Briefing Note - Global Institute For Tomorrow

Global Young Leaders Programme
Executive Leadership Development
Through Experiential Learning
Innovative Development Model for
Rural Prosperity
Briefing note for participants
Partner Organisation:
Pohan Farmers’ Association
Hong Kong and Shanxi, China
July 20 to August 1, 2009
O r g a n i z a t i o n N a m e
P r o p o s a l Ti t l e
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Table of Contents
Introduction..................................................................................................1
Module 1 – Leadership Development..........................................................3
Core Topics...............................................................................................3
Timetable for Module One.........................................................................4
Speakers Profile........................................................................................6
Module 2 – Field Project (Experiential Learning).........................................8
Background..............................................................................................8
Background to the Pohan Farmers’ Association (PFA).............................11
Business Opportunity..............................................................................13
Expected Results and Benefits................................................................17
The YLP Business Planning Framework....................................................19
Module Two Main Tasks..........................................................................19
Business Planning Framework................................................................21
Appendix – Additional Reading Materials.................................................23
Frequently Asked Questions......................................................................26
Annex A. Introducing the 2009 Shanxi YLP Participants:..........................29
Annex B. The GIFT Team...........................................................................33
1. Introduction
Welcome to the Global Young Leaders Programme.
The Young Leaders Programme (YLP) is the first of its kind in Asia. The uniqueness of the course lies
in the life-changing experience that participants from all over the world receive during their Asian field
project as they work on creating investment opportunities for development issues. They will learn
through the eyes of others and witness how decisions made in one part of the world have impacts on
other parts. In particular, they will have the opportunity to use their experience and business acumen
to develop a business plan to attract investors which will assist in the economic development of local
communities.
The YLP aims to bring together, in a series of practical and hands-on learning experiences:
•
•
•
•
•
Cross-sectoral learning – to assemble young leaders from business, government and the
non-governmental organisation (NGO) sector;
Experiential learning – to combine learning and development with practical application;
Measurable sustainable benefits – to create benefits at three levels: the individual participant;
the organisation they work for; and the community groups that participants work with;
Learning from divergent business practices and governance expectations – to foster learning
at all levels by working on live issues with a diverse team of participants; and
Making a difference – to develop long-lasting relationships with communities through
supporting sustainable businesses and building capacity.
Our hand-picked projects are directly linked to globalisation issues and have a real bearing on
business and public sector policies. Through this experience, young leaders of the future will be
much better equipped to understand their future markets and customers as well as the complexities
of doing business in Asia.
Participants will gain: an understanding of Asian globalisation challenges across sectors; valuable
cross-cultural leadership skills; real experience via group dynamics on how to use leadership skills to
succeed in different situations; an opportunity to deliver real benefit to local communities through their
direct interaction and development of business plans; mentoring during training from GIFT-dedicated
mentors; and membership of the GIFT alumni with access to business, community and government
leaders across Asia and elsewhere.
Companies will gain: a tailored programme that can be used to groom managers for the future; crossfunctional development; an understanding of the nature of business decisions and their impact in an
Asian community; a better appreciation of the complex world we live in; and closure of the gap in
leadership development treatment that goes beyond classrooms.
The YLP model comprises three parts:
Module 1 comprises an academic classroom and leadership development component to familiarise
participants with topics of globalisation, civil society, role of government, business ethics, diversity and
corporate social responsibility. This will be conducted in Hong Kong over an intense one-week
period.
Module 2 provides an on-site experiential learning where participants will spend up to one week in
rural communities in Shanxi, China working in partnership with a social enterprise and the community
to prepare a sustainable business plan to harness the available commercial opportunities to alleviate
poverty and at the same time respect ecological and cultural sensitivities.
Module 3, the post-site activities, concerns the business plan prepared by the participants that is
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assessed by GIFT facilitators and, subsequently implemented by the communities involved, initially
with seed investment capital and later as self-sustaining businesses. The benefits of this will be the
continued relationship between the communities and businesses, as well as connecting with the NGO
sector.
This provides a highly practical opportunity for investment options applied to a very
meaningful cause.
Leadership
Development
Module 1
YLP
Experiential
Learning
Module 2
Investment Options
Module 3
Overview:
Module
Description
Location
Timing
1. Leadership
Development
Academic classroom learning
of leadership skills
Hong Kong
20-24 July
2. Experiential Learning
On-site field work with Pohan
Farmers’ Association to
produce a business plan
Shanxi
24 July to 1 August
3. Investment Options
Assessment of business plan
followed by seeking of
investors and subsequent
execution of plan
Hong Kong and
later Shanxi
To be led by GIFT after
participants return to
their respective
countries
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2. Module 1 – Leadership Development
I. Core Topics
Impacts of Globalisation
This session looks at how western influences have changed fundamental aspects of development and
Asian lifestyles. We examine the extent to which changes brought by western economic development
models and ideas have been for the better, or for the worse. Asia’s position in international trade is
considered – what have been the benefits and is there credence to the argument that Asia is being
exploited?
People skills
Talent development for the challenge of business leadership is essential for sustainable business growth
and success. How can we, as leaders, develop an ability to demonstrate flexibility in choice of
behaviour in different types of leadership and team situations? How do we coach others to be aware of
their personal strengths and limitations, and to recognise their personal responsibilities and level of
influence on developing and translating strategy into action? We explore the use of multiple intelligences
and the application of social awareness (empathy, attunement, empathic accuracy and social cognition).
We examine how to present ourselves effectively to shape the outcome of social interactions.
Managing Diversity
Issues of workforce diversity are prevalent with the influx of new businesses to Asia. How are Asian
companies coping with these new demands as they expand globally? We look at the emerging legal
and moral obligations for employers.
Business Ethics
How is business in Asia responding to the challenges introduced by western corporate ethics? The
relationships between business and government, the legal and judicial institutions in Asia and the
influence on business practice are examined. We look at the use of institutional governance tools to
manage corruption and other ethical issues. Is legislation the only answer or are there alternatives for
Asia?
Corporate Social Responsibility
We define corporate social responsibility (CSR) and its drivers. We ask whom corporate decisions affect
and why corporations should care. We look at sensitivity to concerns, reporting methods, accountability
and transparency, and whether stakeholder engagement is truly effective in Asia. We also explore how
to build capacity in institutions. We further examine the environmental responsibilities of companies.
Civil Society in Asia
We look at the origins of civil society and its development in the West and how it contrasts with Asia.
We look at how specific issues helped bring civil society to the forefront of activist campaigning and how
this introduced to people in the West a new perspective on business and government activities. The
historical context to civil society development (or lack of) in Asia and its future role will also be examined.
The Role of Government
We look at three principal areas of responsibility: domestic issues, foreign relations, and business. We
look at the different styles of government in different economies and analyse their effectiveness. Can
business work with government? The public-private partnership model has been widely applied in the
West. What is its applicability in Asia? Who has tried it and with what success? We further look at the
concept of the tripartite arrangement between business, government and civil society.
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II. Timetable for Module One
Date
19 July
(Sunday)
20 July
(Monday)
Time
All day
Overseas participants arrive in Hong Kong and check in at hotel
9:00-10:30am
10:30-11:00am
11:00-1:00pm
1:00pm
2:00-4:00pm
4:00-4:30pm
Introduction to the YLP and ice-breaking – GIFT
Tea Break
An overview of the YLP – GIFT
Lunch
Leadership Awareness: Impacts of Globalisation – GIFT
Tea Break
Leadership Awareness: Leadership – Guest speaker: Tony Miller, Senior
Consultant, King Yip Group
4:30-5:30pm
21 July
(Tuesday)
9:00-10:30am
Leadership Skills: Leadership and People –GIFT
10:30-11:00am
Tea Break
Leadership Skills: Diversity – GIFT + Guest Speaker: Mr. Cassian Cheung
(Former President of Walmart China)
Lunch
Leadership Skills: Business Ethics for Leaders – GIFT
Tea Break
Ethics for Leaders – Guest Speaker: Mr. Stephen Pittman, Corporate
Security Manager, Corning Incorporated
11:00-1:00pm
1:00pm
2:00-3:30pm
3:30-4:00pm
4:00-5:00pm
9:00-10:30am
Leadership Knowledge: Corporate Social Responsibility – GIFT
10:30-11:00am
Tea Break
Leadership Knowledge: Corporate Social Responsibility – Guest speaker:
Jeremy Prepscius, Managing Director Asia, Business for Social Responsibility
(BSR)
Lunch
Special Topics: The Organic Market and Fair Trade – GIFT
Tea Break
Role of Media – Guest Speaker: CK Lau, Former editor for South China
Morning Post
Leadership Knowledge: Role of Government – GIFT
Tea Break
Civil Society in Asia – GIFT
Lunch
Investor’s perspective – James Chen, Chen Yet-Sen Foundation
Tea Break
Special Topics: Shanxi partner – Guest Speaker: Ms Zheng Bin, Co-founder,
Pohan Farmers’ Association
Free time
Shanxi YLP Drinks Event
Shanxi Project Briefing – GIFT + Guest Speaker: Ms Zheng Bin, Co-founder,
Pohan Farmers’ Association
Business Plan Briefing and Group Work – GIFT
Tea Break
Q&A on GIFT and YLP/Module One Reflection – GIFT
Lunch
Define roles and responsibilities – GIFT
Depart to airport
Check-in at airport
Depart for Xian, China (MU204)
11:00-1:00pm
22 July
(Wednesday) 1:00pm
2:00-3:30pm
3:30-4:00pm
4:00-5:30pm
23 July
(Thursday)
9:00-10:30am
10:30-11:00am
11:00-1:00pm
1:00pm
2:00-3:30pm
3:30-4:00pm
4:00-5:00pm
5:00pm
7:00pm
9:00-10:00am
24 July
(Friday)
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Session
10:00-11:00am
11:00-11:30am
11:30-1:00pm
1:00-2:00pm
2:00-2:30pm
2:30pm
3:15pm
6:00pm
MODULE ONE VENUE
Hong Kong Football Club
Venue: Happy Valley Room and Meeting Room
Address: 3 Sports Road, Happy Valley, Hong Kong
Tel: (852) 2830 9500 Fax: (852) 2882 5040
Website: http://www.hkfc.com.hk
Accommodation for overseas participants:
Cosmopolitan Hotel
387-397 Queens’ Road East Wan Chai, Hong Kong
Tel: (852) 3552 1111 Fax: (852) 3552 1122 Website: http://www.cosmopolitanhotel.com.hk
*Transportation to venue: The Module 1 venue (Football Cub) is within a 10 minute walk or 5 minute
taxi ride from the hotel. On 20 July, a GIFT representative will escort you from the hotel to Module
One venue. Participants should gather in the hotel lobby at 8:30am.
