is the abundance of emotional brand attachment opportunities that Chinese history offers. It is far easier for Chinese companies to associate themselves and their brands with aspects of Chinese history, for example the ﬁve famous mountains and many of the famous lakes as well as the multitude of national festivals such as Chinese New Year. Chinese companies and their brands continue to advance and can often be found in any number of global brand surveys. However, it is still very much a rational image that dominates Chinese company and brand positioning. For example, many Chinese banks and insurance companies are among the most valuable company brands in the world. Let’s ﬁnish by restating the importance of solid, rational positioning before any emotional image can

be developed. It is no good trying to build a “fun”, “cool” image if the brand does not perform consistently to the highest quality level. It is also insufficient to build a successful rational and emotional brand image only to become complacent and ignore the importance of continuous improvement and innovation both functional and emotional. Nokia’s success led to such oversights. In order to achieve this happy blend of rational brand performance and emotional attachment consistently and with innovation and creativity always part of the brand’s future, an inclusive, team-oriented and egalitarian management culture appears essential. Such a modern management culture also regards investment in human resources, in the form of training and career development, and new technology as just that and not as a cost to be either avoided or at best regarded as a necessary evil. Investment in human capital also includes generous holiday provisions, which serves to engender a sense of well being among employees and enables far more creative and innovative thinking. Far from leading to a decline in productivity, more generous holidays and a genuine separation between work and home life has been seen to contribute to a more productive as well as a more contented workforce. Germany continues to represent, by far, the most productive economy across Europe, while the German workforce enjoys the highest number of public holidays. Such an open, encouraging management culture is certainly characteristic of many of today’s globally successful companies such as Apple and Google. More and more Chinese companies are moving in this direction, which is encouraging. However, a more rapid and permanent change in management culture would go a long way toward the emergence of the ﬁrst truly global Chinese brand. Apple will continue to eat into China’s consumer market and enjoy the fruits of success and at a healthy pace, as long as the competition remains reticent when it comes to emotional image development and reluctant to invest heavily in innovation and new product development. However, a note of caution is required, even where Apple is concerned. At present the combination of (emotional) Apple and (rational) iPhone works but only because the name Apple dominates, but this will not continue indeﬁnitely. Apple needs to consider a more emotional name for subsequent smart phone upgrades and other high-tech innovation, as people become more technologically knowledgeable and tire of names that simply attempt to describe basic product functionality. This time may come sooner rather than later. The author is a researcher at Nottingham University’s School of Contemporary Chinese Studies. The views do not necessarily reflect those of China Daily.

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‘Banking center’ can often have a hollow ring CHINESE CITIES WITH HIGH ASPIRATIONS NEED TO LOOK WHERE THEY ARE GOING By XIA BIN

ccording to figures from the website of China Stock, 28 cities in China have proposed to become international, national, or regional financial hubs. That may seem like pie in the sky, but with the rivalry between Beijing and Shanghai, Chengdu and Chongqing and Northeast China’s aspirations the financial landscape in China has clearly entered what may be called a Warring States Period. So does China need so many financial hubs? The US financial market is huge, but apart from Wall Street and Chicago are their any other financial hubs there? What is the logic behind Chinese cities striving to become a financial hub, and what should our response be to that? I have often been invited to places to analyze their feasibility of becoming a financial hub. Chongqing and Chengdu in Southwest China and Lanzhou and Xi’an in Northwest China have all expressed such a desire. Asked why they should become financial hubs, most cities — the exceptions are Beijing, Shanghai, Shenzhen, and Guangzhou — have said that they are the leader in their region. In economic and financial circles, developing financial hubs is regarded as a sign of a developed economy, and if China wants to develop a market economy it needs to develop financial hubs. Their contribution to economic growth and employment cannot be ignored. So the good intentions of these local governments should be given the recognition they deserve. A decade or two ago such proposals would not even have seen the light of day, which shows that we are now fully aware of the fact that finance is the core of a modern economy. When Dai Xianglong, the former governor of People’s Bank of China, was the mayor of Tianjin, the State Council came up with a comprehensive trial reform program for Tianjin High-tech Industry Park, aiming to reform the finance there first. Dai invited me to seminars and to give speeches. I said then that even with the trial program, Tianjin would be unable to come up with the kinds of financial innovation and reform and to promote new financial instruments the way Shenzhen and Shanghai did in the late 1980s and the 1990s. Why? After three decades of reform and opening up, China’s financial market system and the

institutional framework of financial markets have essentially been formed. In these frameworks, the operating mechanism of the entire market is unified, and the country’s financial markets are unified. That means investors across the nation can buy and sell any financial products in, say, Shanghai or Lanzhou. In such circumstances Tianjin’s financial reform program would face challenges. The Chinese central government has established its financial strategy to build Shanghai into an international financial center by 2020. When this strategy was confirmed, many financial institutions, including the financial futures exchange, the gold exchange and China Union Pay all set up headquarters in Shanghai, and the city became a second headquarters for the People’s Bank of China. It should not be assumed that finance promotes economic development. For it to do so it needs to be in step with the economic circumstances of the time. When a country’s economy reaches a certain point, a financial center will naturally form, and it will service economic development. Problems arise when everyone tries to set up financial centers before that point has been reached. The Yangtze River Delta is China’s most economically developed region, and Shanghai has traditional financial resources, so choosing Shanghai as an international financial center is appropriate. But as I said when I worked at the Shenzhen Stock Exchange, in a purely technical sense it would be possible to set up a stock exchange in the deserts of Qinghai province because of paperless trading. The brokered transactions could be done via satellite, and it is an invisible market. The key to a financial hub lies in the variety of transactions, trading tools and trading systems. For example, transforming Shanghai into an international financial center is the long-term aim, but the city cannot enjoy that status yet, because its trading system has not been formed. The renminbi is not yet freely convertible, the variety of transactions is still confined to renminbi assets within China, and foreign currencies cannot be converted into renminbi to do transactions. So long as that state of affairs exists, Shanghai’s aspirations remain exactly that. A friend once told me that he was looking for a job in Hartford, Connecticut, where the headquarters of

ZHANG CHENGLIANG / CHINA DAILY

many US and European insurance giants are located. He soon found out that despite all the headquarters in the town, no money seemed to change hands in them, and it was a bit like a ghost town. It certainly could not be described as a financial center. Later he told me that Yiwu, in Zhejiang province, had developed from a small village into an active market, and even began to have financial buildings there. There were transactions first, and then came financial development. So it was not like towns that build a street of tall buildings with fancy names like Wealth Center or Finance Tower and then call themselves a financial center. In fact, if a financial center gradually develops, high-end consumers will go to it, and high added value will be generated, resulting in rising land prices and a variety of business costs. General manufacturing companies will gradually move out of the city because of the high cost of doing business there. In other words, when a financial

center develops to a certain extent, it will push out some of the entity industries to the surrounding region. This can be called the crowding out effect. Financial development has to hold certain resources to make it functional. If the finance there can really render good service to the economy, the cost of the crowding out effect is effective and appropriate. But if you develop finance just for the sake of it, it is a waste, and squeezes out the entity economy. For example, two years ago, capital markets and real estate markets were quite popular. A lot of business owners sold their factories to do equity investment, or real estate investment, or were too preoccupied with private equity investment. When an entrepreneur stops focusing on manufacturing and turns to speculation it bodes ill for the company. When it comes to evaluating if there is financial excess, we have to look at the overall relationship between finance and the entity economy. The US subprime mortgage crisis is a case in point. There were

a variety of derivative products that in themselves were not bad. But the way they were sold, meaning deposits were not even needed for a mortgage loan, was a perfect example of financial excess. Finally, when a country has to resort to finance to stimulate its development, its economic strength is in fact in decline. Britain and the US were mired in the global financial crisis, but Germany, the world’s fifth largest economy, has fared relatively well. German manufacturing has long been strong in innovation, and has had a huge pool of skilled workers with high levels of technical training. Its manufacturing accounts for 24 percent of its GDP, much higher than the US. The country’s resilience can be attributed in no small part to its overall national economic structure. The author is director of Institute of Finance and Banking, Development Research Center of the State Council. The views do not necessarily reflect those of China Daily.

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Business focus

An array of jets at the Hongqiao International Airport in Shanghai at the Asian Business Aviation Conference & Exhibition in early April.

NEXT STOP: CHINA

YONG KAI / FOR CHINA DAILY

AVIATION GIANTS ARE LOOKING TO DEEP POCKETS IN CHINA TO BUOY PRIVATE JET INDUSTRY

By YAO JING yaojing@chinadaily.com.cn

t a major aviation conference in Shanghai in early April, a buzz ﬁlled the exhibition hall. Though there were at least 30 passenger jets on display from manufacturers such as Airbus SAS, Boeing Co, Bombardier Inc and Dassault Aviation, the hoopla came mostly from the sellers and buyers. Nearly everyone, from representatives of industry giants and eager buyers, to aviation fans, all were constantly uttering the word “exciting” during the three-day show at the Hongqiao International Airport. Excited about the 19-seater ACJ318 from Airbus that comes with a champagne-tinged lounge room. Excited about the Boeing business jet, which has a bedroom with a king-size bed. Mostly, however, what got most of those in the jet industry excited was what they see in China: major potential for growth. “We planted one of the ﬁrst seeds of business aviation in China, and right now, the seed has begun to sprout,” says Ed Bolen, president and CEO of the US National Business Aviation Association, a co-host of the Asian Business Aviation Conference & Exhibition. The recent rise of the private jet industry in China is timely. Private jet orders have slumped in the United States and Europe following the financial crisis of 2008, forcing at least 30 manufacturers of business and private jets to attract more and

more buyers from the second biggest economy in the world. As has often been written, the number of affluent Chinese is growing as the economy expands and the industry, helped by the central government’s recent approval of less stringent regulations on its airspace, is looking to take advantage of the boom. At the outset of the ﬁnancial crisis, there were 32 private or business jets registered in China, but as the global economy weakened, so did the number of orders for jets in developed countries. In the US, sales declined

39 percent in 2009 and fell another 10 percent in 2010, according to ﬁgures from JP Morgan. In the European Union, sales of jets in the region accounted for 25.9 percent of total global sales in 2008, but two years later, the region could only muster 22.8 percent of global sales, according to the General Aviation Manufacturers Association in the US. The number of jets in China consequently grew during this period. There were 132 in the country in 2011, though that’s still less than 1 percent of the total number of jets in the US. Flights

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Ed Bolen, a co-host of the aviation show, sees rising demand for jets in China.

of jets climbed to 13,400 last year. Jing Yiming, vice-president of the Shanghai Airport Authority, says this year the number of jet ﬂights in China will grow 10 to 15 percent. In 10 years, China’s market for private jets will be worth about $11.68 billion (8.84 billion euros) annually, eclipsing the US market by that time, Bolen says. One way of looking at the growth

of the private jet industry in China is following the progression of the Shanghai exhibition. In 2005, when the exhibition made its debut, the market for private jets in China was barely developed. Fifty jet manufacturers exhibited 12 aircraft. This year, there were 150 manufacturers. Sponsors have agreed to hold the show in Shanghai consecutively through 2016. >> PAGE 13

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With the industry growing, many of the major manufacturers of private jets have started to see an uptick in sales in China. Overall, revenue from the sales of private jets worldwide reached $15.2 billion in 2010, down from the 2008 figure of $19.8 billion, according to Bombardier Business Aircraft’s market report. Of the 155 jets sold globally by Boeing since 1999, 10 were sold in China, including three last year, says Boeing Business Jets President Steve Taylor. The company expects to sell another three to five jets, each with a price tag of more than $57 million, to Chinese clients this year. Airbus has sold 20 of its Airbus corporate jets (ACJ) in China since 2005, mostly to individual customers. It also expects to continue selling ACJ family business jets in China at a rate of around five per year. “Most of our Chinese customers are billionaire individuals doing private businesses, such as real estate and mining,” says Habib Fekih, president of Airbus Corporate Jets. Fekih says one-third of its ACJ sales take place in China. Three years ago, it accounted for 20 percent. To cater to Chinese consumers, Airbus provides interior design options. One option is to convert a round dining table for six into a square table to play mahjong. Another option allows buyers to convert an office into a karaoke bar. Fekih says he also hopes to expand its branch office in China, staffed with a bigger local sales team and training center. “We have to get people to know us deeper and better, and also convince people to switch to us who have already bought Bombardier or Falcon,” Fekih says. The company will tour different cities in China to let people climb on board an ACJ, he adds. Both of Airbus’ major competitors, however, are trying to further their reach in the emerging market. Dassault opened a marketing office in Beijing in 2010 and has plans to open a branch in Shanghai. It has eight Falcon 7X business jets operating on the Chinese mainland and that number is expected to triple before the end of the year. “We sold our first new Falcon to China in 2006, but the market has now grown to become our largest for new aircraft orders and our most promising,” says John Rosanvallon, president and CEO of Dassault Falcon. Rosanvallon says the company accounts for 35 percent of the global private jet market. Since the rollout of the first Falcon 20 in 1963, 2,000 Falcon jets have been delivered to 67 countries worldwide. Bombardier is also ramping up its activities in China. Forecast for its sales growth in the country is at about 2,300 business jets over the next 20 years. “We’ve added two new sales directors to maximize the potential of this strategic region,” says Bob Horner, senior vice-president of sales for Bombardier Business Aircraft. Bombardier accounts for about

30 percent of the private jet market in China with more than 75 jets on the mainland. But while private jet makers surge with ambition, the industry in China is still hampered by a tightly controlled airspace as well as a lack of airports and pilots. Among the strict air traffic control and restrictions in the country, private jet owners are not able to fly as frequently as they would like. According to regulations, anyone seeking to fly from one airstrip to another must file flight plans with the military and the civil aviation agency and get approval. China also lacks infrastructure support. There is currently no airport dedicated to private jets and since the airspace is run by the military, airports have limited facilities for private jets. Fortunately, the government pledged in its 12th Five-Year Plan (2011-15) to reform how it manages the airspace and has indicated that it would improve both the allocation and use of airspace resources. “Although the policies put a lot of constraints on the growth of the business, we can see some improvements. For example, the period of applying for a private jet flight application has shortened to a couple of hours in advance from the previous seven days in advance. Recently, access to airspace below 4,000 meters has been granted,” Horner says. Bolen says one way in which the industry can grow more rapidly in China is to educate potential buyers about the importance of moving important staff around the world quickly and efficiently. “Organizations all over the world have the same amount of time in each day. Business airplanes help governments and companies all over the world use that time efficiently and productively,” Bolen says. Zhai Jiahua, chairman of Beijing-based China Stem Cell Health Group, understands that philosophy and agreed to purchase three private jets from the China Business Aviation Group. “It’s quick to fly with commercial airlines, but I want to travel even faster,” Zhai says. He says his investment in private aircraft is for business purposes only, adding that he purchased his first jet, a Bombardier Learjet 60, last year to transport clients for medical treatment within China. His second jet, a Bombardier Global Express 5000, will arrive in China this summer to satisfy his clients who seek treatment in Europe. “It’s still not common for companies to own private jets in China. Buying aircraft is not just for showing off or for fun, it is quite practical. It can help you save time. As an entrepreneur, your power can also be improved through it,” says Zhai, who adds that yet another jet will be used for sending customers to Southeast Asia for medical tours. Zhai says the company spends about 30 million yuan ($4.8 million, 3.6 million euros) per year to rent out tarmac space at airports, pay for fuel, maintain his aircraft and pay his pilots. The cheapest flight he offers is priced at 1 million yuan.

Private jet owners can choose a customized design for the bedroom of their aircraft.

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Luxury on a pair of wings AS SALES OF PRIVATE JETS INCREASE IN CHINA, INTERIOR DESIGN COMPANIES ARE LOOKING TO CASH IN By YAO JING yaojing@chinadaily.com.cn

rom bedrooms fit for a prince, to jacuzzis, bars, small theaters, stereo systems and hookups for iPads, interior designs for private jets are taking off in China. As sales of private jets grow in an emerging market, a small group of interior design companies are beginning to reel in more and more Chinese buyers. Both international companies such as Talcao Aviation and Aeria Luxury Interiors, both based in the United States, Italian company Delta Interior Design as well as local companies are meeting the demands from private jet owners to customize their jets. At the recent Asian Business Aviation Conference & Exhibition in Shanghai, Guo Lihui, section manager of Aircraft Maintenance and Engineering Corp, a Beijing-based company providing maintenance, repair, and components installation for aircraft, wandered the halls trying to find interior design providers. “We don’t have fixed partners in terms of interior design. I am finding some middle-end and luxury products to cater to our different customers,” Guo says. “We are intending to choose providers from the United States and Europe as they have a long history with aircraft interiors and modifications,” Guo says. Guo then went up to Yong Keng Kum, director of business development of Talcao Aviation, and inquired about custom carpets. “If we give you a decorative pattern, could you make a special carpet with your material for us?” Guo asked Yong as the manager held up a carpet sample made of silk.

Talcao established a branch company in Hong Kong last year as the number of orders from the coastal city doubled last year compared with the previous year (although Yong would not disclose how many orders were placed). In less than one year, Yong says, the company has worked for more than 10 Chinese clients, mainly providing custom carpets and leather seating. The small number of affluent Chinese, much as they do with their cars, is splashing on individualizing their jets. Although most private jet owners are new to owning an aircraft, design and quality are both important elements for them. Interior design companies can handcraft nearly anything in a jet and they also offer clients a range of paints, fabric and designs tailored to a customer’s taste and style. From his experience, customers do not change the engine, power generators and avionics of a jet, but they tend to redecorate the interior every three years, Yong says. Refurbishing a plane, however, comes at steep prices. It costs more than $30,000 (22,745 euros) to install a new carpet for a large-cabin in a Gulfstream G550. At the Shanghai trade show, Matteo Bulletti, an engineer for Delta Interior Design, was talking up the company to visitors to secure contracts from Chinese customers. “We don’t have a branch in China, but we have an agent (in Shanghai) supporting us,” Bulletti says. He says the company has three designers becoming more familiar with the Chinese culture to meet the demands from Chinese customers but that Delta Interior Design is not investing a great deal in China and simply testing uncharted waters. Some Chinese companies are coming to him, he says, in the hope of

establishing a joint venture in China. Bulletti says the company is still waiting for the right time to seal a deal. “The best way for those newly ambitious companies is working with an agent or establish an office in China. They receive orders in China, and then complete the project at their home base,” says Gui Yue, executive director of the Chinese office of Bizjet Advisor, a British publication that offers guides for governments, individual owners and companies in the aviation industry. Singapore Technologies Aerospace, a division of US-based ST Engineering, unveiled a new brand called Aeria Luxury Interiors in February. It is a part of its global branding program for refurbishing and designing jets, offering high-quality interiors. Aeria is headquartered in San Antonio, Texas, and is converting one of its hangars into an installation center. The facility, which should be ready by May 1, will include shops for cabinetry, upholstery and electrical work. “We have already provided several quotations (for cabin outﬁtting projects) and have been shortlisted on two projects,” says Aeria’s completions general manager Ron Soret. The new hangar will be able to house aircraft up to the size of a Boeing 747-400. “We are focusing on the VIP completion and refurbishment for Boeing and Airbus airframes,” says Cai Huiyin, senior executive corporate communications of the company. She says the company is completing everything from the design, manufacturing to installations in the US. ST Engineering has had a history of doing business in China, Cai says, making ST Aerospace’s job of becoming more familiar with the Chinese market an easier one. It also has several designers especially for Chinese customers.

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Business briefs

‘‘

Quotable

“There will be no need to leap forward at one time and opt for gradual reform at another.”

ZHOU XIAOCHUAN, governor of the People’s Bank of China, the central bank, saying that China will take a gradual approach to yuan reform and will be in no hurry to free up deposit rates offered by banks.

Chinese banks such as the Industrial and Commercial Bank of China generated a large part of their profits from interest income last year. BANK

Profits show fastest growth in four years Lenders’ net income in China rose 39 percent last year to 1.25 trillion yuan ($178.4 billion, 150 billion euros), the fastest growth in at least four years, the country’s banking regulator said. The China Banking Regulatory Commission said the increase was driven by a rise in credit-based interest-generating assets, improved operating efficiency and good controls on credit risks. Interest income accounted for 66.2 percent of the total income of these institutions, which include policy banks, commercial banks, foreign lenders and rural credit cooperatives. Investment earnings provided 18.5 percent, while revenue from fees and commissions contributed 14 percent. IPO

China Auto Rental scraps US IPO China Auto Rental Holdings Inc, which calls itself the country’s biggest car-rental provider, postponed what would have been the second US initial public offering by a Chinese company this year after struggling to attract investors. The IPO was delayed because of “the current capital market conditions” according to an emailed statement from Christensen Investor Relations Inc, China Auto’s public relations ﬁrm. China Auto had considered reducing the offering price after only about half the order book for the IPO was covered, according to people with

knowledge of the matter. China Auto was seeking to raise as much as $137.5 million (104 million euros) by offering 11 million American depository receipts for $10.50 to $12.50 each, according to regulatory ﬁlings. DEALS

Yanjing said to be eyeing Kingway assets Beijing Yanjing Brewery Co, China’s fourth-largest domestic beer maker, is nearing an agreement to buy brewery assets from Kingway Brewery Holdings Ltd for as much as 4.5 billion yuan, sources say. Yanjing is a frontrunner after beating an offer from AnheuserBusch InBev NV, the sources said, asking not to be identiﬁed because the talks are conﬁdential. China Resources Snow Brewery Co dropped out of bidding last month, they said. An agreement may exclude plants in Shenzhen because Kingway wants to keep those properties, two sources said. The deal may value the remaining assets at 4 billion yuan to 4.5 billion yuan, they said.

Gaopeng in possible merger deal with rival Gaopeng.com, a joint venture between Groupon Inc, a groupbuying website, and Tencent Holdings Ltd, China’s largest Internet company by sales, is in talks about merging with a rival, an industry source said. Management at Gaopeng is considering integrating the company with Ftuan.com, a group-buying website in China, a source said.

The possible deal comes at a time when the country’s group-buying industry, which offers a means of obtaining discounted prices on products that a speciﬁed number of customers have agreed to buy, is undergoing a reshuffle as thousands of companies try to compete in it. AUTO

Volkswagen signs Xinjiang deal The auto giant Volkswagen has sealed a deal to build a new factory in China, where it plans to invest 14 billion euros in ﬁve years, as the Chinese Premier, Wen Jiabao, and the German Chancellor, Angela Merkel, attended the signing ceremony at the corporation’s headquarters in Wolfsburg, northern Germany. The ceremony, the last event on Wen’s agenda during his 24-hour stay in China’s largest European trade partner, was largely symbolic. News of the plan had crossed continents for months. FINANCE

Chinese firms line up with heavyweights China has 136 firms listed in The Forbes Global 2000 this year, 15 more than last year. The Forbes Global 2000 by Forbes magazine, an annual list started nine years ago of the top 2000 public companies worldwide, ranks firms according to their composite scores based on sales, profits, assets and market value. The 136 Chinese companies, led by the Industrial and Commercial Bank of China, which ranks fifth on

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the list, are worth $2.8 trillion in aggregate market value.

Debt market opens to World Bank China’s central bank agreed to allow two World Bank institutions to buy debt in the country’s domestic market as the world’s second-biggest economy opens to further investment from abroad, according to a statement by the People’s Bank of China. The International Development Association and the International Bank for Reconstruction and Development will be able to buy debt in the country’s interbank bond market, the Chinese central bank said in a notice on its website on April 23. It signed agreements with the World Bank bodies in Washington, it said.

“The disorderly development of the rare earth industry has caused enormous damage to the environment.” ZHU HONGREN, chief engineer of the Ministry of Industry and Information Technology, warning that the environment will suffer greatly if rare earth exploitation is not regulated. Measures to regulate China’s rare earth industry, including production caps, export quota cuts and stricter emission standards, are in line with World Trade Organization rules, he reiterated.

ENERGY

Sinopec, Orka sign geothermal energy deal Oil reﬁner China Petrochemical Corp, or Sinopec Group, announced it has signed a framework agreement with the Icelandic geothermal developer Orka Energy Ltd to expand cooperation in developing geothermal resources. Sinopec said the two will seek to grow their joint venture, Shaanxi Green Energy Geothermal Development Co Ltd, aiming to expand geothermal energy heating to at least 100 million square meters of housing in China by 2020. The two are also bidding to build their joint venture into a worldclass technology provider. CHINA DAILY-AGENCIES

“The Chinese market has great potential during its transformation from made-in-China to innovation in China.” RICHARD SHOU, general manger of Siemens PLM Software China, predicting that more than 80 percent of Chinese manufacturing companies, big and small, will adopt PLM software.

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Business-Pioneers “Till now, most of our vehicles were sold in the low-end market and mostly in second- or thirdtier cities. The Lifan 720 is our first attempt to break these shackles and move into the high-end market,” he says. Looking at the quiet and unassuming 74-yearold president, it is hard to see someone you would associate with aggressive expansion and adrenaline in a fiercely competitive Chinese marketplace. Such skepticism is not new to Yin. Similar doubts were expressed when, at a time that most of his peers were preparing to retire, the then 54-year old Yin decided to seek his fortunes in the automobile industry. In 1992, with nine employees, Yin started the Lifan Group in Chongqing, Southwest China, with a registered capital of 200,000 yuan (about $36,000 at the time). Nearly 20 years later, Lifan has become one of the largest motorcycle and automobile producers in China. The group’s listed unit Lifan Industry (Group) Co Ltd reported revenue of 8.63 billion yuan ($1.37 billion, 1.04 billion euros) last year and a profit of 390 million yuan, a year-on-year increase of 2.19 percent. Such impressive statistics should have kept most entrepreneurs happy. But Yin is preparing for even bigger things. “I want Lifan to be the best automobile and motorcycle company in the world. To achieve this, it is important for us to expand our presence in the global markets and also make mid- and high-end vehicles,” says Yin, dressed immaculately in a crisp Chinese suit at the well-stocked coffee bar of the Chongqing JW Marriott Hotel. At the same time, Yin admits that the transformation is not going to be an easy task. “It calls for unimaginable efforts from me and the company to achieve these goals,” he says. But that does not mean that he is not confident of success. After all, his record is testimony to the success of several years of grit and perseverance.

expect domestic sales to account for 40 percent of the total sales with the remaining coming from overseas markets,” Yin says.

Versatile approach

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Clockwise from left: Yin Mingshan, president of the Chongqing Lifan Group; workers check vehicles coming off the line at the Lifan factory in Chongqing; and employees at Lifan’s motorcycle production line.

Early days

REWARDS OF THE JOURNEY

SHIFTING GEARS TO CONFORM TO MARKET REALITIES PAYS OFF FOR ENTREPRENEUR Editor’s note: This is the first of a monthly series on Chinese private entrepreneurs.

By HU HAIYAN and MA WEI

mid the bevy of dazzling cars and models at the Beijing Auto Show, it was the somber Lifan 720 sedan that was the center of attention. Sporting a dull black-gray ﬁnish, the mid-sized sedan was not exactly a stunner in terms of looks, but seems to have more than compensated for it with its top-dollar performance and affordable price tag. To understand the pedigree of the Lifan 720 sedan, one really does not have to travel too much. After all, when it comes to pricing and affordability, there are very few companies in China that can match Chongqing Lifan Group, an automobile company that is also the market leader for motorcycles. But the real question that most of the visitors were posing seemed to be, “What is Lifan doing amid the BMWs, Aston Martins, Audis and Ferraris?” Yin Mingshan, the president of Chongqing Lifan Group, answers that it is part of the company’s transition from the low-end market to the mid- and high-end market.

Growing up in a poor family in Fuling district in Chongqing municipality, Yin started dabbling in the world of business when he was 12 years old. His then job of selling needles was necessitated more by the desire to improve the life of his mother and to pay for his education. But just when he was ready to enter the university, the “cultural revolution” (1966-76) took place and he was forced to work on a farm for about 20 years. “I spent most of my youth on a farm, and it seemed to be a big waste of time. Fortunately I did not give up my zeal for learning and utilized every opportunity to further my knowledge,” he says. After donning several hats including that of an English teacher and as an editor for a local publishing house, he decided to test his fortunes in the motorcycle industry. And much like his persona, it was a low-key entry with just nine employees and a 40-square-meter rented workshop. “Many people told me that I was foolish to start a business when I was 54 years old. Even my family did not understand me then. There was tremendous pressure and I hardly knew anything about the motorcycle business. But in the bottom of my heart, I knew that this was an unprecedented opportunity, and I must seize it. My perseverance paid off and I have been able to successfully transform my life,” Yin says. When he turned 65, Yin was elected vice-chairman of the Chongqing municipality’s second committee of the Chinese People’s Political Consultative Conference. It was also the ﬁrst time that a private entrepreneur was able to hold a deputy minister level title in China. “This marked another transformation in my life. It made me think and analyze things in a better and more all-rounded perspective, somewhat different from the thinking of a common entrepreneur.”