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III. Speakers Profile
Mr. James Chen
Founder, Chen Yet-Sen Family Foundation
James Chen is a third generation member of a family owned enterprise, Wahum Group Holdings. The
Hong Kong and Nigerian based manufacturing company produces consumer products, building materials and cardboard packaging. In 1995, he joined the family business as founder and CEO of Legacy Advisors Limited, a single family office operation. In 2004, James was appointed Chairman of
Wahum Group Holdings.
James transformed the way his family managed and preserved its wealth with the establishment of
Legacy Advisors. Structured to provide better control over the family’s assets with a more efficient approach to investment, Legacy Advisors has produced superior risk adjusted returns on its investments
over time.
In 2003, James was instrumental in founding the family’s strategic philanthropic Foundation – the
Chen Yet-Sen Family Foundation. Since its inception the Foundation has supported close to 100 initiatives in Mainland China, Hong Kong and West Africa.
Parallel to this James has backed a number of social ventures, founding the Hong Kong Chapter of
Bring Me a Book (www.bringmeabook.org.hk), an NGO promoting early childhood literacy. As well as
funding the development of variable power fluid filled lens technology designed to meet the challenge
of correcting the eyesight of visually impaired people in the developing world
(www.adaptive-eyewear.org).
Mr. Cassian Cheung
Former President, Walmart China
Cassian Cheung was the President of Wal-Mart China from 2002 to 2005. He led the development of
Wal-Mart’s retail business in China, with over 40 Supercenters and Sam’s Clubs, and oversaw a team
of over 20,000 associates.
Prior to joining Wal-Mart, Cassian was the President of Quaker Oats Asia, where he led the growth of
Gatorade Sports Drinks and the Quaker Cereals business in more than 10 countries.
Cassian started his career with Nestle in the USA, and worked in various marketing positions in Switzerland, Singapore and China. As Chief Operating Officer for China, Cassian was responsible for the
sales and marketing efforts of the company from the late 80’s to the mid 90’s; and played a key role in
the establishments of Nestle’s dairy, instant coffee, culinary and confectionery joint ventures in China.
Since March 2008, Cassian has joined the Hong Kong University of Science and Technology (HKUST)
Business and Management School as an adjunct professor, focusing on Management in China. Cassian is an advisory board member of the HKUST Business School. He is also a member of the Coca
Cola Retailing Research Council of Asia. Cassian was an advisor to the mayor of the city of Tianjin,
and a past advisor of the Asia Consumer Products Panel of the Economist Group Asia. Born in Hong
Kong, Cassian attended university in the U.S. and received a Master of Management degree from
Northwestern University’s Kellogg School of Management.
Mr. CK Lau
Former Editor of SCMP
C K Lau is a seasoned journalist who first joined the South China Morning Post in the early 1980s.
Over the years, he has held various writing and management positions. He is the former editor of the
SCMP. Before his appointment as Editor, he wrote columns and editorials as Executive Editor (Policy).
He has also worked for The Australian in Sydney and for the Overseas Chinese Daily, and was Chief
Press Information Officer of the Independent Commission Against Corruption.
Mr Lau is also a member of the executive committee of the Journalism Education Foundation Hong
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Kong Ltd. He also sits on the board of the Hong Kong News Executives' Association.
A graduate of Baptist University, Mr Lau holds a master's degree from the University of Minnesota,
USA. He is author of Hong Kong's Colonial Legacy published by The Chinese University Press in
1997.
Mr. Tony Miller
Senior Consultant, King Yip Group
Tony Miller retired from the Civil Service in February 2007 as Permanent Representative of the Hong
Kong Special Administrative Region of China to the World Trade Organization in Geneva. Key positions held prior to that include Permanent Secretary for Financial Services and the Treasury 2002-04,
Director of Housing and Chief Executive of the Housing Authority 1996-2002, Director-General of
Trade 1993-96, Director of Marine 1991-93, Information Coordinator in the Chief Secretary’s Office
1989-91 and Private Secretary to the Governor 1979-82. Mr. Miller is a Non-executive Director of
Transport International Holdings Limited.
Mr. Stephen Pittman
Corporate Security Manager, Corning Incorporated
Steve Pittman has over 24 years experience as an International Security Professional. He has managed Security Projects (Personal and Physical), Investigations (Intellectual Property, Due Diligence,
Fraud, Employee Misconduct, Background Verifications, etc.), Conducted Training Events and Developed Multi-Functional Teams in the US, Europe, the Middle East and Asia (most recently spending 4
years in Beijing).
He has worked as a Security Specialist for the US Department of State, Security Manager for a Fortune 500 Company, Law Enforcement Training Commander for the US Department of Defense, Security Consultant and is a retired Law Enforcement Professional.
Mr. Pittman enjoys adventure travel, scuba diving, mountain climbing, motorcycle riding, reading and
playing a 12-string guitar! He is married to Lisa Pittman (who is a US Department of Diplomatic Officer
– assigned to the US Consulate General Hong Kong as the Chief of American Citizens Services) and
is the father of 2 University aged daughters. He is a member of the Union Church in Hong Kong, a
Professional Member of ASIS - HK, a member of the California Retired Law Enforcement Officers Association, and a life time member of the Orange County (California) Association of Deputy Sheriff’s.
Mr. Jeremy Prepscius
Managing Director, Business for Social responsibility (BSR)
Jeremy Prepscius is based in Hong Kong and brings years of practical corporate responsibility experience from the perspectives of supply chain management, business integration, external communications, government relations and compliance operations. Prior to joining BSR in 2006, Jeremy
Prepscius spent more than ten years at NIKE, Inc where he worked in equipment sourcing, footwear
production and corporate responsibility. Jeremy spent two years in Ho Chi Minh City, Vietnam as
NIKE's labor practices manager and five years in Guangzhou China as the North Asia regional Corporate Responsibility Compliance Director. Jeremy spent more than three years in NIKE headquarters
both in sourcing and corporate responsibility strategic planning.
Jeremy has done extensive practical CSR work with focuses on brands, NGOs and governments
both in Cambodia, Vietnam, Taiwan, Korea, Hong Kong, Macau, Japan and China. He has worked on
project and advised companies such as Dell, Ann Taylor, Nissan and many others on a variety of CSR
issues. Jeremy currently heads BSR’s rapidly growing and evolving work in Asia. He lives in Hong
Kong with his wife and growing family.
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3. Module 2 – Field Project (Experiential Learning)
Introduction
Participants will spend eight days on site, working with GIFT’s partner in Shanxi Province, the Pohan
Farmers’ Association (“PFA”), to develop a business plan to address both the economic and social
needs of the community. Adopting an integrated approach, PFA currently offers commercial
opportunities through organic farming and trading, agriculture retail chain stores, micro-financing and
a fair trade handicraft business as well as a variety of public services to empower the rural community.
This has resulted in improved livelihoods, higher productivity and better skills, which is conducive to
the region’s long-term socio-economic prosperity.
Building on this approach, participants will help the PFA design the value chains through which it can
sell their organic and organic in-conversion products, especially organic cotton. To strengthen the
farmer’s capacity in this area, participants will also focus on the educational and vocational training
services that can be offered by the PFA. In order to develop the business plan, participants will need
to examine specific issues such as business opportunities, potential buyers, investment needs, supply
chain issues, governance structure and training needs.
I. Background
Shanxi Province Information
Shanxi: A snapshot
Land area
156,300 square kilometers
Population (2007)
33,925, 800
Per capita GDP (2008)
0~14: 19.64%
15~64: 73.02%
65+: 7.34%
RMB 694 billion (2.12% of
China’s GDP; ranked 18 among
the 34 provinces in China)
RMB20,398
GDP growth (2008)
8.3%
Age structure
Annual GDP (2008)
Per capita annual household income (2008)
Xian
Yuncheng
Inflation
(yoy growth)
Urban: RMB13,119
Rural: RMB4,097 (National average: RMB 4,761)
CPI: 5.9% (2008), -1.2% (Mar
09)
PPI: 6.9% (2008), -6% (Mar 09)
Shanxi Province is located in central China, and borders the three provinces of Shaanxi, Hebei and
Henan in addition to the Inner Mongolia Autonomous Region. With a total land area of around
156,300 square kilometres, Shanxi is divided into eleven prefecture-level divisions including Taiyuan
city and Yuncheng city the capital city and the site location respectively.
In 2008, the GDP per capita of Shanxi was RMB20,398 (USD2,984), ranking the province as 14th
among the 34 provinces in China. Industry in Shanxi is centered around secondary (60 percent of
GDP) and tertiary (35 percent of GDP) industries whilst primary industry only made up 5 percent of the
province’s GDP. Shanxi faces several agricultural challenges. The province’s landscape is
characterized by mountains and plateaus with few plains, resulting in a limited amount of land for
cultivation. Its arid climate conditions and dwindling water resources further inhibit agricultural
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development. Despite possessing fertile soil, scant rainfall and widespread erosion have hampered
the raising of sufficient food levels which has occasionally led to famine. The main food crops are
winter wheat, corn, sorghum, soybeans, millet, barley, and fruit. Cotton, tobacco, and grapes are
grown as commercial crops. Shanxi’s forest resources are also small in scale and of low quality, thus
the province relies on timber imports from other provinces for almost all of its lumber needs.
The vast reserves of coal (some 260 billion metric tons of coal or one-third of China’s total reserves)
together with bauxite deposits in Shanxi has resulted in the province’s economy being concentrated in
heavy industries such as coal and chemical production, power generation and metal refinement.
Shanxi’s geographic location and its historical significance as the former base of the Communist Party
have spurred the development of countless military-related industries. Unfortunately, alongside this
growth is Shanxi’s reputation for poor labour conditions, particularly in coal mines, where thousands
of workers have perished each year.
The following box highlights some of the key challenges facing Shanxi Province, as well as China as a
whole.
Challenges facing Shanxi Province and rural China
High levels of rural poverty in Shanxi
Shanxi Province has relatively high levels of rural poverty. The percentage of the population in
absolute poverty (i.e., those with a per capita annual income of less than RMB 683 (100USD) is 3.9
percent, compared to the national average of 2.5 percent. 35 of its 119 county level cities are
defined as “national impoverished counties” which is approximately 2 percent of all the villages
classified as beneath poverty levels in China. Many villages suffer from low investment, depressed
economic growth and underemployment. Household incomes are low and economic opportunities
few. Although 43 percent of the workforce in Shanxi are engaged in agriculture, this sector only
contributed to 5 percent of province GDP in 2008.
The small-scale farming structure limits the growth of agricultural sector
China’s accession to World Trade Organisation (WTO), robust economic growth and the freeing up
of markets have brought significant opportunities for the rural sector. However farmers in China
have still failed to effectively participate in and benefit from these transformations. To commercialize
the agricultural sector, farmers need to have a larger scale of production, specialized knowledge
and better access to market and technical information. This has encumbered several millions of
small-scale farming households in China, including those in Shanxi Province.
In China, farmers generally rely on primitive farming techniques and lack economies of scale. This
has reduced efficiency and limited the growth of the agricultural sector. Moreover, unable to gain
market access and facing power shortages, many farmers find it difficult to sell their agricultural
products. Without stable sales channels and encountering price fluctuations, many farmers are
suffering from unstable incomes and cannot plan for the long term. Inability to access capital also
makes it difficult for farmers to uplift themselves through investment and business means.
The growing urban-rural disparities
Economic prospects are gloomy in rural areas in contrast to the rapid development of urban coastal
cities in China. Incentivised by government policies that have been persistently urban and coastalbiased, the inequality between rural and urban areas as well as inter-regional income is very serious
in China. The richest provinces are concentrated along the eastern coast whilst the poorest
provinces are clustered in the central and western regions.
Thus, many rural residents become migrant workers attracted to the big coastal cities to earn
better living, as one or two persons working in the city can support a whole family back home.
Migrant workers face little social protection in the urban cities; they are often excluded from many
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aspects of the political, economic and social benefits enjoyed by urban residents. They are by far
the largest group of the underclass living in urban areas. Evidence of this migration trend can be
seen in Shanxi Province (as in many other Chinese rural areas ) where the absence of young
people is noticeable.
In 2009, affected by the global financial meltdown, the income generated by this migrant workforce
has been severely reduced. According to a recent survey run by the National Statistic Bureau of
China, compared with 2008, rural earnings from urban employment have fallen by 30-50 per cent.
Moreover, around 20 million migrant workers have lost their jobs in urban cities. This poses grave
financial pressures to many families in rural areas.
The depletion of rural population will affect food security
From a different perspective, despite the financial contribution of the migrant workers to the rural
areas, this movement has led to the depletion of rural populations which will impact China’s ability
to maintain food security in the long run. China feeds a fifth of the world's population with a land
mass largely unsuited for agriculture (only 14 percent of its territory comprises arable land).
Feeding 1.3 billion people remains one of the government's top concerns after 30 years of reform
and opening-up. Farmers used to store big urns of grain at home every year but as a result of the
migration few families do so now instead choosing to buy grain. Buildings and roads have also
taken away a lot of high-yield cropland. Hence, the Chinese government has made it a priority to
find a balance between food security and urbanization of its vast rural population.
Environmental deterioration
The environmental challenges facing
China include water shortage,
industrial pollution and flooding. The
Ye l l o w R i v e r, w h e r e t h e Y L P
participants will visit, was once one of
China's main arterial water courses.
However, the river waters now no
longer reach the sea for almost twothirds of the year. Water usage is
highly inefficient in China, especially in
agriculture, where it is estimated that
s o m e 6 0 - 8 0 p e rc e n t o f w a t e r
resources is wasted through
evaporation from canals and irrigation
system.
The loss of arable land through a
mixture of erosion and industrialisation
is a major concern in China.
The
country is now one of the biggest
pesticide users in the world, which is
causing significant environmental
damage. In addition the steady fall of
the water table, especially in the north,
exacerbates the problem.
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Project site location - The Pochao and Hanyang Townships in Yongji city
The Pohan Farmers’ Association will be our local
business partner for this project. There are 35
villages with a population of 25,800 and 6,250
households in the Pochao and Hanyang
townships which both belong to Yongji city in the
city of Yuncheng (see figure 1). The total land
area is 260 square kilometres with 5,340 ha of
arable land. To the west lies the Yellow River
where the villagers have established farmlands in
the vicinity of the river.
The soil in the two townships is relatively fertile
and a variety of crops have been grown including
apple, peach, hawthorn, cherry and other fruit
trees. The soil and climate conditions are also
favourable for cultivating cotton, millet, corn and
vegetables.
Per capita annual income is around RMB3,000
(USD439) in the region with the majority of the
population relying on small-scale farming. The
literacy rate in the region is over 90 percent. All
households have access to electricity and
telephone and in some cases, the internet. Like
many other villages across China, the two
townships face the challenge of rural-urban
migration which has resulted in skilled and young
labor leaving the area for greater opportunities in
the cities.
Central Government
Shanxi Province
Yuncheng City
Yongji City
Pochao and Hanyang
Townships
State level
Province- level
Prefecture-level
County-level
Township-level
Figure 1:Administrative structure of China
II. Background to the Pohan Farmers’ Association (PFA)
The importance of farmers’ associations in rural development
As discussed, small-scale farming structures in China have prevented farmers from participating
effectively in the market. There is a need for new ways of organizing agricultural production and
marketing to increase scale of production as well as gain access to technical services and support for
farmers. Arguably the most important solution for small-scale farmers is to better organize themselves
and work together through farmers’ associations.
There are many strong economic reasons and incentives involved: (i) greater access to markets when
larger contracts are awarded to the producer groups who can produce and supply more than just one
type of product; (ii) cost savings and economies of scale in purchasing; (iii) the ability to access public
or non-public services as a result of lobbying as a formal and organised group; and (iv) increased
opportunities to access capital (private or from government) due to being a formal entity (and thus
seen as a more attractive and stable opportunity for potential investors). The primary aim of these
associations is to achieve an increase in aggregate rural incomes, facilitate the commercialization of
agriculture and improve the efficiency of agricultural production.