Shifting gears An avid fan of history books, Yin says it is important for companies and individuals to adjust their development mode according to speciﬁc situations. “Just like in wars, the battleﬁeld is constantly

changing as you move forward. In today’s world when changes take place every day, we should be prepared to transform accordingly.” For Lifan Group, Yin says, the immediate challenge is to further enhance its presence in the overseas markets. “When Lifan was set up, we decided to focus mostly on the domestic market. But we realized that we faced formidable competition in the domestic market from big foreign brands and large State-owned companies. We decided to focus on overseas markets as it offered higher profit margins even though there were stiffer challenges,” Yin says. Lifan adopted many measures to establish its presence overseas, with most of its strategies centered on localization, including local hiring and production. In Africa, most of the company’s products are made from heat resistant materials to combat the hot weather, says Mou Gang, vicepresident of Lifan Group. Lifan is now in more than 160 countries and regions including Europe, the United States, Southeast Asia and Africa, and works with more than 140 dealers. In 2011, the company’s exports reached $636 million (480 million euros), and accounted for more than 40 percent of overall sales revenue and 60 percent of its proﬁts. Sales in the US and Europe accounted for 5 percent of the total overseas ﬁgures in 2011 and are expected to increase to 20 percent by 2015, Yin says. Though exports are the major money-spinner, the company is also sparing no effort to enhance its presence in the domestic market. “With the dramatic improvement in living standards, the domestic market is also becoming increasingly important for us. In the future, we

But the real transition for the company would be when it is able to stamp its presence as a company focused on making different types of automobiles. “Although we started our business with motorcycles, we realized that making cars is more profitable, with automobile costs typically more than 15 times that of a motorcycle. We want to transform ourselves into a large automobile manufacturer, more on the lines of Honda of Japan and BMW of Germany,” Yin says. Lifan got product permission from the National Development and Reform Commission in 2005 to make cars and in January 2006 rolled out its first sedan — the Lifan 520. Yin says the company exported 46,000 vehicles last year. “Auto sales constitute roughly 60 percent of the group’s revenue and the rest is from the motorcycle sector. It is expected that by 2020, revenue from the automobile sector will be four-fifth of our group’s revenue, with the rest from the motorcycle business,” says Yin, speaking Mandarin in the typical Sichuan accent, fast and full of changing tones, and exhilarating sounds much like his favorite food, hot pot. But experts warn that the bright future of the Chinese automobile industry is also fraught with risks and difficulties. Shi Jianhua, deputy secretary of the China Association of Automobile Manufacturers, says rising raw material and fuel costs will affect market development. Other obstacles like an appreciating yuan and trade frictions are also loom. Yin agrees that the market situation now is even more severe than in 2008 when the global financial crisis broke out. “Only those companies that can move up the value chain by providing better value-added products will be able to find a way out in these kinds of situations. That’s why we want to make more mid- and high-end vehicles as part of our third transition.” Yin says that for China’s automobile brands, the biggest challenge is the lack of core technologies. “It is important for companies to develop their own patents and brands,” he says. Lifan owns more than 6,482 patents and spends roughly 5 percent of its revenue on R&D. The company has also set up R&D centers in Chongqing and Brazil , the first private automobile company to have a national R&D center in Brazil. Lifan is also the first Chinese motorcycle manufacturer to have a national technology center in Chongqing. “We are also looking at the possibility of having another R&D center, probably in Europe, by 2015,” Yin says.

The other side Lifan has also invested in financial and real estate businesses. “But these industries cannot be deemed as pillar industries for Lifan to develop. Only the automobile and motorcycle business can help us to achieve our ambitious targets,” says Yin with a conﬁdent smile. Yin still has not lost the passion and zeal for hard work. Employees at the Lifan units are constantly on their toes, as Yin is known to make frequent checks of the manufacturing facilities and production techniques. Like his favorite businessman Henry Ford, who worked until he was 85, Yin never thinks he is too old to start a business, and plans to become the oldest entrepreneur globally. “The oldest entrepreneur till now is someone who is 88 years old. I am still in the prime of my career and hope to break this record. I hope I can work another 15 years and help make Lifan an international automobile giant, besides being a motorcycle tycoon.” Contact the writers at huhaiyan@chinadaily.com. cn and mawei@chinadaily.com.cn

The private connection SMALL, MEDIUM COMPANIES HAVE BIG ROLE IN CHINA’S ECONOMY By HU HAIYAN and MA WEI

tate-owned enterprises have been taking the center stage of China’s economy, but that does not mean private enterprises fell by the wayside. Despite the lack of financial muscle, private enterprises have flourished and played a key role in shaping China’s global fortunes in the past few years. According to the China International Cooperation Association of Small and Medium Enterprises, by the end of last year, the number of registered private enterprises in China was about 9 million, with annual growth of 14.5 percent between 2006 and 2011. Private enterprises also account for more than 77 percent of the companies in China. They also account for more than 60 percent of China’s GDP, according to the association. “In some industries like manufacturing and electronics, private enterprises far outnumber the Stateowned players,” says Tong Youhao, director of the general office of the association. According to Tong, private enterprises also have a key role in fostering employment opportunities. In 2011, these companies employed nearly 196 million people, and accounted for 75 percent of the job opportunities in China. But the real growth point has been the government decision to free up State-controlled sectors like railways, telecommunications, finance and culture accessible for private investment. “With this, private enterprises are now present in most of the key industry sectors,” Tong says. Olivier Horps, the president and chief executive of Club Mediterranee SA Greater China Region, says that the private economy has made many significant achievements in the past few years and considers it the best option to tap the Chinese market. “Because of the big potential in the Chinese market and favorable development conditions, the growth momentum will continue. For foreign companies like ours, it is better to team up with private enterprises for business development,” Horps says. In June 2010, Fosun International Ltd, a privately owned Chinese conglomerate, acquired 7.1 percent stake in Club Med, a French holiday resort operator. By the end of 2010, Club Med opened its first resort in China at Yabuli, in Heilongjiang province, with assistance from Fosun. Chen Naixing, director of the Research Center for Small and Medium-sized Enterprises at the Chinese Academy of Social Sciences, says that private companies have also accelerated their overseas activities in the past five years. “Many private companies have successfully acquired leading global brands, like Lenovo’s purchase of IBM’s PC business and Geely’s acquisition of Volvo. These cases have demonstrated the strong desire of capable Chinese private companies to make global strides,” Chen says. According to Chen, many private companies have also increased their investments in developed regions like Europe and the United States. Attilio Massimo Iannucci, Italy’s ambassador to China, says that the achievements made by Chinese private enterprises are “as gorgeous as the works of famous Italian artist Leonardo da Vinci”. “Private enterprises have played a key role in the development of China’s national economy, and enjoy a higher social status than 20 years ago, when I was a minister counselor in the Italian embassy in Beijing,” says the 65-year-old diplomat. Experts agree that the private economy is the new driving force in the country’s innovation and economic restructuring process. “Private businesses have taken the lead in

million The number of registered private enterprises in China by 2011, accounting for more than 77 percent of the total

percent Private enterprises’ contribution to China’s GDP in 2011

198 million

The number of jobs offered by private enterprises in 2011, accounting for 75 percent of the total job opportunities

many emerging industries and advanced technology sectors such as green energy and information technology, where their numbers far outweigh that of State-owned enterprises (SOEs). They are also more flexible than SOEs. The key to China’s successful economic restructuring lies in these private companies,” says Xu Xiaonian, an economist and finance professor at the China Europe International Business School (CEIBS). But experts also point out that despite the impressive growth, there have also been severe challenges like rising raw material, labor costs, shrinking markets and bleak global financial situation. “The private companies lack effective financial channels. But they are still more vigorous, capable and rich in terms of orders, thereby proving that they are more adept at handling financial issues like the recent Wenzhou crisis,” Huang Mengfu, president of the All-China Federation of Industry and Commerce, an organization representing private enterprises, said in a recent media interview. Wenzhou, a city in East China’s Zhejiang province known for its booming private sector, was one of the regions that was severely affected by the recent private debt crisis. Last year, about 100 leaders of private companies in the city were reported to have committed suicide or declared bankruptcy, leaving behind debts of about 10 billion yuan ($1.59 billion, 1.2 billion euros). “Financial institutions for the private companies, especially for the small and medium enterprises, need to be set up immediately,” Huang said. Some experts also say that apart from the financing difficulties, private enterprises should also accelerate the process of upgrading themselves to enhance their competitiveness in the global market. “The time has passed when many Chinese enterprises could win market share with lower prices. Only those enterprises that can move up the value chain and provide more value-added products will survive the hard times and reap the benefits,” Xu from CEIBS says. But Patrick Nijs, Belgium’s ambassador to China, says that it is common for private companies everywhere to encounter problems. “I admire the Chinese private companies’ huge vitality and creativity. I believe endowed with China’s huge domestic market and favorable development conditions, these problems will not impede their development,” Nijs says. “There must be more and more great private companies, like Huawei and Lenovo, that will come into existence in China in the near future.” Contact the writers at huhaiyan@chinadaily. com.cn and mawei@chinadaily.com.cn

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CHINA DAILY

APRIL 27-MAY 3, 2012

EUROPEAN WEEKLY

Business

A trade lord who cherishes the small FORMER CHAIRMAN OF HSBC LOOKS TO CONNECT MORE GROWING BRITISH COMPANIES TO CHINA By CECILY LIU and DIAO YING

BIO

ord Stephen Green has had a ringside view of China’s economic miracle over the past decade. That experience, when he was group chairman of HSBC Holdings Plc, has convinced him of the incredible opportunities China’s growth offers, a lesson he now freely shares with British businesses as Britain’s Minister for Trade and Investment. “China is rapidly becoming one of the most important trade partners for Britain,” Green says. “This reflects the rapid emergence of China on the world stage, as the second-largest economy, becoming increasingly broad based and increasingly sophisticated.” China is Britain’s second-largest trading partner outside the European Union. Bilateral trade between China and Britain grew to more than $60 billion (46 billion euros) last year, an increase of more than 200 times the $300 million in 1972 when the two countries first established a full diplomatic relationship. Green takes this as evidence that the two countries’ trade is on track to reach $100 billion a year by 2015, a target agreed between Chinese Premier Wen Jiabao and British Prime Minister David Cameron in 2010. British firms have a growing interest in China, Green says. “What’s clear in China is that the Chinese middleclass consumers want the same branded goods as everywhere else.” Famous British brands such as Jaguar, Rolls-Royce, Burberry and various makers of Scotch whisky are now heavily relying on the Chinese market to boost sales, but Green is keen to encourage more small- and mediumsized businesses to engage more with Chinese consumers. “It’s not that SMEs are more important than the big companies; it is that the big companies tend to know what they are doing there.” As such, he says UK Trade & Investment will step up efforts to connect companies with established exporters and will work alongside the Export Credits Guarantee Department, which will market its new range of trade credit services geared toward smaller companies. “About a third of Britain’s exports come from small companies, but I think more can come from small companies.” Almost 60 percent of private sector jobs in Britain are reckoned to have been created by SMEs. To help British businesses export more to China, the commercial diplomacy department of the Foreign and Commonwealth Office and UK Trade & Investment are in the process of deploying 50 staff in China. A new British consulate will open in Wuhan, Hubei province, soon. Green says Britain can offer China exports in a diverse range of areas, including traditional manufacturing, engineering, design, architecture,

LORD STEPHEN GREEN British Minister for Trade and Investment Born: Nov 7, 1948, in England Education: • Bachelor of Arts at Oxford • MSc at Massachusetts Institute of Technology Career: • 1971-1977: Worked at the Ministry of Overseas Development • 1977-1982: Management consultant at McKinsey and Co • 1982: Joined Hongkong and Shanghai Banking Corp • 1992: Became group treasurer of HSBC • 1995: Became a director of HSBC • 1998: Became executive director of investment banking and markets of HSBC • 2003: Became CEO of HSBC • 2006: Became group chairman of HSBC

Stephen Green hopes more British small- and medium-sized companies can do business with China.

engineering consultancy and ﬁnancial services. It is Britain’s strength in these industries and China’s push for its companies to go global that have led Chinese companies to increase investments in Britain. Many Chinese companies have grown a presence in Britain, ranging from Shanghai Automotive’s subsidiary MG car plant, which employs 400 people in Birmingham, to China Telecom’s European subsidiary, whose headquarters are in Britain, providing services across Europe. Another type of industry Britain hopes to attract Chinese interest in is infrastructure. The British government plans to invest 200 billion pounds ($312 billion, 245 billion euros) to develop the country’s infrastructure in the five years to 2015, but much of this funding will need to come from the private sector and foreign investors. China welcomed Britain’s offer when the two countries signed a memorandum of understanding on infrastructure in September. China Investment Corp, the country’s sovereign wealth fund, made the ﬁrst infrastructure investment in January by buying an 8.68 percent stake in Britain’s largest water and sewage company, Thames Water. Citic Construction Co, another Chinese sovereign wealth fund, has also expressed interest in a number of infrastructure projects, including the Atlantic Gateway, offshore wind farms in Scotland, the Battersea power station and the UK Olympic Park. Green believes British infrastruc-

ture provides opportunities for “stable long-term investments for good returns” for the next 20 or 30 years. “There is no prejudice against overseas investors. If you compare Britain with a number of European and North American opportunities, this is the most open market there is for investments in the developed markets.” About 40 percent of Britain’s economic output is driven by foreign investments, compared with 20 percent in Germany and 10 percent in the United States, Green says. Offshore wind, transport, broadband, water and waste are all areas where opportunities for equity investment exist, he says. China’s investment in Britain has grown to more than $2.3 billion, of which half of these investments were made last year. Much of China’s growing investments abroad are fueled by its rapid growth at home, but China announced in March that its GDP target for this year would be lowered to 7.5 percent. This message caused a stir in the international financial markets, but Green remains confident. “China is working toward balanced growth. In China, everyone recognizes that the growth in some past years has been led too much by exports and investments and not enough by consumption and domestic demand … 7.5 percent is still a growth rate any government in this part of the world regard as quite rapid, but more sustainable.” For Green, China’s growth is not just headline numbers. He first went

DIAO YING / CHINA DAILY

to Beijing and Shanghai in 1984 as a young banker for HSBC, and witnessed China’s growing traffic and shopping malls — two distinctive features of China’s modern cities. HSBC’s origins date to 1865, when it operated as the Hongkong and Shanghai Banking Corp to ﬁnance trade in opium, silk and tea. Today it focuses on emerging markets and gets about a third of its operating profit from Hong Kong. Green’s career at the HSBC spanned almost three decades, during which he lived in Hong Kong for years and traveled to about 20 Chinese cities. He was determined also to learn the language and became the ﬁrst student in the Confucius Institute at the London School of Economics, when it opened in 2006. “Unfortunately I did not have enough time to devote to it, so I’m not a very good student, and I need to properly retire from doing this job to devote enough time to really master the language. “But I enjoyed it, including learning the characters”. At the HSBC, Green prized diversity and worked with an international mindset. In 2003 he was criticized after he decided to move 4,000 call center and processing jobs from Britain to India, China and Malaysia. The British finance union Unifi was vociferous, but Green maintained that it was an important move to manage the company’s resources internationally in the most costeffective manner. The Guardian quoted him as say-