The development of farmers’ associations in China is, however, still in its infancy. In 2003, only about
7 percent of villages in China had functioning farmers’ associations. This suggests substantial
potential for the future. Recognizing the importance of farmers’ associations, the government has
provided support ranging from new policies and regulations to direct assistance in the form of training
or even financial aid. Agro-enterprises also view farmers’ associations as a way to ensure efficient
functioning of supply chains and provide assurances of product safety and quality.
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History of the Pohan Farmers’ Association
The Pohan Farmers’ Associations (PFA) is a well-established farmers’ association in the Pochao and
Hanyang Townships, with a membership of around
3,800 farmers covering 35 villages in the region.
PFA evolved from an agriculture retail store (selling
agricultural inputs and rural technologies to farmers)
established by Ms. Zheng Bin and her husband in
1998 into a well-organised farmers’ association with
a mission to uplift rural livelihoods.
After several years of operation, Ms. Zheng
recognized that upgrading farmers in terms of
strategic thinking, farming techniques, market
knowledge and market participation were requisites
for improving the association to achieve its goals of
rural development. Thus, with this vision, Ms. Zheng
has expanded the services offered by the PFA to
include farmers’ training, women’s handicraft
business, women’s study groups, and a cultural
center to empower farmers.
“Here, we broaden our horizons and learn about
the world” – A wall quote in the training room of
PFA
As the organisation expanded and demands from farmers grew, Ms. Zheng formally registered the
PFA with the government in 2004.
Current status
Currently, the PFA employs 28 full-time staff who operate a profitable chain of five agricultural retail
stores, a women’s handicraft cooperative, a micro-credit unit, a farmers’ school and a number of
other different cooperatives. 20 to 30 percent of the profits are set aside for community development
purposes.
The PFA has won a number of awards and recognition for its work, such as the China Poverty
Eradication Award. Ms Zheng has been nominated for the 1000 Global Women Nobel Peace Prize
2005 and voted as one of the top 10 rural entrepreneurs in China in 2008. The PFA in particular
received strong support from various parties from the government who have provided funding and
subsidies for seeds. Last year, the PFA received funding of RMB10,000 (USD1463) per village from
the local government to conduct farmer training programmes in 16 villages. The PFA has also
received external funding from Fuping Development Institute to run a farmers’ school and micro-credit
services. In addition, the Shanxi University, the Northwest Agricultural and Forestry University as well
as the Yuncheng Agricultural Institute provide technology support to the PFA on farming technologies
and organic conversion.
Governance
The PFA has a rigorous organization structure (See Figure 2). Under PFA, there are numerous farmer
cooperatives which have their own organization structures and management team.
12
Member Assembly (3,865 members)
Supervisory Committee (11
members)
Council (40 members)
Standing Council (9 members)
Council Chairman (1 Chairman)
Market
Development
Department
Government
Coordination
Department
Project
Coordination
Department
Secretariat
Financial and
Logistics
Department
HR Department
Figure 2: Organization structure of PFA
III. Business Opportunity
Rural entrepreneurship
In line with its mission of helping small-scale farmers - many whom are trapped in a cycle of poverty the PFA is active in agricultural entrepreneurship, a key component of promoting rural development.
The PFA works to support its farmer members to sell their products through value chains (value
chains refer to all the steps that a product takes from its point of origin to the consumers). Like other
farmer associations in China, the PFA provides information as well as other advisory and capacity
building services. It also works to strengthen farmer’s bargaining power through collective
commercialisation, to create profits from economies of scale through collective storage and
processing, and to represent farmers’ interests in policy negotiations, and dialogue with other
agribusiness stakeholders.
Currently, the PFA has five income generating projects to increase the income sources of farmers. In
acknowledgment that rural livelihoods can only be improved when social developments go hand in
hand with economic growth, the PFA also provides access to a wide range of social services to its
members. In the coming decade, the efforts of PFA will be focused on twelve projects as identified in
Figure 3.
Projects
Category
1 Organic Farming and Trading Association
Income generation
2 Youth Organic Farming Group
Income generation
3 Agriculture retail chain stores
Income generation
4 Rural Bank
Income generation
5 Women Handicraft Cooperative
Income generation
6 Farmers’ school
Adult education
7 Children Education Center
Children education
8 Women Study Group
Gender empowerment
9 Green Family Group
Environmental conservation
10 Health Association
Health and hygiene
11 Elderly Service Center
Public services
12 Cultural Center
Public services
Figure 3: PFA’s 10-year expansion plan (2008-2018)
Start date
2006
2008
1998
2007
2004
2006
2009
2001
2005
2006
2009
2004
13
Project Focus: Organic farming
There is an increasing awareness of food safety and environmental preservation, and promotion of
sustainable farming in the region. To capitalize on this demand and to leverage on its strong existing
networks, the PFA intends to develop a range of organic products, especially as organic farming
enables farmers to earn price premiums.
The PFA has recently established the Organic Farming and Trading Association (OFTA) and the Youth
Organic Farming Group (YOFG).
Participants of the Shanxi YLP will focus on the organic trading business of the PFA, particularly
organic cotton. By providing alternatives to traditional cotton production which is water and pesticide
intensive, the project will also seek to find potential solutions to the serious environmental problems in
the region.
Participants will work closely with the OFTA and the YOFG to write a business plan which involves
setting up the value chains through which the organic and organic in-conversion products, like
organic cotton, can be sold to the market efficiently.
Background: The world’s cotton production
Cotton is grown on 31 million ha or 2.4 percent of global arable land, involving about 50 million
farmers in over 100 countries. In 2008, world production of cotton amounted to 23.3 million metric
tons. China is the world’s biggest cotton producer and consumer, producing 7.8 million metric tons
and consuming 9.9 million metric tons in 2008. About 14 million Chinese farmers are directly
involved in cotton production with regions like Xinjiang, Shandong, Hebei, Henan and Shanxi
famous for cotton production. As cotton farming requires abundant water reserves, low humidity
and long daylight, cotton farming is not widely developed throughout China and the existing farm
sites often face constraints in expansion due to lack of water reserves.
Problems with conventional cotton production
Cotton is by far the most used clothing fabric in the world—between 40 to 47 percent of the
world’s textiles are made from cotton with a global market size of US$300 billion. However, cotton
is arguably the crop with the highest toxic impact on earth. Cotton uses about 25 percent and 10
percent of the world’s insecticides and pesticides respectively. The various chemicals applied can
harm insects and soil micro-organisms which are beneficial for the soil, as well as pollute ground
and surface water adversely affecting the health of humans and wildlife.
The farming of cotton is water-intensive: approximately 400 gallons of water are required to
produce a single cotton T-shirt.
Why organic cotton?
Many, but not all, of the main environmental problems stemming from cotton production could be
addressed by switching to organic production. Organic cotton is grown without the use of toxic and
persistent pesticides and synthetic fertilizers. Organic production systems replenish and maintain
soil fertility, reduce the use of toxic and persistent pesticides and fertilizers, and build biologically
diverse agriculture. Third-party certification organizations verify that organic producers use only
methods and materials allowed in organic production.
The flourishing organic cotton market
Today, organic cotton has become one of the world’s most sought-after products. Retailers and
garment brands are increasingly using organic cotton to meet a steady growth of demand from
consumers who are willing to pay a premium. Global retail sales of organic cotton apparel and
home textile products reached an estimated value of US$3.2 billion in 2008, a 63 percent increase
over the US$1.9 billion market in 2007, according to the Organic Cotton Market Report 2007-2008
released by Organic Exchange.
14
As a result of consumer interest, organic cotton fiber is used in everything from personal care items
(sanitary products, make-up removal pads, cotton puffs and ear swabs), to home furnishings
(towels, bathrobes, sheets, blankets, bedding), children's products (toys, diapers), clothes of all
kinds and styles (whether for lounging, sports or the workplace), and even stationery and note
cards. In addition, organic cottonseed is used for animal feed, and organic cottonseed oil can be
used in a variety of food products, including cookies and chips.
The top 10 organic cotton-using brands and retailers globally are: Wal-Mart Stores Inc.; C&A; Nike
Inc.; H&M; Zara; Anvil Knitwear Inc.; Co-op Group; Pottery Barn; Greensource Organic; and Hess
Natur.
Organic cotton production
According to Organic Exchange, organic cotton production increased 152 percent during the
2007-2008 crop year amounting to 145,872 metric tons grown on 161,000 ha in 22 countries. In
2008, India accounted for about half of the world’s organic cotton production, taking over Turkey’s
long-standing position as the leader and seeing its production increased by 292 percent to reach
73,702 metric tons. Other leading organic cotton producers, according to rank, are Syria, Turkey,
China, Tanzania, United States, Uganda, Peru, Egypt and Burkina Faso.