Favorites: • Chinese book: A Dream of Red Mansions • Food: Italian, Chinese, Japanese, Indian • Hobbies: Reading, listening to music, watching opera, going for walks

ing: “It can’t be the right response to say that emerging markets have no right to jobs.” With so much experience working with emerging markets, it is no surprise that Cameron appointed Green as minister for trade and investment in January last year, when Britain needed to maintain its international competitiveness by engaging with growing markets. Unlike most politicians, Green considers himself a “retired banker”, but he says he enjoys his new role enormously. The job at UK Trade & Investment also gives him great responsibility. “The range of issues you have to grasp, the policy issues you have to deal with, is much broader in the public sector.” His new role offers him plenty of chances to visit China. For instance he will take a British trade delegation to the annual China International Fair for Trade in Services in May. “The fact that I go to China twice a year now, and continue to be involved in an exciting environment, particularly in Asia where I have lived before, is a great aspect to the job.” But he looks forward to some relaxing moments without his ministerial hat on. “I haven’t spent as much time as I would have liked in China’s countryside, in the old monuments and buildings, and I look forward to visiting them.” Contact the writers at cecily.liu@ chinadaily.com.cn and diaoying@ chinadaily.com.cn

APRIL 27-MAY 3, 2012

CHINA DAILY

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EUROPEAN WEEKLY

Business

Company sees the world as its light globe A CHINESE LIGHTING FIRM IS GROWING IN EUROPE, AND BIGGER THINGS BECKON By CECILY LIU and ZHANG CHUNYAN

herever and whenever NVC says “Let there be light”, there is indeed light, and a lot of it. At the Beijing Olympics in 2008, the Shanghai World Expo in 2010 and the soccer World Cup in South Africa the same year, NVC Lighting Technology was doing its thing, to stunning effect. Now the biggest lighting company from China is also trying its best to light up more space in Europe. In April NVC revealed its plans when a new building was opened in Birmingham, doubling the size of its operations there. The new building includes warehouse, office and assembly facilities. “The UK market kind of mirrors European markets,” says Wu Changjiang, founder and CEO of NVC. “Our success in the UK can act as a springboard to our European expansion.” Wu is so busy in China that a visit to the British subsidiary is a rarity, but the plant’s expansion was an occasion he simply could not miss. The British operation supplies commercial, industrial and exterior lighting products to wholesalers in Britain and the Irish Republic. The British subsidiary now employs 70 staff, 10 times the number five years ago, and that has provided a fillip to Birmingham, on old industrial city, because 95 percent of its staff are employed locally. Not only that, but by 2015 the company forecasts that it will have 250 people on its payroll. The newly added industrial unit brings NVC’s total investment in Britain to 15 million pounds ($24 million, 18 million euros). It expects turnover to reach 25 million pounds in Britain by the end of December, and aims for annual turnover of 50 million pounds by 2015. But sitting down for a chat after the morning launch ceremony, Wu focuses on the past for a minute or two, particularly NVC’s entry into Britain five years ago. In 2007 NVC only supplied lighting products to British brands as an original equipment manufacturer. “We made a loss for the first two years we were in Britain, because our operation had a lot of set-up costs. It was at this time we had to make a decision about whether we should continue as an OEM supplier or sell branded products.” Wu chose the latter, and NVC started supplying lighting directly to

wholesalers using its own brand in April 2009, although its OEM business did not stop. “We had to go through a very difﬁcult process, and we managed to do that. Not only did sales of our own branded products rise, our OEM revenue did not fall.” NVC says its latest expansion represents part of the second phase of its British growth plan but is already looking beyond that to move into manufacturing in Britain. That hardly comes as a surprise, given NVC’s rapid development in China. In 1998 Wu founded NVC with capital of 1 million yuan ($158,600, 120,000 euros) in Huizhou, Guangdong province. Eleven years later it had become China’s largest lighting manufacturer, with annual sales revenue of 2 billion yuan and listed in Hong Kong in 2010. Wu says that a branding strategy that highlights differentiation is the key. While most lighting manufacturers advertise their wares in lighting shops, NVC takes to the highways and byways to advertise to the masses. As NVC’s competitors attend lighting trade fairs, NVC promotes itself at fashion, property, outdoor and interior design trade fairs. “All these exhibitors are potential customers of my lights,” Wu says. “As a lighting manufacturer, NVC stands out at these fairs and people remember us. “If I pay 30,000 yuan to advertise in a lighting shop, another manufacturer may pay 50,000 yuan to put up an advertisement out front, and a third may pay 100,000 yuan to advertise in front of the second. Then the customer remembers no one.” Instead of spending on celebrity advertising, NVC paid 10 million yuan to become the exclusive worldwide strategic partner of Confucius, an epic film in 2010 that recounts the life story of the Chinese philosopher. “I want to promote Chinese culture,” Wu says. “I think our culture is great, and if our culture is recognized internationally, our people are recognized, and my company is recognized.” Something else that has helped NVC in Britain is its acquisition of a lighting wholesaler that went bankrupt during the 2008 financial crisis. Before the acquisition the wholesaler was a good customer of NVC, and Wu recognized the value of its team and sales channel. The 100,000-pound acquisition brought to NVC about 10 highly skilled staff, whom Wu kept in NVC’s team so they could bring their cus-

Wu Changjiang, founder of NVC Lighting, says the company is looking at expanding in Europe.

tomers to NVC. At the moment NVC does much of its heavy manufacturing in China, where it has abundant production resources and relatively low labor costs, but product design and final assembly are done in Britain to meet customers’ needs and European regulatory standards. Key components of products manufactured for the European market are bought from European brands including Tridonic, Helvar and Mackwell. Kelvin Lay, of Helvar, a component supplier for NVC, says NVC’s use of European manufactured components for products sold in Europe shows its commitment to quality. “The European regulation is stricter with regards to how much one component can affect the performance of another, the amount of energy a light emits, and the level of heat it produces compared to China.” Paul Mans, of CP Electronics, another NVC supplier, says NVC’s products are cheaper than those of its British competitors, but its products are just as good. NVC’s abundance of stock also makes it attractive for wholesalers, who often need to order additional supply at short notice, Mans says. “Not all lighting manufacturers

can afford to stock as much inventory as it’s very expensive. So having the assurance of being able to receive additional supply when they need it could increase the chances for wholesalers to choose NVC.” Wu says that NVC will expand into other European markets, also through acquisition, as these markets tend to have mature sales channels. Indeed, going abroad through acquisition has become increasingly common for Chinese businesses. Some of the trendsetters have been Lenovo, when it bought IBM’s PC business in 2004, TCL, when it bought assets from the French multinationals Thomson and Alcatel in 2005, and Geely, when it bought Volvo in 2010. According to an Ernst & Young report, China and Japan made the most investments in Europe in the ﬁrst two months of this year, signing nearly $11 billion (8.3 billion euros) in deals. But how to keep sustainable development after such acquisitions is a big problem for all the companies. Wu says Chinese businesses that cannot succeed in post-acquisition integration are ﬁghting a losing battle. “Cultural differences make integration extremely difficult,” he says. Apart from the British market, NVC

ZHANG CHUNYAN / CHINA DAILY

also has research and development centers in Australia, the United States and Hong Kong, and representative offices in more than 40 countries. Contrary to the Western-expansion model, Wu believes it is more efficient to send teams to build sales channels when expanding to emerging economies where sales channels are still developing, such as India and SouthEast Asia. Wu feels confident about sending ambitious workers of a younger generation to establish these markets. The perseverance and hard work that he practices himself are values Wu teaches his employees. As for him, there is more satisfaction in the challenges ahead than in the victories of the past. He compares the achievement of an entrepreneur to that of a mountaineer reaching the summit. “Just as the climber needs to leave the mountain and find a higher one to climb, an entrepreneur needs to find new territories to conquer.” And for Wu, new territory represents his dream of one day making NVC a truly global brand. Contact the writers at cecily.liu@ chinadaily.com.cn and zhangchunyan@chinadaily.com.cn

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CHINA DAILY

EUROPEAN WEEKLY

APRIL 27-MAY 3, 2012

Business

Chinese quaff wine and snap up chateaux THE VINEYARDS OF BORDEAUX AND THEIR SPRAWLING RESIDENCES ARE DELIGHTING THE PALATES OF WEALTHY BUYERS By LU CHANG lvchang@chinadaily.com.cn

or Shen Dongjun, the 22-hectare chateau in Bordeaux seemed a priceless investment and a natural addition to his new wine business, rather than being just an expensive holiday home. The idyllic Laulan Ducos, a medieval-style chateau, with surrounding vineyards that produce wine was the latest addition to Shen’s business empire comprising of more than 300 jewelry stores. “I have been searching for the right vineyard for more than six years. This is exactly what I was looking for and the wine quality is outstanding,” he says. “My aim is to bring these highquality French wines to China at affordable prices.” Shen, 42, is part of a new wave of Chinese investors who are snapping up wine estates across the world to quench China’s growing thirst for highquality wines. Data provided by the International Wine and Spirit Research shows that China surpassed Britain as the world’s fifth-largest wine consumer last year, with annual consumption set to surpass 250 million cases (12 750-milliliter bottles a case) by 2016. Apart from the wine trade, the French chateaux are also turning out to be perfect holiday homes for the wellheeled Chinese who have been adding luxury cars, designer clothes, high-end accessories and private yachts to their shopping baskets in the last few years. Nowhere is the trend more evident than in the region surrounding the Garonne River in Bordeaux, France, where Chinese buyers and private and State-owned firms have bought nearly 15 to 20 chateaux in the last five years. There are estimated to be nearly 11,000 chateaux in the region. Cici Dong, head of the Asia-Pacific desk at the London-based housing agent Savills, says during the recent three-day Beijing Luxury Properties Showcase her company managed to conclude three to five deals with Chinese investors for vineyard buys in the Bordeaux region. “The number of transactions may seem small, but we have been receiving a lot of inquiries since last year,” Dong says, adding that the real boom will happen in the next few years. “A huge demand is already there and it is has been growing steadily.” China is the largest importer of wine from Bordeaux and domestic consumption of the beverage is believed to have soared by nearly 110 percent last year. Dong says that most of the French vineyards that are up for sale have price tags ranging from 3 million euros to 20 million euros. “For a successful entrepreneur, having his or her own vineyard is a symbol of status, achievement and good taste,” she says. “For Chinese buyers, the Bordeaux region represents the best wine location. This is why they are keen to acquire property there rather than going to other wine-producing areas such as Italy and Spain despite

PHOTOS PROVIDED TO CHINA DAILY

Above: Chinese investors are showing interest in buying chateaux in Bordeaux. Right: Affluent Chinese consumers also snapping up high-quality wines.

better bargains.” Jenny Hu, the Chinese representative of CK Partners, a Paris-based agency that sells French vineyards, luxury properties, and golf resorts, says that unlike the multi-million-euro villas in Beijing, wine estates are sound investments for Chinese business people. “The global financial crisis has created a life-time opportunity for investment in centuries-old castles that can be turned into luxury hotels and beautiful vineyards, and more importantly fine Bordeaux wines,” she says. The economic downturn has been a telling blow to the Bordeaux region with exports falling 23 percent to 3.37 billion euros in 2009. Bordeaux wine makers are believed to have lost about 100 million liters of output between 2008 and 2009, according to the Bordeaux Wine Council. Though CK Partners is yet to finalize any chateaux deals with Chinese investors, the company is believed to be in advanced negotiations for several properties with some large media groups and high net worth individuals in China. “Most of the Chinese investors tend to buy small chateaux, rather than go for top-notch wine producers,” Hu says. “They are more interested in the impressive houses and the nice view.” Wine industry experts believe that buying up foreign vineyards is a smart move for many Chinese investors, as it offers them a chance to tap China’s growing high-end market. But such purchases may also suffer if the acquirer lacks knowledge of wine production and management. “Wine is not part of the traditional drinking culture in China, and as such many buyers, who haven’t been in

the wine industry, may find it hard to operate the wineries,” says Duan Changqing, director of the grape and wine research center at the China Agricultural University. “But it is ﬁne if they are just buying the properties for fun.” But for those with an eye on business, it also involves additional investment in trained people to keep the wineries running. To ensure the high quality of Bordeaux wines, Shen has retained most of the previous employees at the chateau. “We have also not made any changes in the original wine making techniques as we respect the French wine culture.” Shen has recently made the Bordeaux wine available in the Chinese market, at prices ranging from 2,380 yuan ($377, 286 euros) to 2,580 yuan a bottle. He says unlike others, Chinese investors have an advantage as they can quickly build lucrative distribution networks in China with their connections. Though there have been apprehensions among many winery owners in Europe that Chinese buyers may neglect the vineyards, they have been welcomed with open arms in Bordeaux. “The Chinese investment will create a win-win situation for us as many chateaux are currently experiencing sluggish business and an ever-shrinking market,” says Pierre Goguet, president of the Chamber of Commerce and Industry of Bordeaux, who plans to bring representatives of 90 enterprises from the region to China to meet prospective investors. “More merger deals will mean better growth for quality and time-honored brands, products.” At the same time there is also a growing interest among Chinese drinkers

for the new world wines from Australia and the US. Wine from these countries is cheaper than those from the old world countries like France and Italy. Retired NBA basketball star Yao Ming recently set up his own winery, Yao Family Wines, to make wine from the cabernet sauvignon grapes harvested in 2009 from the Golden State Napa Valley, California. Chinese investors are also believed to have bought six Hunter Valley win-

eries in Australia last year, with several more in the pipeline, local media reports say. Andrew Margan, president of the Hunter Valley Vineyard Association, told ABC news recently that the association wants fresh investment from overseas, as the wine industry in Australia is “at the bottom of the cycle in terms of the glut”. Xiao Xiangyi contributed to this story.