The Organic Farming and Trading Association (OFTA)
The OFTA was formed by over 40 professional cooperatives organized around a particular product
such as cotton, asparagus, beans, apple, persimmon, apricot, walnut, millet, corn, sesame, pear,
watermelon, chicken, pig, cattle, vegetable, spinning, weaving, etc). It is important to note that
farmers may belong to several different cooperatives depending on the number or kind of crops they
grow. The objective of OFTA is to facilitate organic conversion through providing market information
on agricultural inputs and outputs, and technical support as well as subsidies on the purchase of
seeds and fertilizers.
OFTA plans to standardize the use of fertilizers, pesticides and seeds as well as coordinate technical
training and product sales in three years. It will also assist farmer members to set up agricultural
product processing centers. Figure 4 describes the organization structure of OFTA.
Member Assembly (800 members)
Supervisory Committee
(5 members)
Council (50 members)
Standing Council (9 members)
Council Chairman (1 Chairman)
Technical
Support
Sales &
Marketing
Packaging
Centre
Accounting &
Finance
Production
Center
Agricultural
Products
Processing
center
Office
Administration
Figure 4: Organization structure of OFTA
15
With technical support from organic experts, OFTA has started the organic conversion process in
2008. By 2013, OFTA aims to have 2,000 ha organic certified; which will be 670 ha each for cotton,
asparagus and fruit trees. The projected organic sales and benefits to farmers in 2013 are shown in
Figure 5. These organic products will be branded and sold to domestic and export markets. It is
intended that there will be cross-selling between the OFTA and the Women Handicraft Cooperative
which will use the organic cotton to make blankets, handicrafts, clothes, etc.
(In RMB 000s)
Total sales
Costs
- Expenses paid for machine farming
- Fertilizers
- Seeds
- Pest control
- Watering
- Labour costs
Profit to farmers
Asparagus
50,000
Cotton
22,200
Others
18,000
Total
90,200
(550)
(8,600)
(1,000)
(8,600)
(900)
(750)
(900)
(1,800)
8,250
(1,000)
(8,600)
(900)
(750)
(900)
(1,800)
4,050
(2,550)
(25,800)
(1,800)
(2,250)
(2,700)
(14,850)
40,250
(750)
(900)
(11,250)
27,950
Note:
Asparagus: 10 million kg sold at RMB5/kg
Cotton: 1 million kg sold at RMB 18/kg and 3.5 million catty of cotton seeds sold at RMB 1.2/catty
Others: 1 million kg sold at RMB 18/kg
Figure 5: Projected organic sales and benefits to farmers in 2013
To achieve its goals, OFTA needs a funding of RMB3.6 million (USD526,000) to conduct the organic
conversion from 2009 to 2011. A detailed breakdown is shown in Figure 6. Its initial plans from 2009
to 2010 are to focus on training farmers in order to build up capacity. To help farmer members
convert to organic farming, OFTA will provide subsidies on organic fertilizers, seeds and pest-killing
lamps as well as bearing part of the costs of pest control, land inspection, construction of motorpumped wells and the purchase of necessary farming machines.
One of the biggest challenges in persuading farmers to convert to organic production is the shift away
from heavy reliance on chemical fertilizers and pesticides which subsequently requires more effort and
time in pest control as well as reduced crop yield in the short term. To enhance pest control, OFTA
has already turned soil over, bought 50 pest-killing lamps, and started to grow millet which attracts
pest-eating ants.
Items
Farmers training expenses
Consultancy fee for technical support
Salary
Capacity building for staff
Office expenses
Subsidies on land inputs
(e.g. organic fertilizers, seeds, pest-killing lamps, land inspection fees)
Selling expenses
Capital expenditures
(including office equipment, motor-pumped well, farming machines)
Total
Figure 6: Total investment need of OFTA from 2009 to 2011
16
RMB (000s)
113
120
801
244
36
1,441
172
715
3,642
The involvement of farmers in OFTA allows them to participate in the democratic decision-making
process, to make their voices heard, and to ensure their interests are protected. There are also
training and development elements in the project. It is anticipated that over 40 cooperative heads and
40 university graduates will be trained up with long term vision and leadership skills to drive rural
development. The technical and business training provided by OFTA will also improve the level of selfreliance of the farmers.
Youth Organic Farming Group (YOFG)
The Youth Organic Farming Group was set up to engage university graduates (aged between 18 and
28) to cultivate five pieces of farmland with a total area of 3 ha from villages to turn the farmland into
an organic model farm. The benefits of this project are plentiful. First, it will train up a pool of young
leaders who will lead and drive agricultural and rural
development in the region. Second, by providing job
opportunities and career prospects, young people will be
attracted to stay in the villages which will on one hand help
alleviate the urban-rural migration as well as urban poverty
problems, and on the other hand, provide a quality rural
workforce. Third, the model farm will develop best practices
which can be scaled up and serve as a model to be replicated
in the region or throughout the country. It will also have
demonstration effects to encourage farmers to practice
organic farming.
Rural training for young people
An investment of around RMB1.2 million (USD17,500) is
needed to implement this project (see breakdown in Figure
7). To package the farm as an eco-tourism activity, RMB587,630 (USD85,000) will be put into the
construction of tourism and lodging facilities around the farms.
Items
Land rental
RMB (000s)
98
Land input (e.g. tree plantation, seeds, seedlings, pest-killing lamps, organic
fertizliers)
Salary
Office expenses
159
316
18
Capital expenditures
(including eco-lodge, motor-pumped well, tourism facilities, machinery)
Total
588
1,179
Figure 7: Total investment need of YOFG from 2009 to 2011
IV.Expected Results and Benefits
The business opportunity is to set up a value chain for trading organic products including organic
cotton. Currently OFTA is organizing farmers to convert their products to organic forms which will
command a higher premium. Through practicing organic farming, farmers can further reduce the
financial burden by not having to buy chemical fertilizers and pesticides. Whilst there will be an
investment need of RMB 3.6 million for the organic conversion process, there is an identified gap in
the value chain, namely a trading enterprise to act on behalf of OFTA. Through doing so, this will
directly increase farmers’ income and alleviate rural poverty.
By trading directly with such an enterprise, the farmers will avoid being exploited by middlemen and
obtain fair prices for their products. The enterprise will also provide stable market access for the
villagers, which will encourage them to make long term planning and be more responsive to market
changes.
17
Environmental benefits will arise through the use of sustainable resources in an integrated manner that
minimizes ecological damage to the region and meets the basic development needs. Cotton
plantation is both water- and pesticide-intensive. The organic farming practice will reduce water usage
and eliminate the use of chemical fertilizers and pesticides which is much healthier for farmers and
consumers, and much more ecological-friendly. It will also help build biologically diverse agricultural
systems and replenish and maintain soil fertility. Moreover, no more carbon emissions will be
produced via production and use of mineral fertilizers and thus contributes to climate change.
V. Key challenges
•
The existing role of PFA is mainly to provide training and support for farmers. The PFA however
lacks business knowledge as well as a market network necessary to effectively set up value chains
and to expand its business for its organic products. This is where the role of a trading enterprise
will be vital. Training business and management professional to develop and manage the chain will
also be critical.
•
The first organic crop is expected to be ready for sales in 2013. Prior to this, a large amount of
capital is needed to enable PFA to help farmers convert to organic farming. The YLP participants
will have to consider the various ways to design the investment opportunity to make it
commercially attractive for external investors. Tapping the organic in-conversion market could be
an option.
•
Yield is expected to be greatly reduced during the three year conversion period and it will take
around five years to return to the original production levels. Also, organic farming is highly labor
intensive for weeding and water irrigation (if the appropriate technology is not in place). Motivating
farmers to think longer term and changing their mentality will be one of the key challenges.
•
Cotton farming is highly water-intensive. During the conversion period, a large amount of water is
required to dilute the pesticides embedded in the soil layer although in the long-run about 20
percent of water resources will be saved as soil clogs initially caused by applying chemical
fertilisers can be improved for water retention once the latter is removed. To improve on the water
efficiency, the YLP participants should consider irrigation systems such as drip systems for the
business plan which will reduce the water consumption.
•
On the technical side, pest control is the major problem facing organic cotton farming. The quality
of the cotton produced by PFA is another key concern. The cotton should meet certain standards
such as fiber length, strength and colour.
•
The world cotton market is as volatile as only a commodity market can be. The fall of cotton price
can directly dampen farmers’ incentive and income. The financial meltdown has exacerbated the
situation. Textile mills have now become cautious about buying cotton in large quantities due to
uncertainties regarding demand from the downstream industries (e.g. fabric mills, garment
factories, apparel retailers, etc.) and the devaluation of raw material stocks in storage.
•
The YOFG is a good initiative to nurture rural talents and address existing urban-rural migration
issues. However, additional incentives may be needed to persuade young university graduates to
stay on the farm.