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Fired up DECORATIVE-CERAMICS COMPANY FROM ITALY WANTS TO MOVE OUT OF CHINESE FACTORIES AND INTO MIDDLE-CLASS HOMES By YAO JING yaojing@chinadaily.com.cn

ceramic sleeping angel created by Countess Lene Thun in the 1950s became a popular gift and home decoration across Europe soon after. Peter Thun, the inspiration behind the figurines and the second child of the countess, says he hopes to grow the family business by appealing to Chinese consumers. Thun, who is the president of the eponymous ceramics maker, has flown to China at least once a month since establishing a factory in Tangshan, Hebei province, in 1990. His visits from Italy may become more frequent now that he plans to sell his products, which now include a variety of figurines, porcelain tableware and stove heaters, in China. In March, the first standalone Thun boutique opened in China World Trade Center in Beijing. The 330-meter-tall building is the tallest in the city and marks the company’s determination of jumping into the Chinese market. Thun says now is the time to act because Chinese consumers are more willing to buy foreign brands to decorate the swelling number of newly built apartments. China is the brand’s first sales location outside Europe. Thun regards it as a big step for his family and the company. Before launching the

independent store, Thun tested the market last year in two locations in Beijing. Thun found that its children’s series was the top-selling products in China, unlike in Italy, where white ceramic pieces are more popular. “We recovered our investment … in just one month,” Thun says. Because of the quick turnaround, he decided to open a standalone store. Thun started out as a small family business in Bolzano, Italy. Countess Lene Thun dedicated herself to the creative part of the business, while his father, Count Otmar Thun handled the administrative side. The company has grown to more than 1,700 stores throughout Europe in the past 60 years. The first shop dedicated solely to Thun creations opened in 2004; before that, the decorative items were sold in mixed-brand shops. The Thun collection has expanded enormously. It now sells nativity scenes, animal ﬁgurines, home accessories and coffee sets. The business continues to grow, just not at the pace it experienced before the European financial crisis hit. Previous to 2008, the Italian company regularly grew by 20 percent each year. Last year Thun had a turnover of 214 million euros, an increase of just 8 percent compared with 2010. In an effort to cut costs, the fully

PHOTOS PROVIDED TO CHINA DAILY

Top: The first Thun boutique in China World Trade Center, Beijing. Above: Peter Thun, president of the ceramics maker, is expanding the business in China.

handmade brand is moving its manufacturing line to Vietnam, which is 70 percent cheaper compared with making the products in China. “From molding, casting to ﬁring,

the cost for a piece of handmade work in China is no longer cheap,” Thun says. Not to mention rising labor costs. The Ministry of Human Resources

and Social Security enacted the first minimum wage law in 2004. This was to ensure the basic needs of workers to help improve performance and to promote fair competition between enterprises. “We will continue narrowing our production scale in China, but at the same time, pushing forward sales here.” The president is calling 2012 a study year for the ceramics company. “I’m planning to open six stores in China by the end of this year. Some resellers are coming to us to look for cooperation, but I want to reach the market by opening direct stores first. We are still learning how to choose appropriate products and places in the new marketplace,” Thun says. To appeal to the Chinese market, the ceramics company designed pieces based on the traditional 12 Chinese zodiac signs. “We are trying to combine Chinese culture with our European style to better localize,” he says. Thun is optimistic about the home decoration needs among the rising middle class in China, which is exactly who the brand is targeting. The average price for one figurine is about 650 yuan ($103, 78 euros). Within a generation, the middle class in China will be roughly four times the size of the American middle class population, according to the United Nations Population Division and Goldman Sachs. “More people are moving into new houses in pursuit of higher living standards,” Thun says. “Furthermore, our products are not souvenirs that connect scenic spots and people; however, they are gifts and decorations, intending to bring back childhood values, dreams, magic and warmth, connecting the relations of friends and families. We can provide modern people with emotional appeal.” There are not too many differences in gift-giving customs between Europeans and Chinese; gifts are valued for the thought, not how much money it costs, Thun says. He expects China to account for 15 percent to 20 percent of the company’s global revenue in five years. The first Thun store was supposed to open before Christmas, peak season for buying gifts. But it took longer than expected to finalize issues, such as leasing a store, tax software and accounting. Thun is also looking into Japan and South Korea as next possible sales markets. “That will be more challenging compared with marching into China. The home decoration market there is already mature. New brands and goods are not that acceptable, and there are not many newly built buildings.” Besides growing the business, Thun is considering other aspects of the company’s future. He says his children have already shown interest in the business. He will be happy to deliver the torch to the third generation of entrepreneurs. “When I joined the company, there were only 35 employees. But we are feeding 4,000 staff now. That has realized my parents’ dream of bringing warmth to people and has become my motivation,” he says.

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Business

Getting the message across MULTINATIONAL AGENCIES ARE WINNING THE BATTLE FOR THE BIGGEST ADVERTISERS By MENG FANBIN mengfanbin@chinadaily.com.cn

As a result, 4A enterprises quickly set the standard in China’s advertising industry. The year 1979 was seen as “the ﬁrst year of Chinese advertising”, says Dang, who was also co-founder of Charm Communication. With global unified working systems, multinationals’ branches share the systematic and well-established professional knowledge accumulated by their parent companies, says Chuang, who has worked for Ogilvy & Mather for 27 years. Ogilvy & Mather Advertising arrived in the mainland in 1991 and is the largest advertising agency in China. It employs more than 2,400 people across 29 offices in 18 markets. It provides its customers with data with the help of professional analysis tools, which draw comparatively correct and effective solutions, says Chuang, stressing that its analysis tools always “keep up with the times”.

ony Fan, 35, the owner of a Beijing-based advertising agency, had been talking the whole day with his business partners about the company’s latest failed bid, which was won by a multinational advertising company. “Instead of feeling depressed, I’m honored to have the chance to compete with large international companies,” he says. His company, IBrand Solution (Beijing) Ltd, founded in 2006, is a small one with fewer than 10 employees and an annual proﬁt of several million yuan. Its clients range from international non-governmental organizations to regional consumer goods companies. Some multinational advertising corporations are in de facto control of China’s advertising market due to their advanced management, rich experience, adequate funding and high-end professionals. Since the opening-up of the Chinese market at the end of 1970s, the rapid development and potential of the nation’s advertising market attracted the attention of members of the American Association of Advertising Agencies, known as 4A enterprises, which were eager to enter China in the 1990s. Statistics show domestic advertising agencies generated revenue of 94.04 billion yuan ($14.94 billion, 11.32 billion euros) in 2010, which accounts for only 40.18 percent of China’s total advertising turnover, up 10.7 percent year-on-year, lower than the average growth of the industry. At the same time, there were only three domestic advertising companies among the top 10 advertising agencies by annual revenue in 2010 — Charm Communications Inc, Guangdong Advertising Co Ltd and AVIC Culture Co Ltd. Data from the China Advertising Association shows that the top 10 advertising agencies realized revenue of 36.4 billion yuan in 2010, accounting for 39 percent of advertising agencies’ total turnover, rising 4 percentage points from the year before. More clients and high quality resources have been attracted to large advertising companies, especially multinationals. “Multinational advertising agencies have more finance, more advanced technology and management and more talents, posing a threat to domestic agencies,” says Professor Huang Shengmin, dean of the Advertising School at Communication University of China. With a globally unified working system and specific analytical tools, Ogilvy & Mather Advertising, one of the largest marketing communication companies in the world, possesses not only a global service network but has also accumulated large amounts of professional knowledge, says Shenan Chuang, CEO of Ogilvy & Mather in China. “Compared with young Chinese

Rise of domestic firms

AN XIN / FOR CHINA DAILY

A worker preparing an outdoor advertising board in Nanjing, Jiangsu province.

advertising agencies, foreign advertising conglomerates understand the market economy and marketing management more deeply and comprehensively,” says Dang He, chairman and chief executive of Charm Communications Inc. The State Council released the plan on culture industry revitalization on Sept 26, 2009, the ﬁrst time that China announced clearly and deﬁnitely that it would boost the development of the culture industry, such as advertising, comics and animation. As a result, advertising became a strategically important industry that the nation was going to foster. The following year, four Chinese advertising companies were listed. This “was a sign that late-starting Chinese advertising companies were beginning to compete in the capital market and continue to strengthen in the coming years”, says Qiao Jun, a professor at the School of Journalism and

Communication at Nanjing University. Statistics show that the number of advertising agencies in China reached 243,000 in 2010, with total revenue of 234.05 billion yuan in the year and 1.48 million employees. China is already the world’s secondlargest advertising market, Chairman of International Advertising Association Alan Rutherford said at the International Advertising Festival held in Changsha in May 2011.

Top enterprises Multinational advertising companies already had rich experience before they entered China. On the other hand, advertising was new to most Chinese, who had not experienced or realized its value, Professor Huang says. At the beginning of reform and opening-up, Chinese people preferred foreign products and ideas, and most advertisements for foreign brands were successful, he adds.

Only one 4A enterprise was included in the CCTV 2010 Top 10 Best Advertising Agencies, which was announced on March 9, 2011, and there were only three among the top 20. Professor Huang says that “multinationals actually in a way promote the development of China’s advertising industry by shortening its growth process. Local agencies learn a lot from their opponents, for example, in the aspects of company management and creativity”. “Local companies, which are familiar with Chinese social circumstances, consumption characteristics and the local media, integrate closely with Chinese culture and satisfy the needs of local customers,” Dang says. By April 2011, 14 Chinese local advertising agencies had been listed. In 2010, four corporations went public in succession — Spearhead, Bluefocus, Charm Communications and Guangdong Advertising. Other Chinese advertising companies such as D&S Communication Group, Who’s Who Advertising, Linksus and Shunya Communication Group are planning IPOs. “Focus Media’s listing on the Nasdaq set an example for other domestic advertising agencies. A growing number of Chinese advertising companies will be listed in the near future,” says Zhang Xiang, vice-dean at the School of Communication and Art at Beijing Technology and Business University. The rapid capital reconstruction of domestic agencies promotes their own development. For instance, Guangdong Advertising has enlarged its operating scale through asset restructuring. In 2010, Charm Communications, one of the biggest domestic advertising companies, went public and cooperated with Aegis Media, which helped the company become an internationalized and specialized advertising group, Dang says. “At the same time, Charm Commu-

nications has accelerated the upgrading of its operating standards, working tools, business distribution and company management,” he adds. Qiao of Nanjing University says that during the 12th Five-Year Plan (2011-2015), domestic advertising agencies will increasingly expand and multinationals’ domination of China’s advertising industry will probably change. There may be tougher competition between locals and multinationals and the two parties may share the market equally, Qiao predicts. High-end talent would also ﬂow back to domestic advertising companies. With the growth of local clients and the development of Chinese advertising agencies, local companies have opportunities to grow bigger and stronger due to the large number and different level of clients, Dang says. Chuang predicts “advertising multinationals will maintain their leading position in China’s advertising market for at least the next ﬁve years”.

Challenges ahead Although Tony Fan, the advertising agency owner, says small agencies like his are more flexible than the larger ones, because of to low expenditure and ﬂexible strategies, the advertiser, who graduated from Guanghua School of Management at Peking University, also expressed a pessimistic view of the possibility that local advertising agencies can overtake their international rivals. He says 4A enterprises’ development was closely related to their multinational clients’ progress in China, but there is little chance that Chinese companies can create internationally recognized brands. As newcomers to China, foreign advertising companies’ fortunes are inextricably linked with their clients, multinational corporations such as Procter & Gamble and Unilever. High-end talents are essential to the development of local agencies because advertising is a knowledge-intensive, technology-intensive and talent-intensive industry, Huang explains. Chuang, who is also the founding chairman and the incumbent chairman of the Association of Accredited Advertising Agencies of China, also known as China 4A, which has 23 multinational members and 24 local members, says that Chinese advertising agencies should attach more importance to personnel training. Few domestic agencies attended the personnel training sessions organized by China 4A a few years ago because Chinese companies are reluctant to pay for this kind of training. Chinese advertising companies should improve their management abilities, build better operating systems and upgrade analytical tools to enlarge their business quickly in different cities in China, Chuang says. In order to become global players, they should cooperate with each other through an industry association, she says.

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Travel Sichuan

Guizhou

Kunming Yunnan

200 km

IF YOU GO Transport Direct ﬂights from Beijing to Kunming take about four hours and a one-way ticket costs about 750 yuan ($120; 90 euros) to 1,800 yuan; ﬂights from Shanghai also take about four hours, with tickets from 750 yuan to 1,900 yuan.

Weather Short, cool and dry winters; and long, warm and humid summers. Kunming has one of the mildest climates in China and the temperature averages about 24 C in summer. Freak snowfalls can occur in winter with an average of about 15 C.

Souvenirs • Pu’er tea • Yunnan coffee • Ham and mushrooms

KUNMING CHECK-IN

SOUTHWESTERN HUB REFRESHES WITH NATURAL AND CULTURAL ATTRACTIONS nown as the City of Eternal Spring for its pleasant climate and ﬂowers blooming all year long, Kunming, capital of Yunnan province in Southwest China, boasts numerous natural attractions and cultural heritage sites that make delightful detours for any traveler. Kunming served as a gateway to the Silk Road that facilitated trade with important regions including Tibet, Sichuan, Myanmar and India. In modern times Kunming’s proximity to Southeastern Asian countries has helped it become an economic, political and cultural center in Yunnan as well as a transport hub linking China and Southeast Asia. More than 20 ethnic groups including the Yi, Bai, Miao, Dai and Hani thrive in this area. These groups offer unique and colorful attractions, such as the Torch Festival of the Yi, indigenous cuisines and local customs. Expansive highland scenery and exotic wildlife further off beckon, but there are too many attractions to cover in just a few days. Here are some spots to get started. 1. Shilin Stone Forest Located in Shilin county 85 kilometers southeast of Kunming, the Stone Forest is considered a natural wonder. An old saying goes “if you have visited Kunming without seeing the Stone Forest, you have wasted your time”.

The park covers an area of 400 square km and includes stone peaks that rise abruptly from the ground in numerous layers like bamboo shoots, verdant forests and historic pagodas. The roads leading to the attraction wind around the peaks and surprise visitors with breathtaking vistas. The Stone Forest is in some ways like a real forest. Visitors scaling the highland will be rewarded with a panoramic view of thousands of mountain tops and valleys, just like a vast, black forest. Chinese and overseas geologists have proven that the Stone Forest is more than 270 million years old. The area used to be ocean and it was dur-

PHOTOS PROVIDED TO CHINA DAILY

Top: With thousands of mountain tops and valleys, the Stone Forest is a natural wonder. Above: October to February is the best time to visit the Green Lake.

ing this period that the rocks were eroded by water and shaped in the way they are seen today. 2. Green Lake Park Compared with many famous lakes in China like West Lake in Hangzhou, this Kunming attraction can seem like nothing special. But it can offer a relaxing, sunny afternoon stroll or lakeside coffee break to enjoy the beautiful sunset. Paddle boats are also available.

The Green Lake has pleasant weather all year round but the best time to visit is from October to February, when red-beaked gulls from Siberia migrate south and make their home here. Getting to the park, which is located downtown between Yunnan University and the Bird and Flower Market, is easy. 3. Bird and Flower Market This is one of the most interesting attractions in central Kunming, serv-

ing as a shopping destination for all kinds of items such as flowers, name stamps, camping and hunting gear, live baby turtles and dried lizards. The market offers shops and stalls built in the typical architecture of the region. Wooden houses with grass growing from their roofs line streets where small alleys devoted to flowers and caged birds are found. Eating and drinking As a branch of Yunnan cuisine that is also known as Dian cuisine, the attractions of Kunming dishes lie in their mixture of sour and slightly spicy tastes. Most of the ingredients are green, fresh and natural, including vegetables, fruit, bamboo and flowers. One traditional dish, guoqiao (across the bridge) rice noodles, are prepared at the table by adding raw ingredients into a bowl of hot broth. The name of the dish comes from a story in ancient times, when a devoted wife preparing lunch for her husband discovered a way to keep soup boiling hot — by topping it with a thin layer of vegetable oil — so that her husband could have a hot meal after crossing a long, wooden bridge to get home. The dish is made of broth, sliced meat, rice noodles and local seasonings. Other typical dishes include steamed-pot chicken, earthen pot fish and Xuanwei ham. There are several choices for nightlife in Kunming. Camel Bar and Top One are two typical expat bars in the Golden Horse and Jade Rooster Memorial Arches (Jinmabiji). Discotheque in Bao Shan Hotel also offers good entertainment and joyful shows. C H I NA DA I LY

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Life

Movie producer David U Lee (center, standing) on the set of Inseparable, a black comedy starring two-time Oscar winner Kevin Spacey (left, seated) and Chinese star Daniel Wu (right).