•
Once investment is committed, the company’s management and governance structure needs to
be set up in such a way that addresses the needs and interests of various stakeholders. There is
always the risk that PFA will gradually become purely profit-oriented and abandon the social
mission. The business model will need to be formulated in such a way that both commercial and
social objectives are retained and balance one another. The YLP presents an exciting opportunity
for participants to scrutinise and refine the business model to make sure this happens.
18
4. The YLP Business Planning Framework
I. Module Two Main Tasks
The primary objective of this YLP is to develop a business plan for the PFA which involves building the
value chains through which the farmer members can sell their organic products especially organic
cotton to the domestic and export markets. The key success factors are an adequate legal and
regulatory framework; a good business environment; sufficient information and access to training and
technical assistance and good governance consistent with fundamental principles of the PFA. The
setting up of a trading enterprise should be considered.
During the eight days field work with the PFA, participants will undertake the following tasks in order
to develop the business plan:
1. Develop a firm understanding of the model of PFA, governance and stakeholder issues;
2. Design a business model for PFA to trade and market its organic products;
3. Assess the business opportunities and analyse the markets for the organic products, especially
organic cotton;
4. Identify the key factors (structure and market) that will promote or hinder the trading business;
5. Examine the potential environmental and social benefits and impacts of the trading business in
the region; and
6. Develop financial projections for setting up the trading, marketing and logistic facilities.
Main Task
1. Develop a firm
understanding of the
model of PFA,
governance and
stakeholder issues
Key Issues
•
•
•
•
•
•
2. Design a business
model for PFA to trade
and market its organic
products
•
•
•
•
•
3. Assess the business
opportunities and
analyse the markets for
the organic products
•
•
•
•
•
What are the roles of PFA in the region?
Who are the key stakeholders and how do they interact?
How will the governance structure work?
What are some key socio-economic and environmental issues and how does
PFA anticipate in dealing with these risks?
How should the investment model be structured so that it is commercially
viable?
Who are the key stakeholders and how do they interact?
How will the governance structure work?
What is the quality level of the organic cotton produced by the PFA? How
competitive are they in the world market?
How should the PFA control the quantity and quality of cotton production by
its members?
How should the PFA promote organic farming and engage more farmers to
enlarge the supply base? What are the incentives?
What are key trends for organic and organic in-conversion products in China
and world market?
Who are the clients?
What are the key supply chain issues?
How does PFA cooperate with other parties (e.g. ginning factories, spinners,
garment factories, garment brands) along the textile supply chain?
What are the market prices?
Who are the competitors to PFA? How are competitors’ products priced?
19
•
4. Identify the key factors (structure and
market) that will promote or hinder PFA’s
trading business
•
•
•
•
•
•
5. Examine the
environmental and
social benefits of PFA’s
trading business in the
area
•
•
6. Develop financial
projections for PFA’s
trading business model
20
What are the challenges and what technical expertise are required to provide
key services?
Can the cotton produced by PFA meet certain quality standards such as fibre
length, fibre strength and color?
How can PFA networks be leveraged?
What are the management training needs of the PFA?
How can PFA improve water efficiency and ensure pest control?
How will other factors like cotton prices, manpower issues and conversion
period affect the trading business?
What are the key social and environmental impacts brought about by PFA’s
trading business model?
What is the nature of the relationship between PFA’s trading business and the
farmer members? How is value captured and distributed between different
players?
Which grant-making foundations does PFA have close ties with and how can
these ties be leveraged for furthering social benefits in the area?
Develop financial projections of the PFA’s trading company over the next three
years.
Items to include:
•
Key operational cost items
•
Projected product unit sales prices and quantities
•
Costs of goods sold
•
Hidden costs of doing business (if relevant)
•
Profit, sales and/or value-added taxes
•
Start-up and subsequent investment required
•
Working capital needs
•
Potential sources of financing
And use the above to project:
•
Profit and Loss
•
Cash flow
•
Payback period
•
Return on Investment
•
Breakeven points
•
Internal Rates of Return
•
The pros and cons of various financing options (e.g. debt, equity, publicprivate-partnership)
II. Business Planning Framework
Having obtained information from undertaking the above tasks, participants will prepare a draft
business plan. The plan will outline how PFA will set up and implement its trading business model to
market and sell organic products especially organic cotton while generating wealth and
entrepreneurship for the rural communities. The plan will be put together by participants with help
from GIFT facilitators.
A business plan template is presented below for reference.
I. Objectives
•
•
Mission statement — one or two brief sentences describing the core objectives of the business
opportunity; why undertake this new venture?
Measures of success — briefly outline what you want to achieve in one-year and three-year time
horizons. Include both financial and non-financial measures. Also, incorporate changes to the
community that will occur through successful implementation of this new business.
II. Business Model
•
•
•
•
•
•
How will you add value for the target markets?
Primary products — what will this business generate in terms of products or services? What are the
competitive advantages of these products?
Production and Technology — are current methods of production and technology appropriate? How
do they need to be improved? What are the investment needs?
Target markets — who are the primary customers for this product or service? Why will they make
this purchase over other competitive products?
For example, consider price, location,
appropriateness of technology, etc.
Supply chain —how will the products be procured and delivered to the target customers? Are there
any special risks or issues associated with this distribution approach?
Maintenance — how will products and services be maintained to ensure effectiveness and longevity?
Are there any special risks or issues associated with this maintenance approach?
III. Business Organisation and Governance
•
•
•
•
Organisational structure — briefly describe how this business is organised. How does it interact with
the local community?
Leadership — who will lead this business? Include information on the chief executive and chief
operating officer equivalents as well as financial and operational leadership.
Governance — how will this business deal with regulatory compliance as well as social and
environmental impact issues? How do you plan to independently review the business? How will you
go about putting this governance into place? How will the community be involved?
What are the benefits to the community? How will income generation improve livelihoods for the
various stakeholder groups?
IV. Marketing & Sales Plan
•
•
Marketing — how will you inform potential customers about your products or services? How will you
build a “brand” reputation?
Sales — what methods will you use to sell the products? Are any third parties involved? How will
they be compensated?
V. Physical and Human Resource Requirements
•
•
Physical resource needed — are current physical resources adequate (transportation vehicles,
servicing equipment etc)? What investments are needed?
Human Resources — are current human resources adequate? What additional investments are
needed (training, more staff etc)? What management skills are needed?
21
VI. Financial Resource Requirements
•
How will you obtain the funds to launch and operate this business for the first three years?
•
How will the business be funded? Debt or equity?
•
Start-up capital — how much will you need to launch the business? How much working capital will
you need?
•
Lines of credit — what do you anticipate needing for a business line of credit for the first, second and
third years of operation?
•
Banking arrangements — do you have any preliminary thoughts on how to find and confirm both
equity and debt?
•
Who might be likely investors? Please provide a list.
•
What are the benefits to investors?
VII. Profits
•
How much do you plan for the business to return during the first three years and how will the profits
be distributed?
•
What is the ROI over this period?
•
What is the IRR?
•
Profits by year — what do you expect the business to generate during the first, second and third
years?
•
Profit distribution — how do you expect to retain and/or distribute the profits?
community get involved?
How will the
VIII. Implementation Issues
•
What are the key implementation issues faced by the business?
•
Which areas should a detailed feasibility study focus on?
•
Who will lead the business in its initial start-up phase?
•
What is the scalability of the business in the future?
•
Can the investment opportunity be bundled or unbundled to attract different investors?
IX. Leverage of Business to Other Communities
•
Can this business be leveraged outside the originating community?
•
If so, what are your plans to undertake this effort?
•
By when? How?
•
What are the overall benefits back to the wider community?
X. Risks
22
•
What are the primary risks to the success of this business?
•
Risks to — supply chain, technology, marketing and sales, people, quality, financing, and compliance
issues etc
•
Globalisation risks – what will be the impacts of globalisation on the village community (e.g. culture,
structure, influence of outside markets)
III. Appendix – Additional Reading Materials
The following are optional reading materials:
1. Country background
Human development & Poverty Alleviation
•
•
Human Development Report: China, 2008, United Nations Development Programme
From poor areas to poor people: China’s evolving poverty reduction agenda, March 2009,
World Bank
Other
•
National Integrity System Report: China, 2006, Transparency International
2. Project-relevant research
Rural and agricultural development
China- Farmers Professional Associations Review and Policy Recommendations, October 2006,
World Bank
• Background: China’s Economic Development and Implications for Agriculture, USAID
• China's farmers a poor base for growth, May 22, 2009, Asia Times
•
Cotton production
“Cottonchina.Org” founded jointly by the Cotton and Jute Bureau of All China Federation of
Supply and Marketing Cooperatives and China National Cotton Exchange,
http://www.cottonchina.org/english/index.php
• Global Cotton and Textile Production Chains, October 2008, International Institute for
Sustainable Development
• China’s Cotton Conundrum, December 6, 2006, Asia Times
•
Migration
Return Rural Migration in China: A Source of Social Instability or a Force of for Rural
Transformation, January 9, 2009, Zhao Litao, East Asian Institute, National University of
Singapore
• Daunting Departure, January 7, 2009, Financial Times
• A Great Migration into the Unknown, January 29, 2009, The Economist
•
23
IV.Itinerary for Module Two
Date
25 July
(Saturday)
Time
8:00am
Breakfast
8:30am
Coach transfer to Yongji City (3 hour drive)
11:45am
Briefing by the heads of Organic Farming and Trading Association
1:00pm
Lunch
2:15pm
YLP teams visit the organic farm. Opportunity for teams to meet with
organic farming experts and local community to understand organic
farming methods and local situations.
4:00pm
Visit ginning factory
5:00pm
Head back to hotel
6:00pm
Dinner
8:00pm
Participants start developing the business plan – facilitated by GIFT
(Local partner available on-site to answer questions)
8:00am
Breakfast
8:30am
Coach transfer to project area
9:15am
YLP teams interview the representatives of farmer cooperatives
Visit the agriculture retail chain stores operated by the Pohan
Farmers’ Association
11:15am
26 July
(Sunday)
27 July
(Monday)
12:00pm
Visit the Farmers’ School
1:00pm
Lunch
2:15pm
Visit Women Handicraft Cooperative
3:30pm
Teams visit and interview government officials
4:45pm
Transfer back to hotel
6:00pm
Dinner
8:00pm
Participants summarise findings from the field – facilitated by GIFT
(Local partner available on-site to answer questions)
8:00am
Breakfast
9:00am
YLP teams conduct various meetings and market research (potential
buyers, banks, competitors etc)
12:00 noon
YLP teams conduct various meetings and market research (potential
buyers, banks, competitors etc)
6:00pm
Dinner
Teams summarise findings from market visit and interviews – facilitated
by GIFT (Local partner available on-site to answer questions)
8:00am
Breakfast
8:30am
Teams continue to develop business plan and conduct meetings and
market research as necessary – facilitated by GIFT
12:00 noon
2:00pm
28 July
(Tuesday)
Lunch
2:00pm
8:00
28 July
(Tuesday)
Event
Lunch
Teams continue to develop business plan and conduct meetings and
market research as necessary – facilitated by GIFT
28 July
(Tuesday)
29 July
(Wednesday)
30 July
(Thursday)
31 July
(Friday)
1 August
(Saturday)
6:00pm
Dinner
8:00pm
onwards
Teams continue to develop business plan – facilitated by GIFT
8:00am
Breakfast
8:30am
Teams continue to develop business plan – facilitated by GIFT
12:00 noon
Lunch
2:00pm
Teams continue to develop business plan – facilitated by GIFT
6:00pm
Dinner
7:00pm
onwards
Teams continue to develop business plan – facilitated by GIFT (Local
partner available on-site to answer questions)
8:00am
Breakfast
8:30am
Teams finalize business plan – facilitated by GIFT
12:00 noon
Lunch
2:00pm
Finalise business plan and prepare summary slides – facilitated by GIFT
6:00pm
Dinner
7:00pm
onwards
Finalise business plan and prepare summary slides – facilitated by GIFT
8:30am
Breakfast
10:30am
Participants present the business plan to Pohan Farmers’ Association
management and potential investors - representatives from government,
private firms and other organisations
12:45pm
Lunch
2:00pm
YLP debrief – YLP reflections and evaluations, any last minute revisions
on business plan etc.
4:30pm
Coach transfer to Xian
7:30pm
Dinner
8:30pm
onwards
Free time
8:30am
Breakfast
9:00am
Free time
11:30am
Check out of hotel
12:00 noon
Coach transfer to airport for check-in
2:20pm
Depart for Hong Kong by MU203 (1420-1700) – (if travelling with group)
5:00pm
Arrive in Hong Kong
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3. Frequently Asked Questions
TRAVEL, HOTEL, ELECTRICITY
Do I need to arrange my own insurance?
Participants are expected to possess the necessary insurance that covers medical, travel and
personal liability for the duration of their GIFT experience. It is their responsibility to understand what
their respective package covers.
What travel document is required? Where can I get my visa for China?
Home Return Permit is needed for Hong Kong and Macao citizens. A China visa is required for
overseas passport holders. It is strongly recommended that you obtain your visa well in advance.
What is the time difference between Hong Kong and Shanxi?
There is no time difference between Hong Kong and Shanxi, which is GMT +8.
What will the weather be like?
Shanxi Province is very dry and hot in the summer with highs of up to 38-40ºC. However, it is
recommended that participants bring a light windproof jacket as many meetings will be held in airconditioned rooms.
Heavy rains, humidity and tropical cyclones are not uncommon in July in Hong Kong with
temperatures ranging between 26-34 ºC. Participants are recommended to bring a light windproof
jacket as many meetings will be held in air-conditioned spaces.
What kind of food will be available? Should I bring my own food?
Simple local Chinese food will be available. Certain dishes will be moderately spicy. At the site, food
varieties are limited, and their way of cooking may differ from what we normally have. If you have
special diets or do not like Chinese food in general, you may want to bring along your own food that
requires minimal preparation. Food is generally prepared hygienically, as long as stays away from
street vendors.
What are the facilities available in the hotels?
In both Hong Kong and Shanxi, standard facilities and amenities are available in the hotel. Hotel
rooms will have internet access.
What kind of electrical adaptor should I bring?
Electricity in Hong Kong and Shanxi is 220V, 50 cycles, AC. Hong Kong uses the British squared
three pin sockets, while China accepts two-pin and sometimes three-pin sockets. In Shanxi, most
hotels have a socket for shavers and hairdryers in the bathroom for both 110V and 220V.
TRAVEL HEALTH
Are there any health risks for travelers?
Travellers should avoid buying food or drink from street vendors, and take precautions to avoid insect
bites. The risk of avian influenza is present in the region so close contact with birds should be
avoided.
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MONEY AND CURRENCY
How much local currency should I take?
Domestic travel, accommodation and food are included in the YLP package. You only need to bring
cash (yuan) for personal expenses and hotel extras (laundry, and phone calls etc.). Hotels in Hong
Kong and Shanxi will accept VISA and Mastercard payments.
Will I be able to change money there? Are credit cards accepted?
You can change your money into Renminbi at banks in Shanxi, but it is advised that you do so in your
home country. Having some small denomination notes is highly recommended. Credit cards are not
commonly used, especially outside the major cities of Beijing, Shanghai and Guangzhou. Many local
establishments accept locally-issued credit cards only. ATM machines are available in major cities,
but Cirrus and PLUS cards are not always accepted.
FIELD WORK
What should I wear?
T-shirts should suffice, but wear a light-coloured, long-sleeved shirt and a hat to protect you from the
sun and repel insects, especially when outdoors. Light trousers and good walking or running shoes
are recommended. Avoid wearing shorts.
Will I be able to use my laptop computer there? Is it required?
A computer is not mandatory for the field trip, but each group should have at least one laptop to use
while preparing the business plan. There is 24-hour broadband internet connection in the rooms of
both hotels. It is advised that you bring your LAN cable.
What essential items should I bring for field work?
Insect repellent containing DEET, long-sleeved shirt and long pants recommended for outdoor
activities
Sunblock, sunglasses and hat
Medication for personal use
Umbrella or raincoat
Notepad and pen
A small water container that can hold boiled water
Will there be interpreters?
Yes, we will have Putonghua-speaking staffs from GIFT and interpreters that are responsible for
simultaneous interpretation.
Will we be out of communication during the field work? How will we be able to contact people or
be contacted if necessary?
Certain rural areas do not have mobile phone reception. Other than that, you can use mobile phones
in most areas. Stored value SIM cards can be purchased in Shanxi.
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HOTEL INFORMATION
Hong Kong (July 20 – 24)
GIFT has arranged hotel accommodation
for participants from outside Hong Kong.
The hotel details are as follow:
Cosmopolitan Hotel
387-397 Queens’ Road East
Wan Chai, Hong Kong
Tel: (852) 3552 1111
Fax: (852) 3552 1122 The most convenient way to get to the hotel from the airport is:
Take the Airport Express train at the arrival hall of the airport to Hong Kong Station. One-way ticket
costs HK$100, and takes around 25 minutes. Take a taxi from the Hong Kong Station to the hotel,
cost at around HK$30.
The hotel is within walking distance to the classroom (at the Football Club) where YLP sessions will be
held. On July 20, a GIFT representative will escort you from the hotel to Module One venue.
Participants should gather in the hotel lobby at 8:30am.