PROVIDED TO CHINA DAILY

HINTS FROM HOLLYWOOD WORK EXPERIENCE WITH A US STUDIO CAN SERVE AS A STEPPING-STONE TO OPPORTUNITIES IN CHINA FILM INDUSTRY

By ZHOU LIMING raymondzhou@chinadaily.com.cn

ollywood movies attract a huge amount of attention in China, but those Chinese who have worked inside the US system and are now setting up shop as part of the country’s ﬁlm industry have largely been ﬂying under the radar.

Take Ben Ji as an example. For much of the 1990s, he represented Disney in marketing and distribution to the Chinese market. The Rock, which starred Nicolas Cage and Sean Connery, made a huge splash in China after Ji successfully pitched the project to the distributor, China Film Group. “The fast tempo was refreshing to Chinese audiences,” he recalls. However, Ji reveals that many features in the drama genre have difficulty drawing a sizable audience because of differences in cultural background, social ethics and other factors. The international politics involved in Enemy of the State, another Disney release, might have been off-putting for Chinese moviegoers, according to

Ji. “This type of story may do better now, given the growing knowledge about the outside world.” After attending the University of Southern California and working for Warner Bros Pictures International, Ji moved to China and produced three feature films starring some of the country’s biggest cinematic names, such as Ge You, Joan Chen, Liu Ye and Yao Chen. The magical pairing of Wen Zhang and Bai Baihe in last year’s sleeper hit Love Is Not Blind started as one of a quartet of urban romances in the Ji production The Law of Attraction. But Ji is not alone in forsaking a Hollywood career in pursuit of greener pastures in the Middle Kingdom.

Many others in the sector who did not grow up in China have come to establish themselves in the country’s burgeoning film industry that in 2010 reached the milestone of 10 billion yuan ($1.5 billion; 1.2 billion euros) in box office revenue and has an annual growth rate of 30 percent. By Ji’s estimate, some 100 returnees are involved in both the creative and management areas of the Chinese film business, each with the advantage of firsthand expertise in what is arguably the world’s most advanced cinematic industry. They are plowing what they learned in Hollywood back into the land of new adventures. Those who trained in the US and have since moved to China “will make a big difference to China’s film industry”, says Stanley Rosen, director of the East Asian Studies Center at the University of Southern California’s College of Letters, Arts and Sciences, and they will remedy some of the weaknesses, the biggest of which is “the lack of good producers”. “In addition, the returnees will be presented with opportunities not pre-

viously available, because of recent deals with such companies as Disney and DreamWorks,” according to Rosen. They “will play a bridging role, particularly in areas such as storytelling, marketing and distribution”.

Iron Man 3

Last week, it was announced that a Chinese company, DMG Entertainment, will invest 1 billion yuan in the production of Iron Man 3, and will distribute the film in China in collaboration with Disney. In 2007, Christopher DeHau Lee helped to launch the entertainment division of DMG, before leaving last year to set up his own company, Move Eye Media, with his brother Dickson. The brothers were raised in Los Angeles. They started at the bottom of the Hollywood ladder with internships at various companies in the 1990s before going on to work at production companies and studios such as Sony, Disney, Paramount, MGM, DreamWorks and Will Smith’s Overbrook Entertainment. “I read more than 1,000 scripts

from every genre during my 10 years in Hollywood,” says Christopher, the younger brother. “That was the best training I received.” Out of every 100 scripts, only 1 percent won approval for development and even fewer were actually produced. That selection process honed Lee’s skills in all kinds of genres, from sci-ﬁ to romance. He is now preparing to direct a selfpenned comedy about the love-hate relationship between dogs and people in modern-day China. Called Doggie Says I Love You, it’s an official project selection of the 2012 Beijing International Film Festival Co-Production Forum. Lee is also part of the production team of another official festival project called Gods. “The most important thing I learned in Hollywood was integrity, including creative integrity. With so much focus on budgets and box office, movies have to be relevant and realistic, with the ability to impact and entertain people,” he says. >> PAGE 25

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Life FROM PAGE 24

A secret plan

Zhang Lihui recently left Warner Bros after 17 years, “all in corporate positions”. She has a secret plan for getting into the production side of the business, a field in which she has a master’s degree (plus a doctorate in film theory). “I want to do something that takes my fancy while I still have the energy.” In addition to consultancy work for a number of US companies, Zhang is shuttling back and forth across the Pacific Ocean to facilitate a co-production, which originated in the US and is now incorporating the feedback from the Chinese side. “American audiences are receptive to this kind of story, but China is at a phase where people are not ready for serious drama. They want more action,” she says. What China can learn from Hollywood, according to Zhang, is increased protection of intellectual property and greater development

PHOTOS PROVIDED TO CHINA DAILY

Top: Ben Ji (left) on the set of Color Me Love with Yao Chen (at the back) and Zhu Hong (in yellow). Above: The Lee brothers, on the Sony backlot. Dickson is on the left and Christopher on the right.

of the ancillary market that includes television rights and disc sales. “Chinese players tend to go to extremes when pricing and selling their products.” She recounted an incident from her time at Warner Bros. Zhang had worked out a deal to sell 100 Chinese movies to a US website, “But the Chinese side was reluctant to spend an extra 10,000 yuan per movie to add the English-language subtitles. They don’t realize that success from theatrical distribution is extremely hard.” Some of the Chinese ﬁlms that have garnered respectable overseas box office proceeds have been co-productions, such as Karate Kid II and The Forbidden Kingdom. David U. Lee, who advised China Film Group on the Karate Kid sequel and served as co-executive producer of The Weinstein Company’s Asian Film Fund Production, Shanghai, says

that co-productions are harder to do because one has to think from both perspectives and some “core commercial elements” have to be compromised. A lot of the things a filmmaker takes for granted can suddenly become sensitive when examined through the eyes of another culture. According to Lee and Ji, there is a glut of scripts floating around with cross-cultural subject matter, such as the Flying Tigers (volunteer pilots from the US who joined the Chinese air force during World War II) or the story of Jewish immigrants in Shanghai. “It has become such a cliche,” says Ji. “While there is no formula for what will work, the successful ones always come back to universal values, as in Slumdog Millionaire. But even films like that should not be expected to compete with mainstream Hollywood fare.”

Lee says that things have changed in recent years. It has become clearer that pure drama does not transcend cultures as easily as action films. “It’s hard enough to make movies with no restrictions, but once you factor in cultural compromises it becomes harder to sell them internationally.” As for the overseas reception for Chinese films, Lee argues that a story set in ancient times is likely to be more easily embraced by an overseas audience than one with a contemporary setting. Likewise, a rural story is easier on a foreign audience than an urban one. “If it’s a contemporary drama or comedy, the Hollywood version can usually go around the world because it is big enough. Each country will then have its own version of the same story, but it will be limited to the local market.” That means martial arts movies may remain Chinese cinema’s highest-profile productions internationally. When asked whether Asians will feature as superheroes in future blockbusters, Lee was cautiously optimistic: “I think it’ll be an Asian film and then Hollywood will follow suit. Also, it’ll be a star that makes it big in Asia first. Then Hollywood will say ‘Come over’.” Lee’s “next big frontier” is to “work with Chinese enterprises to acquire US studios”. He considers it his “ultimate show business plan”, and one that will utilize all the skills he’s accumulated in the US and China. What a Hollywood studio has that no one else can come close to matching, explains Lee, is its global distribution capability. “They control their own destiny.” Lee senses that, in China, he has greater control over his own destiny too. Yang Wanli contributed to this story.

‘‘

The returnees will be presented with opportunities not previously available because of recent deals with such companies as Disney and DreamWorks. They will play a bridging role, particularly in areas such as storytelling, marketing and distribution.

‘‘

“Two of the Chinese filmmakers I had my eye on for future collaboration before I came to China in 2007 were Ning Hao and Xu Jinglei. I’ve now worked with and learned a lot from both of them and hope to emulate their success in China as well as back in my hometown, LA.” For more than 10 years, Dickson, the elder brother, worked as a Sony Studios executive in studio operations strategy, finance and operations, in addition to five years at the Disney Company in its international home video and Internet divisions. His corporate affairs experience has armed him with both the knowledge and the management tools for the modern film business. “One has to treat any film project like a business,” he says, emphasizing the “checks and balances” that should be present to mitigate risks. “We hope we can be the next Warner or Huayi Brothers, but bilingual,” says Chris. David U. Lee, no relation to the brothers, grew up in Taiwan and started his Hollywood career as an intern at Miramax. Having worked at three Hollywood companies before settling down on the Chinese mainland, he revealed that the competitiveness of the environment is the ultimate driving force in his career. “I have no family connections, no reasons to be in showbiz. In Hollywood I had to figure people out and focus on how to be competitive.” However, not everything that works in Hollywood can or should be replicated in China. For example, the agency model has failed to take off in China, according to Ben Ji. In Hollywood, an agency can put together a package that includes a story idea with top talent attached and sell it to a studio. Here in China, there is one giant State-owned studio and half a dozen private ones that are coming of age, plus many fly-by-night operations. “Nobody is going to buy your package,” says Ji. That factor may explain the difficulties encountered by the Chinese branch of the Creative Artists Agency, a top Hollywood agency.

STANLEY ROSEN DIRECTOR OF THE EAST ASIAN STUDIES CENTER AT THE UNIVERSITY OF SOUTHERN CALIFORNIA’S COLLEGE OF LETTERS, ARTS AND SCIENCES

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Life

More people in the West are warming to Go, a Chinese game that originated more than 2,000 years ago.

WAY TO GO ANCIENT BOARD GAME CAPTIVATES MORE AND MORE MINDS IN THE WEST

By ZHANG LEI zhanglei@chinadaily.com.cn

t is a game whose fundamental concept is life and death, and whose strategies include offense, defense and deception. It may be that these raw characteristics make Go such an attractive pastime to its millions of adherents worldwide. One of thoes adherents is Vesa Laatikainen, who has represented Finland at the World Amateur Go Championship nine times. The 49-year-old says he fell in love with the ancient board game in college when he met members of the school’s Go club. “The patterns, the board and the stone-cut pieces were so different from the chess that I knew,” says Laatikainen, marketing manager of Teamware Group company in Helsinki. The Finn is part of a growing number of Westerners who are becoming mesmerized by the Chinese game that

few knew, let alone played well, just decades ago. Laatikainen himself frequents a Go club in Helsinki twice a week, sparring with players with various skill levels. Usually, there are up to 20 players around, he says. “I met my wife at the Go club and we both love the game. I am passing that

love down to my 7-year-old daughter.” Laatikainen has also obtained top finishes at the Finnish championship league. Latest estimates put the number of Finnish Go players alone at about 1,000, with more than 700 at active rankings as of August. Go comprises of a grid of 19 by 19 lines, making up 361 intersections on the board. The pieces or “stones”, in black and white, are placed on the intersections to gradually command more territory by surrounding and eliminating opponents. Go, or weiqi, meaning the game of surrounding, originated in China more than 2,000 years ago. The game reached the West via Japan, which explain its Japanese name. It has been held up as the ultimate game offering simple rules but infinite possibilities with strategies that have been applied on and off the battlefield in the East since ancient times. Go is not just seen as a game of leisure to while away the time. The legendary Emperor Yao is said to have created the game to develop the intelligence and mold the temperament of his son, Dan Zhu. Yao used white and black pieces to symbolize two armies and arranged different battles between the two to

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train Dan Zhu’s ability to judge and command. By playing weiqi, Dan Zhu, who was a rude and reckless man, turned into a learned general who excelled in commanding armies. Yao used weiqi to teach his son to rule, and the merits of the game have been passed down to modern Chinese. With the Qin Chinese zither, shu or calligraphy, hua (painting), and weiqi formed the four “prerequisites” of a Chinese gentleman in ancient times. Considered to reflect some of the most profound thinking behind Chinese philosophy, weiqi players are said to be able to grasp the workings of society and business dealings better through the game. Weiqi is not just held up as an aesthetic and intellectual experience, but also as a miniature of Chinese strategic and collective thinking. Many continue to enjoy it as an art that combines moral, educational and intellectual functions. “Go is still a cultural symbol of the East to most Finns,” Laatikainen says. “There are a limited number of Go competitions a year available to me. I can only seriously improve my skills by reading books and through professional plays,” says the Finn, who has collected at least 500 Go books, mostly from Japan, South Korea and China.

More people like Laatikainen in the West are warming to weiqi. The European Go Federation estimates that there are about 20,000 people who play the game in Europe, not including those who only play it online or at home. Martin Stiassny, the federation’s president, puts the ﬁgure much higher — probably more than 100,000. In the United States 15,365 players are registered, of whom 8,933 are ranked, based on a data from the American Go Association Go Database. “Go is perhaps the best game in the world”, Stiassny said in a report by Xinhua News Agency. He has been constantly promoting the game and telling people that it is not as difficult as it seems. In China there are no exact ﬁgures on the number of Go players because of its large base. Even with the rising popularity of modern video games among the younger generation, visitors can still catch Go players engrossed in their next moves in the backstreet alleys of big cities. Liu Siming, director of Chinese Go Association, believes the game is evergreen. Speaking at the 31st World Amateur Go Championship in Hangzhou in 2010, he said there is a need to promote the game’s “charisma in itself, regarding it as an art”.

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EUROPEAN WEEKLY

People

Merlene Emerson says with the change in China’s role in the world, British Chinese have a greater level of self-confidence than before.