Shanxi, China (July 24 to August 1)
HaiNa Hotspring International Hotel The southern tip of Hedong Road
Yongji City, Shanxi Province,
FLIGHT SCHEDULE
Date
Flight
Itinerary
Departure
(local time)
Arrival
(local time)
July 24 (Fri)
MU204
Hong Kong - Xian
18:00
20:20
Aug 1 (Sat)
MU203
Xian - Hong Kong
14:20
17:00
Itinerary between Hong Kong and Shanxi province(The above itinerary may be different for individual
participants.)
All local transport in Shanxi will be arranged by GIFT.
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4. Annex A. Introducing the 2009 Shanxi YLP Participants:
Ms. Sherin
GOH
IMC
Sherin has more than 10 years of experiences in various fields such as HR, consultancy,
government and law. She is currently the HR Business partner of IMC Pan Asia Alliance
Pte Ltd.
Sherin is interested in joining the YLP as part of her leadership development in addition to
networking opportunities. She will also be evaluating the programme to see if the YLP
would be of benefit to her other colleagues in IMC.
Ms. Sandy
HSU
Sandy is currently an MBA student at HKUST. She graduated from UC Berkley with a
Legal Studies degree and has 6 years of experiences in investment operations.
‘The YLP would definitely provide a great opportunity for me to utilize and apply the skills
learned into the real world. Not only do I benefit from learning but this is also an
opportunity to give and help the local farmers in developing a business model for them.’
HKUST MBA
Ms. Reimi
IMAIZUMI
Reimi is currently working in the CLSA Japanese Equities Division with Calyon Capital
Markets Asia B.V., Tokyo Branch. She has a degree in Policy Management from Keio
University in Japan. Reimi has also lived and studied in the UK.
Calyon
Capital
Markets Asia
B.V.
Ms. Marike
JENSEN
HKUST MBA
Mr. Takashi
KUMON
Japan
External Trade
Organisation
‘I joined the YLP because I am interested in becoming a social entrepreneur. I believe that
this programme will provide a good experience and enable me to be closer to achieving
my future goal. The YLP would also enable me to meet people from various back
grounds and to have the opportunity of discussing and sharing ideas with them.’
Marike is currently an MBA student at HKUST. She also has a master degree in Industrial
Engineering from the University Of Applied Sciences Kiel in Germany. Marike has also
worked and lived in Mexico City, Perth, Osaka, Madrid and Hong Kong.
‘Currently I am holding the marketing chair at Net Impact, which is a CSR organization
working with MBA students and graduates. I would like to enhance my leadership
potential and see management from a more sustainable perspective.’
Takashi is an economic and business analyst regarding China and serves as Deputy
Manager at Agricuture, Forestry and Fisheries Research Division at the Japan External
Trade Organization (JETRO).
‘Through this program, I expect to find ways to start BOP businesses in Asia, to find out
how global leaders in the 21st century can be developed, and to discover insight as to
how to create a new type of organization where people can discover and share their
talent.’
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Mr. Sin-Hong
LEONG
IMC Group
Sin-Hong is the Associate Director for Direct Investments Department in the IMC Group.
He holds an MBA degree from Cornell University, a Masters in Engineering from Stanford
and a bachelor degree from UC Berkeley.
‘I hope to further develop my leadership skills while working in a cross-cultural and crossfunctional environment. The programme will expose me to real-world problem solving by
coming up with a viable business plan for the local community. Having worked in
developing countries such as Vietnam and Pakistan, I view this as an important
professional challenge and worthwhile personal objective.’
Ms. Ivy LI
As a Production Planning Manager at Lever Style, my main task is to follow-up on orders
in the pre-production process, identify problems and to provide effective solutions.
Lever Style
‘I hope to learn and share my experience in the YLP which will help me in my work in our
company.’
Ms. Hui-Yi LIN
Hui-Yi is an MBA student from Tsinghua University. She has previously worked for the
Singapore Ministry of Trade & Industry in their Europe & Central Asia Division in addition to
their Research & Enterprise Division.
Tsinghua
University
‘I am very interested in international and public developmental issues, and the balance of
achieving social objectives in a commercially feasible manner. I believe that the YLP will
have many good learning points for me, not only in the course material, but from the
practical ground experience and network of like-minded people from all around the world.’
Mr. Chi On
LIU
Chi On is the Associate Director of Meinhardt Singapore. He has 20 years’ experience in
consultancy field.
Meinhardt
Singapore
Ms. Sherry
MA
Tsinghua
University
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‘I want to gain knowledge that would benefit my career, and insights that I can share with
people back in my office.’
Sherry is a Programme Managers in the Climate Change and Energy unit of the British
embassy in Beijing. She is also an MBA student in Tsinghua University and holds a degree
in economics from the University at Colorado at Denver.
‘What interests me about the YLP is the chance to work on a real case that brings
together both the private and public sector to improve community life. In addition the
organic cotton business addresses low carbon issues that I have been promoting at work.
I believe this will be a very meaningful case for both Shaanxi Farmers’ Association and the
YLP team, and I’m extremely looking forward to becoming part of it.’
Ms. Iliodora
MARGELLOS
Iliodora is a graduate of Yale University with a degree in Art. She has experience working
in the US, Greece and Switzerland including working at UBS for its art banking unit.
‘The YLP’s agenda appeals to me because of the idea of setting up a sustainable project
that cultivates a social and environmental awareness in a challenging location. I value the
educational quality of the programme that addresses the impact of globalization in Asia.’
Mr. Melinda
MEARS
Meinhardt
Australia
Mr. Hideki
OKA
Melinda is a Senior Project Manager at Meinhardt Australia. She has 8 years experience in
project management.
‘The YLP offers an opportunity to experience working with different cultures. I can see the
programme providing invaluable exposure to working with a team to bring about a
tangible outcome. I also see this as an intensive programme that will bring great
understanding of the full process of business management through inception, planning,
consultation and development.’
Hideki works with a variety of clients to provide IT and business consulting services.
‘I am interested in joining the YLP to enhance my business skills and career in a global
market. I am very interested in markets in Asia, particularly China. I would like to learn
more about how to do business in China.’
Infotree
Mr. Zero
Sham
Zero currently works at an event planning company in Hong Kong. Previously, he worked
in sales and marketing in the aerospace industry. He obtained his degree in Anthropology
at the Chinese University in Hong Kong.
Awake Ltd.
Mr. Jeffrey
SONG
Tsinghua
University
Jeffrey is an IMBA student from Tsinghua University. He graduated from Nankai University
and has worked as a software engineer for IBM and other companies.
‘I’m very interested in business opportunities in emerging markets, especially in the
organic agriculture and renewable energy fields as this may be some areas where I may
start my own business one day. I also look forward to meeting the participants who are
from different backgrounds as I feel we can learn from each other. The YLP will also
enable me to help Chinese peasants and to give back as I had also experienced poverty
during my early childhood in rural Inner Mongolia.’
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Mr. Philip
XIAO
As the Human Resources Director for Lever Style, Philip is in charge of training and
development, recruitment, compensation & benefits and employee relation.
‘I want to improve my leadership skills, especially in areas such as influencing others,
business thinking, and strategy.’
Lever Style
Ms. Janelle
ZAI
CUHK
Ms. Jenna
ZHENG
Janelle is studying her Juris Doctorate degree in Chinese University of Hong Kong. She
has a degree in history from California State University of Los Angeles.
‘During my studies in law school, I was particularly interested in courses related to human
rights and international law, as I find the interaction between law and public policies
fascinating. I hope the The YLP programme in Shanxi will help me to discover the social
role I can play in utilizing my legal education in a practical manner by actively helping
support local communities.
Jenna is currently an IMBA student at Tsinghua University. Previously she worked at a
consulting firm as a project manager, in designing, organising and implementing various
projects.
‘Leadership is not only about theories; what’s more important is how to apply. YLP
Tsinghua
University
Mr. Robert
ZHOU
Nike Inc.
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provides a real life project in which we can practice and improve our leadership skills. This
is a valuable opportunity for participants like me, and it’s also a chance for us to help
people in rural regions in China to reach for a better life.
Robert is the Nike North China Corporate Responsibility Manager.
‘I see this program as an opportunity to learn more about my strength and weaknesses.
More importantly it is an opportunity to develop my communication skills. In addition, it will
be my first time running a business project which aims to generate profit while being
environment friendly. This is important to me as my current job requires sustainability and
responsibility from enterprises.’
5. Annex B. The GIFT Team
Mr. Chandran Nair
Founder & CEO
Dr. Thomas Tang
Executive Director
Mr. Eric Stryson
Programme Manager
Ms. Freda Tong
Programme Manager
GIFT Contact Details
Hong Kong – Global Institute For Tomorrow
GIFT office
Tel:
852 – 3571 8103
Fax: 852 – 3585 3910
www.globalinstitutefortomorrow.com
For programme details:
Anita YANG
Office: 852 – 3571 8210
Mobile: 852 – 9011 3941
E-mail: [email protected]
For travel and other logistics:
Amanda CHIU
Office: 852 – 3571 8134
Mobile: 852 – 6099 1679
E-mail: [email protected]
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