BIN WU / FOR CHINA DAILY

LONDON CALLING

CANDIDATE LOOKS FOR CHANCE TO REPRESENT CAPITAL’S BRITISH-CHINESE COMMUNITY

By DAVID BARTRAM For China Daily

ondon’s Chinatown is rarely a center of political campaigning, but just a couple weeks before Londoners headed to the polls, one candidate canvassing outside a row of Chinese restaurants was trying to persuade passers-by not just to vote for her, but to vote at all. On May 3, Merlene Emerson will stand for the UK’s Liberal Democrat party in London’s regional elections. She hopes to become the first ethnic Chinese representative in the London Assembly, a body that holds the city’s mayor to account. Britain’s Chinese community has traditionally struggled to gain representation in UK politics. Despite numbering some 400,000, there has never been a Chinese member of parliament and politicians at a local level are few and far between. “The Chinese in Britain have traditionally stayed out of politics as they have either been first-generation migrants more concerned about making a living, or children of migrants encouraged by parents to pursue a professional career,” says Emerson. “Considering the high risks involved in going into politics and the lack of security or a guarantee of getting elected, it is not surprising that the pragmatic Chinese have shunned politics so far.” Emerson moved to the UK in 1979 from Singapore, studying law, first at King’s College, London and then Cambridge University. But it wasn’t until she had lived in the country for 25 years that she decided to become a naturalized citizen and get involved in politics. “I chose the Liberal Democrats as I agreed with their values and prefer a more moderate centrist party com-

pared to the left-wing Labour and right-wing Conservatives. It was also the only major political party in the UK to oppose the Iraq war.” It was not long after joining the party that Emerson identiﬁed a problem: unlike their political rivals, the Liberal Democrats did not have a branch dedicated to Chinese members. She set about correcting this, forming the Chinese Liberal Democrats alongside Linda Chung, a local councilor for the party. “The Chinese Liberal Democrats was established to be a bridge between the party and the Chinese community and to forge a better understanding between the UK and China,” says Emerson. “We have consulted on why the Chinese don’t vote as much as other groups and what issues are of concern. Now we are campaigning to address these issues. “We work in partnership with organizations such as the British-Chinese Project, Citizens UK and Operation Black Vote, as well as with community centers across the country to raise awareness of the importance of the Chinese commu-

nity getting more active and integrated into mainstream society.” Emerson has also been campaigning alongside the Liberal Democrats’ candidate for mayor of London, Brian Paddick. If elected, she pledges to bring the issues that are of concern to the Chinese community into the mainstream agenda. These include immigration, care for the elderly and assistance for small businesses. One issue of particular interest to Emerson is that of graduate work visas. The UK is home to some 100,000 Chinese students studying at universities across the country. From March this year, the Post-Study Work (PSW) visa was abolished, making it harder for recent or fresh graduates to stay on in the UK to ﬁnd employment. Some worry that this might threaten British universities’ current status as one of the most popular destinations for overseas Chinese. Students wishing to stay on to work will now be subjected to stricter regulations regarding English-language proﬁciency and must meet minimum earning criteria. “I regret that the PSW visa has been

BIO MERLENE EMERSON Liberal Democrat candidate for the London Assembly Education: • Studied Law at King’s College, London • LLM at the University of Cambridge Career: • 1987: Qualified as solicitor with Norton Rose, city firm • 1993: Made partner of PK Wong & Advani, Advocates & Solicitors • 2000: Accredited as commercial mediator • 2007: Joined board of Richmond Housing Partnership • 2008: Stood in London Assembly elections for W Central Constituency • 2010: Stood as parliamentary candidate for Hammersmith • 2012: Standing in London Assembly elections on London-wide list Interests: “I have a British Wheel of Yoga teaching diploma and I’m currently enjoying learning taichi.”

phased out, and only hope that the students will still be able to use their summer holidays to ﬁnd some work experience. If elected, I intend on gathering evidence and lobbying the government to rethink this change of policy. “Our party has already been working to push for a more ﬂexible immigration policy rather than the knee-jerk

reaction pandering to the more rightwing elements of government who want to clamp down on immigration from non-EU countries.” Emerson hopes that by championing their cause, she can count on the votes of those Chinese students who do stay behind and make London their home. In an effort to reach some of these young immigrants, she has looked toward social media to connect. The Chinese Liberal Democrats’ Weibo (a microblog similar to Twitter) account gathered an impressive 2,000 followers in the ﬁrst two days after it was launched. Emerson is using the account to connect with overseas Chinese students and encourage them to get involved and volunteer in the community. “There has recently been a growing number of Chinese becoming more vocal and standing up on issues, from immigration changes to the proliferation of gambling licenses in Chinatown, but the community as a whole would still welcome more representation in public life.” Finding tangible ways to both help and engage London’s Chinese community has become a passion of Emerson’s. Earlier this year she helped organize an event to encourage the Chinese community to take up the UK government’s offer of free school meals for children from under-privileged families. Traditionally, the Chinese community has one of the lowest take-up rates in the country, with some speculating this could be down to anything from a dislike of the food to an embarrassment of accepting handouts. But for every child who claims, schools receive additional funding, so Emerson has been busy urging the community to claim what they are entitled to. “It is not just about the actual meal. Schools receive 600 pounds (735 euros) a year for every pupil claiming the meals, so it is important everyone signs up. I have been sending out surveys to the Chinese community to try and identify those who might not realize they are eligible.” Should Emerson make it onto the London Assembly, it will be the culmination of a decade’s progress in the integration of Britain’s Chinese immigrant population. During the past 10 years, political campaigning and lobbying on behalf of the Chinese community has become more common, in part due to the work done by organizations such as the British-Chinese Project. Academic research has contributed to the process. Emerson is working alongside Dr Bin Wu at Nottingham University’s China Policy Institute to explore new ways of engaging the Chinese community with different aspects of society. But the community ultimately still lacks high-level representation. “I would say that with the change in China’s role in the world, BritishChinese have a greater level of selfconﬁdence than before. The news is no longer about illegal immigrants being smuggled into the country; it’s now about China’s economic growth. “That sort of thing is changing public perceptions. We need to show that British-Chinese people can play a role here. We have an understanding of China and can help Britain build ties.” Emerson will be hoping that after May 3, she’ll be in a position to build these ties from the London Assembly.

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People

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Much of Chino Martinez’s time is devoted to his organic farm on the outskirts of Beijing.

PARTY ANIMAL PUTS DOWN HIS ROOTS FEW OTHER THINGS GET CHINO MARTINEZ MORE ANIMATED THAN HIS CHICKENS AND ORGANIC FARMING

By ZHANG LEI zhanglei@chinadaily.com.cn

n a restaurant near the Russian embassy in Beijing, Chino Martinez, basking in the glow of early spring, enthuses about life down on the farm. For Martinez, 27, skipping from chitchat to the earnest business of business is effortless as he reminisces on how he got into organic agriculture more than three years ago. Yet there is nothing in this Puerto Rican’s urbane appearance to suggest that this is a man of the land.

Martinez, whose father was Chinese, says he partied for much of his first six years in Beijing, and, crowned with a fedora and shod with stylish Vans shoes, became almost a fixture in Beijing nightspots. But all that partying ground to a halt three and half years ago when he rented an abandoned farm on the outskirts of Beijing, with his partner Huang Zhongde. Their ultimate goal: to turn it into an organic farm. “The farm we rented is expensive, considering how much we can get it for now. In the first year we didn’t really know about pricing and stuff like that. We paid 60,000 yuan ($9,500, 7,250 euros) for one year. It is funny you don’t really need a big farm to produce a lot of stuff. The key is to use every square centimeter efficiently, not wasting space, time and money.” They spent the first two years getting the farm ready to erect greenhouses, and spent a lot of money making it suitable for their purpose. In the third year it became clearer to them exactly how they would achieve this. Martinez grabs a piece of paper and begins to scribble diagrams to show how their plant cultivation philosophy works. Soft soil and beds that are off the ground are better for the roots, and promote air circulation, he says. “Our yields are four times the size of traditional farming. We favor the square-foot method. One tomato plant uses 4 square feet (about 3,700 square centimeters). We put one tomato plant in the middle and fill out all the other areas with carrots and lettuce, which do not need a lot of sun.” Plants are grown in the greenhouses, each 60 meters long and 7 meters wide. Separating them are seven aisles, usually 9 meters wide, designed to let in as much sunlight as possible. Huang says most traditional Chinese farmers overlook these shaded areas. Now the pair set aside lanes 2 meters wide for the aisles, using the other 7 meters for grass, protected by wire, to feed the chickens. “Everything looks messy and leafy, but that’s how nature does it. We plant seven kinds of grass here, including alfalfa, trefoil, corn grass and chicory, which meet chickens’ basic needs.” The key to making the eggs organic is to ensure that all the chickens eat everything organic. There are also strict standards on the density of chickens in one grass lane. “The density has to be lower than seven chickens per square meter. They cannot be called free-range if the density is higher, otherwise it is no different to machine-fed chickens — just one big cage instead of a smaller one.” Under this formula they can have only 60 chickens in each grass lane. The entire farm is 10 mu (a little more than half a hectare). Freshly born chickens need to brood in a greenhouse with high-voltage sodium lamps to keep them warm. Meanwhile grass grows in the aisles. When the chickens are 10 centimeters tall they are put in the grass aisles. “One grass aisle is always empty for the chickens to move from the previous aisle to the next,” Martinez says. “We transfer the chickens every week (to extend the life of the grass).” Huang says: “Besides the grass, chickens need supplementary forage. We use earthworms, yellow mealworms all grown in our own greenhouses. We mix corn and wheat with them for forage. Basically we produce every part of the egg production cycle. There is no outside buying; if there was we wouldn’t be able to control the quality.’’ Their eggs sell at 2.5 yuan each, about five times the going rate for non-organic eggs. Last winter, they say, they supplied 300 eggs for a banquet in the US embassy for the US-China Forum on Arts and Culture. “Our eggs are small but heavy,” Martinez says. “Our chickens spend 80 percent of their time walking to find their food. The energy formula is all in one. Commercial eggs are produced by chickens locked in a cage that are fed hormones and that get no exercise. They don’t move much; they concentrate on laying eggs, which is why those eggs are so big. But what’s inside the egg

is the most important thing. “I just came back from Puerto Rico; even there you cannot (get) good eggs; eggs equal commercial proﬁt. “Some so-called free-range farms feed their chickens in barren, grassless areas, and their chicken practically cannot find any food by themselves. The amount of exercise they take is 80 percent less, and it is no different from caged chickens.” Martinez and Huang have four employees on the farm, one of whom looks after the chickens, feeding them 20 grams of supplementary forage twice a day. Huang says feeding chickens is essential for a farm to be sustainable. They have visited more than 100 farms in China and only 5 percent are organic, they say. “Our system is a sound, sustainable circle,” Huang says. Huang says some Chinese entrepreneurs have invested millions or even billions to buy the best equipment, but in some cases it is misguided. For example, in Beijing some farms have been equipped with particular types of glass houses that are unsuitable because of the windy climate of the capital. In general, China is still behind the times in agriculture, Huang says. Having spent three-and-half years building up their farm, it has bred such success that the pair are about to move to something bigger, 30 kilometers away. In a few weeks they will move to a farm in the town of Jiuduhe town, in the mountains of Huairou, which is cheaper to rent and whose water resources are better. The new farm is three times as large as the current one.

For farm chickens, food is just a stroll away.

But the pair’s willingness to expand does not mean they are abandoning their small-is-beautiful principles. Indeed an upmarket supermarket chain approached the pair recently asking if they could supply it with eggs but was turned down. “We are quite small and could not produce the quantity they needed,” Huang says. “I don’t think even 30 mu ... is big enough for them. But I think we will have to stick to a medium size. If you claim to be organic you cannot get that big.” Instead the pair rely on word of mouth to sell their eggs and produce for private customers, mainly expats, living in Beijing. With Martinez’s party life now on ice, he spends just one day a week in his apartment in downtown Beijing, and the rest on the farm. His father runs a couple of restaurants in the Puerto Rican capital, San Juan. When Martinez graduated from high school his father sent him to Beijing, barely able to speak Chinese, which was to be resolved by his attending Beijing Foreign Studies University. “At that age you don’t know what you are going to do. During that time, it is more of an option rather than a career. Even today I don’t know what my career is going to be. I have learnt a lot over the past three years doing this. I’ve just been to Puerto Rico, and all my family are so proud. My mother wants to work with me ... My father wants to invest money. Everyone is supporting me now. “We struggled for something — that’s when you really learn. Fortunately we made it out alive. I recommend to a lot of expats here to get out of the city to the countryside. I am pretty sure what they are trying to learn, they learn it faster here. “Nobody is really doing ... real organic farming. It is radical, but a challenge ... We are living off our own products; we are happy.”

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Books

REVOLUTIONARY RECIPES NEW BOOK SERVES UP DELICIOUS DISHES FROM A DIFFICULT TIME By KELLY CHUNG DAWSON kdawson@chinadailyusa.com

he years of the “cultural revolution” (1966-76) are often associated with scarce food supplies, a time when many people struggled to put dinner on the table. Chairman Mao Zedong himself famously declared that a revolution is not a “dinner party”, and most citizens who have lived through that time would likely agree. But a new book titled The Cultural Revolution Cookbook argues that those exact conditions drove people to create filling, healthy dishes with the most simple ingredients. “We realized that what was born out of necessity as the result of a lack of ingredients could actually be viewed as desirable in 21st century America — the idea of eating locally grown produce, eating fresh food and using the most basic, unprocessed ingredients,” co-author Scott D. Seligman says. “It’s simple country cooking, and people are interested in that today.” The book only uses ingredients that can be found at standard American grocery stores, Seligman says. Tofu, vinegar and soy sauce are the only processed foods in the book. Since publication in December, a first edition has sold out and the book has risen to No 1 in Amazon’s Chinese cookbook category. Time magazine’s Daven Wu described the book as “a beautifully illustrated cookbook that documents the indomitable spirit of a people whose defining greeting is still, ‘Have you eaten yet?’” “We weren’t prepared for the huge response we’ve received,” Seligman says. “People like Chinese food, but what surprised me is that people seem to feel that Chinese food is hard to make. These recipes are so simple.” Seligman and co-author Sasha Gong are long-time collaborators, having worked on Gong’s autobiography Born American and other projects and articles. Seligman has written several books on China including Chinese Business Etiquette, and Dealing with the Chinese. During work sessions, the pair frequently take breaks for lunch, Seligman says. After working together for some time, Seligman soon realized that Gong’s cooking was different typical Chinese restaurant fare, he says. “When Scott first suggested the idea of a book based on ‘cultural revolution’-era recipes, I said, ‘Are you nuts?’ People didn’t have enough to eat during that time,” Gong says. “But the more I thought about it, the more I realized that if we could incorporate the stories of Chinese history in the book, it would be fun and very educational.” Gong, who was born in Guangzhou, capital of Guangdong province, learned to cook at the age of 6 because her parents worked long hours, she says. Later, when her parents were sent to the countryside for “re-education”, she and her siblings had very limited access to food, she says. “As children, we had to take care of each other,” she says. “Everything except for vegetables was rationed, so we learned how to plan our meals carefully, and how to make the most of what we had.” Cooking was among the few enjoyable activities in those days, she says. “I found satisfaction in making simple dishes. Cooking is a very creative process, and in the way I grew up, I didn’t really have room to be creative in any other areas of my life.” Her memories of cooking and eating with her family are extremely positive, she says. As a self-proclaimed “history nerd” and sociologist who has taught at UCLA and George Washington University, Gong says that a country’s food and eating culture reflects its values. “Food is a major bond that holds society together,” she says. “Eating is both social and personal. Chinese food culture focuses on family, personal loyalty, generosity and friendship. There are many differences between Chinese and Western-style eating. One example is the Chinese style of sharing food.” The Chinese emphasis on giving the best parts of the dish to the older members of the family is also indicative of Eastern values, she says. The book’s 59 recipes are accompanied by colorful stories about Chinese history and the background of each dish. A vinegar-glazed cabbage dish is paired with the story of The East is Red, a famous rallying song of the era. The tune was originally a peasant ode to cabbage hearts, before being rewritten to honor Chairman Mao. A potato dish is accompanied by the story of Nikita Khrush-

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Clockwise from top: The Cultural Revolution Cookbook has risen to No 1 in Amazon’s Chinese cookbook categorys; Shallow-fried potato shreds, one of the 59 dishes introduced in the book; Sasha Gong and Scott D. Seligman, co-authors of the book.

chev’s “goulash communism”, a phrase popularized when he made the comment that if the former Soviet Union promised only revolution, “they’d ask if it’s not better just to have good goulash”. Chairman Mao took this as a weakening of resolve. Chinese translators of the time, lacking an appropriate word for goulash, chose “potato and beef stew” as an alternative. “Beef was scarce in China in the 1960s, so goulash was not really much of an option,” the cookbook says. “But everyone enjoyed fried potato shreds.”

Beautiful color photographs of the dishes are the result of three food-ﬁlled days in which Seligman and Gong cooked every single meal in the book, he says. Neighbors and friends joined as the pair prepared dishes for the photographs. Gong hopes that American audiences will come away with a sense of the endurance of the Chinese people. “We can overcome anything, and at the very least, we came away with some seriously good recipes and a good sense of humor.”

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Events DIPLOMATIC POUCH >> WITH MIKE PETERS

CONFERENCES & MEETINGS >> IN CHINA

International Conference on Computer and Communication Devices, Zhengzhou

bout 100 cyclists on white bikes ﬂashed through one of Beijing’s embassy districts on Sunday as the Danish embassy celebrated Earth Day by hosting a climate race. Danish Ambassador Friis Arne Petersen was joined by three other European ambassadors: Markus Ederer of the EU, Theodore Georgakelos of Greece and Ante Simonic of Croatia. Chinese actor Liu Ye and several Danish business leaders working in China led about 100 pedal-pushers for three pleasant kilometers in the morning. After lunch, another group of 100 cyclists convened near the Ming Tombs for a more ambitious bike trek in the hills. Petersen said such green transport is a key part of sustainable living for the future. The ambassador noted that people in all walks of life, including Denmark’s future king Crown Prince Frederik, cycle to work and around the capital city, Copenhagen. Several weeks before the climate race, the Danish embassy raised 30,000 yuan ($4,756, 3,621 euros) for local organizations advocating environmentalism in a web auction of Petersen’s racing bike. The envoy handed over the ﬁrst portion of the charity donation to representatives of the NGO Smarter Than Cars.

Aims to lay the foundations of a new principled approach to computer and communication devices. It will foster cross-pollination between different research fields, expose and discuss innovative theories, frameworks, methodologies, tools, and applications. Date: June 2-3 Venue: Selected places Website: http://www.icccd.org

International Conference on Advanced Materials Design and Mechanics, Xiamen Aims to provide an international platform for researchers, engineers, and industrial professionals worldwide to present their research results and development activities in the fields of advanced materials design, materials engineering research, manufacturing technology and processing. Date: June 5-7 Venue: Selected places Website: http://www.icamdm.org/index.html

Offshore Technology Asia, Shanghai Topics include technological advances in upstream exploration and production; the role of the floating production storage and offloading subsea system; offshore supply vessel; pipeline and seismic technology; the management of the offshore industry and its social, economic and environmental impact. Date: June 5-8 Venue: Selected places Website: http://www.otanet.org

Global Real Estate Institute, Shanghai It brings together decision makers of global real estate investors, financiers and Chinese developers to discuss the challenges and opportunities created by the market correction in China. Date: June 6-7 Venue: The Portman Ritz-Carlton Website: http://www.globalrealestate.org/mygri/ Chinagri/2012

Building Solar China Exhibition and Conference, Guangzhou The conference showcases integrated solar and smart technology solutions for buildings. It is designed to be a platform to focus on smart solar building solutions, including building integrated photovoltaics. Date: Exhibition June 9-12; Conference June 9-10 Venue: China Import and Export Fair Complex Website: http://www.buildingsolarchina.com

CONFERENCES & MEETINGS >> IN EUROPE Reception and seminar to celebrate the London office opening of Zhong Lun Law Firm, London Attendees will hear from Chinese and British officials and lawyers from Zhong Lun Law Firm. Speakers will explore the practical and legal factors that affect the flow of capital, goods and services between Britain/ Europe and China. Date: May 2 Venue: Chancery Court Hotel Website: http://www.cbbc.org

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Guo Xiaolu will introduce a screening of her film She, A Chinese at the University of Westminster.

Chinese on the big screen The Chinese presence in British cinema dates from James Williamson’s 1900 “documentary” film, Attack on a China Mission, a re-creation of that year’s Boxer Rebellion in which nationalist militants attempted to expel Christian missionaries and other foreigners from China. It was filmed in Brighton and Williamson had never visited China. Recently Guo Xiaolu’s award-winning film She, A Chinese (2009), a British film in terms of its financing and much of its location, also failed to achieve due recognition from the film trade press and distributors. But a new generation of British-born Chitiaan Molijn. The front man of the group is the DJ Jeffrey Sutorius. Date: April 27 Venue: CLUB G PLUS Website: http://www.damai.cn

Impression Europe, Beijing

Doing Business in Asia: Opportunities for mid-sized businesses, London

The pianist Jacques Couillard Despres will present European master classes.

Examines the conditions needed for mid-sized enterprises to grow internationally. Attendees will hear from business panelists who have achieved growth in Asia.

Jordi Savall

Date: May 3 Venue: 8 Northumberland Avenue Website: http://www.cbbc.org

Hong Kong — Pathway to China Trade Seminar, Cambridge The seminar is for businesses looking to enter and increase their exposure to Hong Kong, the mainland and the economies of South and South East Asia. Date: May 3 Venue: Holiday Inn Cambridge Website: http://www.cbbc.org

CULTURE >> IN CHINA Dash Berlin, Shanghai Berlin is a Dutch progressive-trance project founded in 2007 in the Hague by Eelke Kalberg and Sebas-

Date: April 27 Venue: Forbidden City Concert Hall Website: http://theatrebeijing.com

Savall is a Catalan viol player, conductor and composer. His characteristic repertory ranges from medieval to renaissance and baroque music, though he has occasionally ventured into the classical or even the romantic periods. Date: May 4-5 Venue: Beijing and Wuhan Website: http://www.damai.cn

CULTURE >> IN EUROPE Modern Chinese Theater and Calligraphy, London Li Ruru, a lecturer at Leeds University, will talk about the playwright Cao Yu and the significance of Cao’s works in the development of modern Chinese literature. Kam Sang Law will then present a

nese are at the vanguard of positive change, among them a University of Westminster alumna, Jo Ho, who created the hit BBC television show Spirit Warriors and who is now working on several feature ﬁlms; and the award-winning director, Lab Ky Mo (who will be speaking alongside Soursweet director Mike Newell). Date: May 10 Venue: Room 451, 309 Regent Street, London W1B 2UW Website: http://www.westminster.ac.uk/ home demonstration of Chinese calligraphy. Date: April 28 Venue: National Union of Journalists Website: http://www.themeridiansociety.org.uk

Shakespeare in Mandarin: Richard III, London The National Theater of China will perform Richard III in Mandarin. The production, which is the first to be performed in Mandarin at the Globe, is expected to attract audiences of about 1,500 for every performance, and the use of English language captioning aims to make it a fascinating experience for Chinese and English viewers. Date: April 28-29 Venue: Shakespeare’s Globe Website: http://www.cbbc.org

Fashioning the East-Asian Screen, Nottingham Pamela Church-Gibson and Tamar Jeffers-McDonald will talk about the role of fashion in East-Asian cinemas and how the screen has influenced fashion cultures in the region. Date: May 3-4 Venue: Nottingham Castle Website: http://www.gbcc.org.uk

Events can be sent to: events@mail.chinadailyuk.com

he Dutch embassy in Beijing is celebrating 40 years of diplomatic relations with China in a series of events. The Nanjing Museum hosted the opening of a Van Gogh exhibition that runs until May 31, including an original painting titled A Peasant Woman Digging in Front of Her Cottage. Sponsored by sister provinces Jiangsu and North Brabant, the exhibition was opened by North Brabant Governor Wim van de Donk, Vice-Governor of Jiangsu Cao Weixing, Dutch Consul General for Shanghai Peter Potman and Mayor of Nanjing Ji Jianye. The consulate general in Shanghai organized seminars on topics such as social responsibility, sustainable urban development and Chinese environmental law, and hosted screenings of Dutch ﬁlms last week. The embassy in Beijing, meanwhile, participated in the opening of the Beijing International Flower Port last weekend with a performance by the Dutch acrobatic group Circus Klomp and will sponsor a pavilion at the 10th Beijing Book Fair at Ditan Park from May 18 to 27.

rench Ambassador to China Sylvie Bermann hosted a farewell reception on Wednesday for Yo-Jung Chen, the embassy’s retiring deputy officer for press and communications. Chen, a cheerful Taiwan native who began an unlikely career as a French diplomat as a translator in Tokyo in 1974, was honored last year with the French Order of Merit.

hinese Ambassador Shen Zhifei recently met Croatian Tourism Minister Veljko Ostojic in Zagreb, and applauded a big increase of Chinese tourists coming to Croatia for visits thanks to “the loose visa policy toward the Chinese tourists adopted by the Croatian government in the past two years”. Shen expressed support for Croatian tourism agencies working in China, saying that the Chinese government also welcomes more Croatians to visit China.

he Romanian embassy hosted a wine seminar and tasting by several producers who are working to enter the Chinese market soon: F&J Internationa, Jidvei, Senator Wine, Stand Up Nazarcea and Viti-Pomicola Samburesti. The seminar was co-sponsored by China’s Trade Development Bureau of the Ministry of Commerce, the embassy said. Embassy and consulate news can be sent to michaelpeters@chinadaily.com.cn

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Last word

Law of the lands is in his hands FORMER CORNELL UNIVERSITY HEAD WANTS MORE FOREIGN LEGAL TALENT IN CHINA By TODD BALAZOVIC toddbalazovic@chinadaily.com.cn

hether it is a battle fought out in a courtroom or in negotiating the next big merger, it has long been known a lawyer’s tone of voice can win or lose a legal battle. But the chancellor and founding dean of Peking University’s transnational law program, Jeffery Lehman, is teaching China’s next line of legal eagles a different lesson in speaking in tones. Translating law across several languages and cultures is just one of the many additional skills would-be transnational lawyers have to understand to get ahead in the global village. “What we really want is for students to understand that a big part of the work for a transnational lawyer is talking, listening, reading, writing and that the voice a lawyer uses is different for each context they are working in,” Lehman says. The former president of Cornell University is doing so by helping one of China’s top universities develop a law program that may soon bridge the gap between two of the most polarized legal systems on the planet, those of the US and China. “The two systems are quite different in their structures and their philosophies, in their speciﬁc rules and, historically, in their view of the role of a lawyer,” Lehman says while visiting Peking University campus on a recruitment drive. “In the age of globalization all of these systems are getting closer and closer, but there’s still a striking difference.” Those differences are being bridged by the likes of Transnational Legal Practice, a rigorous two-year course that teaches Chinese law students which tone of voice to use by creating mock trials in the classroom and putting students in the shoes of a transnational lawyer. Lehman says it is the only course of its kind anywhere. “What we are doing is preparing our students to be completely comfortable in both systems. “We are not bringing actually American law to China, we are bringing American legal education to China.” He hopes to cross the chasm by educating and accrediting a new generation of Chinese lawyers versed in both Chinese and US law. In order to do so, Lehman is push-

BIO JEFFERY LEHMAN Founding dean, School of Transnational Law, Peking University Born: 1956 Career: • 1981-83: Law clerk to US First Circuit Chief Judge Frank Coffin, and US Supreme Court Justice John Paul Stevens • 1983-87: Lawyer with Caplin & Drysdale, Washington • 1987-2003: Professor and Dean of Law School, University of Michigan • 2003-05: President of Cornell University • 2006-present: Chancellor and founding dean, School of Transnational Law, Peking University

ing to break international boundaries by applying Peking University’s transnational law program for accreditation with the American Bar Association (ABA). The school is waiting for the association’s verdict, hoping the accreditation process can soon begin. “We are the first law school ever from outside the United States to seek accreditation from the ABA. Because we are the first, the association is going through a very careful process of whether they should even accept an application from outside the US.” Lehman says a decision is expected in summer and, if successful, the school, designed to operate within the association’s standards, could be accredited by 2014. If any non-American school stands a chance, it is Peking University. With China’s new drive to attract foreign experts into its education system through the Thousand Talents program, set up in 2008, Lehman has spearheaded an effort to bring foreign talent into Peking’s law program. Seven of the program’s nine staff are foreigners, hailing from the US, Britain, Germany and South Korea, all highly noted in international law. Lehman himself was approached by Peking University leaders in 2007 while serving as the president of Cornell University and was made an offer he describes as “quite a surprise”. Even though his experience with China dates back to the 1990s when,

Jeffery Lehman helps to develop a program that bridges the legal systems of the US and China.

as the dean of the University of Michigan law school, he began arranging faculty exchanges with Peking University law school, he did not expect to be approached for the position of dean when the institution decided to launch its transnational law program. “I thought they were coming to talk about the idea, and to ask me to help design the program. I even recommended a number of American law professors who do speak Chinese and know China extremely well, who I thought could help. “I was not sure I could do it effectively as a foreigner, not just a foreigner, but that much of a foreigner to China.” Hesitant to accept the position at ﬁrst, he says it was the idea of doing something different and contributing to what he sees as a vital part of the world’s legal future that finally convinced him. “It was the school’s vision that ﬁnally convinced me,” he says. “The vision of the world as it is evolving and the need that has now for a particular type of person to help in this process of build-

ing the shared legal structure for the world is very compelling. “The opportunity to help create this type of school, which is a resource for China and the world, is what won me over in the end.” After accepting the position, Lehman immediately began approaching leaders of Fortune 500 companies across the globe to explore what types of skills are lacking in the world of transnational law. What he found was a huge demand from companies for people who understood the intricacies of Chinese culture as well as the way the West practices law. “Universally everyone was so excited, because every one of them have experience with these problems of culture based misunderstanding, or legalbased cultural misunderstanding. “Someone who is deeply bicultural, especially people who are native-born Chinese, is a skill set that is highly precious.” He says the need for China-based lawyers is a result of the interdependence between China and the US,

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something that has changed signiﬁcantly since he ﬁrst engaged in law. “I grew up in a world where China and the United States were not interdependent. Each country could survive without the other. “This generation is growing up in a world where both countries need each other. In the modern era we need people who are comfortable walking all around the table; where people are not locked into a single vision of what the law is, or what the rules are, or even what one’s national interest is in some ways.” And for now, as the political landscape continues to transform globally, Lehman is happy to help China’s next generation of transnational lawyers be heard.